Charities (Protection and Social Investment) Bill [HL]

Lord Bridges of Headley Excerpts

Wednesday 10th June 2015 Lords Chamber

[The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)]

My Lords, I thank all those who have spoken for their excellent contributions and for the kind words spoken about me. Clearly, the pressure is now on for me to live up to your Lordships’ expectations. I particularly thank the noble Lord, Lord Watson of Invergowrie, for his speech and for his contribution to the pre-legislative scrutiny of the Bill. The last few hours confirmed what I said at the start of the debate: your Lordships’ House is indeed a place for quiet but incisive scrutiny. Much more than that, it is a forum in which the voice of our nation’s “little platoons” can be heard. I counted more than 30 charitable organisations being represented by the speakers in this debate.

Taking a step back, it is clear to me that, thanks in very large part to those who spent so long scrutinising these proposals over many months, there is considerable support in this House for the principles that underpin the Bill and most of its measures. Let us not forget why these powers are needed. It was the independent National Audit Office that pointed to,

“gaps in the Commission’s statutory powers which were hampering its ability to regulate effectively”.

In the years since that report was written, many in the charity sector have supported the need for change, as my noble friend Lord Hodgson did again today. These powers need to be carefully balanced, as does the role of the Charity Commission, between being a regulator and an adviser, as the noble and learned Lord, Lord Hope of Craighead, said. Here again I pay tribute to and thank the noble and learned Lord—the Usain Bolt of charity law, as we are told to call him—for all he did in making that process so productive and worth while.

[Lord Hope of Craighead]

My Lords, it occurs to me that Usain Bolt suggests that we rather rushed our job. I think Mo Farah might be a better analogy.

[Lord Bridges of Headley]

I am brought up short. The noble and learned Lord is quite right: Mo Farah would be much better. Thanks to the noble and learned Lord’s hard work, and the work of so many others in this Chamber, I am pleased but not entirely surprised that rather than wheeling out the wrecking ball for this Bill, your Lordships have simply started to stick little pins into it before the House, to test, to probe and to clarify a little bit more. I very much welcome this, my first experience of legislative acupuncture, an experience I am told will leave me feeling invigorated, refreshed and revitalised.

Turning to address the points made, I hope to cover as many as I can, starting with some of the more detailed comments. The noble and learned Lord, Lord Hope, asked whether we could amend Clause 8 to make it clear that there are other circumstances in which a third party may be unable to comply with the Charity Commission direction. I am sympathetic to this point as we want the provisions to work effectively. We will need to look at this in some more detail before Committee, as we will other words such as “privy”, which I think the noble and learned Lord also mentioned.

My noble friend Lord Lindsay referred to the complementary role that standards and accreditation could play alongside the new powers proposed in the Bill in addressing governance and trustee issues. I agree and I welcome the work being done by the United Kingdom Accreditation Service and the NCVO to explore the potential that standards and accreditation have to offer in the charity sector.

My noble friend Lord Hodgson made a number of incisive points, as one would expect. He asked for the tribunal appeal rights to be consolidated and simplified. While recognising his point, it is important to note that not all Charity Commission decisions are subject to appeal and the existing table of appeal rights provides a useful checklist of what decisions can be appealed and who can appeal them. The Charity Tribunal itself has, I am told, not expressed concerns about it in practice. My noble friend Lord Hodgson also asked for time to implement the Law Commission’s recommendations. I am sorry to say that I cannot give any guarantees, but my noble friend knows that the Government will look favourably on deregulatory and simplification measures.

A number of comments were made about the social investment aspects of the Bill, and I am very encouraged and heartened by the interest that your Lordships paid to this. The noble Viscount, Lord Chandos, for example, made a number of perceptive points about social investment, as did the noble Baroness, Lady Kramer. I would very much like to meet with both of them to pick their brains, as they clearly have a lot of experience in this sector. I know that the noble Viscount sits on a number of foundations, and it is quite clear from the noble Baroness’s very eloquent speech that she, too, has a lot to offer.

My noble friend Lord Borwick made some very interesting points on the definition of social investment, including a slightly detailed point on mixed-motive investment. I will not detain the House on that point now but I would be delighted to discuss it with him, as I would with my noble friend Lord Bridgeman. As regards the naming of charities, a point which my noble friend Lord Borwick brought up, I simply point out that it is an offence to call yourself a charity if you are not; and as regards charitable income, charities must now declare income from central and local government in their accounts.

I turn to my noble friend Lord Moynihan’s remarks about independent schools, and pay tribute to the extensive and fantastic work that he has done in this area and on sports in general. He made some interesting points about the public benefit test. I would like to make it clear that charities already have to report on their public benefit in their trustees’ annual report. However, I would be happy to meet my noble friend before Committee to discuss the points that he has raised. Likewise, I would like to discuss the public benefit issue with the noble Baroness, Lady Brinton, who also brought this up in a number of ways.

