Charities (Protection and Social Investment) Bill [Lords]

Kevin Foster Excerpts

Thursday 3rd December 2015 Commons Chamber

[Maggie Throup]

My hon. Friend is completely right, and we both experienced that in our time volunteering in Rwanda as part of the social action there. We thought we were going there to give, but we learned and benefited a great deal from that experience. Whether overseas or in my own constituency, I feel very humble every time I go to see a charity.

During our day spent volunteering, my staff and I met all the charity volunteers, the staff and the trustees. Trustees play a very important role in a charity—in the past, I have been a trustee of two charities. Before being appointed as a trustee, on both occasions I went through a selection process and was put under scrutiny. This is only right, as trustees hold very responsible roles. Sadly, we have heard some bad news stories recently of instances when trustees may not have been quite as scrupulous as they should have been. This should not happen, as it reflects very badly, and undeservedly, on every charity across the board, even those not involved. That is why I support this Bill and its aim to strengthen governance and give more powers to the Charity Commission to remove inappropriate trustees. As my hon. Friend the Member for Congleton (Fiona Bruce) pointed out, regulatory abuse in charities is rare, but it is vital that measures are in place to ensure that the public, and indeed the many charity volunteers, do not lose confidence when such incidents happen.

Another aspect of the Bill is to protect members of the public from unscrupulous and unrelenting fundraisers. Once again, there have been some very disturbing stories in the media recently, which simply end up reflecting badly on every charity, even though so many are not involved in such procedures.

[Kevin Foster (Torbay) (Con)]

Does my hon. Friend agree that “chugging”, as it is called, also puts people off donating, particularly when they hear about the sorts of fees these people receive for the donations they collect from the public?

[Maggie Throup]

I completely agree. When we see these people on the streets, we tend to avoid them. I think it affects the local shopkeepers as well, as people get a bit fearful of what they are going to find on their high streets.

It has another effect, too. In their later years, my parents stopped donating to charities when the donations were in any way traceable. This was because after making one donation, they got phone call after phone call trying to persuade them to set up a direct debit. My parents were subjected to just a fraction of the pressure that Olive Cooke suffered, which ended in such a tragedy. With 44% of adults reportedly giving money to charitable causes every month, it is very important that donors feel they can make their donations freely and know that their donations are being spent wisely. This Bill ensures both things.

Of course, our small local charities do not employ third-party professional fundraisers, but have to use their ingenuity to raise their funds. Members will have heard me talk before about the fundraising events organised by my local hospice, Treetops, which provides amazing care in the community. I have awarded prizes at its dog show, which raised money, and taken part in its sponsored bike ride taking in all its charity shops across Derbyshire—and I did that on a tandem. There is always something happening somewhere in Erewash; there is always a charity event going on somewhere.

Only last Saturday I popped along to the Christmas fair organised by the League of Friends of Ilkeston Community Hospital. When I got there I was delighted not just to see Father Christmas but to find that Ilkeston Rotary had a stall there, as I knew from last Christmas that it would be selling locally made Christmas cakes which are very tasty, and which have saved me trying to find the time, rather belatedly, to make one. At the Long Eaton Christmas lights switch-on last Thursday, I was able to win on the Scout’s tombola—every ticket was a winner—and buy some handmade Christmas tree decorations from the Women’s Institute stall. All these make fantastic contributions to my local area, and it is much richer as a result.

I said earlier that I would come back to the Canaan Trust, a Long Eaton-based charity providing much more than just a bed for homeless young men. The social investment part of this Bill will provide the ideal vehicle for this charity, should it wish to provide low-rent accommodation for those young men once they get their lives back on track, and help them move on even further with their lives. As my right hon. Friend the Minister said, social investment is the way of the future, and I am delighted that it forms part of this Bill.

I believe this Bill provides a suitable means of protecting our many charities from unscrupulous behaviour, so maintaining the confidence of the public, the confidence of the many donors, and the confidence of the amazing volunteers as well as those who are employed by the charities. I will want to ensure in Committee that our small local charities will not be penalised in any way as a result of these changes, but I do like the way the Bill provides a mechanism to enable charities to develop social investments that can be of great benefit to those they serve.

