Charities (Protection and Social Investment) Bill [HL]

Lord Hope of Craighead Excerpts

Monday 29th June 2015 Grand Committee

Moved by

[Lord Hope of Craighead]

6: Clause 8, page 6, line 38, after “unwilling)” insert—
“(a) in subsection (1)(a) after “unwilling” insert “or unable”;(b) ”

[Lord Hope of Craighead (CB)]

My Lords, Amendment 6 is the sole amendment dealing with Clause 8 of the Bill, which is a comparatively short clause on the “Power to direct property to be applied to another charity”. As it appears in the Bill, Clause 8 makes one amendment to Section 85 of the Charities Act 2011, which is dealing with a different matter from the one that is of concern to me. Amendment 6 seeks to insert two words into Section 85(1)(a) of the 2011 Act so that the phrase,

“persons in possession or control of any property … unwilling to apply it … for the purposes of the charity”,

would also deal with those who say that they are willing to do so but are unable to do so.

The draft Bill, as it appeared before us in the Joint Committee, included the words that I am seeking to insert into Section 85. The description of the draft Bill can be seen in paragraph 141, read with paragraph 142, of the Joint Committee’s report. As paragraph 141 records,

“Clause 7”—

as it was in the draft Bill—

“would amend the 2011 Act to allow the Commission to direct the application of charity property in the event that the person is either ‘unwilling’ or ‘unable’ to do so, rather than just ‘unwilling’ as is currently the case. The explanatory notes to the Bill refer to ‘several cases in which financial institutions holding charity property were contractually unable to transfer it to secure its proper charitable application but would have been willing to do so.’”

In paragraph 142, we go on to say that,

“The evidence received by the Committee was supportive of this provision”,

and the footnote refers to Professor Gareth Morgan, the Charity Commission for Northern Ireland and the Joseph Rowntree Charitable Trust. Paragraph 142 continues:

“The Charity Law Association”—

which had made a number of very helpful comments on the wording of the draft Bill—

“did not oppose this change, but questioned whether the meaning of the term ‘unable’ was sufficiently clear and whether banks in such situations were really ‘unable’ to transfer charity money or just ‘unwilling’ to breach a contract to do so”.

Since the current Bill was published, I have had a meeting with William Shawcross of the Charity Commission, who has explained to me that he would much prefer that the words “unwilling or unable” were put in—in other words, that the words “or unable” were restored, as my amendment seeks. He explained that, from time to time, he encounters cases of this kind where a direction is proposed and the response is, “Yes, indeed, we are willing to do this, but for a variety of reasons we are simply not able to do so”. As he put it to me, it would be possible by sleight of hand to fudge the thing a little bit, as it were, and treat unwillingness on such a ground as being within the scope of the section, but he would rather that the section was really upfront about the fact that both situations that he encounters in practice were actually dealt with in the wording of Section 85, so that unwillingness, which certainly occurs and is a source of concern, was dealt with but inability—where the persons involved are perfectly willing to comply with the direction but for various reasons say that they cannot properly do so—was covered as well.

This is a very short point. I am a little puzzled as to why the draft Bill which survived scrutiny by the Joint Committee should have been altered in this way. I hope that the Minister will pay attention to the wishes of the Charity Commission, which would find it useful if the amendment were accepted. I beg to move.

[Lord Watson of Invergowrie (Lab)]

My Lords, as one who was a member of the Joint Committee under the excellent chairmanship of the noble and learned Lord, Lord Hope, I share his puzzlement as to why this change has been made to the draft Bill. I have no wish to repeat the words of the noble and learned Lord, but those of us in opposition do not fully understand why such a change should have been made and we invite the Minister to explain that if he can, and to say why, after the Joint Committee recommended acceptance of the draft proposal, and given that, as we have heard, the Charity Commission wants this change, the original wording of the draft Bill should not be reinstated. There is little more to say than that. I look forward to the Minister’s response.

