Charities (Protection and Social Investment) Bill [HL]

Lord Hodgson of Astley Abbotts Excerpts

Tuesday 23rd June 2015 Grand Committee

[Lord Hope of Craighead (CB)]

My Lords, there is a great deal that the noble Baroness, Lady Barker, said with which I agree. Perhaps I can take this opportunity to pay my own tribute to the work that she, along with other Members of your Lordships’ House who are present, did on the committee. There is a great deal of force in her point about the importance of the notice that is being given to trustees as to what the Charity Commission wants to do with regard to publication. However, I have a concern about the removal of the word “how” and the substitution of the words “when and where” for this reason: when you think carefully about what the words really mean, the effect of the amendment is to narrow the amount of the information that is required by the provision. There are other things built into the word “how” which are not there—the manner in which this is to be done, and how often, are two examples. One point that the Charity Law Association raised with us and is in a memorandum it sent to us in connection with the Committee stage of the Bill is the element of publicity itself and whether anonymity is to be given to the trustees who are the subject of the publication. If one restricts the amount of information simply to “where” and “when”, it leaves out the possibility of further inquiry as to the precise way in which this is to be done.

I appreciate the word “how”. After all, a three letter word seems very weak but, if you think about it, it is actually quite a powerful word because it embraces so much within it. If you read that together with what is in subsection (6) which enables people to make representations as to “how”—I repeat the word “how”—the publication is to be done, one can see that it gives scope for a good deal more inquiry.

I have huge respect for the noble Baroness, Lady Barker—I am entirely in sympathy with what she is seeking to do—but I would respectfully suggest that “how” is probably the best word to use. If it is to be replaced by something else, then there would need to be more in it than simply “where” and “when”. I find that a little untidy, which is why I suggest that we leave the word “how” as it is.

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I have some sympathy with the noble Baroness’s amendment. I hoped that she would have inserted those words in addition to “how”, so that it would have been “how”, “when” and “where”.

Before I address the pros and cons, because this is the first time I am speaking in Committee, I want to take this opportunity to let noble Lords know of a potential, tangential interest that I may have in a matter which will come before them at a later stage. It concerns fundraising. The charities report that I produced, which was published in July 2012, has a whole chapter—Chapter 8—devoted to fundraising. It is 17 pages long and makes a number of recommendations, none of which I resile from. In fact, I think many are equally, if not more, appropriate today.

In my non-political life, as can be seen on the register of interests in your Lordships’ House, I am non-executive chairman of a company called Nova Capital Management. Nova is a specialist private equity firm which is focused on what are known as “secondary directs”. This means that Nova purchases groups of companies on behalf of groups of institutional investors—often an unloved and neglected division of a much larger company. Nova provides intensive support for management of the individual companies within the group with a view to achieving improved operating and financial performance which, in due course, is reflected in a superior sale price. I play no part in the day-to-day operation of Nova, let alone of any of the individual companies in the various portfolios.

In December 2011, Nova created a company called CNH Capital Partners to take over a public company called Parseq plc. It has three divisions—two need not concern us at all. The third, Parseq Services, has a series of subsidiaries which provide business processing outsourcing services to banks, local authorities and utility companies from locations stretching from Glasgow to Brighton. In February 2013, seven months after my review was completed, the board of Parseq decided to expand its operations by acquiring a company called Panther Group. This, in turn, has a number of subsidiaries. One of these, Pell & Bales, undertakes telephone fundraising for a number of leading charities, including Christian Aid, RNIB, Cancer Research UK, Barnardo’s, the National Trust and the Royal British Legion.

As a result of the death of Olive Cooke, Pell & Bales has been caught up in the storm over charity fundraising, in particular because an undercover journalist from the Sun was embedded in the business in order to investigate the sector. In its major article of Saturday 6 June, the Sun concluded:

“There is no suggestion Pell & Bales did anything illegal. Indeed, the company is scrupulous in instructing its employees to stick to acceptable practices”.

