Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Bill

Lord Hodgson of Astley Abbotts Excerpts

Monday 16th December 2013 Lords Chamber

The final question that I want to ask before I sit down is addressed to my dear friend, if not my formal friend, the noble and right reverend Lord, Lord Harries of Pentregarth, who is the chairman of the commission. I simply cannot understand the suggestion that we abandon constituency limits; the argument in the report is extraordinarily weak. We know that they are not strong but they have been strong enough in a number of cases in recent years to disqualify candidates who have overspent on the limits before them. Fragile though the limits are, they represent probably the single strongest pillar we have to prevent corruption and money running politics in this country. I say to the commission—I beg it, actually—to look more seriously at that issue. If you remove constituency limits, you remove one of the most effective, although not very strong, measures we have to keep politics clean. I urge the commission to go look again and come up with a much more serious proposal in order to balance the rest of what it has said, which is undoubtedly excellent.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, the noble Baroness has given us a sobering picture of the future of US political funding. Before that, we heard from my noble friend Lord Phillips, who, as ever, is a passionate advocate and has a lifetime of experience in charity law. He and I have had many debates on this issue. One therefore has to listen with care to his explanation and how he places his case, particularly when it is supported by some experienced and heavyweight voices from the Liberal Democrat Benches.

However, I hope that he will forgive me if I say that I am not convinced—at least, not yet convinced—that charities should be exempted from the Bill. I accept the seductive simplicity of his argument, but I think that it is based on an ideal world that I fear no longer exists, if it ever did. In part, the noble Baroness, Lady Mallalieu, put her finger on it when she said that charities have a special status in the eyes of the public. They get it not just because of tax but because the charity number is seen to be something that carries with it a stamp of quality, and therefore charities have something that is not granted to people who do not go through the Charity Commission hoop.

I see two major challenges to what the noble Lord proposed. One is the role of the Charity Commission itself, first of all at an operational level. We have said that there are 160,000 registered charities and there are probably another 160,000 unregistered charities: that is a third of a million charities. The noble Lord made reference to this in his opening remarks. The commission therefore faces a huge operational challenge just to deal with basic charity law, and to hold charities to account in the most basic way. When he says that the Charity Commission has very rarely asked trustees to put their hands in their pockets, I accept that. Is that because nothing is going wrong or because the commission does not know what is going wrong? That is one of the issues we have to address; so there is an operational problem.

Then there is a strategic challenge to the commission. The commission is an organisation that is under a huge strain. Some noble Lords will have seen the National Audit Office’s report, which had some disobliging things to say about the way the Charity Commission operated. It faces considerable problems in respect of the public benefit test, the aftermath of the independent schools test and the Plymouth Brethren case, which is now before it. It has had problems with links to Her Majesty’s Revenue and Customs, the Cup Trust and other tax-avoidance measures. It has also had a 40% cut in its budget. I ask my noble friend whether it is a practical proposition to ask the commission to take on another huge area and start to drill down on 335,000 charities to find out whether they are complying in a way that is, as the noble Baroness said, fair across the piece.

The noble Lord might say to me, “Of course it should have additional resources”. If it were an ideal world, that might be possible, but it is hard to argue that the Government should devote additional resources to providing the Charity Commission with the ability to enforce electoral law when the Electoral Commission already specialises in it and is up to date with all the arrangements of the way that matters are proceeding—as opposed to the Charity Commission, for which it would be one of about 10 major tasks it would have to carry out. That is my concern about the way the structure would work in real life.

My second concern is really the point made by the noble and learned Lord, Lord Hardie: the nitty-gritty point of the loophole. I fear that it will attract those who wish to push the envelope. The noble Baroness, Lady Williams of Crosby, said that she thought the envelope was being pushed—and I am sure it is. In my review of charities, Members of the other place said to me, “Some charities are really getting into what we are doing as Members of Parliament”. There is a sort of concern that charities are doing things that get very close to the role of a Member of Parliament in representing his or her constituents. This amendment will open the way to the more adventurous and to the outliers who choose to become charities, because it will be seen as a way to minimise the regulatory burden and to evade some of the issues that we have just been discussing as part of this Bill.