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

My Lords, I, too, will keep my remarks relatively brief, by reason of the conclusion that I have come to as a result of what the noble and learned Lord and the noble Lord have said.

The provision corresponding to Clause 8 in the Bill made reference to “unable” in the manner proposed by this amendment. The Charity Commission asked for the change following several cases where financial institutions holding charity property were contractually unable to transfer it to secure its proper charitable application but would have been willing to do so. As the noble and learned Lord said, the Joint Committee which considered the draft Bill supported the provision.

However, as is noted in the report, the Charity Law Association, while it did not oppose the change, questioned whether the meaning of the word “unable” was sufficiently clear and whether banks in such situations were really unable to transfer charity property, or simply unable to breach a contract to do so. Therefore the Joint Committee recommended that the Government consider the inclusion of some form of statutory protection for a financial institution in cases where compliance with a Charity Commission direction in these circumstances might constitute a breach of its contract with a charity. The Government therefore followed this recommendation and amended Clause 8 to provide for such statutory protection. Since the clause was aimed at dealing with financial institutions which are contractually unable to transfer property, this statutory protection was considered sufficient and the reference to “unable” was omitted.

The amendment tabled by the noble and learned Lord, Lord Hope, proposes to reinstate the reference to “unable”, as we have heard, and further examples have been provided as to when this would be needed beyond the contractual liabilities of banks. I also note what the noble and learned Lord said about his conversations with the Charity Commission. In light of this, I am happy to give further consideration to the amendment and to return to this on Report.

[Lord Hope of Craighead]

My Lords, I am grateful to the noble Lord for his remarks. It is worth adding that the wording of Clause 85(1) is quite general—it refers to,

“a person or persons in possession or control of any property”.

It does not confine the provision to banks alone. Although they may be the main aim of the provision, it is more widely cast, so whatever the banks may think is not the end of the story.

I hope that the noble Lord will bring forward something on Report without my finding it necessary to table another amendment to keep the matter alive. For the time being, however, in light of what the Minister has said, which I very much welcome, I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

--- Later in debate ---

[Lord Hodgson of Astley Abbotts (Con)]

My Lords, I understand the noble Baroness’s concerns on this point and why she feels this may be a loophole which may be abused by the Charity Commission. Nevertheless, we need to give the Charity Commission additional powers, as the noble Baroness said. It has produced quite extensive guidance on how it proposes to use the power, and I cannot imagine that if the Minister, whoever it was, was to propose a change under subsection (4), the sector would allow it to go by unchallenged. The sector would surely be up in arms if it felt that its independence or its freedom to appoint trustees was being infringed. I accept what the Joint Committee on the legislation said, but we are in danger of unnecessarily trammelling the hands of the Minister. These things will need to be looked at from time to time—for example, who would have thought about terrorist fundraising five or six years ago?—and no doubt there may be other issues in the future that will need to be dealt with.

Will the Minister say whether this is subject to the affirmative resolution procedure or the negative procedure? My ability to support the noble Baroness will depend slightly on his answer to that question.

[Lord Hope of Craighead]

My Lords, I shall add a few words based on the Joint Committee’s report. The noble Baroness, Lady Barker, is right that this is the clause which caused the committee most concern. We have before us, among other things, a very carefully worded memorandum from the House of Lords Delegated Powers and Regulatory Reform Committee, the meat of which is set out at pages 96 to 97 of the Joint Committee’s report. That Delegated Powers Committee draws attention to a number of problems that subsection (4) of new Section 178A gives rise to, including the risk of retrospective legislation bringing in offences that were not in the purview of the section when they were committed, without any provision for what would happen to people who were unaware that this might cause them to be disqualified. The committee considered various other aspects, but overall its conclusion was that subsection (4) of the new section should remain in the Bill.

Although the Joint Committee discussed this very fully, we reached the same conclusion, which was put in the report. We were content that the order-making power should be available in the form and subject of the procedures that were proposed, but I draw attention to paragraph 208, which contains the recommendation, that,

“when using the power, the Minister should be required to consult fully on whether it is appropriate and proportionate to include an offence within the list of disqualifying offences”.