I understand that the management of Pell & Bales has since reported the Sun to IPSO as a result of what the company believes are breaches of the press guidelines.

As I have explained, my very tangential association with Pell & Bales began six months after I completed my review. There can be no suggestion that it was in any way influenced by that association. Some might argue that I have nothing to declare. I think it best if I explain this position on the first occasion I speak in Committee. This amendment is not about fundraising but I judge that the sooner I lay out the facts and explain my position, the better. In the highly charged atmosphere of cases such as the tragic death of Olive Cooke, truth and accuracy can be early casualties.

With that declaration, I turn to the amendment in the name of the noble Baroness, Lady Barker. As I explained, the ideal situation would be to have “when and where” added to “how”. An example is the impact not only on a trustee, but on a charity. The charity might have been given an official warning—or a warning of a warning under new Section 75A(3)—but perhaps I and my fellow trustees do not agree with the commission’s determination. We make representations, but the commission decides not to accept them. Our charity has a significant funder and I want to talk to him or her about this case and give the trustees a view of the issues. Such a conversation or discussion is made much clearer if I know when and where the news of the official warning is to be released—the date, time, methodology and so on. “How” could mean no more detail than by a press release on a date yet to be determined. That would be unfair to the charity, which may be contesting the view and wants to be able to talk to its funder to ensure that its side of the argument is heard, without which the case might go by default.

With respect to the noble and learned Lord, Lord Hope of Craighead, I do not entirely take his point because, for a charity trustee, some further clarity in the wording would be a good idea. Therefore, I look forward to hearing my noble friend’s response.

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[Lord Hodgson of Astley Abbotts]

My Lords, I would like to focus on Amendment 2. I do not doubt that it is an exceptionally well-meaning amendment. If that sounds patronising, I do not mean to be at all; I think that it is very well meaning. We have all been horrified by the Jimmy Savile cases and the other cases of that nature, and we all want to do everything we can to protect children. The easy option is to say, “Absolutely, we should agree to this”, and that would avoid the by-product that one might be accused of being careless about the safety of children.

However, this afternoon I shall resist that temptation and ask my noble friend to reject the amendment. I do so on three grounds: those of efficacy, proportionality and impact. I want to say a word about each of those in turn but, before doing so, I draw the Committee’s attention to the fact that, before doing the charities review, I produced another report for the Government on what stopped people volunteering—what stopped people giving money and their time. The report was called Unshackling Good Neighbours. I took a lot of evidence from people about this and I should like to refer to some of it.

First, on efficacy, there are not many good outcomes from the terrible saga of Jimmy Savile and other prominent people, but one is that now the doziest trustee of the sleepiest charity is aware of CRB vetting and barring, as well as the legislation and the importance of complying with it. That is for two reasons: first, the risk to trustees themselves if they fail to do so; and, secondly, the risk to the charity they represent. We were talking about fundraising. The rows that there have been over unauthorised fundraising will be as nothing compared with the damage to a charity’s reputation if it is shown to be light-handed over the need to check its volunteers as appropriate.

The evidence that I had when preparing the Unshackling Good Neighbours report was that screening to prevent undesirable individuals becoming involved with children or vulnerable adults is now pretty fine. Indeed, if I heard the noble Baroness aright, the example that she gave was from 2010, about five years ago. We learned that the dangers, such as they were, were not so much within the institutions, because these undesirable people go where the softer targets are. They know that they are going to be checked if they work in schools with vulnerable adults, so the dangers are outside the school gates and, above all, on the internet, and that is where society needs to apply the pressure to ensure that our children are safe. Therefore, at the moment I do not see why this amendment would add to the efficacy of the vetting and barring arrangements vis-à-vis charities.

