Charities Bill [HL]

Baroness Stowell of Beeston Excerpts

Thursday 18th November 2021 Other Business

[Baroness Barker (LD)]

My Lords, in the course of deliberations on the Bill, we have focused, rather predictably, on the Law Commission recommendations rejected by the Government. This is the most important of those. We spent a great deal of time on this in the Committee listening to the Minister and the Attorney-General, talking to the Law Commission in great detail about why it came to the conclusions and put forward the proposals that it did and talking to the witnesses.

A compelling witness was Dr Mary Synge, a specialist academic researcher in charity law. She put forward to us the argument that the reasons for keeping the Attorney-General’s veto on the Charity Commission making a reference to the tribunal were quite weak. The noble Lord, Lord Hodgson, referred to some of them, but one that was particularly weak was that the Attorney-General is part of the legal system; that does not seem a good enough reason to indicate how they add to regulation by the Charity Commission.

The Government’s second reason was the need for consistency in the Attorney-General fulfilling her duty to protect charitable interests. Back in 2006, a case was made during the passage of that Charities Bill that we must at all costs avoid duplication by the Attorney-General and the Charity Commission. The amendments put forward today deal quite effectively with that. There are strong reasons to do that. There are strong reasons to allow the Charity Commission not to have to go through the Attorney-General. The Charity Commission is the effective regulator of charities. It has to be clear on the nature of the charity law that it is to apply. If, as in the cases outlined, the effect of the Attorney-General’s refusal is that the Charity Commission is left in doubt about what charity law is, that cannot be right.

Given that the Charity Commission has the overall duty to make sure that the administration of charities is effective and legal, we should not put this block in its way. It is important that we make sure that the Charity Commission has permission to make a reference without reference to government—therefore, completely away from political interference of any kind. These amendments avoid duplication. They do not prevent the Attorney-General fulfilling her duty in any way. They simply allow the Charity Commission to get on with part of its job, which is to clarify charity law in a timely and effective way. I see no reason to object to either of these amendments which seek to do that.

[Baroness Stowell of Beeston (Con)]

This is the first time I have spoken on the Charities Bill since it was first introduced to your Lordships’ House. I must declare a recent, albeit ceased, interest, to which my noble friend Lord Hodgson has already referred: I was chair of the Charity Commission until the end of February this year. I became chair of the Charity Commission at the end of February 2018. One of the first things I did—it was certainly the first letter I wrote —was write to the then Civil Society Minister asking the Government to adopt the Law Commission’s recommendations and to bring forward a Bill. The fact that the Government decided to bring it forward a few weeks after I had left perhaps illustrates just how influential I was when I was chair of the Charity Commission—I hope not, anyway.

I am very pleased to add my name to the amendment that my noble friend Lord Hodgson has tabled. I want to add some comments to those he has made. After I had written the then Civil Society Minister about the importance of the Law Commission’s recommendations, I regularly raised the matter with DCMS. During 2020, I lobbied DCMS Ministers particularly on the merits of the Bill because of its modest deregulatory measures.

The pressures that charities were under last year, and many are still under a lot of pressures now, made the reason to bring this Bill forward even more compelling. Like my noble friend Lord Hodgson, I want to make it clear that I am delighted that the Government have done so, and they have my wholehearted support for the Bill.

However, I do not understand why, in a Bill that is about deregulation and removing unnecessary burdens on charities, the Government have not adopted the Law Commission’s recommendation to relieve an unnecessary bureaucratic burden on the Charity Commission itself. We have heard this morning that the Members of this Special Public Bill Committee have received evidence from a lot of witnesses over the past few months, but none the less I still feel it necessary to say that I sometimes think that, in general, people see the commission as almost a charity itself, run by well-meaning volunteers. The Charity Commission is the regulator of a sector with an annual turnover of £84 billion. The combined property, assets and investments that it regulates add up £250 billion.

To put that turnover in context, it is five times the size of the UK’s television revenues, which are regulated by Ofcom. I know that Ofcom regulates far more than just television, but even if we look at the banking industry, regulated by the FCA, we see that £84 billion of turnover does not pale into insignificance, because the annual income of the UK banking industry is £124 billion, or so it was a couple of years ago. So the charity sector is not a minnow. Whereas the FCA regulates 50,000 financial entities, which are varied, the Charity Commission regulates 170,000 charities—that is only those that are on the register; tens of thousands more are exempt—and they range from, as we have heard, cultural institutions, university colleges, professional bodies and public schools through to small local community groups.

The commission is run and staffed by professionals who understand charity law and ensure that it is applied, but they do more than that. They represent the interests of the public to charities, and not the interest of charities to the public. I am proud to say that the Charity Commission is probably the least technocratic public body that exists. It does not regulate for the sake of it; it is motivated only by ensuring that charity can maximise its benefit to society. That means that it also has to ensure that people can be confident and have trust in charities to operate in the way they say they do.