I am delighted to have been able to speak in support of this Bill, with my reservation about its potential impact on small charities such as those I have talked about today, and to outline its benefits to the constituents of Erewash.

--- Later in debate ---

[Wendy Morton]

I could not agree more. Even I got out the knitting needles and learned how to knit again. It was a case of knit one, purl one and then drop several, but I did my bit, as did everybody else. The community came together, worked together and had a bit of fun for an incredibly worthwhile cause.

Small charities often play a huge part in our local communities. They provide something over and above, or in addition to, what the Government or the public sector provide. Those small things often make a big difference to the lives of individuals and their families.

Through my involvement with social action projects over the years, I have been extremely fortunate to get to know many charities, both in the UK and overseas. I have also spent time with other Members on projects working with charities in Rwanda.

As some Members will be aware, a private Member’s Bill of mine is going through this place, to help Great Ormond Street Hospital Children’s Charity. I had the great pleasure of visiting the hospital and seeing some of the fantastic work it does in supporting patients. It is involved in building projects and has a chapel, and it does a huge amount of paediatric research. None of that would be possible without the work of the charity and all the people involved in it.

Sadly, the results of high-profile charity crises can damage trust in charities. It is really important that we do all we can to maintain and strengthen that trust, and the Bill demonstrates the importance of having an effective charity regulator.

I support the Bill because it will provide stronger protection for charities in England and Wales. It will also equip the Charity Commission with new and stronger powers to tackle charity abuse more effectively and efficiently.

[Kevin Foster]

My hon. Friend is making some strong points in support of the Bill. Does she agree that, in order to keep the flow of funds coming in from the public and from donors, it is vital that abuse is not possible and that the public have confidence that there is a mechanism to tackle it?

[Wendy Morton]

Absolutely. Trust and confidence are critical. That is why I believe that robust but proportionate action should be taken where serious mismanagement occurs. It is about maintaining and strengthening trust in a vital sector and enabling all charities, both large and small, to continue to do their work.

I have one plea, which is that the Bill needs to ensure that smaller charities are not disproportionately affected by any bureaucracy or too much legislation. It does not matter whether a charity is small or large: charities have so much to give to our country, society and communities, and I will do all I can to ensure that they get the support they deserve.

[Robert Jenrick (Newark) (Con)]

I welcome the Bill, which is a much needed and sensible Government reform. I am delighted that they have introduced it.

Before entering this place, I practised as a solicitor for several years. I practised corporate governance, among other areas, and over the course of the past year, I think we have all come to realise that the governance of charities is in crisis and it is affecting all charities. The large charities are infecting the small charities, which is why it is so important for this House to act.

As has been said by many Members on both sides of the House, we all support the charities in our constituencies, including those we give to and those of which we are trustees. We want them to thrive and we want public confidence in them to increase, because, undoubtedly, public confidence in charities has been knocked this year. As the head of a charity based in my constituency recently told me, charities are different from many other parts of our society. When large businesses get knocked by scandals, the public turn towards the little guys and confidence in them rises. If there is a horsemeat scandal at Tesco, we all go to our local butchers and sales there start to rise. Charities seem to have the inverse situation. If the big charities get hit by scandals, the little guys suffer as well.

It is essential that we protect the thousands of excellent small charities that we, as Members of Parliament, get to know more than most members of society. It is for them that we must ensure that the larger charities, in particular, have the highest quality of governance. That comes down to trustees. It has been a torrid year in many respects for how the large charities have behaved, whether the scandals have been about the high salaries of chief executives and the management teams of big charities, about the question of politicisation or, above all, about the question of the inappropriate use of fundraising on our high streets. Of course, there has been the tragic case of Olive Cooke.

[Kevin Foster]

My hon. Friend is making a very strong speech. Does he agree that part of it is about the public having confidence about how much of the pound that they donate ends up going to the good work of the good cause, particularly as with some of the larger charities there have been issues about how much ends up going on overheads and administration?

[Robert Jenrick]

My hon. Friend makes a strong point. I want to come on to how we can ensure proper financial management of our charities. That cuts in both directions: how they govern themselves and what percentage of their organisation and resources is deployed on central management.

