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

Lord Phillips of Sudbury Excerpts

Monday 16th December 2013 Lords Chamber

Moved by

[Lord Phillips of Sudbury]

160: Clause 26, page 13, line 19, at end insert—
“( ) In subsection (8)(a) after “body” insert “(except a body which is a charity)”.”

[Lord Phillips of Sudbury (LD)]

My Lords, Amendment 160 is very short and innocuous, but it is of significance in terms of its impact on the Bill in that it would remove charities from the scope of the Bill and the 2000 Act. Like everybody else, I must declare interests, which are largely to be found in the register, but I should add that I have been for 40 years a charity lawyer—if that does not sound a contradiction in terms—and have great sympathy with all those trying to get their head around the relationship here between charity law and electoral law because it is far from simple.

Thanks to the work of the Library staff, I got an insight into the debates when the 2000 Act was legislated. It is fair to say that charities got short shrift. In fact, during the passage of the 2000 Act, the awareness in the Chamber was pretty extraordinary and at no point did a clear statement on the impact on charities find its way into print. I am sure your Lordships will also have noticed that the vast majority of charities are as amazed as anyone that they have ever been part of the 2000 Act. Most of them went through the previous election in complete ignorance of that fact.

I fear that the misunderstandings that attend this Bill are not inconsiderable. I am afraid that that misunderstanding finds its way even into the Harries report, if I can so call it. I, like everybody else, greatly admire the energy and astuteness that has been put into this report and I agree with the vast bulk of it. I happen not to agree with recommendation 11, which is that charities should not be exempt from regulation. To make my point and because it is germane: recommendation 11 is preceded by three statements. The first—in favour of my amendment, so to speak—is that the commission heard evidence from charities of the “disproportionate regulatory burden” on them registering as third parties. That burden is at the heart of my wish to see charities removed from this Bill and the 2000 Act.

There are two reasons given for the recommendation about not exempting charities. Incidentally, it is fair to say that the commission itself was made up of representatives of the charities sector and the non-charity NGO sector. The first reason is that,

“the regulatory system should not be structured such that the status of being registered as a charity could be a mechanism for avoidance”.

That is a little gnomic, perhaps, but were we to agree to take charities out of the Act and this Bill, the authors of the Harries commission report decided that this would represent a mechanism for avoidance. I beg to differ. Charity law and electoral law are in all essentials the same. Being bound by charity law rather than electoral law is not a soft touch. Indeed, some charities have made the point that they are afraid of not being part of the Bill—and therefore under the aegis of the Electoral Commission—because they fear that if left to the devices of the Charity Commission alone things might get rather more brutal than they already are.

The second reason given for that recommendation is that,

“campaigning with non-charities is so central to many charities’ activities”.

That is as if to say that if charities were not part of the Bill, they would not be able as they currently are to campaign with non-charities. Again, that is completely misconceived. The position of charities vis-à-vis joint campaigning—coalition campaigning, if you want to call it that—will not be affected significantly; in fact, I could not put my finger on any single difference between being outside and inside the Bill. I repeat: charity law on its own is very severe and, as I shall explain, very similar to electoral law on this point.

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[Lord Hardie (CB)]

My Lords, I seek clarification from the noble Lord, who is recognised as an expert in the field of charitable law. One concern that has been expressed to me is that, if charities are exempt from these provisions, there may be a means for others to use charities to avoid the measures. Could the noble Lord address that concern, which others may have? If people could be reassured on that matter, we would be with the noble Lord.

[Lord Phillips of Sudbury]

I am grateful to the noble and learned Lord, Lord Hardie, for raising that issue. It is one of two issues used by the Harries commission to justify its recommendation to keep charities in the net. But it simply does not stack up in any way. Would the noble and learned Lord give an example of where he thinks the problem that he has enunciated would be found?

[Lord Hardie]

Simply, a concern has been expressed. As the noble Lord has observed, it is referred to in the report. The noble Lord may wish to have time to reflect on the matter and come back. To my mind, if that concern could be answered, I would be reassured.