Secondly, on proportionality, vetting and barring legislation has nothing to do with charity law. It is the statute on its own that needs to be enforced. Vetting and barring is to do with a well-run organisation, whether it is a charity or not, but it does not particularly apply to charities. I think that government departments and the police need to enforce their own legislation and not pass it around, trying to find somebody else to do the checking for them. I am always concerned that if more and more is passed to charity trustees, fewer and fewer people will wish to take on the risks and responsibilities of what appears to be becoming a very one-sided state of affairs. If, as I believe, the mesh on the screen is pretty fine, should we be imposing another specific role on the Charity Commission? It should do it anyway, and in any case it has the powers to ask for this. The commission is already stretched. Vetting and barring is a role that is not part of charity law and there is already an established enforcement procedure for it.

If we are concerned about the situation with charities, why are we concentrating just on vetting and barring? Why do we not include health and safety? That, too, is very risky for people. Without sounding too flippant about it, a school headmaster whom I talked to said, “Actually, if you want to safeguard children with a new level of screening, the best way is to make sure that everybody everywhere drives at below 30 miles an hour, because that is how most children are injured”. Therefore, I think that proportionality is the second important issue.

The third is the question of impact. Surely our shared objective must be to encourage as many of our fellow citizens as possible to become involved in our civil society and to volunteer. It may be strange to the Committee but many potential volunteers find vetting and barring legislation intrusive, especially in the way that it is implemented and shows a lack of personal trust. The law says—I think that the Minister will put me right if I have got this wrong—that it is a question of frequent and intensive contact. Nervous trustees interpret those words pretty widely, and amendments like this will increase that nervousness and increase the likelihood of wholesale vetting and barring checks even when they are not needed.

One of the examples that I received was from a retired doctor living in the north of England: she was 65 and wished to do some work reading to Alzheimer’s patients. She was required to carry out the CRB vetting and barring check. She said to me, “Look, I’ve been before the GMC now for 35 years and if you can’t trust me now, what else do you require from me? I’m not going to do it as a matter of principle”, and she did not. That seems to me to be a shame. It is important that we do not allow this to become out of all proportion.

I have a second example, from a lady who got involved in a Manchester drama group. She was required to be checked and was happy about that but, she says,

“having been approved, we were invited to a session with the local child protection officer. I came away from that meeting with a number of very serious questions as to whether I should get involved with this sort of group. The talk left me feeling I would potentially be placing myself in situations of real risk. The child protection officer focussed the session on ensuring no adult put themselves in a vulnerable position e.g. if a child requests to go to the toilet—in no circumstance should an adult accompany them. If a child (with particular reference to girls) falls and cuts her knee, whilst wearing tights—under no circumstances should any adults remove the girl’s tights and help stem the bleed. No adult, whatever sex, should ever be alone with either one or more children. Needless to say, I came away from the session questioning the sense in many of the messages conveyed. As a caring responsible adult … I did not feel at all comfortable with the prospect of not being able to help an injured child”.

In accepting the spirit of the noble Baroness’s amendment, we have to be prepared to step back from this issue and accept that there is another side, however difficult it is to interpret. Why does this matter so much to us? All of us, particularly as parents, are of course horrified by child abuse and wish to stamp it out. Less attractively, however, there is an industry out there that actually profits from CRB vetting and barring checks. If noble Lords receive the same emails that I do, they will have had one today from one of the agencies that provide vetting and barring checks saying, “If you get checks through us for the next month, we’ll put £1 of the check cost towards charity because our chief executive’s going to run a marathon”—a way of appearing user-friendly. That is fine, but they are not going to tell us that fewer checks are needed; they will tell us that we need more. Some of the big charities have vetting and barring sections, and they too—after all, it is their job—are going to say, “We need more checks and more emphasis on them; that is the right way forward”.

I am not so sure. I think that right now the mesh performs its task pretty well. Is it perfect? Of course not. Whatever the size of the mesh, though, there will be failures, and when they happen we shall be told by someone that if the mesh had been finer we would have caught the person in question, and that will be very hard to rebut. Still, we need to stand back now and not impose further responsibilities on the Charity Commission that, as a by-product, may reduce the willingness to volunteer.

