Charity Sector Funding: Transparency

Debate between Lord Mackinlay of Richborough and Jim Shannon

Wednesday 1st March 2023 Westminster Hall

[Craig Mackinlay (South Thanet) (Con)]

I beg to move,

That this House has considered the transparency of charity sector funding.

It is always an enormous pleasure to have you chair a debate, Mr Hollobone.

The charitable sector has a long and proud history, with truly ancient charities still very much in existence, in particular in education and the almshouse sectors. There was a huge blossoming of philanthropy in the first Elizabethan period, and much of that tradition continues today, with service clubs, the Round Table, Lions Clubs, the masons, the Rotary and many thousands of other organisations, working daily through charity shops and a host of other activities to raise funds to assist in domestic and international projects, in particular at times of emergency, which we have seen in the situation in Syria and Turkey at the moment.

Domestically, charities have often filled gaps in society that Government could not, or perhaps should not even attempt to. We can safely say, however, that that has blurred over time, as we have moved to a situation where the demands and expectations of modern society are for the Government to meet and they are expected to solve, frankly, everything.

One of the oldest educational charities, the King’s School in Canterbury, which is just a few miles over the border from my constituency, dates back to AD 597, now faces threat after nearly 15 centuries because of Labour’s ambitions to tax such providers and users of education. I have numerous independent schools in South Thanet, the largest possibly being St Lawrence College, which is similarly under threat because of political game-playing and the usual politics of envy. I have called the debate not for that reason, but to question whether in some cases the “charitable” tag, with its incumbent benefits, is being stretched beyond credibility.

I have a number of strands for the Minister to consider. First, my fear is that too many charities, often financed by vast Government—that is, taxpayer-supported—grants that run into multiple billions annually are straying into the political arena. That is particularly true of many charities in the refugee and immigration sphere. I note one, Care4Calais, which receives no direct Government funding that I can see. However, there is complete opacity that I could not penetrate as to where its £1.6 million of funding—according to its most recent accounts—comes from.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Gentleman for securing the debate. We all want to ensure that our charity giving goes where we expect it to go. As he may be aware—this is factual, not me saying it for the occasion—Northern Ireland is the most generous nation per capita in the world. This matter is therefore incredibly relevant in my constituency. Does the hon. Gentleman not agree that when people donate money after they see a registered charity number, there is a belief that the charity is accountable and that accountability means transparency and simple access to the accounts and spendings of any charity?

[Craig Mackinlay]

The hon. Member is quite right. That imprimatur of a charity registration number has always given people confidence that the charity has charitable aims and is being looked at properly by the Charity Commission and others, and it is often the reason that people are willing to give to such charities. I also note the extensive charitable sector in Northern Ireland.

Where does the income of many charities come from? It might often be from another charity, higher up the chain, which is a key thread in what I want to discuss. I note, too, that that Care4Calais charity has been under investigation by the Charity Commission since August 2020, but with no outcome as yet. We are getting towards the three-year anniversary, which in itself I find quite remarkable—the case of a £1.6 million institution is patently uncomplicated, and that leads to questions about the Charity Commission’s competence and ability to investigate properly.

Refugee Action received £2.2 million in Government grants and contracts in its accounts to March ’22. The British Refugee Council received £7.5 million in Government grants and contracts. That is close to half its revenue, yet I find that those selfsame charities, and many more, put up commentators to attack the Government—I have faced them regularly on the media—and in some cases take the Government to court on various migration issues, particularly the Rwanda situation. Care4Calais and Detention Action have got themselves involved in those activities.

I have no issue at all with whichever person, company or entity wishes to take the Government to court—that is a strength of our system that we do not see everywhere in the world—but the question for the taxpayer is, should such action be taken under the auspices of a charitable organisation whereby the donors receive tax relief, or indeed taxpayers themselves are in the funding chain?

Let me analyse what happened during the covid support period. There was £1,570 million—a truly exceptional sum—of Government funding under the culture recovery fund. That was distributed by the Arts Council. I found it bizarre at the time, although I do not know what other Members thought, that we were all provided with embargoed lists, which were provided at the same time to local media, yet we had had no input whatever to the grant allocation or the consideration of the suitability of the recipients, although we MPs have unique local knowledge of our patch.