The process of consultation would be directed to the variety of problems discussed by the Delegated Powers and Regulatory Reform Committee in its report. There is a question as to whether that requirement should be statutory, or whether it is enough that the Minister would be prepared to say that he would be content to follow what the Joint Committee recommended: that he would consult fully on whether it was appropriate and proportionate to include an offence within the list of qualifying offences. I speak only for myself, but if the Minister was prepared to give an assurance of that kind, that would go some way at least to meeting the noble Baroness’s concerns.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, it is a sobering day even to discuss something with the word “terrorism” in it. I note that the House of Commons had a moment of silence at 3.30 pm, which maybe is a lesson for all of us.

On the amendment before us, the Committee will know that we have always been a bit jumpy about Henry VIII powers. However, it is very important to have this provision in the Bill because I did not move Amendment 7, which we dealt with on the first day of Committee last week, when we dealt with our attempt to include people on the sex offenders register on the list of those who are precluded—which, frankly, I take more seriously than someone who has got into a bit of debt and has an IVA. The Minister did not think that that was appropriate, and I hope very much that he is right and that we will not have a trustee who is on the sexual offenders register and then abuses someone, which would show that I was right and he was wrong. I do not want to be in that position, for fairly obvious reasons. However, if we find that the evidence is that we should have added those on the sex offenders register to those who are precluded from being a trustee, unless there is a waiver, this provision would allow the Minister, at that stage, to put right—unless we win the vote on Report—what would be an omission from the Bill.

There is always a problem with retrospective legislation, which would be the same now for people convicted for other things. Therefore, it will be important that the implementation date of any regulation is in good time to notify people so that they do not suddenly find themselves acting as a trustee and putting a charity at risk because of some new provision that then comes in. However, if it was something such as someone being on the sex offenders register, that is a known register and they would be able to be notified pretty easily that they could no longer act as a trustee. As a failsafe, albeit that any new measure should be by the affirmative procedure, we are content to see this power in the Bill.

--- Later in debate ---

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I support the probing questions of my noble friend Lord Watson of Invergowrie. At several stages in our pre-legislative scrutiny of the Bill, we became anxious about the breadth and vagueness of the powers which it bestows on the Charity Commission. These concerns were reinforced by a letter from the chairman of the Joint Committee on Human Rights, Dr Hywel Francis MP, in which he said:

“In the absence of further definition in the Bill itself, or other guidance, such broad and vague language significantly increases the power of the Commission and provides insufficient certainty to both individual trustees and charities about the possible consequences of their conduct”.

At each stage, when we had these concerns, we looked carefully at the evidence and concluded, as noble Lords will see from the report, that the powers were indeed justified in that they were likely to help to increase public trust and confidence in charities.

However, when it came to the inclusion of terrorism offences, as my noble friend has indicated, we received evidence that disturbed us. As noble Lords will know from our report, a number of witnesses expressed concerns over the difficulties presented by terrorism legislation in relation to the operational requirements of NGOs in challenging circumstances overseas. They were particularly concerned about charities operating in dangerous parts of the world for humanitarian purposes. My noble friend referred to the chairman of the Muslim Charities Forum, Dr Hany El-Banna, who told us that he thought counterterrorism legislation was,

“preventing us from having access to the neediest people”.

David Anderson QC, the Government’s Independent Reviewer of Terrorism Legislation, who has already been referred to, said concepts such as the provision of “indirect support” to terrorist organisations had,

“an impact on humanitarian charities, particularly when working abroad and when working in areas that are under the de facto control of a proscribed or designated group”.

He went on to say that charities operating in these areas ran the risk of falling foul of terrorism law by, for example, delivering relief to a general population which might include individuals or groups designated as terrorists. He suggested that an increased risk could deter charities and their trustees from delivering humanitarian support. Bond, the umbrella group, went on to suggest, in our words, that,

“the withdrawal of banking services exposed donor assets to greater risk because international NGOs had no option other than to use less secure money service bureaux or to carry sums of cash across borders”.