[Baroness Barker]

My Lords, I wonder if I might ask the noble Baroness, Lady Hayter, a question about her Amendment 11, which, as she explained quite clearly, deals with children. A lot of my work with charities is about vulnerable adults. In fact, the noble Lord, Lord Hodgson of Astley Abbotts, is right: if there has been any silver lining to the horrors that have been unveiled over the last five years it is that there is now a much clearer focus on the need to protect children in all settings. That includes in charities.

The law governing abuse of vulnerable adults is much less robust. If one were to think about this in a strategic way, the increase in dementia that will happen over the next 10 to 20 years, barring the discovery of an effective medical treatment, means that scope for abuse of older people will be far greater than it is now. That is something to which good charities—there are many of them—are alive. They put in place robust procedures with their staff and their volunteers. I happen to think that it is no less serious than abuse of children. If I have an objection to that amendment it is that omission.

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[Baroness Hayter of Kentish Town]

My Lords, this is in a way part of the same issue—it is about where we put responsibility. In moving Amendment 3, which relates to reporting misdemeanours, I shall speak also to Amendment 11, which concerns the power to disqualify all trustees where there has been a collective failure to protect children or, indeed, vulnerable adults, as the amendment should have said. They are not mentioned in the current wording, but I will come on to that.

The Charity Commission’s guidelines on reporting serious incidents list—I shall keep to the order used—significant items to report. They include loss of money, damage to property and, only thirdly, harm to beneficiaries. The examples given have the same order of priority. They start with fraud and theft, go on to a large donation from an unverified source linked to terrorism, a disqualified person acting as a trustee, then not having a policy to safeguard your charity’s vulnerable beneficiaries, not having vetting procedures to check prospective trustees, and, only lastly, suspicions, allegations or, indeed, incidents of abuse of vulnerable beneficiaries. That order does not seem to give great confidence that beneficiaries rank very highly.

In the same guidance, the commission warns that if trustees fail to report a serious incident, the commission “may”, not “must”, consider this mismanagement and take regulatory action. Therefore, it is possible that trustees could have failed to record an incident of abuse of a vulnerable beneficiary and still no regulatory action would be taken. So not only does abuse of vulnerable beneficiaries rank below big donations or theft but failure to report is only possible evidence of mismanagement.

We should compare that with the duty on auditors, which, again, relates to money rather than to beneficiaries. The Charities Act 2011 places a duty on auditors to report matters of material significance to the Charity Commission, so there is a higher requirement on auditors for anything relating to money than there is on trustees for abuse of beneficiaries.

For that reason, amendments are needed both to make reporting mandatory and also, where there has been a collective failure of a board to identify, report or deal with serious allegations or incidents, to enable—not force—the Charity Commission to replace the whole group. At present, the Charity Commission would have to seek to disqualify each trustee one by one, probably showing evidence of individual responsibility, whereas if on the watch of a whole group of trustees things were seriously amiss and there had been a collective failure, the amendments would enable them to be removed as a collective so that the charity could move forward in the interests of its beneficiaries.

Although, as has already been pointed out by the noble Baroness, Lady Barker, Amendment 11 deals with a failure of trustees to protect children, we also have in mind other vulnerable beneficiaries, including older people who may be at risk of elder abuse. Perhaps I may cite some examples of why we think that these two amendments are necessary and important. We know of cases in more than one charity where incidents of abuse of children were not reported as serious incidents by trustees. That shows that the general duty is not strong enough and not sufficient. We also know that trustees who may not be expert in child abuse and safeguarding work very much at the behest of the staff, who may have little more than cursory training in safeguarding.

This is particularly the case in trusts which do not concentrate on children. The Charity Commission may be notified by relatives of children that major incidents are not being taken seriously by the charity and the trustees. However, in one such case the families were advised by a government department that the Charity Commission was the only party able to address the failings of trustees to protect children. In that case the Charity Commission disagreed, feeling that it did not have the powers to intervene. It could only trigger the beginning of an inquiry. It appears that it lacks the power either to remove the trustee board as a whole, because it can do it only one by one, or indeed to appoint a new trustee with relevant experience to assist the board with the complex area of child protection.