It is the outliers who will most likely damage the sector’s reputation. The sector has historically had a very high reputation with the public, but this reputation is not immutable. We think now of the Cup Trust, as I mentioned. That has undoubtedly made members of the public consider charities and their role. We subsequently had a very public row about the payment of chief executives and senior staff of charities, and how that is commensurate with charitable status. I am not making any comment upon it; I am saying that the charitable sector has considerable challenges to answer if it is not to see some leeching away of the enormously strong public reputation it has historically enjoyed.

If we were to accept the noble Lord’s amendment—seductively simple and attractive though it is—we would run the risk of putting a burden on the Charity Commission that it will not be able to fulfil, and giving it tasks that it will find very difficult. The result could be that we will have difficulties, problems and issues with the public that, after the next general elections and elections thereafter, will be seen to rebound on the charity sector. We need to make sure that does not happen, because, as the noble Lord said, it is such a precious jewel in our crown. It provides a way for so many of our fellow citizens to put something back, to create something and to connect with their fellow members of society. It would be a tragedy to lose that. That is why I fear I cannot support the noble Lord’s amendment tonight.

[Lord Harries of Pentregarth (CB)]

The commission did not support taking charities out, for the reasons put so fluently and eloquently by the noble Baroness, Lady Mallalieu. I will not add to what she said, but I want to respond briefly to points made by the noble Baroness, Lady Williams, and the noble Lord, Lord Phillips.

We are debating constituency limits in a separate set of amendments, so I will respond to that issue then. The noble Baroness has unrivalled experience and knowledge of the American system and the British system, and I do not doubt for a moment what is happening in America. But we have not yet been presented with any real evidence that it is happening in England. The precautionary principle is quite right: we have to beware what might happen. But we also have to make sure that our reaction is not disproportionate.

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I was about to refer to the noble Lord, Lord Hodgson, but if he would like to go first, that is fine.

[Lord Hodgson of Astley Abbotts]

I am very grateful to the noble Lord. I just wanted to ask him how he thinks matters will develop if, at a future general election, the Electoral Commission determines, on a complaint to it from a non-charity, that a charity has done something that is outside the electoral law but may be inside the charity law. Which will be pre-eminent? How will be that determined? Does the noble Lord, Lord Phillips, think that, whatever happens, charity law will come out on top, and therefore are we going to allow that there will be an unlevel playing field because the Electoral Commission’s views will be seen to be subordinate to those of the Charity Commission?

[Lord Tyler]

I admit that hypothetical examples of that nature at this time of night rather baffle me. I am not a lawyer either. But I think that the subsequent amendments that the noble Lord is suggesting, which should in any case mean that there is a coming together of the guidance from the two commissions, should be adequate to this task.

I just want to pick up a point the noble Lord made earlier. He has huge knowledge of the charitable world. He has given a lot of time, energy and specialist attention to the charities, but he seemed to suggest earlier that somehow or other the Charity Commission was not up to the job: it was not in a position, not able, not capable and it did not have the resources to police CC9 and the subsequent advice. That is a very serious charge. If it is his view that the Charity Commission simply is not capable of doing this job, then I admit that the case put by my noble friend Lord Phillips of Sudbury may be rather weaker than I anticipated. I do not think the noble Lord was saying that, but perhaps he would like to clarify that point. If he was saying that, I understand that there is a real doubt about whether the commission is up to the task it has set itself. In my experience of charities and of the previous advice that was given to charities, I thought it was well up to the task and there have been comparatively few cases where the rules have been infringed.

--- Later in debate ---

[Lord Hodgson of Astley Abbotts]

Again, I am very grateful to my noble friend. I simply invite him to go to the Printed Paper Office and get a copy of the National Audit Office’s report on the Charity Commission, published two weeks ago. That is its view after six or eight months’ investigation. He can see it all laid out, warts and all—some good, some bad—but the NAO has some pretty disobliging things to say about the position of the Charity Commission.

[Lord Tyler]

My Lords, it is late at night to have to introduce a new element into the debate, but the natural conclusion is that the Charity Commission should withdraw completely from this role of policing what should and should not happen in terms of public policy and elections. But CC9 is there and the Charity Commission is now developing more advice on this point. Either we trust the commission to do the job or we do not. I fear that what my noble friend Lord Hodgson has just said does not increase my trust.

In those circumstances, we are still faced with a genuine dilemma. As the noble Lord, Lord Low of Dalston, said, as things stand at the moment many charities, large and small, feel that they are going to be subjected to two quite separate sets of regulations in this regard and they feel that is unfair. That seems to be a very critical issue, and I hope that in due course this House will be able to address it.