Charities (Protection and Social Investment) Bill [HL]

Lord Hope of Craighead Excerpts

Monday 20th July 2015 Lords Chamber

[Lord Cromwell (CB)]

My Lords, I shall speak to Amendments 30 and 31, which are amendments to government Amendment 29. In doing so, I remind the House of my involvement in the charity sector and in financial investing. I am grateful to the Minister for government Amendment 29, which I support. I sense that I may be swimming against the tide here, but I hope that he will feel able to reconsider his approach to the text by adding what we have suggested in the amendments tabled in my name and that of my noble and learned friend Lord Hope of Craighead.

The Minister’s amendment highlights the need for trustees to consider a social investment in respect of two factors: the charity’s purposes and the financial return. I am sure he is right in that. No financial return is not, in my definition at least, an investment. The missing element in our view is to consider how a social investment fits into the pattern of overall investments and the long-term plan for the charity’s assets as a whole, not just considering the investment in isolation, which I think Amendment 29 seems to imply.

Some might say that prudence and long-term planning are motherhood and apple pie because they are self-evident. However, the Bill is breaking new ground. It invites trustees to engage with a new type and class of investment. These are welcome additions to the investment universe, but they are different from and less regulated than mainstream financial investments. Furthermore, these investments are likely to be presented in different ways, separately, and by different people. I hope that the Minister will agree that, first, the wording we suggest does not place any barriers in the way of social investing, or certainly none that a worthwhile social investment could reasonably object to. Secondly, they provide a context to such investments, and given that this is a new area of investing, a reasonable sense check that trustees should observe when making or considering them.

[Lord Hope of Craighead (CB)]

My Lords, I am in the unusual position of having heard the Minister’s reply before we move our amendments, so I know what he is saying. Perhaps I may say in support of the amendment tabled by the noble Lord, Lord Cromwell, to which I have also put my name, that what we are trying to do is refine the exercise which the Minister is himself engaged upon. For myself, I very much welcome government Amendment 29.

The starting point for this is to look back to new Section 292C(2)(c), where the charity trustees are asked to,

“satisfy themselves that it is in the interests of the charity to make the social investment”.

It was because that in itself seemed rather bald that we suggested in Committee that the phraseology should be expanded upon to give further guidance to the charity trustees. The noble Lord has very properly expanded on that, but our point is that it does not go quite far enough. It tells the trustees that they should have regard to the benefit that they expect the social investment to achieve for the charity, stating,

“(by directly furthering the charity’s purposes and achieving a financial return)”.

That is a specific and immediate task; namely, looking at the information and the task before the charity trustees at the moment. The problem may be that if a step is taken today, it may undermine or at least put at risk the assets of the charity in the longer term. It is to try to balance these two things out—the way things seem today as against how they might seem in two or three years’ time—that we are making this additional suggestion.

The Minister has said that he is not persuaded, but I wonder whether he would be kind enough to at least think again about whether he might give some little step in our direction to balance out these two things. Long-term management of the assets is obviously essential to the charity if it is to remain alive, and it is to balance out the immediate task with the long-term future that we suggest the wording should be expanded further.