Charities (Protection and Social Investment) Bill [HL]

Debate between Lord Hodgson of Astley Abbotts and Baroness Hayter of Kentish Town

Monday 29th June 2015 Grand Committee

[Baroness Hayter of Kentish Town]

My Lords, this amendment is also in my name and that of my noble friend Lord Watson of Invergowrie. When we are discussing it, we refer to it by the shorthand “Olive’s Law” as it arises from the complaints about somewhat overpushy fundraisers in the wake of the tragic suicide of 92 year-old poppy seller, Olive Cooke.

As the Minister knows, hundreds have since reported how they, too, came under pressure, with particular concerns about the elderly, some with dementia, being targeted. At Second Reading, I referred to the Mail on Sunday story of the underhand methods of a private company which appeared to break every rule in the book to make money for itself as well as for charities that were employing it. Cold calling is a particular curse of the housebound and risks damaging trust in charities. We also see charities, having secured one donation, ratcheting-up demands, leading people to fear that if they give they will just be asked for more.

The issue is whether the existing self-regulation is working. Our view is that it is not. A third of fundraising charities are not even members of the Fundraising Standards Board, and charities or the private companies they use can continue to fundraise even if expelled from the board.

The Fundraising Standards Board self-regulation system, which is effectively funded and run by and on behalf of those it seeks to regulate, has, we say, failed to work. It has not done the monitoring to check up on its members. Indeed, without the tragic case of Olive Cooke and the exposé by the Mail, we might know nothing of these practices other than from the anecdotal complaints we all hear about in our personal lives. I was with some elderly friends last night, and without me even raising the question it was one of the things that kept coming up in conversation. However, it was not coming to us from the board that should have monitored this.

The Fundraising Standards Board has not publicised its existence, meaning that those with complaints never took them to it, and it has not outlawed unacceptable practices. This, of course, is not just my view. The Minister for Civil Society, Rob Wilson, calls this,

“a critical time for charity fundraising”.

He concludes:

“Charities’ hard won reputation is at serious risk”.

His “last chance saloon” warning was for charities to show that their fundraising was “beyond reproach” quickly, as they,

“do not have the luxury of time”.

He called on the sector to respect the wishes of householders who do not want to be disturbed at home and to respect “no cold caller” stickers on doors. He also acknowledged that many of us question the self-regulation model. Although it appeared that he favoured one last period of grace, he warned that the,

“window of opportunity … may not remain open for much longer”,

and advised the sector to change rather than,

“allow others to do it for you”.

I do not think that Minister had it quite right with that final warning, but I think he may have moved on since then.

We have concluded that the time has passed for charities to be able to choose whether they want to join the Fundraising Standards Board, or to abide by the code of conduct set by the Institute of Fundraising, by which the FRSB adjudicates complaints, and to put their own house in order—hence, the first part of Amendment 13, which would oblige large charities to belong, thus making their expulsion a matter for Charity Commission intervention. We do not have all charities in mind, but those raising more than, say, £1 million a year. On Report, we will find a form of words to either include a specific figure, or to have the figure set out in regulations, but the principle is clear.

The NCVO, which obviously speaks for many charities, usually prefers effective self-regulation to statutory regulation, as, normally, do we, because it is flexible, responsive, and cost-effective. However, it accepts that the regulatory regime must secure public trust and agrees that there is clear public concern over fundraising. It therefore agrees that self-regulation should be strengthened,

“to a point where an objective observer would say beyond doubt that the interests of the public are sufficiently represented”.

Sir Stuart Etherington of the NCVO said that,

“the correct regulatory regime is not one that is convenient for those who are being regulated, but one that … balances the interests of the public and the regulated … fundraising self-regulation can be successful … but … only … when it is … sufficiently robust and seen to be sufficiently robust”.

The NCVO concludes that change is required, including giving the Fundraising Standards Board a remit over large fundraising charities. It therefore supports Amendment 13, which would require charities to be members of the Fundraising Standards Board, and to abide by the code of fundraising practice. Crisis—which I think of as Crisis at Christmas, although it is a long time since it was called that—one of the charities which would be covered, favours a greater investigative role for the fundraising regulator, with action taken on identifying and dealing with bad practice. It would therefore favour the institute’s code of conduct applying to all large fundraising charities.

