Charities (Protection and Social Investment) Bill [Lords]

Lady Hermon Excerpts

Tuesday 26th January 2016 Commons Chamber

[Mr Wilson]

What the hon. Gentleman says is quite extraordinary. We had this debate in Committee. It was quite clear, from the reaction to the concerns about the Badger Trust, that the hon. Gentleman and those on the Opposition Front Bench agreed that party political campaigning was actually a good thing. Even today that has been repeated, with regard to the Badger Trust. The hon. Member for Redcar disagrees with the Charity Commission finding that it was party political.

In Committee, my hon. Friend the Member for Newark (Robert Jenrick) gave us a very strong warning about new clause 3, which sums it up well and bears repeating. He asked us to look across the Atlantic to America, where charities can engage in party politics and support political candidates, and where wealthy philanthropists can set up organisations with blurred aims. He said we should be careful what we wish for. I agree with that sentiment entirely. The new clause would risk setting us off down a very slippery slope of involving charities in party politics. For that reason alone, I strongly encourage the House to oppose it.

On fundraising, I am sure all hon. Members will be aware of the poor fundraising practices uncovered over the summer. They present a real risk to levels of public trust and confidence in charities. I asked Sir Stuart Etherington to review how fundraising had been regulated in the past and to suggest improvements. The Government accepted his recommendations for a new, stronger self-regulatory body, backed up by the statutory powers of the Charity Commission. This new fundraising regulator is currently being set up by Lord Grade of Yarmouth and his chief executive Stephen Dunmore. The new regulator will establish the fundraising preference service, which will give people who feel overwhelmed by the sheer volume of requests they receive a simple way to opt in. I am grateful to the working party, led by George Kidd and supported by the NCVO, which has already started to draft proposals on how the FPS will work in practice.

As I made clear in Committee, this place owes it to the generous British public to ensure that they are not coerced or bullied into giving their hard-earned money to charity. It is because of this that we brought forward Government amendments in Committee that would enable the Government to step in and compel charities to register with the self-regulator should they fail to do so voluntarily and in significant numbers. Should this still prove insignificant, the Government would have the power to mandate the Charity Commission with the regulation of fundraising.

I truly hope that I and my successors are not put in a position to have to resort to those reserve powers, and that charities seize this last chance to make an independent self-regulatory system work. If self-regulation does fail, however, we need to make sure that we are equipped to step in quickly with effective statutory regulation. In that respect, I warmly welcome Opposition Members’ support for the Government’s approach to addressing fundraising regulation. I give particular thanks to the hon. Member for Redcar for her supportive comments on Second Reading and in Committee.

I thank my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) for his work as Chair of the Public Administration and Constitutional Affairs Committee. His Committee has played an important role in investigating the poor fundraising practices we saw last summer. I welcome the Committee’s report, which was published yesterday, and I will give it careful consideration before responding fully in due course. As it highlights, the public rightly expect the highest standards from our charities. Like the Committee, I believe that charities should get a last chance to put their own house in order to restore public trust and confidence.

[Lady Hermon (North Down) (Ind)]

The Minister will know that people in Northern Ireland give generously to charities. Regrettably, the Bill has been designated as exclusively English. If constituents of mine are oppressed by requests from charities, can they legitimately complain to the Charity Commission and the new regulatory body?

[Mr Wilson]

The hon. Lady is right that the Bill has been certified as England and Wales only. Northern Ireland has a separate devolved process. I suggest that, as her first port of call, she speak to those responsible in Northern Ireland.

[Lady Hermon]

The Minister does not seem to grasp the point. There are national charities across the UK, of which Northern Ireland is a part. Thousands of people voted in the referendum on the Good Friday agreement—the Belfast agreement—to remain part of the UK. The donors and supporters of national charities, such as the Salvation Army, the Royal National Lifeboat Institution and others, are also in Northern Ireland, so the first port of call should be here, not Northern Ireland.

[Mr Wilson]

The hon. Lady makes her case strongly, and it is absolutely right that she should do so here in the UK Parliament. I hope that she will also make her case strongly to the devolved Administration, which many people in Northern Ireland wanted, and got as a result of the actions of subsequent Governments.

