Public Administration Committee Report (Charity Commission)
Debate between Barry Sheerman and Bernard Jenkin
Mr Jenkin
I will give way to the hon. Gentleman in a moment.
The chair of the Charity Commission, William Shawcross, described chugging as
“a blight on the charitable sector”.
Self-regulation has failed so far to address that. The case for statutory regulation of fundraising is compelling, but what about the cost, whether to the taxpayer or to charities themselves? Self-regulation has made some progress, but we recommend that it is placed on notice and reviewed in five years’ time.
Lord Hodgson proposed a rise in the threshold for compulsory registration with the Charity Commission to £25,000 a year to reduce red tape for smaller charities. We rejected that on the basis of the overwhelming majority of the evidence we received.
We also recommended against any relaxation of the rules on political campaigning by charities. Moreover, charities should publish their spending on campaigning and political activity to boost transparency. That is relevant to the question of lobbying, which Parliament is shortly to consider.
As for the question whether public funds should be used by charities involved with political campaigns, again transparency is the answer. Ministers should inform Parliament whenever a decision is made to provide Government support by direct grant to a charity that is involved in political campaigning.
Earlier this week, the Public Accounts Committee reported on the case of the Cup Trust and the specific issue of sham charities and tax avoidance. We welcome its report and the Charity Commission should learn from that scandal. We question whether the commission’s legal advice was too cautious and whether they should have acted more boldly. If the commission feels that it lacks necessary powers, it should tell us. Generally, however, the abuse of charitable status to obtain tax relief is intolerable and should be uncovered by Her Majesty’s Revenue and Customs and the Charity Commission working more closely together.
Mr Jenkin
I am grateful to the hon. Gentleman for his intervention, because he demonstrates the diversity of view on the question of the charitable status of independent schools. That shows why that matter should be decided by this House and Parliament, rather than simply being passed to the Charity Commission to determine. It is too controversial and we should not be delegating legislative functions to an executive body.
Mr Sheerman
I am obviously not a member of the hon. Gentleman’s Committee, but I am a trustee and chair of a number of charities. Can he comment at all on the well-known whistleblower who worked for the Charity Commission but said that the weakness of the commission is that it has absolutely no power to investigate what is known to be widespread fraud in the charitable world? The commission is ineffective at doing that and does not have the necessary staff. Even the staff it does have are not directed to that large-scale fraud, which the whistleblower who came to see me told me is going on and must be stopped.
Mr Jenkin
I am mindful of the hon. Gentleman’s point. We did not major on that during this inquiry, but it might be something to which we return. We recommend in our report that the Charity Commission and HMRC should work much more closely together. In fact, HMRC has the resource to investigate, penetrate and demand information about charities and their tax affairs and donors. In my personal opinion, it is as much a failure of HMRC as of the Charity Commission, but we recommend they work together more closely. What we have to be absolutely clear about is that the Charity Commission cannot start to conduct extensive investigations into the tax affairs of charities and their donors; it simply is not resourced to do so.