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[Lord Phillips of Sudbury]

I think that the concern may relate to a misnomer, which is that a non-charitable NGO that wants to escape the limitations of the Bill could simply form a charity which, if charities are taken out of the Bill, would be able to do all sorts of things that it could not do as a non-charity within the Bill. There is a very simple answer to that. A charity may be the brainchild of, and have come into existence through the efforts of, a non-charitable NGO—and there are a number of non-charitable NGOs, such as Amnesty International, which have brought into being a charitable arm that does things that can properly be done by a charity and which is therefore more tax efficient to have done through a charity, because of the tax provisions attaching to charities. A number of non-charitable NGOs have a related charity—perhaps even the Countryside Commission has. Many of them do it. But the misunderstanding comes in this element. Some people think that because Amnesty and the Countryside Commission took the initiative in creating a charity, they can control it and tell the trustees to do their bidding, what to do and when to do it. But they cannot. It is a fierce rule of charity trusteeship that the trustees of any charity do not and cannot take their orders from any outside body, even one that is in that sort of relationship.

To take another example, where I, as an individual, set up a charity with funds that I provide, unless there is some express power which I retain to require the trustees to make charitable gifts as I indicate, I cannot tell them what to do. The trustees must act independently. It is a fierce and fundamental provision of charity law, precisely to protect it from prostitution by the means that I think was behind the noble and learned Lord’s question.

[Baroness Mallalieu (Lab)]

My Lords, I take issue with one or two of the matters that the noble Lord, Lord Phillips, has just raised. The commission came to the view that there should be no exemption for charities and that was based squarely on the evidence that we heard. As everyone else is doing so, perhaps I should make a full declaration of my involvement with various campaigning organisations. I am president of the Countryside Alliance and president of the Horse Trust; one is a charity and one is not. I am a member of the National Trust, the RSPCA and the Humane Slaughter Association and I am a supporter—whatever that may mean at the end of this Bill’s progress—of the Stop HS2 campaign. There may be others, but I cannot, at the moment, remember them.

[Lord Phillips of Sudbury]

I am so sorry to interrupt the noble Baroness so early in her speech, but it is directly germane to her first point. I think she said that the Charity Commission came to the conclusion that charities should not be exempt.

[Baroness Mallalieu]

I was not referring to the Charity Commission; I was referring to commission of the noble and right reverend Lord, Lord Harries. I am afraid this had led to some confusion. I noticed someone else fell into the same error. If I did, I apologise. Except for those who have put their names to the amendment on the Marshalled List—and no doubt there will be others who will speak—I am not aware of anyone among those to whom we have already spoken, who shares the view of the noble Lord, Lord Phillips. Not one of the charities which came and gave evidence before us asked for there to be an exemption. Nor, as far as I am aware, does the Electoral Commission suggest that it is a good idea. I am not certain about the view of the Charity Commission, but my understanding is that it does not seek it either. As I understand it, this is because it is generally felt that transparency in the way people campaign during elections should run right across the board, for charitable and non-charitable campaigners. The spending limits, which are a key difference, should be the same across the board. No charity asked to be exempt, but we did hear evidence from some which felt that, if they were exempted, some charities would bring others into disrepute, and that it was a possible route for avoidance.

The argument of the noble Lord, Lord Phillips, is predicated, I think, on a belief that the guidance given by the Charity Commission at present works well—and he knows a great deal more about charity law than I do. That was not entirely my understanding of the evidence that we heard, and there has been concern that it has not always been rigorously enforced in this area. It is, perhaps, not surprising, given the number of registered charities. I think there are something like 130,000; he will know the figure better than I do. Indeed, there have been a number of public complaints about charities and how they have campaigned recently. It was for that reason particularly that I drew attention to my involvement with the Countryside Alliance.