I saw on those lists various institutions, charitable and commercial, in South Thanet that are often in receipt of five-figure grants. Looking through the list, I saw that they were often the same institutions that had been driving very unpleasant social media against me over long periods, some of it quite vile. This was overly political, and, bizarrely, these institutions are willing to bite the hand of the Government who are feeding and supporting them.

There is one local institution I would like to note, which is Faith In Strangers, in Cliftonville in my constituency. It achieved a planning consent for a venue based on a community workspace with incidental community music opportunities. Since then, that has shown itself to be nothing but a sham, and it has morphed into a full-on, late-night drinking and music venue. It causes so much noise and interference with long-term residents who live above that many have had to move out. One has taken to living in a camper van. This has rendered their life investment worthless.

To its credit, Thanet District Council initiated a licensing hearing on the venue. I invested four hours in assisting residents and making representations myself at the hearing, but this institution, Faith In Strangers, employed one of the most expensive, hugely skilled and, I have to say, very impressive licensing barristers in the country, and was supported by a local Labour councillor, who sided with a corporate nightclub over local residents. It was truly shocking. That private company received £160,000 across the two tranches of the culture recovery fund, and a further £5,000 from the Music Venue Trust—another charity in receipt of direct Government grant funding.

Let me summarise what we saw during that period. This was just in my constituency; there must be similar stories across the country. Taxpayers money, via Government grants, financed institutions with an overly anti-Government leaning, which loudly expressed their views, and funded institutions that had been making the lives of local people a misery. Those institutions then employed top notch legal support to quash residents’ objections, which left me, the local MP, to try to pick up the pieces.

While many charities take care not to suggest who people should vote for, and hence have not come to the notice of the Electoral Commission—I must declare that I am a member of the Speaker’s Committee on the Electoral Commission—the activities of many of these charities are, by negative inference, hinting that a vote should not be cast for the Government in power.

There is an increasing case for the Electoral Commission to look more closely at the activities and pronouncements of many of these charities—not just on the issue of asylum and immigration, but more widely—when there is an obvious straying into politics. I am sorry, but that would have to apply to those charities that many of us would deem very good. Let me mention the Trussell Trust, for instance.

I have collected with the Trussell Trust, particularly at Christmastime—I am sure most Members have, and are very supportive of its aims—but I am increasingly worried as to its true objectives. I met the then chief executive officer at a parliamentary reception for the Trussell Trust back in 2016; I was, indeed, younger and a little more naïve in those days. As a chartered accountant and chartered tax adviser, I proposed a scheme to the CEO that could be put to His Majesty’s Revenue and Customs to allow gift aiding of the food donations received under the gift aid small donations scheme. That could have triggered a 25% cash top up under the scheme. I followed the proposal up with the CEO, sending a detailed letter offering my services pro bono to promote a means by which such a scheme might be accepted by HMRC. I received no reply.

I am a big supporter of the founding ambitions of the Child Poverty Action Group, and I always buy its annual book, “The Welfare Benefits & Tax Credits Handbook”—it is an invaluable tool for my caseworkers. The group received close to £1 million in Government grants up to March 2022, and it is a very worthy organisation. However, I am afraid that the Government are often at the receiving end of very political campaigns. I do not know about the Minister, but I receive various campaign emails that the organisation promotes to its subscribers—standard form emails that we receive on a daily basis. That is purely political campaigning.

The Charity Commission does disclose Government grants received. There is a snapshot on the front page of the financial affairs of any charity one searches for, but it is rather opaque. As ever, I thank the House of Commons Library—it gathers a wealth of information for us, and as an institution it is unrivalled on the planet—which has tried to pull together various sources, public and other. It has become clear, however, that in the charitable sector, which now runs to many tens of billions of pounds a year, it is very difficult to find the true ambitions of many charities or their sources of funding.

The second strand of my debate is sub-funding by super-sized charities to non-charity organisations, or even to smaller charities down the chain. In those instances, the opacity becomes truly muddy, and I feel it is a means of directing overtly political funding. Stop Funding Hate led a campaign to put pressure on advertisers not to advertise on GB News when it started. Stop Funding Hate is not a charity, but a community interest company. It received a £50,000 donation from the huge Joseph Rowntree Foundation. Following the concerns that I raised with the Charity Commission, a review was undertaken, but it was decided that the aims of the Joseph Rowntree Foundation were within scope to allow such funding.