This need for a power to remove all trustees also arises from the case of an institution where there were several instances of child-to-child abuse. An investigation by families and their lawyers showed that the staff had failed to appreciate the cumulative danger facing children, and they therefore failed to report. The fact of repeated sexual injuries involving different children over time should have led the trustees to ask some very challenging questions of the child protection officer there, as well as of the management, but they failed to do so. In that case the charity finally had to close. However, had the Charity Commission had the power to act in the way that we are proposing and been able to remove several trustees simultaneously, the closure might not have been necessary. Without the scope for agile action, matters can drag on, further damaging not only the children concerned but the charity’s reputation and, ultimately, its future. I beg to move.

[Lord Hodgson of Astley Abbotts]

My Lords, I was slightly surprised to see that the noble and learned Lord, Lord Hope of Craighead, was not going to rise to his feet to take us through the significant words “any serious incident”, as serious incidents obviously can be in the eye of the beholder, the second point,

“results in, or risks causing”,

which requires one to take a view of the future, which is also quite demanding, and the definition applied to “significant harm”. I wonder about the wording of this amendment, which I think would have a pretty chilling effect on trustees and might well lead to them ringing the Charity Commission with inquiries about the nature of particular incidents and whether they qualified under this quite broadly drawn clause, or indeed might lead to a rash of reports to the Charity Commission, which may or may not be a good use of the commission’s time and energy to follow up.

For my part, I go back to my wish to expect trustees to behave responsibly and for the Charity Commission to check them, but not to impose other and further duties. I drew a different conclusion from the noble Baroness about the Charity Commission’s guidance on its website, which seems to be a much better way of dealing with this than putting it into statute. The charity’s trustees would have to be aware of that guidance and follow it. I think that the noble Baroness was slightly unfair to the commission about the order in which it has rated the different offences. Just because child abuse comes a bit further down the list does not mean that it is considered less important; I do not think that is a fair conclusion to draw. It is more important that we should have flexible guidance and that the Charity Commission empower trustees. We should not impose in statute quite wide-ranging and imprecise duties that will be a further reason why people do not want to act as a trustee.

[Baroness Barker]

My Lords, I say to the noble Baroness, Lady Hayter, that I do not think anyone in this House feels that the whole matter of child abuse has been done and that there are no more protections to be had. There is a question about the extent to which we need to change the law as opposed to the extent to which we need to give advice and change practice within organisations. I rather think that large organisations, such as the BBC, and indeed small organisations, are very far from having fully worked out their response to the revelations that have come out over the past couple of years.

I, too, take the point made by the noble Lord, Lord Hodgson: I think that the order in which things appear on the Charity Commission website, to be fair to the commission—and we are not always very fair to it—is as much to do with history as with anything else. In the time of Anthony Trollope, financial misdemeanours were at the forefront of the commission’s mind, not child abuse. I really think that the climate has changed. I shall not repeat the arguments that I made about older people under the previous group, because I misread the groupings, but I take the point about the protection of vulnerable adults.

I wanted to ask the noble Baroness about her Amendment 11—and perhaps the Minister might help with the answer to this—and the power to disqualify all trustees of a charity. My understanding is that it is a basic tenet of charity law that trustees are jointly and severally liable for decisions that are made or for failures within the charity. So I am surprised to learn that trustees can be removed only as individuals. I should have thought that their joint and several liability would mean that, if something as bad as the examples given by the noble Baroness were to happen, the whole board of a trust would be equally affected by it and would therefore they would all be removed. But maybe my understanding is slightly out of date.

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[Lord Bridges of Headley]

My Lords, following what the noble Baroness, Lady Hayter, said in response to the last amendment, I will just put on record that I would certainly not wish to give the impression that I am complacent about these issues. I completely understand that we need to debate and discuss them. As I said right at the start, we need to kick the tyres here. I just wanted to make that perfectly clear.