Perhaps I may turn to some of the substantive points in the Bill itself. Clause 3, as noble Lords will remember, will enable the Charity Commission to take account of other relevant evidence of a person’s conduct in the context of a statutory inquiry into a charity. I think that the noble Baroness, Lady Barker, and the noble Lord, Lord Low, raised concerns about this. I would simply point to several safeguards on this point, and I shall do so quickly. First, there must be a statutory inquiry open and the Charity Commission must be satisfied that there is misconduct or mismanagement linked to the individual in that charity before it can rely on conduct from outside the charity in its decision-making. Secondly, when exercising its powers the commission must provide a statement of reasons which sets out the evidence it relied on in making the decision. This would include any evidence it relied on from outside the charity. Finally, there is a right of appeal to the Charity Tribunal in relation to the exercise of the commission’s compliance and remedial powers, ensuring judicial oversight of the exercise of the power.

The noble Baroness, Lady Barker, and the noble Lord, Lord Low, also referred to Clause 7, which contains a power to direct a charity to be wound up. As your Lordships will know, the commission’s usual practice is to restore a charity to health following an inquiry. However, in some very rare cases—and I stress they are rare—it would be more appropriate for any remaining assets to be transferred to another charity. The commission can already do that under existing powers, but now the commission will have the power needed for the shell to be wound up. This power is available only in the context of a statutory inquiry where there is misconduct or mismanagement, or risk to charity property. In addition, the commission must be satisfied that the charity does not operate, or that its purpose could be more effectively promoted if it were to cease to operate, and that the exercise of this power is expedient in the public interest. There is also a requirement for the commission to publish details of a proposed winding-up order and invite representations. A winding-up order can be appealed to the tribunal. So, there are a number of safeguards around that clause too.

Two points were made on Clause 9, which concerns the automatic disqualification powers that the Charity Commission is to be given. The noble Baronesses, Lady Hayter and Lady Barker, and the noble Lord, Lord Low, among others, raised this point. I am sure that we will discuss this further in Committee. As regards their wish for sex offences to be added to the list, I would simply say that there is an existing regime to ensure the suitability of anyone in a charity with unsupervised access to children and vulnerable adults. Whether they are a trustee, an employee or anyone else, they must all have had a Disclosure and Barring Service check. It would be impractical for the Bill to break down the charities type by type and prescriptively list criteria for automatic disqualification in each case. Charities should be trusted to make their own decisions on how suitable a potential trustee is when recruiting. Where charities fail to take their safeguarding responsibilities seriously, the Charity Commission can and does intervene to take regulatory action.

[Baroness Hayter of Kentish Town (Lab)]

Does the Minister accept that that occurs only after someone has been abused?

[Lord Bridges of Headley]

I would point out, if I may finish my point, that under the Bill the commission would also be able to rely on the disqualification power if a person’s conduct clearly made them unfit to serve as a trustee or senior manager of a particular charity or class of charities. The commission’s draft guidance on how it would exercise the disqualification power makes clear that it could be used in the circumstances. This is made clear on page 4, under paragraph (b)(i) concerning condition F. I know that we will probably return to this point in Committee, so I hope the noble Baroness will forgive me for going on right now.

Also as regards Clause 9, the noble Baronesses, Lady Barker and Lady Brinton, and the noble and learned Lord, Lord Hope, were among a number of your Lordships who raised the issues that counterterrorism legislation might have in this context. I have been fortunate enough to talk to a number of your Lordships about this point and I recognise that there is a concern for some charities operating in some of the most difficult parts of the world—not just the Middle East, as the noble Baroness, Lady Brinton, pointed out. However, I would point out that several government departments, including the Home Office, the Treasury and DfID as well as the Charity Commission and the Cabinet Office, are engaging with NGOs to understand their concerns and ensure that, wherever possible, they are given proper guidance.

In many cases there is already detailed guidance dealing with the points that were raised, and it may be a case where better signposting is needed. We are also not aware of any legitimate NGO worker who has been convicted in the UK under the counterterrorism legislation. Providing some sort of exemption for charities from aspects of counterterrorism legislation may sound attractive, but I would argue that it could create a loophole in the law that could be exploited by the unscrupulous—something which I am sure we would all want to avoid. I was particularly struck by the remarks made on this point by the noble Lord, Lord Green of Deddington, given his extensive experience in this area, and I thank him for his contribution.

The noble Lord, Lord Low, raised Clause 10, particularly as regards whether condition F in the proposed new section is too broad. This condition needs to be considered in the context of other criteria for the exercise of the disqualification power, namely the test of fitness that disqualification,

“is desirable in the public interest … to protect public trust and confidence in charities”,

and the safeguards relating to the operation of the power, including the right of appeal to the Charity Tribunal. The Charity Commission’s draft guidance on how it would exercise the power should provide reassurance that it will use the power only when there is a clear case for doing so; that the commission would clearly explain what it would take into account before using the power; and that in exercising the power, the commission would provide an explanation identifying the conduct in question and why it thought that the conduct met condition F.