Let us stand back a bit, because I find that rather bizarre. A charitable institution advanced funding to a non-charity to put pressure on potential corporate advertisers not to spend money with a duly UK-licensed TV channel that it simply did not like. There is virtually no way of shining a light on the extent of this channelling of funds from charities to non-charities. For the first time in my experience, the House of Commons Library were similarly stumped by this inquiry.

My third strand is about the fact that, although Government grants are visible—albeit with some difficulty —local government gives huge amounts to the charitable sector. I have no particular issue with much of that; for instance, the bedrock of funding for Age UK is often via county and unitary authorities. But it is very difficult to find the amounts that are going through local government, unless one takes the trouble to trawl through the register that has to be published of spending over £500 within any council. My fear is that taxpayer funding is routinely channelled to chumocracy charities at the local level, virtually out of plain sight.

On this point, I will refer to Ramsgate Town Council. It has channelled taxpayer funds—small amounts here and there—to so-called charities and community interest companies, for which I can perceive no objectives for public good except that they are often chums of local Labour councillors. I raised that in relation to a project some weeks ago called the Ramsgate Arts Barge, which has received funding from Ramsgate Town Council. I am a local taxpayer, and some of the precept that I pay goes to Ramsgate Town Council. Its latest accounts for the Ramsgate Arts Barge show the balance sheet in deficit, but the mere airing of my concerns, as a local taxpayer, elicited an outraged call from one of its directors threatening me with legal action.

Let me summarise that point. Taxpayer funding through local councils supports various charities. A local MP and local ratepayer who pays for all of that gets threatened with legal action for even querying whether such taxpayer funding—my funding—represents value for their local taxpayer pound. Thank heavens that I have legal privilege here today.

The Commons passed the Economic Crime and Corporate Transparency Bill a few weeks ago to provide greater disclosure of the ownership of entities and sources of funding, and the Bill is now in the Lords. We have increased the reach and activities of the Electoral Commission to ensure that all political funding that is designed to influence voters positively or negatively is open, transparent, published and backed up by the rule of quite stiff law. Yet we allow the charitable sector—unaccountable and hidden, but very influential and in receipt of vast amounts of taxpayer funding—to continue pursuing, in many notable cases, anti-Government activity to overturn the will of Parliament and attack legitimate and registered businesses that it has decided that it does not like.

This is an area of grave concern. I have been thinking about it for some years, but a number of things have come together to cause me to want to air it in this Chamber. I ask the Minister for new transparency rules throughout national and local government; that we publish amounts granted to charities in a clear way; and for proper disclosure of amounts granted down the line from charities to other charities and non-charities. I ask for the Electoral Commission to look more closely at the whole field of political campaigning that is done under a charitable umbrella.

In my view, the charity commissioners need to take a firmer view of core charitable activities. On behalf of taxpayers, I ask whether it is wise, fair or value for money for Government to pass billions of taxpayer funding annually—outside of core contracts, which are a slightly different issue—to the web of charities that now constitute a £50 billion-a-year industry and have well-paid CEOs and boards.

I fear that the charitable sector is the new area of non-transparent activity and funding. I am in favour of transparency; transparency is good, and it shines a light on activities. As an accountant, I always say, “Follow the money.” I welcome anything the Minister might say on this, but I certainly hope that the Government will agree with my view and take action.

Election Law Reform

Debate between Lord Mackinlay of Richborough and Jim Shannon

Monday 11th February 2019 Commons Chamber

[Craig Mackinlay (South Thanet) (Con)]

I am pleased to be afforded the Floor of the House for this Adjournment debate on the reform of election law. Many might ask, “What does it matter?” Naysayers might say that this is a debate in defence of ourselves. Well, perhaps, but this is serious. Our election law is a mess, leaving candidates and agents exposed as never before to the real risk of criminal prosecution, so this cannot wait—it needs solving now.

Election law is important, as it defines the type of democratic institutions that we have. The playing field must be fair and equal, and seen to be so, and the results of elections need to be respected as just and fair. That must be encapsulated in our election law.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for giving way before he gets into the thrust of his contribution. I asked his permission to intervene beforehand.

In Northern Ireland we have made many, many changes to electoral law, particularly for stricter controls on registration and identification. That is not the subject of this debate, but does the hon. Gentleman agree on the need for voter ID in the mainland? We have done it in Northern Ireland, and it has done away with a lot of discrepancies in voting. That may be a separate issue but, none the less, does he agree it is important?