Kids Company has seen the last and perhaps most prominent scandal, which has raised all manner of questions about the governance of our most high-profile and largest charities, particularly their capacity to handle their finances appropriately. I do not want to dwell on Kids Company, which is an outlier, but it has done huge damage to other charities. That is why those who have been at the heart of it and those parts of Government that have worked with Kids Company have to take it seriously. It is damaging all our charities throughout the country. The powers in the Bill to bar ineffective and inappropriate trustees from acting as trustees will be tested if there are Kids Company-type scandals in future.

--- Later in debate ---

[Kevin Foster]

My hon. Friend is being extremely generous with his time. Does he agree that it is also important that we ensure that anyone who wants to do the best for their community or to support a good cause does not feel excluded from being a charity trustee merely because they do not have formal qualifications? It is important that the Charity Commission helps to build the skills they need, as I would not want to see trusteeship become a graduates-only zone.

[Robert Jenrick]

That is very important, but I do return to the theme of some of our biggest charities. They are major organisations dealing with hundreds of millions of pounds of not only the public’s money, through charitable donations, but the taxpayer’s money. I am nervous to dwell on the case of Kids Company, but its trustees had very little relevant expertise. One was a celebrity hairdresser—there is nothing wrong with that, but I do not expect that person necessarily to have expertise in running a major multinational business, as Kids Company had become. It is therefore essential that those organisations step up and have appropriate trustees. I would like this Bill and the Government to push our biggest charities to have those individuals.

I know that charities are now required in their annual return to confirm whether or not they have reviewed their financial controls. Clearly, that important lesson has come out of recent scandals, and such a provision is essential. Anything we can do to beef it up, without deterring the little guys, is essential.

Another issue is that, unlike as happens in companies, most trustees do not meet in mixed board meetings with their management, and so the interplay between the two is often limited. Those trustees who take their role most seriously and work hardest at it no doubt get to know the senior management of their organisation, but others do not and often rely, crucially, on the chief executive, who may be, as we have seen in other scandals, an overbearing founder. Such a person may be incredibly charismatic, powerful and knowledgeable about the organisation, but it is difficult to scrutinise them, stretch them and hold them to account. That is important, and our larger charities have started to have mixed board meetings involving executive and non-executive directors— I use the corporate setting there.

I would like the Government to think about the role of overbearing founders, because it is an incredibly important issue. Anyone involved in the charitable sector sees examples where someone who may be a brilliant individual founds a charity and then it gets out of control, as they become extremely difficult to scrutinise and perhaps the time comes when they should step aside or hand over to somebody else. Perhaps it would be appropriate for these individuals to have term limits, as we might have for a chairman of a public company, where they have to go through a rigorous procedure at the end of a certain term in order to be reappointed.

A number of our charities, even the largest ones, are riddled with conflicts of interest. We see trustees having friends and relatives employed in the organisation, and trustees sometimes getting benefits that are not appropriate. I do not think the Bill particularly deals with that issue, but it does a lot of damage and undermines confidence in the charitable sector.

Lastly, I wonder whether the Minister really believes that the Charity Commission has the capacity to regulate the vast number of charities. We have thousands of charities in this country, some of which are extremely complex organisations, as we have seen. Does the Charity Commission have the resources to do that work? I suspect it does not, a view shared by many in the sector. Some of our most experienced chief executives believe the time has come for some form of beefing up of the Charity Commission through self-funding, whereby the big charities, which are the holders of public trust and confidence, might contribute some money towards ensuring that trust in the wider sector is maintained through a Charity Commission that has the funding required to see that happen.

I know that the Minister wants to speak, so in conclusion, trustees are absolutely essential and those of our biggest charities are letting down the entire sector. Scandals such as what happened at Kids Company matter, because they are harming the small charities, which are the lifeblood of charitable giving. As a Member of Parliament, I have taken huge pleasure in getting to know and working with these charities in my constituency, and I know other Members feel the same. Those who hold those positions in the big organisations need to step up and behave as if they are non-executive directors of large and important organisations, which they are.