It seems to me that there must be equality across the board, not only with obvious transparency, but with the way in which people are permitted to campaign. If the situation were—as the noble Lord, Lord Phillips, would wish it—that non-charities continued to be regulated under the Bill as amended and charities were removed, there could be two organisations campaigning on precisely the same issue, but bound in different ways by different forms of regulation. There could be an argument during an election period, for example on hunting, which has already raised its head a number of times in this debate. This would have the Countryside Alliance as a non-charity, restricted in a variety of ways, required probably to register as a result of whatever the new limits might be, to observe strict spending limits, and with no regulatory burden. Whereas the League Against Cruel Sports, which is a charity, would have no spending limits and would not have to put in the sort of rather onerous reports that are required otherwise. This is a cross-party issue which is seen by some as being politicised. There may well be complaints about it.

My noble friend Lord Gardiner—I call him my noble friend even though he sits opposite because he is from the “barricades” days—has tried to reassure us that the Countryside Alliance would not be caught by this measure. However, I am not so sure. We wait for that matter to be tested or, I hope, clarified as the Bill progresses. The noble Lord, Lord Phillips, says that it is wrong for one body to be doubly regulated, but he is overlooking the fact that charities are in a privileged position in many ways. They have a great many advantages and it is right that they should be regulated not just during election periods but all the time so that they do not infringe the rules. As I say, whether that is enforced is a matter of considerable controversy. Surely the Bill is about the transparency of those engaged in campaigning at election times. It is not a Bill about charities—that is something quite separate. There should be a level playing field and the public should be entitled to know what is being spent and by whom, whether the body in question is a charity or not. Therefore, although I have enormous sympathy with what the noble Lord says, and I share his concern that charities are very worried about the Bill, so are NGOs, and for precisely the same reasons.

[Lord Phillips of Sudbury]

The noble Baroness refers to a level playing field between charities and non-charity NGOs. However, there is no level playing field because non-charity NGOs can politick any way they like until the cows come home, whereas charities cannot.

[Baroness Mallalieu]

The noble Lord is correct on the face of it but, in reality, when one looks at some of the forms of campaigning that have taken place in recent years, it is very difficult to discern a difference between the two. The two organisations to which I referred earlier are a case in point. If the charity guidance—CC9—and the appendix to which the noble Lord referred were enforced rigorously, and the Charity Commission had the means to do that, perhaps I would take a different view. However, given that the Charity Commission cannot possibly have a handle on 130,000 charities during an election period, it seems to me important that there should be one rule that applies to all.

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[Lord Harries of Pentregarth]

I absolutely agree that it is right to take precautionary steps, but I am sure that the noble Baroness would also agree that we must ensure that they are not disproportionate. The main complaint at the moment by charities and other campaigning groups is that this legislation is grossly disproportionate in the way that it bears upon them—I see the noble Baroness nodding her head.

I also have the utmost respect for the noble Lord, Lord Phillips, who is the leading charity lawyer in the country. But I have to agree with the points made by the noble Lord, Lord Hodgson. Perhaps I can approach the argument from another way. I carefully read CC9, which is the Charity Commission guidance. I also read the additional guidance that it provides for election campaigns. It makes it quite clear that charities are allowed to politically campaign. That is absolutely crystal clear. But as the noble Lord made abundantly clear, it is not always easy to draw a distinction between political campaigning in general and political campaigning that might be interpreted as supporting a particular party.

The noble Lord drew his hand across and said that there was a kind of hazy line. Does that not lead to the conclusion that the noble Lord, Lord Hodgson, made: namely, that if charities were taken out, they would have to have their own separate regime, employ extra staff, and keep in day-by-day contact with the Electoral Commission to make sure that their guidance agreed with the guidance of the commission? Would that not be a waste of resources? If charities are in fact in the same position as other groups, would it not be better for them all to be under the same regime?