New clause 4 would fundamentally change the division of responsibilities between the new fundraising regulator and the Charity Commission. If we were to propose that the commission hold public hearings on matters of charitable fundraising, this would effectively amount to a form of statutory regulation. The commission does not believe that it currently has the resources effectively to exercise the power to hold hearings on fundraising, as suggested in the new clause. It can, in theory, already hold hearings in relation to statutory inquiries under section 46 of the Charities Act 2011, but it does not do so because it would not be an effective means of undertaking its casework. Unlike with other powers in the Bill, the commission does not ask for this ability.

I understand that my hon. Friend the Member for Harwich and North Essex may have intended in new clause 4 to offer to witnesses giving evidence to the Charity Commission in public hearings on charity fundraising the protection of not having their evidence used against them in other proceedings, rather than legal professional privilege. Legal professional privilege protects the lawyer-client relationship and is not what I think he is looking to achieve. However, the proposed hearings would be proceedings undertaken by the commission, not proceedings in Parliament, so parliamentary privilege would not be appropriate, either. The reserve power to regulate fundraising in section 64A of the Charities Act 1992 is a power to make secondary legislation that is necessary or desirable or in connection with regulating charity fundraising. If the commission were to assume statutory responsibility for the regulation of fundraising and this included holding public hearings, we would need to consider, at that point, what protection for witnesses would fall within the scope of the power.

My hon. Friend’s new clause 5 would prematurely task the commission with becoming the primary regulator for fundraising activities. The Government have provided for this already, but through the stronger reserve powers we introduced in Committee. We would also risk undermining public confidence, if self-regulation were to fail while under the oversight of the commission, particularly if the solution to that failure was statutory regulation by the commission. We would also need to do a lot more detailed thinking about whether, and if so how, witnesses could or should be protected by an equivalent to parliamentary privilege, which is what I think he might have been seeking with the new clause.

However, I completely agree with the finding of the Select Committee on Public Administration and Constitutional Affairs that

“It would be a sad and inexcusable failure of charities to govern their own behaviour, should statutory regulation became necessary.”

Perhaps I can reassure hon. Members that, under the reserve powers in the Bill, it would be possible for the Charity Commission to be given statutory responsibility for the regulation of fundraising, but to deliver that through a third party such as the fundraising regulator. New section 64C(2) of the Charities Act 1992, as introduced by clause 14, already specifically enables that.

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[The Second Deputy Chairman of Ways and Means (Natascha Engel)]

I remind hon. Members that although all Members may speak in the debate, only Members representing constituencies in England and Wales may vote on the consent motion.

[Lady Hermon]

On a point of order, Ms Engel. I make this point of order with a heavy heart, but I feel duty-bound to do so. When the certification process was introduced and debated before the Christmas recess, the indication was that when the Mace was moved and we sat in the Legislative Grand Committee, a Minister would be called upon to move the consent motion and then a debate would commence. It was disappointing last night that there was no effort by the Minister to open a debate about why the consent motion was being moved. As I find this happening again today, I seek clarification from the Chair as to whether it is appropriate now to consistently adopt a routine of a Minister moving a motion without further debate.

[The Second Deputy Chairman]

The hon. Lady is aware that it is up to the Minister to move the motion formally or to speak to it, but she is perfectly entitled to speak in the debate now, if she so wishes.

[Lady Hermon]

Thank you very much, Ms Engel. I am grateful for that clarification, even though my vote, if we were to vote, would not count in the same way as that of every other Member of this House would count. This is a serious constitutional issue, particularly for those from Northern Ireland.

After years of horrendous violence in Northern Ireland, we had the Good Friday agreement, otherwise known as the Belfast agreement, and we voted in our thousands that Northern Ireland would be part of the United Kingdom unless and until we voted ourselves out of the United Kingdom. That is not going to happen any time soon. My constituents elected me at the general election to represent them fully in this House.

In response to an intervention earlier, the Minister confirmed that there is a Charity Commission for Northern Ireland. However, the Charity Commission for Northern Ireland has only devolved responsibilities. The point that I was making to the Minister was about national charities across the United Kingdom, such as the National Trust. When constituents of mine and those right across Northern Ireland—where we have the Giant’s Causeway, which is owned by the National Trust, and Castle Ward and various other wonderful properties across Northern Ireland—join the National Trust or renew their membership online, their membership fees go straight to the headquarters of the National Trust. The fact that we have a devolved Charity Commission for Northern Ireland does not give it national reach.