[Craig Mackinlay]

I thank the hon. Gentleman. He raises a wider debate about voter registration, and I would not object to its application on the mainland. I see nothing wrong with every single voter having a unique identifying code so that people cannot vote in two places, for instance. I would welcome moves towards that.

Through no design of mine, and for obvious reasons, I have come over the past two years to know, rather too closely, the intricacies of election law. I do not intend my contribution to descend into a personal rant against the Electoral Commission, the Crown Prosecution Service and Kent police, which led me to a three-month trial and subsequent acquittal, but I hope some good can come from my experiences by being a catalyst for the reform of election law, which was recently described by a retired professor of election law, Bob Watt, as a “compost heap”.

We have two key statutes: the Political Parties, Elections and Referendums Act 2000, often referred to as the PPERA; and the Representation of the People Act 1983, often called the RPA. The PPERA was enacted to reflect the reality of modern politics, and it created the Electoral Commission, a statutory body with powers over election processes and guidance setting for candidates, agents, political parties and, importantly, local authority electoral staff.

The Electoral Commission has a budget of £17 million and employs 134 staff. It oversees and controls national party spending, donations and reporting and the regulation of third-party campaigners, among other things. Members may not be aware that it is from the PPERA that ballot papers have thereafter had the candidate’s name and the logo of the national political party for whom they are standing. That was a recognition of the reality that the electorate vote for political parties. Few of us in this House would be so bold as to claim that the electorate vote for us solely as individuals—if only that were true; they vote in larger part for the party messages, for the perceptions they have of party leaders and for the national party manifestos. This legislation set spending limits of close to £20 million for registered political parties to spend across the UK in the regulated period of a year prior to a planned and forecast election as envisaged by the Fixed-term Parliaments Act 2011.

We then have the law that is more relevant to us. It is relevant to candidates and agents across elections, no matter what their type, be they parliamentary, Assembly Member, council, mayoral or police and crime commissioner elections. I refer to the Representation of the People Act 1983, which is the legislation I would like to focus upon this evening. I wish to focus on two small sections—sections 90C and 90ZA. It was on the construction and interpretation of these two sections that the entire case against me was founded, and it is from these things that we need to learn and change. In broad terms, the 1983 Act governs candidates’ returns, spending limits, timings, agents’ and candidates’ responsibilities, and, importantly, various offences, notably against those not authorised to spend money on a campaign. There is a clear prohibition in section 75 of the Act, with punitive criminal sanctions against those who spend without the authority of the election agent.

Those small sections are detailed and they are often not understood, so I will advance to the House what they mean. Section 90ZA explains the common meaning of “election expenses”. Subsection (4) outlines the concept of “incurred and authorisation”, and this accords to the long-held view that election expenses can be so only if incurred or authorised by a candidate or agent. This interpretation, relied on by all political parties, has roots going back to 1868 legislation in another form. If not authorised, an offence can be committed by the person incurring expenses under section 75 of the Act. This seemingly clear interpretation was to prevent those who might want to interfere with an election from doing so—or else face criminal proceedings. It also provided candidates and agents with the power to control what is spent on the campaign they are legally responsible for.

Section 90C explains what to do if goods, services or facilities are provided free or at a discount, for instance, where a friendly printer provides printed material, perhaps as a party supporter. It is clear and people fully understood what it was there for; the concept was simple. The section dictates that the item, service or facility given free or at an undervalue should form part of the election expense return at a proper market value rate, subject to some simple de minimis rules.

My case passed through a long trail of court interpretations before criminal trial. At an early application to dismiss, which was rejected, we argued that the normal interpretation of section 90C—the discount or free provision—could apply towards a candidate’s election expenses only if such a good, service or facility had been properly authorised in the first place by the candidate or agent under the normal authorising provisions of section 90ZA. It has long been the understanding of colleagues in this House and experienced election law Queen’s counsel, some of whom write the textbook on election law, that the rules always intended that agents were responsible for the finances of election campaigns. Candidates will be focused on meeting electors and winning votes during the campaign period—we will all be familiar with that. The law intended agents to be involved in all the spending decisions in a campaign, either by spending themselves or permitting someone else to spend on their behalf. They, or the candidate, are meant to authorise any spending on the campaign, so that all expenditure goes through them. As a result, the agent is then liable to produce a full, “true” return of all this spending and be responsible for keeping within the legal spending limits.

