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

Lord Low of Dalston Excerpts

Wednesday 15th January 2014 Lords Chamber

[Lord Mackay of Clashfern]

I understand that, but I do not understand why they have come out against it, because it must be based on an understanding that charities could in fact engage in activities that are regulated by this Bill.

[Lord Low of Dalston (CB)]

My Lords, my name is added to this amendment and I do support it, but I think that we have been somewhat blown off course by the reference to this letter that we have had from the Charity Commission, which we have not had very long to consider, and also by the briefing that we have received from the Electoral Commission.

On the Charity Commission’s letter, I honestly think that this faces both ways: at one point the commission says that it is not in favour of an exemption but elsewhere it says that it believes in keeping the burden of regulations on trustees and charities to the minimum that is consistent with effective regulation. If that is what the commission is saying, then why on earth impose another burdensome layer of regulation on charities? Or is the commission saying that the regulation that it provides is not effective? I honestly think that the letter that we have received from the Charity Commission is not robust enough to sustain any argument and I do not think that we should be further diverted by it, certainly not today.

I agree that this has rather blown the debate off course and I think that the suggestion made by the noble and learned Lord, Lord Mackay of Clashfern, that this be taken away, that discussions take place and that we ask the Government to review the situation and come back with something at Third Reading, would honestly be the best way of proceeding.

[Lord Best (CB)]

My Lords, I think that I shall go with the suggestion that we defer debate on this until Third Reading. I will just throw one or two thoughts into the pot that have not yet been fully explored.

Charity law is currently very much under review. The noble Lord, Lord Hodgson of Astley Abbotts, has reported on the workings of the Charities Act 2006 and the Select Committee on Public Administration has looked into the operations of the Charity Commission. Both the noble Lord, Lord Hodgson, and the Select Committee on Public Administration issued reports last year recommending changes, and the Government have accepted many of those recommendations. In addition, the National Audit Office recently issued a report calling for a reform of the Charity Commission, and the Law Commission is looking at charity law and will report this year.

It is almost certain, therefore, that there will be significant reforms to charity law in the near future, so if charities are taken out of the lobbying Bill, which is the proposition here, there will be an opportunity, if necessary, to amend charity law and to see changes of this kind in a broader and wider context at a later date. The many arguments on why charities should be taken out of this particular Bill stand on their own, I think, and although we are giving great deference to the quangos, I find the comments of the noble and learned Lord, Lord Mackay of Clashfern, and others to be compelling. Possibly we should not be debating all those details if legislation that is specifically about the future of charities, charity law and the Charity Commission is in the pipeline. It would be better to defer our debate until then, but I would be very happy to see this brought back at Third Reading.

--- Later in debate ---

[Lord Low of Dalston]

I thank the noble and right reverend Lord for giving way. Does he not agree that to be caught by the legislation the expenditure has to be “intended” to procure that effect?

[Lord Harries of Pentregarth]

The whole point of those provisions, which is where the sting is, is that you can campaign on and focus on an issue and that can be reasonably regarded as indirectly supporting a particular candidate or party, or you can even do so inadvertently. Let us be quite clear: charities are able to campaign on issues.

[Lord Harries of Pentregarth]

Then why does the Charity Commission guidance—and I have read carefully both its main guidance and its guidance in relation to the Electoral Commission—include a series of examples, just like the Electoral Commission, where charities may or may not be caught? This is a borderline area. Charities are able to campaign and to campaign vigorously, and many trustees encourage them to do so. Therefore, it is always possible for them to come within the scope of this provision.

If you take out charities, only two courses are open to you. Either you have an unlevel playing field so that you have a charity campaigning against a campaigning group which is not a charity, and the charity, if it were taken out, would be able to spend an unlimited amount of money, whereas the non-charitable campaigning group would have very strict limits on what it was allowed to spend, or the Charity Commission could set up a much stronger policing body than it has at the moment—one which would match that of the Electoral Commission.

[Lord Low of Dalston]

I am grateful to the noble and right reverend Lord and I apologise for intervening again, but does he not agree that we are continuing to get bogged down in technicalities about the interpretation of very detailed points in this clause? If the point is taken that there will be discussions before Third Reading and we can look for something more fully considered to come back then, it will make a lot of sense to put into that review the points that the noble and right reverend Lord, Lord Harries, is dealing with at the moment.