Let me start by dealing, first, with the proposed new clause on serious incident reporting. It might help if I explain briefly the position as it currently stands. The Charity Commission already requires serious incident reporting from charities with an income of over £25,000 as part of annual return requirements and encourages all charities to report serious incidents immediately as a matter of good practice. The Charity Commission’s annual return regulations require charity trustees to sign a declaration each year that there have been no serious incidents in the charity in the year or to give reference to any serious incident reports already made to the regulator and also report serious incidents that have not previously been reported.

On the lists that have been referred to in the debate, I do not think that the order of the listing suggests how serious the Charity Commission thinks those issues are. However, I can tell the noble Baroness, Lady Hayter, that the Charity Commission will look again at the issues it defines as serious.

There are various other legal requirements on charity trustees to report certain matters immediately. For example, there is a duty under terrorism legislation to disclose information about certain possible terrorist financing based offences to the police. Specifically on safeguarding, the Safeguarding Vulnerable Groups Act 2006 places a requirement or legal duty on employers and volunteer managers of people working with children or vulnerable adults to make a referral to the DBS in certain circumstances where a person has been dismissed or removed from working with children or vulnerable adults. That is in addition to any referral to a body such as a local authority safeguarding team.

As regards charities themselves, charity trustees are ultimately responsible for safeguarding within their charity. The Charity Commission’s role in safeguarding is to ensure that charity trustees take steps to protect and safeguard their beneficiaries. This means that charities working with vulnerable beneficiaries must have in place appropriate safeguarding policies and procedures, and must monitor them on an ongoing basis to ensure they are effectively implemented. The Charity Commission can and does take action against charities and trustees where they fail to do so but it is not the role of the Charity Commission to investigate suspected abuse. If there are allegations of abuse of vulnerable beneficiaries, the Charity Commission expects trustees to handle them properly and, where appropriate, report allegations to the police, social services or other agencies. Where the commission itself has serious concerns, it can and does refer them to the police or other agencies.

As I said at Second Reading, the Bill is about striking the right balance. While on the face of it there are many attractions to imposing a new serious incident reporting duty on charities, we have to acknowledge that it would be a new reporting requirement that would affect tens of thousands of small charities. Furthermore, and this is an important point, there is also the concern that the charities that would meet their obligations under a duty to immediately report serious incidents are those charities that would do so as a matter of good practice, and have already taken appropriate action to address the issue. Charities bent on abusing their position of trust would be unlikely to report the matter to their regulator. The danger would be that we would simply create a lot of red tape for the vast majority of honest charities, while those poorly managed or involved in abuse would ignore the requirement.

Under the amendment, diligent trustees might consider it necessary to report to the Charity Commission every time there was a risk to beneficiaries or the charity’s reputation. It is not hard to see how the commission could be inundated with queries and unnecessary reports. There is also the question about whether the commission would be able to cope, and what it would do with such a volume of reports.

The Government are committed to minimising regulatory burdens for charities, particularly small charities. We do not want to impose new burdens, particularly when the implications for the commission and the impact on charities have not been fully considered.

I do not want to appear overly negative towards this amendment as I believe there is much to be said for it, but I hope that the noble Baroness will also accept that there are downsides and that we do not want to tie up small charities with red tape. I hope that on that basis she will feel able to withdraw her amendment.

[Lord Hodgson of Astley Abbotts]

I have a question, which does not have to be answered today. The Minister refers to the fact that the Charity Commission generally refers matters to the police. Are we satisfied that police forces around the country always refer matters to the commission? I wonder sometimes if the commission is not up here while the police forces down there are looking into things. Is the information flow sufficiently strong? I am not asking for a response today; this is something that we can pick up later. However, it is an issue that has come up from time to time in the discussions that we have been having.

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[Baroness Hayter of Kentish Town]

I thank the Minister, particularly on that second point. The reassurance that action for collective failure can be taken answers the point we were seeking to make.