I turn to some of the wider issues that have been raised. The noble Baroness, Lady Hayter, and a number of other noble Lords raised the tragic case of Olive Cooke. This was a very sad case and I start by paying my condolences to the family of Olive Cooke and pay tribute to her outstanding work in the field of charity, which the noble Baroness, Lady Corston, referred to. I would like to say here that the charity sector needs to move quickly and firmly to show that self-regulation works in the best interests of the public and that fundraising can set itself sufficiently high standards to meet public expectations.

Last week, my honourable friend the Minister for Civil Society met with three chief executives of the self-regulatory bodies. He made it clear that action must be taken quickly to protect the long-term reputation of charities. The self-regulation bodies agreed to pull together a plan of action that could be taken in the short term, together with plans to work on in the longer term. The FRSB published its interim report yesterday, and its findings and recommendations are being discussed at the Institute of Fundraising’s standards committee today—a point, I think, that the noble Lord, Lord Watson of Invergowrie, was referring to. Charities need to ask for funds, but that is not an inalienable right and it needs to be exercised responsibly, particularly if we are to protect public trust and confidence in charities for the long term.

A number of your Lordships raised the issue of charity campaigning, including the noble Baronesses, Lady Hayter and Lady Pitkeathley, and the noble Lord, Lord Watson. The Government have been consistently clear that charities have the right to campaign within the law and that this can be a valuable way in which charities can further their charitable purposes. The Charity Commission’s guidance, CC9, makes it clear that charity law recognises that campaigning can be a legitimate activity for charities and sets out the general principles. The Charity Commission keeps all its guidance under review to ensure that it remains relevant and up to date. The commission has monitored charities’ observance of the guidance during the election campaign and is considering the findings from that monitoring along with the impact of the lobbying Act and other issues relating to the current guidance. The Charity Commission will need to take account of any findings of the statutory review of Part 2 of the transparency of lobbying Act by my noble friend Lord Hodgson of Astley Abbots. If the commission considers revisions should be made to CC9, it has committed to say so publicly and to consult widely.

I turn to housing associations, right to buy and their charitable assets. The noble Baroness, Lady Hayter, raised the Government’s policy to extend right to buy. This, of course, is being taken forward in another Bill. The Government are determined that anyone who works hard and wants to get on the property ladder should have the chance to do so. There is indeed, as the noble Baroness knows, a precedent for housing association tenants accessing discounts to enable them to buy their own home. I believe many people exercised the right to buy their housing association home between 1997 and 2010.

Finally, a number of your Lordships raised the resources and role of the Charity Commission, including the noble Lords, Lord Low and Lord Watson of Invergowrie. I would make two points. First, on its resources, if we are to bring down the deficit, we need to make savings and efficiencies right across government, and that includes the Charity Commission. The Treasury has agreed a sensible settlement for 2015-16 with the Charity Commission, based on its forecast needs and focused on protecting its investigation and enforcement functions. The 2015-16 settlement also increased the Charity Commission’s capital budget by £500,000 to invest in a new digital online system for charities to file their annual accounts. This will improve the Charity Commission’s efficiency and help it to identify and tackle fraud and mismanagement. I also welcome the £8 million investment in the Charity Commission announced last October by my right honourable friend the Prime Minister. All this will help the Charity Commission refocus its regulatory activity on proactive monitoring and enforcement in the highest risk areas, such as the abuse of charities for terrorist and other criminal purposes, such as tax avoidance and fraud. Secondly, as regards supporting charities, I am confident that the Charity Commission will get the balance right between regulator and adviser, and I was heartened to read what the National Audit Office said in its interim report.

I look forward to debating and discussing these measures, and more, in more detail with your Lordships in the weeks ahead. As I said, my door is always open. That said, I would be grateful if your Lordships do not follow the example set by my formidable great-aunt, who was general secretary of the Women’s Institute during the Second World War. I am told that when she ran into some bureaucratic obstacle, she found that the best way of overcoming it was to harry Ministers by ringing them at home well before breakfast. That is something that I recommend your Lordships do not follow, as you may get my four year-old daughter, who is twice as formidable as her great-great-aunt.

This Bill is just one part of the Government’s programme to strengthen the fabric of our nation—one nation. In myriad ways, in every community across the land, charities are performing that vital role. Some are tiny, others enormous—together they are a golden thread, weaving together those who want to do their bit. The Bill will give the Charity Commission strengthened powers to tackle abuse so as to maintain the public’s trust in charities, and it will enable those who have to do still more to help those who have not. I thank your Lordships for all your contributions today and for the many months spent scrutinising the Bill’s proposals. I ask the House to give the Bill a Second Reading.

Bill read a second time and committed to a Grand Committee.