Charities (Protection and Social Investment) Bill [HL]

Baroness Hayter of Kentish Town Excerpts

Tuesday 23rd June 2015 Grand Committee

Moved by

[Baroness Hayter of Kentish Town]

2: Clause 1, page 2, line 15, at end insert—
“( ) The Charity Commission may call for and randomly or systematically check the Disclosure and Barring Service checks undertaken by charities on trustees.”

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I remind the Committee of my interests as a trustee of a number of quite small charities. In moving Amendment 2, I shall speak also to Amendment 7, both in the names of my noble friend Lord Watson and myself. As with the next group, these amendments are to improve the safeguarding of children and vulnerable adults, particularly in regard to sexual abuse.

Amendment 2 concerns the power for the Charity Commission to check on disclosure and barring service checks undertaken by charities. It follows concerns raised by Mandate Now, a pressure group supported by the Survivors Trust, which lobbies for mandatory reporting of abuse, and is led by adults who experienced child abuse in establishments that were also charities. Mandate Now told us of a charity providing education; in its inspection report, there were references to failure to return—that is, notifications—but the staff concerned went on to abuse elsewhere. They also told us about a charity providing education where the press reported that the head in that case had phoned a receiving establishment to warn it of an abuser who was applying to work there. However, no formal notifications were found that might have ensured the known abuser would not offend elsewhere, and—this is the important thing—the trustees do not appear to have challenged the head.

In 2010, an inspection report on another educational establishment registered with the Charity Commission said that there was no,

“established policy for reporting directly to ... the Independent Safeguarding Authority, responsible for such referrals … The advisability of making such referrals is now clearly understood even when there may not be a strict legal obligation to do so”.

Our concern is that it is advisable only—there is no compulsion. In the case that I have just mentioned, neither the management nor trustees made any referral to what is now the DBS, which meant that it did not lead to any action. No action was taken about those trustees for not making those reports.

I think we can all agree that notification should not be an optional extra. More than that, the Charity Commission should be able to check that the system is working as intended. Relying on trustees always to do the DBS checks obviously does not always work.

Another example occurred in an educational establishment which happened to be run by a religious order, where the head ignored the enhanced check, which showed a history of child abuse offences for the new chair. It appears to be rather discretionary as to whether trustees act on information provided by the DBS, when there are no independent checks by a third party that the correct procedure is happening. Amendment 2 gives a power—not a duty—to the Charity Commission to undertake such checks.

Amendment 7 covers perhaps the most glaring anomaly in the current law, which is that someone who has got into debt and is subject to an individual voluntary arrangement, or a person with financial misdemeanours behind them, is automatically excluded from being a trustee, but people on the sexual offenders register, who have surely done far worse than run up their credit card debt, can happily serve as a trustee. To date, the Government have said that when something comes to light, or in areas covered by the DBS, such people should be identified. That is not good enough. We do not want to wait until something has happened, or until other trustees get suspicious and then have to act, possibly against someone with whom they have been working closely on the trust. Nor is it sufficient to deal only with charities which obviously are in contact with children, and thus covered by DBS. There may be other examples, such as a church hall that gets used by guides, or for children’s parties. That would not have been covered.

An alcohol misuse charity could decide to run a special programme for the children of problem drinkers or, similarly, a cancer group could offer support to the children of cancer patients. They would not be covered by the current safeguarding regime. Who would think to check on the background of someone, particularly if they were offering to be the treasurer of such a charity? It is a thankless task, as I know. Trustees are all too willing to sign up a suitably qualified person without a thought for their wider background. Indeed, I have had dealings with an accountant who, unbeknown to the trustees using him, admittedly as an adviser rather than a trustee, had been convicted, although not imprisoned because he was having a kidney transplant, as he had been found with more than 1,000 images and videos of child sex abuse on his computer. None of the trustees knew about it.

I know that many trustees are very sympathetic to our proposal to add sexual offences to the criteria that trigger automatic disqualification from being a trustee. Of course we would want a waiver for charities working with ex-offenders which need that input to help them in their work. Those charities would know of the record and there would be no secret.

We also know that many smaller charities, particularly parish charities, depend on hard-pressed volunteers and already find the expanding vigour of the Charity Commission guidelines and reporting somewhat burdensome. Expecting those trustees to think and risk-assess before they approach a new trustee is quite a burden to put on them. Surely the onus should be on the person on the sex offenders register to know they should not, without a waiver, be a trustee. We should not to leave it to chance that someone else would spot it and consider whether it makes them a risk.