The public are with us. More than two-thirds agree that charities should be regulated more. That was before Olive’s case was publicised, so they already had concerns. We are not the first to identify the need to strengthen the regime. There is already a reserve power ready and waiting that allows the Charity Commission to regulate fundraising. It is time to implement this, hence the second part of the amendment, on which we have reason to believe the Government have now reached the same conclusion. Yesterday’s Sunday Telegraph reported that:

“Charities have been given until the middle of this week”—

tomorrow, 30 June—

“to curb their pressure selling techniques to raise money or face action from the charity regulator … Section 64A of the Charities Act 2006 gives”,

the Minister,

“a ‘reserve power to control fund raising’, including imposing ‘good practice requirement’ on charities”.

We want good charity fundraising to continue. We salute the British public, who give more than £12 billion a year—more than the Government’s aid budget. However, we owe it not just to Olive, but to all the many hundreds who have been hassled by charity fundraisers to stamp out malpractice. This amendment is the way forward. I beg to move.

[Lord Hodgson of Astley Abbotts]

My Lords, I have listened carefully to the noble Baroness, and I understand the frustration and disappointment that underlines much of her speech. Before I go any further, I remind the Committee of my tangential connection to Pell & Bales, which is involved in the charity fundraising sector.

My review had a whole chapter—15 pages or more—concerning fundraising. It is one of the areas which caused the most angst, difficulty and comment. The conclusions were that we need to drive forward ways to improve self-regulation because that is probably the most flexible and cost-effective way of regulating the sector, that there needs to be changes in the way that public charitable elections take place and that there needs to be a clear programme for implementing change and monitoring progress towards it.

I shall be making some relatively disobliging remarks about the charitable fundraising sector in the next few minutes. However, before doing so, there is a case for the defence which ought to be put on the record this afternoon. The first point is that charities must have the right to ask. If they cannot ask, then the amount of fundraising that charities will be able to do will fall dramatically. That is balanced by the right of the public not to be unduly hassled. It is that nexus which we are seeking to find in any fundraising regulatory system.

Secondly, the public do not really like any money being spent on fundraising. They would like every pound that they give to go straight to the beneficiary of the charity, not even to be used by the administration of the charity—hence the concerns about the salaries of chief executives in the sector. That is an issue which the sector has not been able to address. There is an argument for explaining to the public that, in order to have effective fundraising, it is possible that you will need to pay someone money for it. The statistics are that a direct debit signed on the street—the so-called “chuggers”—on average lasts for four years or 48 months, and the charities expect to pay 10 to 18 months of that for the work that is done to get the donation in the first place, which amounts to between 20% and 33%. The public would say that it is outrageous that it costs that amount of money, but from the charity’s point of view, they are getting 67p to 80p in the pound that they would not be getting otherwise. There is a difficult philosophical balance to be established.

Thirdly, the legislation is very uneven. The cash collection—the tin-rattling, as we might call it—dates from 1916, and the charitable collections door-to-door regulation dates from 1939, but local authorities have entirely different standards. Some local authorities will give permission in a week or two, others want two years’ notice, and of course in London local authorities do not do it at all as the Metropolitan Police are the licensing authority. Meanwhile, while we are agonising, quite appropriately, about charitable collections, commercial collections have no regulation whatever. They are free to behave as they wish.

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[Baroness Hayter of Kentish Town]

Will the noble Lord accept that when I moved the amendment, I said that I was talking about charities that raise £1 million a year? It would be very nice if Mrs—I’ve forgotten her name—does—

[Lord Hodgson of Astley Abbotts]

That is absolutely right. The noble Baroness did say that, but her amendment says, “All fundraising charities”. I know she slightly shifted the ground in the middle of her speech, and I accept that.

What, then, is the problem? There is reluctance in the sector to accept that every problem is everybody’s problem. There is a tendency to push the pea round the plate and to blame another sector, so the chuggers in the street blame the telephone collectors, who blame the direct mail people, and so on. They say, “It’s not our problem—it’s somebody else’s”. There is also reputational pride in individual charities: “We don’t do that sort of thing—other people do that”. Therefore there is a real need for the sector to understand that it is judged by the weakest link, and unless it takes steps to remedy it, the sorts of results the noble Baroness talked about will occur.