Nothing in what I have said undermines the need to deal with terrorism offences and to address legitimate concerns about the abuse of charitable funds in connection with terrorism. It does, however, raise questions about the uncertainty surrounding the application of terrorism legislation when it comes to charities operating in dangerous circumstances overseas. The pre-legislative scrutiny committee was offered the examples of Australia and New Zealand as places where Governments had addressed this issue and where specific exceptions in law existed to meet this point. We thought that this was worth pursuing, but when we raised it with the Minister for Civil Society, he said it fell outside his remit and was essentially a matter for the Home Office. He went on to say that it could be,

“chasing a problem that does not exist”,

since,

“no one has been prosecuted”.

I do not think that that is good enough. Clearly these charities are expressing real anxieties about the risks they might face and about the chilling effect of this legislation. The difficulties facing these charities are already enormous in Afghanistan, Iraq, Chechnya and Somalia, among other places. If it is possible to provide them with greater certainty in pursuing their important work and overcome this worrying and chilling effect, then we should try to do that.

Like my noble friend, I was disappointed with the Government’s response. The Government recognise that there are concerns, but points only to the problems of creating loopholes without even addressing the suggestion that they might look at the examples of Australia and New Zealand to see whether and how those countries have overcome this danger. I ask the Minister to think again and at least to consider whether other countries can provide some inspiration about whether there are ways to provide greater legal certainty.

Finally, the Government have said they will draw to the attention of the Director of Public Prosecutions our recommendation to publish guidance. I hope they will agree to do rather more than that and to put their weight behind the need for guidance to address the current uncertainty, which was revealed in our evidence and which the Government acknowledge.

[Lord Hope of Craighead]

My Lords, I draw attention to the last two sentences of paragraph 183 of the Joint Committee’s report, at pages 53 and 54. They refer to an exchange between me and the Minister speaking for the Home Office, the noble Lord, Lord Ashton of Hyde. I pointed out to him the difficulty faced, according to the evidence we received, by people who are trying to gain access to areas where people are in dire need of food, warm clothing or whatever else when somebody there is, in effect, a gatekeeper and refuses any transit to the areas where these people are without some form of payment.

One would of course support what the noble Lord, Lord Ashton, said as a general rule—one does not want people to pay money to terrorists for any reason—but the New Zealand legislation has addressed the problem by putting in the phrase “without reasonable excuse”. Something of that kind would go some way to addressing this problem, because a hard-edged refusal to contemplate any situation where money is paid by somebody—not to assist terrorist activity but simply to get access for a humanitarian purpose—would seem to be too severe. I would have thought that there is a need for some degree of flexibility, although like everyone else I recognise that this is a very sensitive issue and the last thing one wants to do is encourage terrorism. There is a conflict of two diametrically opposed interests here, and the hard-edged and uncompromising line, as described in the noble Lord’s reply when I put forward my suggestion, is prejudicing those who are in need of humanitarian assistance.

[Lord Hodgson of Astley Abbotts]

My Lords, having also been a member of the Joint Committee, I support the need for flexibility on this. I used the example at Second Reading of the Yazidi women who have been enslaved by ISIS and whom it is allegedly possible to ransom for $10,000. Clearly that money is going if not directly then indirectly to ISIS and these charities are faced with an incredibly difficult decision. On the one hand, morality drives you towards wishing to rescue these wretched women who are in a state of sexual slavery. On the other, there is the danger that if you do it, you may end up being prosecuted for the reasons that we have been discussing. I support the need to find some way through this thicket. Whether it is a DPP statement of guidelines or whatever else, I do not know, but we should not let it just ride through our Committee without having a real go at getting clarity as to how charities can operate, not only for the benefit of the individuals concerned but for the reputation of this country. Our soft-power reputation for making an important contribution to providing humanitarian aid in various parts of the world is important to us, and we need to spend time making sure that we maintain it.