This is an opportune moment to add being on the sex offenders register as a category for automatic exclusion, subject to waiver, as this Bill adds terrorism, money-laundering and bribery to such automatic exclusions. I assume that the Government are as concerned about safeguarding children, women and other vulnerable people as they are about debtors and money-laundering. I am therefore very hopeful that this amendment can be accepted. I beg to move.

[Baroness Pitkeathley (Lab)]

My Lords, the noble Baroness, Lady Barker, and the noble Lord, Lord Hodgson, talked about concentrating the mind of trustees. The main attribute of my noble friend’s amendment is to work further on that concentration of the mind. Contrary to the assumptions often made that charities regulated by the Charity Commission are the large household names which have skilled, informed trustees who are offered training and induction, most charities are not like that. They are small, with governance that can be a bit hit and miss for some of the reasons we have heard: the difficulty of getting volunteers and so on. I venture to suggest that the majority have no idea about the Charity Commission and its powers and have a very hazy concept of collective responsibility, which we will discuss in the next group of amendments. History shows us that we cannot take the protection of children too seriously. We must also be aware of the serial, repetitive nature of some sexual offences and of the great skill in deception that sexual offenders often have. I therefore very much support these amendments. However, I am wary of the need for balance, which the Minister reminded us about, so I am very pleased that the amendment acknowledges that some charities need positively to seek trustees with experience of, even convictions for, these offences so that they can be helped in their work of rehabilitating offenders.

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[Baroness Hayter of Kentish Town]

I believe we are still on Amendment 7. I will deal with that when we come to Amendment 11.

[Baroness Barker]

I am sorry; I thought that they had been grouped together. I apologise to the noble Baroness.

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While I am very sympathetic to the aims of the noble Baroness to further protect children and vulnerable adults, I hope she will understand that I am not able to accept her amendments today. I will, however, commit to considering and discussing with the Charity Commission whether there is more that can be done in this area, and I am happy to meet the noble Baroness before Report to feed back on those discussions.

[Baroness Hayter of Kentish Town]

I will certainly take up that offer. I want to make only a couple of comments. I thank noble Lords who participated in this debate. My noble friend Lady Pitkeathley quite rightly said that this is about concentrating the mind. If we do not get this movement, I hope nobody reading this in a few years’ time says that the Minister was being very complacent. I do not think anyone who spoke was complacent, but the feeling coming across is that everything is fine as it is, and I am not sure that that is correct. It is quite right that the case was five years ago but the charities that have dealt with abused children have been with us this week and last. They retain those concerns and will not be reassured by some of the things that they have heard along the lines of, “Don’t worry, it’s all there”.

I was not suggesting that the Charity Commission had to check that charities were doing their job with DBS; I was suggesting that it has the power to do so. I want to read Hansard very carefully about whether it has that power or not. At one point the Minister was saying that there was a power for the regulators that had not yet been implemented, but at another point he seemed to be saying that the commission could do this. Whether it could, short of an inquiry, I am not certain. Perhaps that is something we could clarify. I think that I read out some of the stuff that was said. The charities concerned have been told that these spot checks, if you like, could not be done.

There is also something beyond the charity itself. We have seen the damage that was done both to the NHS and to the BBC by their complete failure over Jimmy Savile. I would hate to find that a charity where this sort of thing happened then damaged the whole of the charitable sector. That risk remains.

I thank the noble and learned Lord, Lord Hope, for his comments. I certainly think that the wording of this could be greatly improved. It would be about serious sexual offenders. I think that some of the comments about being on the register for life probably affect other things even more than this particular one, and that is more a question about the register itself. I think that I emphasised the word “waiver” a few times, not only for ex-offenders in general but for here. A waiver to get someone back into charitable work or into civil society is great. As people know, I was and still am very involved in alcohol misuse. If we did not have ex-offenders working for us, we would be rather short of hands to do it, so the waiver is very important.

My concern remains that we are more concerned about money than about people. We are adding money-launderers to the people who will be barred and we are very worried about people’s ability to look after funds, but beneficiaries are probably rather more important.

The issue remains that we do not know which charities these people could be involved in—even, I have to say, a charity working to restore historical buildings and churches. If a woman gets raped in one of those buildings, I would not want to be the Minister who said, “Oh well, that’s a safe charity because it doesn’t see children”. Those are empty properties late at night. As a woman I would be very worried if someone who could have been on the sex register, not for a child but for a serious sexual offence, looked terribly respectable in preserving an old building, and I was the one there late at night. Having said that, though, I welcome the offer from the Minister to discuss this further, particularly Amendment 7, because, as I say, I am very worried that debtors, money-launderers and terrorists, or the people who help to fund terrorism, should be excluded but people with perhaps quite serious findings, not just about children but about women, would be able to be a charitable trustee unknown to all of us. I look forward to discussing that further, but for the moment I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

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Moved by

[Baroness Hayter of Kentish Town]

3: After Clause 2, insert the following new Clause—
“Reporting misdemeanours
A trustee must report to the Charity Commission any serious incident that results in, or risks causing, significant harm to their charity’s work, beneficiaries or reputation.”