[Lord Harries of Pentregarth]

My Lords, I take the point but it was important to state the argument because some people are understandably initially very attracted to this idea. It would lift the regulatory burden, and people are attracted to the idea of taking out charities. However, there are very strong, compelling and rational reasons why this should not be done, and that is why it is opposed by the Electoral Commission, the Charity Commission, the commission that I chair, the NCVO, ACEVO and all the others.

--- Later in debate ---

[Lord Wallace of Tankerness]

My Lords, I thank my noble friend Lord Phillips for raising the important issue of charities and seeking to exclude them from the regulatory regime governed by controlled expenditure for third parties. In Committee, we had a useful debate during which I indicated that some very important points had been made and undertook to give consideration to them. To those who ask the Government to take this issue away and to think about it, I say to your Lordships’ House that we have given this very serious thought. I probably spent more of my time on it than I had necessarily expected over Christmas and the new year in Orkney. I will not overegg it but I think my wife thought that it probably was more than was healthy.

With other Ministers, the Government have seriously thought about this matter and looked into it. Under present charity law, charities are organisations which must be established for charitable purposes only which are for the public benefit. An organisation will not be charitable if its purposes are political. Campaigning and political activity are legitimate and valuable activities for charities to undertake. However, this must be undertaken by a charity only in the context of supporting the delivery of its charitable purposes.

The Charity Commission and the Electoral Commission produce guidance for charities on campaigning and political activity. Both regulators acknowledge that there may be a narrow range of circumstances—noble Lords who took part in Committee will remember that the word given to me by officials was “sliver”, which I did not particularly like but was meant to show that it was a very narrow range of activities—in which charities may be compliant with charity law and also operate within the regulatory regime established by the Political Parties, Elections and Referendums Act 2000. I listened carefully to the speech of my noble and learned friend Lord Mackay of Clashfern. The Charity Commission guidance updated in January 2011 on charities, elections and referendum states:

“A charity may publish the views of candidates in local and national elections where these views relate to the charity’s purposes and publishing them will raise public interest and debate about the underlying issues. The charity must not encourage support for any particular parties or candidates”.

It goes on to say that “even if” a charity is,

“following the guidelines set out in this document and in Speaking Out: Guidance on campaigning and political activities by charities (CC9), if you use material that could be seen as indicating to the public that particular candidates or parties support or oppose your policies, it is possible that you may need to register as a third party with the Electoral Commission”.

Indeed, that has been the position following PPERA 2000. My understanding is that two charities registered in 2010 .

I admit that the circumstances may be very narrow but the important point to remember is that we are using an objective test. It is not a subjective intention of the charities: it is how a reasonable person might perceive what the charities have done. As the noble and right reverend Lord, Lord Harries of Pentregarth, pointed out, Clause 26(4)(c) states that,

“a course of conduct may constitute the doing of one of those things even though it does not involve any express mention being made of the name of any party or candidate”.

Applying that consideration and the objective test is the considered view of the Electoral Commission and the Charities Commission that there could be circumstances in which PPERA should apply.

[Lord Low of Dalston]

I am sorry to intervene on the noble and learned Lord, but does he not agree that the test is only partly objective because the test is not what a reasonable person would make of what the charity has done but what a reasonable person would make of the charity’s intention?

[Lord Wallace of Tankerness]

My Lords, I can do no better than remind your Lordships of Clause 26, which states that,

“the expenditure can reasonably be regarded as intended to promote or procure electoral success at any relevant election for—”.

The point is that there is a distinction between an objective and a subjective test. It may be that if the charity was complying it was not intending, but if objectively it was thought to have done so it would fall into that narrow range of activity. The important point was made by the commission chaired by the noble and right reverend Lord, Lord Harries; namely, that it is the activity that is important rather than who is undertaking the activity.

