Charity Commission

Baroness Hayter of Kentish Town Excerpts

Thursday 27th February 2014 Grand Committee

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I thank the noble Baroness, Lady Barker, for the debate on regulating what is one of society’s most valuable assets, charities, which are often described as,

“the very bedrock of our civil society”.

There are nearly 1 million trustees of charities, and I reckon that around 700 of them are in your Lordships’ House. I have set up and run various charities and I remain a trustee of two.

The regulator’s role in maintaining trust in this sector is key but, as we have heard, today’s debate comes after the NAO and PAC inquiries, the latter saying that the commission fails,

“to regulate charities effectively. The Commission is a reactive rather than proactive regulator, and has yet to use its powers properly … we are not convinced it has the leadership capability to tackle its significant failings and transform its culture”.

It goes on to say that the commission has “no coherent strategy” and that it is “buffeted by external events”. It is,

“too willing to accept what charities tell it”,

and has failed to tackle “poor performance” and to “implement recommendations”. Indeed, the Charity Commission itself has admitted that it was,

“weakest in identifying … deliberate wrongdoing”.

Furthermore, when asked whether it had,

“sufficient resources to effectively regulate the sector”,

Mr Younger’s answer was,

“very close to being no”.

So, should the commission and the Government begin to rethink what has become a near impossible job and consider even the issue, which has just been raised, of a levy on charities? The commission thinks that anyone who feels like it should be able to establish a charity. It gets 27 applications a day, but we have heard nothing about how those 7,000 concerns a year perform or whether all their trustees, who are often untried and untested, are actually capable of running a charity, given that,

“charity law is hard … especially … for trustees setting up small charities”,

and that, to quote the commission,

“in the overwhelming majority of cases where trustees are getting it wrong”,

it is “through ignorance” that sometimes seems to be “bordering on negligence”. Given this, why of all things did the chair of the commission promise to tackle “the politicisation of charities” or consider that the lobbying Act was broadly satisfactory to the sector, despite its “gagging” effect and despite the sector’s own view?

The Charity Commission’s report on investigations shows that fraud is one of the most common problems. Indeed, of its completed investigations, 39 were about fraud, accounting and crime, 33 were about trustee issues and only one was about political activities. Is there another agenda here, as I fear we have heard something of today?

We welcome many of the suggested new powers in the government consultation, especially broadening the range of offences for which trustees can be disqualified, but focusing on powers misses the point. The problem stems from being overly cautious, not from a lack of legal powers. Some of those suggested may go too far, such as giving the commission the pre-emptive power to block charities from holding certain events or inviting particular speakers. Preventing fraud, mismanagement, abuse and the funding of terrorism should be the priority, not gagging legitimate activities.

The Charity Commission has made progress. However, there is more to make, and the Government have a role in terms of thinking whether they are asking this small organisation to do far too much on far too little money.