The point I am making to the Minister is that we have national charities in Northern Ireland—I have mentioned the Salvation Army and the RNLI, for example—that have their headquarters in England, so will he kindly and generously do my constituents, and indeed all the people of Northern Ireland, the courtesy of explaining why this Bill is designated as exclusively English-only? That is what I would like to hear him explain.

[Sir Edward Leigh (Gainsborough) (Con)]

I can reassure the hon. Member for North Down (Lady Hermon) that the Procedure Committee, of which I am a member, is looking at what is happening with this procedure and will report back to the House. It shall be noted that these are matters of great interest, but recently when I have sat in on consent motions for these sorts of debates under English votes for English laws, I have noted that nothing is said at all. It is incumbent on us to draw up procedures that actually make a difference and have a purpose. The problem with EVEL is that, because the Conservative Government have an overall majority, no Bill will be changed one iota in this Parliament as a result of EVEL. Because all the other parties are opposed to EVEL, if the Conservative party does not have a majority after the next general election, the procedure could be abolished in an afternoon. The Committee will be looking at these procedures very carefully and—of course, I cannot speak for its other members—will want to be reassured that the procedures under EVEL are actually changing something.

[Matthew Hancock]

I will respond briefly to the comments of the hon. Member for North Down (Lady Hermon). She asked why the Bill has been designated as an England and Wales Bill, and that is because it relates in its entirety to England and Wales. On her point about a charity that covers the whole United Kingdom—it hardly behoves me to reiterate, passionately and fulsomely, the Government’s support for the United Kingdom, which we share—regulation of the activities of charities in Northern Ireland is devolved. I cannot speak to, and I do not have responsibility for, the activities of the Charity Commission for Northern Ireland, which regulates the activities of charities in Northern Ireland. Likewise, this section of the debate ensures that there is consent for this legislation among the MPs whose constituencies will be covered by it. The reason I did not speak at the start of this procedure is that, given that the Bill is so clearly restricted to activities that take place in England and Wales, it is plain and obvious that it is therefore an English and Welsh Bill for these purposes.

[Lady Hermon]

I am grateful to the Minister for allowing me to intervene. I want to make the point—I am sorry to repeat myself—that we have legislation going through the House today that will give increased powers to the Charity Commission based in England. However, were the Charity Commission based in England to take action against a national charity of which my constituents are members and supporters and to which they are contributors and donors, my constituents would be directly affected by its actions in relation to that particular charity. Am not I therefore entitled, as of right, to represent the views of my constituents in this House?

[Matthew Hancock]

Of course the hon. Lady is entitled to represent the views of her constituents, which is precisely what she has been doing in the stages of the Bill, but it is also right that English and Welsh MPs can have their say on the Bill. I point out that were her constituents involved in a similar way in a charity that was headquartered in France, Germany, America or anywhere else in the world, that charity would of course be regulated by its home regulator in the same way as a charity based in England. It is a consequence of the devolution of charities law, and the actions of support for and regulation of charities, to Northern Ireland that this is an issue not for Northern Ireland but for England and Wales, and therefore, under the EVEL procedures, this is self-evidently an England and Wales Bill.

[Lady Hermon]

I do not want this to become a one-way conversation, but I have to say that I do not think the people of Northern Ireland would be flattered to be compared to France. I have listened studiously to Government Front Benchers reassuring the House that theirs is a one nation Government. I invite the Minister to come to Northern Ireland and meet those who have contributed to charities in Northern Ireland. He can explain to them face to face why, given that the Government claim to be a one nation Government, Northern Ireland MPs in some cases do not count—apart from Sinn Fein Members, of course.

[Matthew Hancock]

It is self-evident that if the issues in the Bill relate to England and Wales, as they do, the Bill should, in the view of the Government, be certified as an England and Wales Bill. It is a consequence of devolution that those representing England and Wales should be able to have their vote on a Bill that relates only to England and Wales.