I know that the House wants to move on, but the e-mail issued yesterday evening by Mr Rowley has been referred to by a number of noble Lords. He says:

“We recognise that there are some circumstances where a charity’s activities can adhere to charity law but may still require them to register with the Electoral Commission during an election period. Indeed, during the last General Election a small number of charities did register with the Electoral Commission. Due to the increased awareness and scrutiny of this area we believe that this number may increase, regardless of the change in the scope of activities and limits that this Bill proposes”.

My noble friend Lord Phillips was suggesting that somehow or other the information on this coming from the Charities Commission was out of date. It is important to recall that it does set out the current position, but it is a situation in which PPERA is not changing with regard to the definition. It will not change as a result of this Bill, so the case remains that a narrow scope of activities could be covered. The Electoral Commission is clear that charities should not be exempt from the PPERA regime. It highlights that such an exemption would undermine the effectiveness of the PPERA regime and create incentives for campaigners to carry out as much campaigning activity as possible via charitable channels. Potentially that could have implications for the reputations of the charities.

I repeat what the commission said:

“It is the Commission’s view that it is right that charities are not excluded from within this legislation, and we believe the Government’s approach to distinguish by activity rather than by type of organisations is correct”.

The Government’s view, however, is that the nature of the PPERA test, to which I have referred, and the constraints of charity law will mean that the circumstances in which charities are brought within the scope of PPERA rules will be very rare. First, they must meet the PPERA test where their activities can reasonably be regarded as intended to promote or procure the electoral success of a party or candidate. Secondly, if they meet this test they must incur controlled expenditure over the registration threshold. The amendments that we will debate later and that are being brought forward by the Government to raise the registration threshold in essence will ensure that smaller or even medium-size charities will not have to register with the Electoral Commission.

I heard comments in Committee and in the meetings that I have had about the importance of trying to keep the administrative burden to a minimum. I accept that there was force in the concerns expressed when I first became engaged in this Bill and attended meetings with my noble friend Lord Wallace of Saltaire, in which charities said that there was a possibility that they could do something that took them into PPERA-controlled expenditure, with the limit at £5,000—£2,500 in Scotland, Wales and Northern Ireland. That might happen, without their knowing that there could be a freeze on their activity. But limits of £20,000 for registration are now proposed; in Scotland, Wales and Northern Ireland it is £10,000.

If charities are undertaking that level of expenditure this is neither unreasonable nor the sort of thing that will get lost in the loose change. It is significant expenditure. Therefore many charities will be removed from any concern by the thresholds that we are setting. Those approaching that level of expenditure may wish to consider whether it is appropriate. In terms of the general core principles of accountability and transparency in the Bill, it is important that if a body is undertaking the kind of activity that falls within this scope it should be accountable and transparent. In some of my discussions with the chief executive of OSCR, the Scottish charities regulator, he said that he thought that the transparency argument was important: if two organisations were doing exactly the same thing that brought them within the scope of the Bill or PPERA, it was wrong that one should have to be accountable and transparent, and the other, because it was a registered charity, should not. In transparency and accountability terms, this departed from an objective of the Bill.

Charities have raised concerns as to what happens if a party or a candidate adopts one of their policies. The Electoral Commission guidance is clear on this point. If a party or a candidate adopts a charity’s policy this will not automatically result in the charity incurring controlled expenditure. A charity will incur controlled expenditure only if it subsequently highlights the fact that party A or candidate B supports its policy, or ramps up its campaign. As such, the Government are not persuaded that there is a compelling case to take such a significant step as to exempt charities from the regulatory regime. It is the activities of the third party and not the type of organisation that should be subject to regulation. I can assure my noble friend, who raised the matter, as did other contributors to the debate, that the regulatory regime on charities will be explored during the review of third-party campaigning that we have indicated, as laid out in later amendments, will take place after the 2015 election.

We have had a good debate. I am not sure that I can elaborate these points much further. The noble and learned Lord, Lord Mackay of Clashfern, very properly made the point that the shape of the Bill will not be determined by the Charity Commission or the Electoral Commission; it will be done by Parliament, by your Lordships’ House and the other place. But, in doing so, it is important that we have some regard to those who have dealt with these issues in elections past, and to the Charity Commission and the Electoral Commission, which agree that the amendment proposed by my noble friend would not be appropriate in these circumstances. I therefore invite my noble friend to withdraw it.