On reporting, I have greater concerns. In answer to the noble and learned Lord, Lord Scott, we know of schools where abuse that was taking place was not being reported. Clearly, the recommendations and guidelines for reporting are not being followed. This is the problem. You have an educational establishment where abuse is going on and it is not being reported. It is that failure to report which gives rise to concern.

The noble Lord, Lord Hodgson said that we expect trustees to behave responsibly. Of course—but this issue is where they do not. I have now heard the phrase “red tape” used twice and I jib slightly every time I hear “red tape bandwagon”. It is not red tape. We are talking about protecting vulnerable people.

[Lord Hodgson of Astley Abbotts]

The noble Baroness has used the word “complacent”. She has used the phrase “red tape”. Nobody is in any way complacent about the importance of protecting children. The question is how do we do it effectively and are we getting the right answers to make it happen, or is it coming at a cost that is out of all proportion? One can argue that there is no cost too high, but the reality is that we have to have a system that ensures we get the proportionate, right result. Is this system going to be perfect? I have never said that it would be, but we need not be complacent about it. What we are trying to do is to give trustees the confidence to decide what is best for their charity, rather than saying, “Here is all this wraparound that you have to look at”, which terrifies them and means that people do not become trustees at all.

[Baroness Hayter of Kentish Town]

The noble Lord is absolutely right. Are we doing it properly? Representatives of abused people are coming to me, saying, “No, it is not working right”. That is the difference between us. We are hearing that there is a failure at present. There has to be a balance. The noble Lord is saying, “No, we have it about right”. The people representing the families of abused children where something did not happen are saying, “No, it is not right”. This is a charity Bill. If they are correct that it is not working properly, this is our opportunity to make it better. This is what we are seeking to do.

The order of the guidelines may be historical, but the issue is that, sadly, we know far more about sex abuse than we used to. It is probably already going on. It happened to my aunt when she was a child—she would be 109 if she was alive. This is not new, but we know more about it. Sadly, we know that it is far more common than we think. We are trying to do something to make reporting and awareness of it better. The only difference between us is that we are hearing from the charities concerned that the policies and the reporting requirements do not seem to be working. We are trying to get it right.

I, of course, defer to the noble and learned Lord, Lord Hope, about whether the phrasing should be “direct beneficiaries” or,

“who are within the objects of the charity”.

We were trying to say,

“those people for whom they provide a service”.

I am not going to try to draft, but we are talking about establishments that provide a service for a group of people where there is some sort of abuse going on and they fail to notice it. It is well hidden; people do not come along in dirty macs to abuse children. Either trustees really do not know because they do not have the qualifications, or they are not dealing with it properly and are not reporting it. We are trying to lift the bar.

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[Lord Hope of Craighead]

My Lords, I just add a word to what the noble Baroness, Lady Warwick of Undercliffe, said by drawing attention to two paragraphs in our report—paragraphs 120 and 121. In paragraph 120, we refer to evidence from the Charity Law Association. It told us that, in its view,

“the wording of this power was ‘very wide’ and that it had concerns about how conduct would be deemed relevant for consideration by the Commission”,

if it was given that very wide power. In paragraph 121, we referred to the Muslim Charities Forum—this is on page 41 of the report—which expressed a concern that,

“the provision would allow the Commission to pass judgment on the political views of charity trustees, potentially infringing upon freedom of association and expression”.

A particular concern—and we quote from its evidence—was that trustees might, in a personal capacity,

“express support for Palestinian Statehood, speak out against the crack-down on Freedom of Association in the aftermath of the Arab Spring, or merely voice their anger at aspects of Western foreign policy”.

That could all,

“potentially fall under the net of supporting terrorism and/or extremism”.

It would then fall within the very broad description which is given in the two paragraphs to which these amendments refer.

I have to confess that we did not make any specific recommendation in our report. However, in paragraph 124, we state:

“we share the concerns of the JCHR and other witnesses about the risks associated with the power and its lack of clarity”.

I wanted to make these points to emphasise that there was a strong evidential basis for the concerns that the noble Baroness, Lady Barker, has expressed. These two references are in addition to those that the noble Baroness, Lady Warwick, mentioned in her short speech.