[Baroness Hayter of Kentish Town]

My Lords, this is in a way part of the same issue—it is about where we put responsibility. In moving Amendment 3, which relates to reporting misdemeanours, I shall speak also to Amendment 11, which concerns the power to disqualify all trustees where there has been a collective failure to protect children or, indeed, vulnerable adults, as the amendment should have said. They are not mentioned in the current wording, but I will come on to that.

The Charity Commission’s guidelines on reporting serious incidents list—I shall keep to the order used—significant items to report. They include loss of money, damage to property and, only thirdly, harm to beneficiaries. The examples given have the same order of priority. They start with fraud and theft, go on to a large donation from an unverified source linked to terrorism, a disqualified person acting as a trustee, then not having a policy to safeguard your charity’s vulnerable beneficiaries, not having vetting procedures to check prospective trustees, and, only lastly, suspicions, allegations or, indeed, incidents of abuse of vulnerable beneficiaries. That order does not seem to give great confidence that beneficiaries rank very highly.

In the same guidance, the commission warns that if trustees fail to report a serious incident, the commission “may”, not “must”, consider this mismanagement and take regulatory action. Therefore, it is possible that trustees could have failed to record an incident of abuse of a vulnerable beneficiary and still no regulatory action would be taken. So not only does abuse of vulnerable beneficiaries rank below big donations or theft but failure to report is only possible evidence of mismanagement.

We should compare that with the duty on auditors, which, again, relates to money rather than to beneficiaries. The Charities Act 2011 places a duty on auditors to report matters of material significance to the Charity Commission, so there is a higher requirement on auditors for anything relating to money than there is on trustees for abuse of beneficiaries.

For that reason, amendments are needed both to make reporting mandatory and also, where there has been a collective failure of a board to identify, report or deal with serious allegations or incidents, to enable—not force—the Charity Commission to replace the whole group. At present, the Charity Commission would have to seek to disqualify each trustee one by one, probably showing evidence of individual responsibility, whereas if on the watch of a whole group of trustees things were seriously amiss and there had been a collective failure, the amendments would enable them to be removed as a collective so that the charity could move forward in the interests of its beneficiaries.

Although, as has already been pointed out by the noble Baroness, Lady Barker, Amendment 11 deals with a failure of trustees to protect children, we also have in mind other vulnerable beneficiaries, including older people who may be at risk of elder abuse. Perhaps I may cite some examples of why we think that these two amendments are necessary and important. We know of cases in more than one charity where incidents of abuse of children were not reported as serious incidents by trustees. That shows that the general duty is not strong enough and not sufficient. We also know that trustees who may not be expert in child abuse and safeguarding work very much at the behest of the staff, who may have little more than cursory training in safeguarding.

This is particularly the case in trusts which do not concentrate on children. The Charity Commission may be notified by relatives of children that major incidents are not being taken seriously by the charity and the trustees. However, in one such case the families were advised by a government department that the Charity Commission was the only party able to address the failings of trustees to protect children. In that case the Charity Commission disagreed, feeling that it did not have the powers to intervene. It could only trigger the beginning of an inquiry. It appears that it lacks the power either to remove the trustee board as a whole, because it can do it only one by one, or indeed to appoint a new trustee with relevant experience to assist the board with the complex area of child protection.

This need for a power to remove all trustees also arises from the case of an institution where there were several instances of child-to-child abuse. An investigation by families and their lawyers showed that the staff had failed to appreciate the cumulative danger facing children, and they therefore failed to report. The fact of repeated sexual injuries involving different children over time should have led the trustees to ask some very challenging questions of the child protection officer there, as well as of the management, but they failed to do so. In that case the charity finally had to close. However, had the Charity Commission had the power to act in the way that we are proposing and been able to remove several trustees simultaneously, the closure might not have been necessary. Without the scope for agile action, matters can drag on, further damaging not only the children concerned but the charity’s reputation and, ultimately, its future. I beg to move.

[Lord Hodgson of Astley Abbotts]

My Lords, I was slightly surprised to see that the noble and learned Lord, Lord Hope of Craighead, was not going to rise to his feet to take us through the significant words “any serious incident”, as serious incidents obviously can be in the eye of the beholder, the second point,

“results in, or risks causing”,

which requires one to take a view of the future, which is also quite demanding, and the definition applied to “significant harm”. I wonder about the wording of this amendment, which I think would have a pretty chilling effect on trustees and might well lead to them ringing the Charity Commission with inquiries about the nature of particular incidents and whether they qualified under this quite broadly drawn clause, or indeed might lead to a rash of reports to the Charity Commission, which may or may not be a good use of the commission’s time and energy to follow up.