Secondly, there is a failure to see that the alphabet soup of regulatory bodies—the IoF, FRSB, the PFRA and the Charity Retail Association—is confusing to the public. They often appear to be acting quite separately; the FRSB’s report on Mrs Cooke said:

“Fundamentally, the FRSB Board believes that the IOF Code must be strengthened”,

as if they are completely separate organisations, way away from each other. It seems much neater to collaborate and work closely together.

There are three things that we should encourage the sector to do. The public need a single point of entry into the system—whether they wish to approach it by phone, by email or by letter—by which complaints or concerns can be addressed. All the bodies involved in charity fundraising regulation and all charities need to pool their sovereignty into a single charity self-regulating organisation, called, say, the charity fundraising authority. That would be tasked with producing national guidelines and model rules with which local authorities should comply. If they do not comply they should explain why they are not complying. They should also provide internal best practice rules for fundraising, in particular about things like passing on names of donors to other charities, because the Olive Cooke case was about the pressure built up by repeated approaches from charities. The Government need to oversee this, either directly or through the Charity Commission.

This will be a challenge to the sector, which has not found it easy to accept change and responsibility for one another. I accept and agree that the situation is not satisfactory and action needs to be taken, but I wish good luck to whoever takes it on and suggest that they pack a tin hat.

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[Baroness Hayter of Kentish Town]

I thank the Minister, the noble Baroness, Lady Barker, and the noble Lord, Lord Hodgson. Before I respond—I hope I will take only a couple of moments—I have a particular view that some of this forgets who are the people affected. They tend to be vulnerable. It is not just charities that treat them that way. I shall very briefly tell the Committee something that happened over the weekend. I have an aunt and an uncle aged 91 and 93. My uncle’s Alzheimer’s is quite bad, and seven weeks ago he had to move into a home. Two weeks after that, my aunt, who is 91, had a very bad stroke. The NHS was completely brilliant, and she is back home. They are highly vulnerable people. This is not a story about a charity. It is about Barclays Bank, which on Saturday wrote to them informing them that it was going to close their account. It had failed to contact them—actually it had not tried—and was going to close their account. It said that,

“we will not be prepared to offer you any new banking services”,

and would not give them a reference for any other bank. If a body such as Barclays, which is regulated by the FCA, can so mistreat elderly people, my concern is that it is not just charities that are affecting them. The vulnerable are getting this from everywhere. Therefore the standards have to be particularly high. They are not for you and me. I have talked to lots of people around the House since we raised this, and they have said, “I’ve cancelled my standing order. I just can’t do those phone calls any more”. We are robust enough to cancel standing orders, to say boo, or in this case to get on to Barclays, which is emailing me at this moment saying “Please don’t mention our name”, “We promise we’ll put it right shortly” and “We didn’t really mean to send the letter”. It is outrageous behaviour. Like the charitable stuff, it is particularly the vulnerable who we need to protect. I think the only difference between us is whether we are in the last chance saloon. My view is that we are already there, and we need to get out and do something about it. I think what the noble Lord, Lord Hodgson, said was actually close to me, although he may not have thought that. By saying that there should be a single point of entry and that the Government should oversee the process either directly or via the Charity Commission—if I have got his words down correctly—that is one stage further on than the last chance saloon. Perhaps he and I should get an amendment together for Report because we really need that extra little bit now.

[Lord Hodgson of Astley Abbotts]

The danger about moving as the noble Baroness says is that when in two years from now there is a charge from the Government for regulating the sector, there will be an enormous outcry, so what looks attractive to begin with will be inflexible, expensive and even more unpopular than the present system. It would be better from every point of view, accepting all the points about vulnerable people, if the sector could be persuaded to take up the challenge, find the will, find the money and make it happen, because it will make it happen in an effective way. The problem at the moment is that it has not really accepted that there is a fundamental problem and thinks that if there is a problem, it is not its problem but somebody else’s.

Charities (Protection and Social Investment) Bill [HL]

Debate between Lord Hodgson of Astley Abbotts and Baroness Hayter of Kentish Town

Tuesday 23rd June 2015 Grand Committee

[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.

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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.