To respond to the point made by my hon. Friend the Member for Gainsborough (Sir Edward Leigh), I should say that it is inconceivable that anybody would unwind these provisions in any future Parliament, given that they protect English and Welsh voters from having legislation imposed on them without the will of the majority of Members with constituencies in England and Wales. The reaction of those who could then be overruled by others who had their own devolved Assemblies and Parliaments would be quite savage.

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[Matthew Hancock]

I beg to move, That the Bill be now read the Third time.

Charities are at the very heart of our society and have held that important place for many generations. The vast majority of charities are run well by selfless people whose motivation is to help others. By way of example, I was struck by the incredible way that charities and the local community mobilised after the devastating floods that took place in Cumbria in December. Cumbria Community Foundation set up a flood relief fund to help all those affected. The fund has already raised well over £4 million, alongside Government contributions. It has involved hundreds of local charities, voluntary organisations, businesses and individuals raising funds to support the appeal. National Citizen Service graduates in Carlisle have helped renovate a local youth club damaged by the floods. We owe a great debt to such charities and the volunteers who freely give their time to make a difference. We celebrate the work of this example just as we celebrate our hospices, universities, housing associations, community fundraisers, global research institutes, and the many, many other charities, from the most local to those with worldwide reach. We salute their effort, their time and their generosity, and the joy that they give in the service of others.

This Bill will help to protect that vast majority of charities from the tiny minority that would seek to abuse the benefits of charitable status and risk undermining the public’s trust on which charities as a whole rely.

[Lady Hermon]

I am genuinely grateful to the Minister for allowing me to intervene on him again. In the light of the fact that he has emphasised on a number of occasions that responsibility for charities is a devolved matter in Northern Ireland, and given the changes introduced by this legislation, will he kindly confirm that, if he has not already done so, he will make it a top priority to get on the telephone to his counterpart in the Northern Ireland Assembly to say, “Right, this is what we’ve done at Westminster—perhaps you should think of making these changes in Northern Ireland.”

[Matthew Hancock]

Absolutely—we will certainly make contact with the Northern Ireland Assembly to ensure that we can have exactly that communication, not least because the Bill will support charities that want to engage in social investment, which many can benefit from. It provides a new way for charities to maximise the impact of their investments.

The Bill will also better support regulation of practices for fundraising, which have been found wanting. We all know of and support charities that, week in, week out, do brilliant work in our constituencies. I want to ensure that the regulatory framework for charities continues to support charities like these while supporting the work of the Charity Commission in robustly bearing down on the few bad apples. This Bill will do just that. I will touch on some of the things that I hope, through its passage, we will be able to deliver.

Extending trustee disqualification will better protect charities from individuals who present a known risk. Like many Members during the passage of the Bill, I struggle to conceive how it could ever have been considered appropriate for a convicted terrorist or money launderer, for example, to be involved in running a charity. These changes are long overdue. However, I agree with my right hon. and learned Friend the Member for Harborough (Sir Edward Garnier) that, in extending disqualification, we must take extra care not to undermine the vital work done by charities involved in the rehabilitation of offenders. I am confident that the waiver process will allow those who have changed their ways a route back into charity trusteeship or senior management. I hope that the commitments given by my hon. Friend the Minister for Civil Society will provide a degree of further reassurance.

When the National Audit Office reviewed the Charity Commission and reported on it in 2013, it recommended that the Government look at gaps and weaknesses in the regulator’s powers. We have done so, and the Bill addresses those gaps and weaknesses. We should however be clear that the Bill provides only one element of the change that is needed.

The Charity Commission was established in 1853 to take on a number of the court’s functions in relation to charities. At the time, misconduct in charities was a source of public concern, and that led to the founding of the commission. If we fast-forward 150 years, we can see that the Charity Commission’s role is in many ways much the same—focused on ensuring public confidence in charities.

We all want strong, effective, independent regulation of charities. The Charity Commission is making great strides towards that under the strong, clear-eyed and sure-footed leadership of its chairman, William Shawcross, and chief executive, Paula Sussex. They are driving the transformation of the commission into a modern, effective and efficient regulator. However, such a change can happen only with the full commitment and support of the charity commission’s staff, and I pay tribute to them for their hard work, which too often goes unrecognised.