For my part, I go back to my wish to expect trustees to behave responsibly and for the Charity Commission to check them, but not to impose other and further duties. I drew a different conclusion from the noble Baroness about the Charity Commission’s guidance on its website, which seems to be a much better way of dealing with this than putting it into statute. The charity’s trustees would have to be aware of that guidance and follow it. I think that the noble Baroness was slightly unfair to the commission about the order in which it has rated the different offences. Just because child abuse comes a bit further down the list does not mean that it is considered less important; I do not think that is a fair conclusion to draw. It is more important that we should have flexible guidance and that the Charity Commission empower trustees. We should not impose in statute quite wide-ranging and imprecise duties that will be a further reason why people do not want to act as a trustee.

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[Lord Bridges of Headley]

My noble friend makes a very good point about the information exchange between agencies across government, and I am more than happy to pick that up with him in writing or at a later stage.

I turn to the noble Baroness’s Amendment 11. This amendment seeks to empower the Charity Commission to disqualify an entire trustee board where it collectively fails to ensure adequate protections for children who are the charity’s beneficiaries. Later on we will come to debate Clause 10, which will confer the power for the commission to disqualify on a case-by-case basis; suffice it to say that it is one of the most important powers in the Bill. That clause is relevant to this amendment so it may help the Committee if I give a short overview of it now before going on to consider the noble Baroness’s amendment.

Most unfit individuals will be caught by the existing—and, under the Bill, extended—automatic disqualification criteria, but the Charity Commission needs a power to act in cases where individuals are not excluded by automatic disqualification. The whole point of this power is to give the commission the ability to disqualify an individual whose conduct clearly makes them unfit to be a charity trustee, where, if the commission were not to act, there would be a real risk, or at least a reputational risk, to charities.

We carefully considered the report of the Joint Committee on the draft protection of charities Bill, and made improvements to this provision as a result. More detail about the operation of the provision has been included in the Bill, and it is now a three-limbed test: first, one of the conditions A to F must be satisfied; secondly, the commission must consider that the person’s conduct makes them unfit to be a charity trustee, and draft guidance has been published on that; and, thirdly, the commission must consider that exercising the power is in the public interest, to protect public trust and confidence in charities. While the power may be relatively broad, its use would be targeted. The commission has said that it expects to use this power on a relatively low number of occasions each year.

The commission already has the power to act, and has done so, in cases where there has been a collective failure of trustees in relation to systemic governance issues. The powers to remove trustees in Sections 79 and 80 of the Charities Act 2011 do not explicitly or implicitly contain any restriction on removing trustees where that leaves one or none in place. Neither does the proposed disqualification power in Clause 10. There is, therefore, no reason why the commission would not remove all trustees on the ground of ensuring the safety and protection of children, where this was appropriate, proportionate and in accordance with best regulatory principles.

In circumstances where there is an impact on the beneficiaries of the charity, the commission has tended to appoint an interim manager, under Section 76 of the Charities Act 2011, to ensure the continued operation of the charity and to get it back on track before new trustees can be appointed and take over. However, there has been a case—and I will not name the particular charity concerned—where the commission has removed all 10 trustees on the board for collective governance failings.

The noble Baroness, Lady Barker, made a point about trustees having joint liability. The Charity Commission is required to act proportionately and so, in most cases, would target regulatory action on those most culpable or responsible for misconduct or mismanagement.

The noble Baroness’s amendment deals specifically with collective trustee failure relating to safeguarding. We would not want to cast any doubt on the commission’s existing liability to take action relating to collective trustee failures, or limit that by making specific provision. On the basis that the commission can, and does, already act to address collective trustee failures where it is proportionate to do so, I hope the noble Baroness will feel able to withdraw her amendment.

[Baroness Hayter of Kentish Town]

I thank the Minister, particularly on that second point. The reassurance that action for collective failure can be taken answers the point we were seeking to make.

On reporting, I have greater concerns. In answer to the noble and learned Lord, Lord Scott, we know of schools where abuse that was taking place was not being reported. Clearly, the recommendations and guidelines for reporting are not being followed. This is the problem. You have an educational establishment where abuse is going on and it is not being reported. It is that failure to report which gives rise to concern.