[Lord Hodgson of Astley Abbotts]

My Lords, having served on the pre-legislative scrutiny committee, I understand the concerns about the width of this clause, but if we were to accept this amendment, we would go from a very broad power to a very narrow one. As I read it, we have to take into account, first, the effect of a person’s behaviour within the charity about to be inquired into and secondly, the conduct of that person in any other charity. That does not seem satisfactory because there are clearly issues that range more widely. The behaviour of a trustee in general life is an indication of their seriousness. For example, the existence of county court judgments would indicate that their personal financial behaviour may be a bit erratic. It may be that they had been a director of a commercial company which had gone bankrupt and which had been unfavourably commented upon by the companies’ inspectorate. It might even have resulted in them being banned as a company director for a time. These are all issues which the Charity Commission might reasonably take into account when considering a particular situation, if what can be seen as a proven rotten apple is likely to result in damage to the position, reputation, trust and confidence in the charitable sector generally.

While I have some sympathy with the concerns of the noble Baroness, I do not think striking out subsection (3)(b) of new Section 76A is the right answer. It would be too narrow a prism and the Charity Commission would have its hands unduly tied. We must find some better way to sort it out.

[Lord Watson of Invergowrie]

My Lords, we think this clause in its generality provides an important addition to the powers of the commission. It is appropriate that a person’s activity outwith their work with or for a charity should be taken into consideration. That is not to say that we are uncritical of the wording of the two paragraphs referred to in these amendments in the name of the noble Baroness, Lady Barker.

One reason it is a useful addition is that it would only apply after a statutory inquiry had begun. That would be a sign that the Charity Commission already believed that there was evidence of misconduct or mismanagement. That is clear from the last two lines of page 2 of the Bill. Of course, there are concerns—some of which noble Lords have referred to in the Joint Committee’s report. It is again a question of provisions being drawn too widely and lacking clarity.

The Government’s response to the Joint Committee’s report stated that they would,

“look to revise the draft Bill to make this clearer”.

Unfortunately that has not been done. I invite the Minister to say why the Government eventually proved unable or unwilling to do so. It is regrettable, although I do not think it constitutes a reason to remove the wording completely from the Bill. I do not think that is appropriate. We agree with comments that have been made about the need to refine the wording, and perhaps some attention might be given to the report published yesterday by your Lordships’ Select Committee on the Constitution on this and two other Bills. Paragraph 41 of the Select Committee’s report was critical of new Section 76A to be inserted by the Bill. I am sure the Minister has already read that report and taken it on board. It is important that that should be considered further before Report.

The final paragraph of that report states:

“The concerns identified by the JCHR from a human-rights perspective are mirrored by corresponding constitutional concerns on the grounds of legal certainty. We draw these concerns to the attention of the House”.

That simply adds to the arguments we have already heard in relation to these amendments.

An important suggestion of the Select Committee’s report is that conduct should be qualified in terms of its seriousness. It must be recalled that this activity does not need to lead to a charge or a conviction. On these amendments, and I think in a previous amendment, the noble Baroness, Lady Barker, mentioned that things that you do at one stage in your life these days follow you around through social media. It is very possible that a person a lot younger than me and a lot more able on social media might well do something that seems relatively trivial but that could come back to haunt them in later years. That has to be borne in mind.

The noble and learned Lord, Lord Hope, referred to evidence that the Joint Committee received about political causes. That is a concern. It could be that somebody who was publicly critical of government policy or of the Charity Commission might find that coming back to them. I do not mean that as a trivial point. The point is that we do not know what would be regarded as something that could effectively add to charges already assembled by the Charity Commission in targeting an individual. It is a question of uncertainty. We have heard this point several times this afternoon. In light of what the Minister has heard, I hope he will reconsider this matter, possibly with a view even to bringing forward a government amendment on Report. Given those remarks and the report of the Select Committee on the Constitution, I hope we may be able to look forward to that when we consider this matter again.