The extensions to the commission’s powers in the Bill have been carefully thought through. Following public consultation, pre-legislative scrutiny and the Bill’s passage through the other House and this place, we have a much-improved Bill. As a result, the commission will be equipped with the tools that it needs to tackle serious misconduct and mismanagement in charities, and to do so effectively and efficiently. I am also reassured by the range of safeguards that accompany the powers, some of which have resulted from consultation and scrutiny.

It is important to stress that most charities will not experience any direct impact from the new powers in the Bill, because most charities are, quite rightly, never on the receiving end of the Charity Commission’s powers. However, ensuring that the regulator can act quickly and effectively against serious abuse will support public trust and confidence in all charities.

On public trust and confidence, I now turn to fundraising. It is clear to me that poor fundraising practices had the potential to undermine public trust and confidence in charities. Sadly, there is already evidence of reduced trust. We acted quickly by commissioning the Etherington review last summer. I am very grateful to Sir Stuart and the cross-party panel of peers who supported him. Sir Stuart recognised the serious risk to public trust in the charity sector generally, and the need for change in the fundraising practices of some charities. His review marks a watershed moment.

I welcome the support from Labour Members for our measures on fundraising. This is something on which we all agree there is a need for change. It really is the last chance for self-regulation. Under the leadership of Lord Grade of Yarmouth, it will have every chance. I very much hope that all across the charity sector are willing and able to embrace that. I do not want to have to resort to statutory regulation, but we will if we must. We now have the reserve powers to do so in case they are needed.

I welcome the important contribution on fundraising published yesterday by the Public Administration and Constitutional Affairs Committee, under the chairmanship of my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), who has followed the proceedings on the Bill closely. We will need to consider carefully the report and recommendations before responding fully, but we completely agree with the central finding that it would be a sad and inexcusable failure of charities to govern their own behaviour should statutory regulation become necessary.

On the new social investment power, the Bill will help charities that want to get involved in this exciting new area of finance for charities. We are committed to growing social investment as a sustainable source of finance for charities and other social ventures. The UK is a world leader in this respect, and the social investment power will help charities to play a bigger role.

I am pleased that there is a review provision in the Bill. After three years, it will enable Parliament to look back at the provisions and their impact. I hope that that will be a happy occasion.

The Bill and the improvements it will bring would not have been possible without a huge amount of hard work by many people. I particularly pay tribute to my hon. Friend the Minister for Civil Society and my noble Friend Lord Bridges of Headley for their sterling work in piloting the Bill through. Charity law can be fiendishly complex; they have not only grasped such complexities, but clearly and succinctly explained them to Members of both Houses. They have met a wide range of stakeholders to discuss all aspects of the Bill, and they have introduced amendments to improve it. I also thank my officials from the Cabinet Office and the Charity Commission who have supported the Bill’s passage.

I thank my hon. Friend the Member for St Albans (Mrs Main) and the hon. Member for Leeds North East (Fabian Hamilton) for their chairmanship of the Public Bill Committee. I thank the hon. Member for Redcar (Anna Turley), the noble Baroness Hayter of Kentish Town and Opposition Members for their broad support for the Bill. It would be fair to say that we have not agreed on everything, although the rows have tended to be about things that are not in the Bill. We have the shared aim of protecting charities and ensuring that the Charity Commission has the right powers independently and effectively to regulate charities. The debates have generally been constructive and positive and are, in my view, an example of the House at its best.

Particular recognition should go to the Joint Committee on the Draft Protection of Charities Bill, which undertook pre-legislative scrutiny under the wise chairmanship of my noble and learned Friend Lord Hope of Craighead. Its pre-legislative scrutiny resulted in a number of improvements before the Bill was introduced. I thank the Law Commission for drawing up the new social investment power. Its expertise was important in getting the detail right. I give enormous thanks to all others who have contributed in any way.

Finally, I thank my noble Friend Lord Hodgson of Astley Abbotts, whose prescient 2012 review of the Charities Act 2006 identified many of the weaknesses in fundraising self-regulation that are being addressed both through the Bill and the implementation of the Etherington review more broadly. That work four years ago showed the path that we have followed and that I hope the House will approve today.

The Bill has had broad support through the long process of consultation and scrutiny. We have listened and acted when we have heard ideas to strengthen it and add additional safeguards. The Bill will support and protect the strong, independent charity sector that is so important to our way of life in Britain, and I commend it to the House.