The noble Lord, Lord Hodgson said that we expect trustees to behave responsibly. Of course—but this issue is where they do not. I have now heard the phrase “red tape” used twice and I jib slightly every time I hear “red tape bandwagon”. It is not red tape. We are talking about protecting vulnerable people.

[Lord Hodgson of Astley Abbotts]

The noble Baroness has used the word “complacent”. She has used the phrase “red tape”. Nobody is in any way complacent about the importance of protecting children. The question is how do we do it effectively and are we getting the right answers to make it happen, or is it coming at a cost that is out of all proportion? One can argue that there is no cost too high, but the reality is that we have to have a system that ensures we get the proportionate, right result. Is this system going to be perfect? I have never said that it would be, but we need not be complacent about it. What we are trying to do is to give trustees the confidence to decide what is best for their charity, rather than saying, “Here is all this wraparound that you have to look at”, which terrifies them and means that people do not become trustees at all.

[Baroness Hayter of Kentish Town]

The noble Lord is absolutely right. Are we doing it properly? Representatives of abused people are coming to me, saying, “No, it is not working right”. That is the difference between us. We are hearing that there is a failure at present. There has to be a balance. The noble Lord is saying, “No, we have it about right”. The people representing the families of abused children where something did not happen are saying, “No, it is not right”. This is a charity Bill. If they are correct that it is not working properly, this is our opportunity to make it better. This is what we are seeking to do.

The order of the guidelines may be historical, but the issue is that, sadly, we know far more about sex abuse than we used to. It is probably already going on. It happened to my aunt when she was a child—she would be 109 if she was alive. This is not new, but we know more about it. Sadly, we know that it is far more common than we think. We are trying to do something to make reporting and awareness of it better. The only difference between us is that we are hearing from the charities concerned that the policies and the reporting requirements do not seem to be working. We are trying to get it right.

I, of course, defer to the noble and learned Lord, Lord Hope, about whether the phrasing should be “direct beneficiaries” or,

“who are within the objects of the charity”.

We were trying to say,

“those people for whom they provide a service”.

I am not going to try to draft, but we are talking about establishments that provide a service for a group of people where there is some sort of abuse going on and they fail to notice it. It is well hidden; people do not come along in dirty macs to abuse children. Either trustees really do not know because they do not have the qualifications, or they are not dealing with it properly and are not reporting it. We are trying to lift the bar.

[Lord Bridges of Headley]

I want to make this one point to the noble Baroness. I asked the commission what its communication to the sector would be when the relevant changes on automatic disqualification come in. I completely agree that we need to ensure that not only are these new measures properly communicated, but we take the opportunity to remind all charities of their existing responsibilities, not just on this, but on other issues, although I would suggest especially on this. I will not bore the Committee with the six bullet points that I have been given about e-newsletters, press releases et cetera, but I can assure the noble Baroness that I have asked the Charity Commission to do this. It has given me its assurances, which I am happy to pass on.

[Baroness Hayter of Kentish Town]

That is helpful. Having been reassured about the ability to take action where there is a collective failure, we probably will not pursue that. We may, however, want to come back on the bar on reporting.

[Lord Scott of Foscote]

I wonder if the noble Baroness could help me with one point. If a scholarship is set up for a particular school, the money is charitable money and is used to provide scholarships for people who perhaps otherwise would not be able to go to the school. I find it extraordinary to suppose that the trustees of the charity must examine what is going on in the school to see that there are no misdemeanours among the staff towards the boys or things like that. If that is the intention of the proposed new clause, it seems to me that it is full of difficulties. If that is not the intention then the wording is not quite right.

[Baroness Hayter of Kentish Town]

If they are the trustees of the school they have that responsibility now.

[Lord Scott of Foscote]

They are not trustees of the school; they are trustees of the charitable trust that is funding the scholarships.

[Baroness Hayter of Kentish Town]

The wording may not be right, but we are talking about where, basically, they are running an establishment, such as a music school. They are the trustee running the school; they therefore have these responsibilities. They cannot say, “I am a trustee, it is not my responsibility”. They have the responsibility to ensure that they have the right management and that they are trained correctly. It is some time since I have done that, but they have to have those policies in place. This group of people, who are running an organisation either for children or for vulnerable people, has that responsibility.

The bit that we are trying to add is where it has come to their notice—or they have not asked the question right—that abuse is going on in those areas where they have responsibility. We want it to be a duty on them, not just in guidelines, that they should report that abuse. I am not a draftsperson, but what we are driving at is probably clear. It is raising the bar of when they need to report. The guidelines are already there, the duties are on them, and what we are hearing is that sadly some trustees fail to report what they should. For the moment, I beg leave to withdraw the amendment.

Amendment 3 withdrawn.