The Act also takes steps to try to ensure that others are dissuaded from spending on an election campaign without this authorisation from the agent or candidate. Section 73(6) and section 75 provide for offences for people who make payments for the campaign or who spend on campaigning without the agent’s express permission. Anyone spending or making such payments without authorisation—written authorisation should be the norm—risks committing an offence. If others are willing to take the risk of committing an offence by spending or paying expenses without authorisation from the agent, that would be a criminal matter for them. This does not mean there is a free pass for people to flout spending limits by simply refusing to give authorisation for spending which others decide to incur anyway. So it is clear that the baton of the risk of illegal activity passes from the agent or candidate to the individual deciding to incur the unauthorised expense. We all have some strong and great supporters in our constituencies who are keen to help, but I expect that none would flout the wishes of the candidate and agent and decide to place themselves in jeopardy. Then there is a deterrent to third parties incurring expenses without authorisation.

The judge in an early part of my ordeal did not agree with this long-held interpretation and interpreted that the legislation should mean that anything used to the benefit of a candidate or to denigrate their opponent, used either by the candidate or, more worryingly, simply “on their behalf”, should be included in a candidate spending return, regardless of whether it was authorised or not. This was appealed to the Court of Appeal, in front of the Lord Chief Justice. That appeal was successful and the normal ground was seemingly restored.

The Crown Prosecution Service, with the Electoral Commission attaching itself as an interested party, appealed the Appeal Court decision to the Supreme Court. That appeal was heard on 23 May 2018, with judgment given on 25 July last year. In summary, that decision overturned the Appeal Court decision and has to stand as the ultimate authority on the interpretation of sections 90C and 90ZA of the 1983 Act.

State Pension Age: Women

Debate between Lord Mackinlay of Richborough and Jim Shannon

Wednesday 30th November 2016 Commons Chamber

[Craig Mackinlay]

My hon. Friend makes an excellent point. Given the state of the nation’s finances in 2010 and that 70-year-old inequality, something had to be done.

WASPI women find themselves in a difficult situation, having started out in a more traditional era of British life. Back then, women were more likely to be at home. If in work, they were unlikely to have been on a well-paid career path. Often part-time work would feature and low-paid work was the norm. The problems do not end there, though; this generation has parents themselves benefiting from increases in longevity, hence an extended caring function often falls upon them, while many WASPI women often support grandchildren as well.

The majority view among women at my forum was that there should have been no change at all to the 1995 Act and that the retirement age of 60 should have prevailed. Now, that clearly is not sustainable. None of the Opposition parties proposed it in their manifestos last year, and indeed this option—option 1 in the Landman Economics report—has been discounted even by the SNP. At £30 billion, it is simply too expensive and unfair. The SNP report advanced other options: option 2 was to wind back the 2011 pension change, which accelerated the age increase; and option 3 was a slowing down of the 2011 Act—a sort of Pension Act 2011-minus.

An option 4, suggested by Labour Members, is that pension credit be used to bridge the gap, but the great problem with that is that it might actually discourage work, or even encourage people to stop work altogether. Option 5 is for an actuarially reduced pension at an earlier age. I floated that with many WASPI women, and some supported it, given an appropriate discount rate. It could work—it works in the USA and Canada—but then another group of WASPI campaigners do not want to hear of it, and my worry is that, in 10 years, we might have a group of WASPI women who, having accepted less for longer, are now in poverty. I have discussed all these issues with my WASPI women, and there is very little agreement.

[Jim Shannon (Strangford) (DUP)]

On the question of what is acceptable, does the hon. Gentleman understand that many WASPI women, having been born in the ’50s and done physical work, are physically unable to continue working and cannot be expected to do so? Moreover, those born in the ’60’s and ’70’s have a chance to retrain, whereas the WASPI women do not and are physically unable to work on their knees for physically demanding jobs. Surely that has to be a consideration.

[Craig Mackinlay]

I fully understand the hon. Gentleman’s point, and I will cover some of those issues as I progress.

On the contract that many Members say was there, there was no contract for the Government to implement the triple lock, which has done more to alleviate poverty in older age than any other measure before it. There was no contract about the implementation of the new state pension, which will provide £155.65 per week on 35 qualifying years of national insurance. These were choices made by Conservative Governments and were done for the right reasons. We will have increased the take-home pension by £1,100 a year since 2010. Many people welcome these things, which were done for the right reasons, as I said. WASPI women have the right to work for longer because they are not forced into retirement any more. If they are unable to work, there is a benefit system, which I support and hope would carry them through.