The Charity Commission’s most recent annual report shows its success in the courts when anyone has sought to appeal against its findings. Operationally, the Charity Commission has been transformed in the past few years. Clearly, it is still on a programme of improvement which will never stop; it is an organisation that is continually seeking to improve. However, if it is to meet public expectations—and people have a right to have expectations of a regulator which exists to represent their interests—many of the improvements that still need to be made rely on it having more powers to take action against wrongdoing more swiftly and in a way that leads to less bureaucracy.

That the Government consider it necessary to retain the arrangement whereby the commission needs the permission of a Minister, albeit the Attorney-General, to refer a matter to the tribunal to get clarity on a point of law beggars belief. I really hope that the Committee will support the amendment that I have put my name to.

I note that the noble and learned Lord, Lord Etherton, has tabled an alternative amendment. When the noble Lord, Lord Ponsonby, comes to respond, can he advise what protection there would be in the approach suggested by the noble and learned Lord—that is, in the 60-day period that is suggested—to avoid a situation where the Attorney-General might say, “You need to think about it a bit more”? Basically, would the clock keep getting reset? As noble Lords have already heard from the noble Lord, Lord Hodgson, in the context of the Royal Albert Hall, the Charity Commission has experienced, certainly for the past few years, a never-ending prevarication in terms of any decision being made by the Attorney-General.

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[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I will respond to the question asked of me by the noble Baroness, Lady Stowell. From reading the Member’s explanatory statement, it seems that the objective of the amendment in the name of the noble and learned Lord, Lord Etherton, is to avoid the clock being reset every 60 days. Nevertheless, I will draw the noble Baroness’s question to the noble and learned Lord’s attention so that he can respond to her.

[Baroness Stowell of Beeston (Con)]

I am grateful to the noble Lord. Sorry, my point was this: what would happen if the Attorney-General responded during the 60-day period with an acknowledgement that the clock would not start again at that point? This is not about getting to the end of the 60 days but about continuing to restart the clock during those 60 days.

[Lord Ponsonby of Shulbrede (Lab)]

I thank the noble Baroness for that clarification. I understand her point: she does not want a “never-ending prevarication”, to use her words. I will draw her question to the attention of the noble and learned Lord, Lord Etherton, so that he can respond to her.

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[Lord Ponsonby of Shulbrede (Lab)]

My Lords, in supplemental written evidence, Professor Nicholas Hopkins, the lead Law Commissioner on the Law Commission’s project on technical issues in charity law, pointed to the list of regulated alterations for unincorporated charities under the proposed new Section 280A(7) to the Charities Act 2011, which adds to the list of regulated alterations for companies in Section 198(2) and for CIOs in Section 226(2). CIOs are charitable incorporated organisations. The commission’s decisions under Sections 198 and 226 to give or withhold consent are appealable. The provision of a right of appeal, in respect of the giving or refusal of consent to a decision under new Section 280A(7), would therefore be entirely consistent with the policy of treating unincorporated charities in the same way as companies and charitable incorporated organisations.

Professor Hopkins went on to say, regarding new Section 67A, that a decision of the Charity Commission under the provision is essentially a specific type of new Section 280A resolution. Therefore, if there is provision for an appeal under new Section 280A, it would also be logical to provide an appeal to a decision under new Section 67A. I beg to move.

[Baroness Stowell of Beeston (Con)]

My Lords, I will speak briefly on this amendment. I am assuming I have understood it correctly—do not look at me like that, Lord Ponsonby! If I have, the amendment seeks to introduce a right of appeal to trustees, after they have arrived at a resolution on a decision. Under the proposals from the Law Commission, it requires that they go to the Charity Commission for formal approval or refusal. If I understand it, this amendment perpetuates the appeals process. That is in contrast to the Law Commission’s proposal, which is that, at the point that the approval is sought from the Charity Commission on a decision reached by the trustees, it is final. This introduces an extra level of appeal.

I offer a few thoughts on this because, quite often with smaller charities—we are talking about small amounts of money here—the underlying problem is a dispute between trustees. A lot of the commission’s time can be eaten up by disputes between trustees over quite small matters. The Law Commission was trying to remove that or force trustees, on these modest matters, to arrive at a decision on their own and take responsibility in the way they are required to and not, therefore, to allow an ongoing battle.

My fear is that if this appeal process is brought in, it would lend itself to those trustees who will never ever give up. That is why I caution against the amendment. I understand the intention behind it and it is of course well-intentioned, but it brings with it a burden that it might not have meant to. I counsel against it.

[Lord Parkinson of Whitley Bay (Con)]

I thank the noble and learned Lord, Lord Etherton, for tabling Amendment 7, the noble Lord, Lord Ponsonby, for moving it, and those who raised this issue in the written and oral evidence that the Committee heard. By way of background, new Section 280A will create a new power for unincorporated charities to amend any provision in their governing documents. This brings the amendment powers available for unincorporated charities more in line with those for incorporated charities, supporting the Bill’s policy to create greater consistency for different legal forms of charities. In a similar vein, charitable incorporated organisations and charitable companies both have the right to appeal a decision by the Charity Commission to give or withhold consent to a request to make a regulated alteration to their governing documents.