I absolutely agree that there is a major difference and that charities cannot have political campaigning as their prime purpose. That is absolutely right. If the suggestion of the noble and learned Lord, Lord Hardie, about the definition of political expenses were accepted, of course charities could come out—but as long as they are allowed to politically campaign, that campaigning could be interpreted as supporting a political party or candidate.

[Lord Phillips of Sudbury]

Does the noble and right reverend Lord not agree that it is one thing politically to campaign—which is what charities can do—but another to do that in a partisan way? They cannot do that. That is a huge and fundamental difference between them and non-charitable NGOs.

[Lord Harries of Pentregarth]

I could not agree more, but as the noble Lord made clear, the difference between the two is sometimes a bit hazy and judgments have to be made as to when a particular charity has gone over the line.

[Baroness Lister of Burtersett (Lab)]

My Lords, like the noble Baroness, Lady Williams, I speak as a non-lawyer. Indeed, my background was originally in the charitable sector; I was the director of the Child Poverty Action Group and worked there for eight years, and now I am its honorary president. I also have links with non-charitable NGOs.

The noble Baroness talked about the political and legal aspects of this. While I am sure that the noble Lord, Lord Phillips, has tabled this amendment from the very best of motives, there is a danger of it being seen as the politics of divide and rule. The two things that strike me are, first, that charities themselves are not asking to be exempted. Surely that must count for something. The noble Lord said that charities are worried. Yes, they are worried, but they do not want to be exempt.

[Lord Phillips of Sudbury]

My Lords, I am most grateful to the noble Baroness and I am sorry to interrupt so often, but I am being challenged. The noble Baroness, Lady Mallalieu, said that the charities she has talked to do not want to be exempted. All I can say is that the overwhelming majority of those I have been speaking to, and indeed know of because perforce I know a vast number of charities, want exemption. Perhaps I can take as examples the Charities Aid Foundation which only has charities as members or the Directory of Social Change which only has charities as members as compared with, say, the NCVO, which has both. The organisations I have mentioned are keen for charities to be exempt for all the reasons I have tried to explain. The impression must not be left tonight that charities somehow want to be kept in this Bill. My experience is quite the reverse.

[Baroness Lister of Burtersett]

I do not have that evidence and no charity has written to me asking to be exempt, but there may be other noble Lords who can act as the referee in this dispute.

A point which has not been made yet is that the Electoral Commission has said explicitly that it does not support this amendment, and surely that must count for something. The noble Lord, Lord Hodgson, talked about what have been very seductive arguments, but I say to the Minister that I hope he will not listen to the siren voices of his noble friends.

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[The Advocate-General for Scotland (Lord Wallace of Tankerness) (LD)]

My Lords, I thank my noble friend Lord Phillips of Sudbury for introducing this debate, which has been very interesting. Different views have been expressed. The noble Lord, Lord Low, said that charities do not speak with one voice on this matter, and that confirms my experience from having engaged with charities, admittedly not as extensively as my noble friend Lord Wallace of Saltaire. I have heard different views expressed about whether there should be an exemption for charities. Therefore, it is important that the arguments that have been put forward on both sides are given proper examination. My noble friend’s amendment would amend Clause 26 so that charities were excluded from the regulatory regime governing controlled expenditure for third parties. At present, under charity law, charities are organisations which must be established for charitable purposes only and which are for the public benefit. An organisation will not be charitable if—as my noble friend pointed out—it engages in partisan political activity.

Campaigning and political activity can be legitimate and valuable activities for charities to undertake. However, they must be undertaken by a charity only in the context of supporting the delivery of its charitable purposes. As we have heard, the Charity Commission produces comprehensive guidance—CC9—for charities on campaigning and political activity. However, the Charity Commission also acknowledges that there may be circumstances in which charities may legitimately operate within the regulatory regime established by PPERA 2000, even if their campaigns remain within the rules on party political activities by charities.

When the Bill was in the other place, the Electoral Commission highlighted a situation in its briefing. If a charity distributes material to the public that highlights the views of candidates from different parties on issues related to the charity’s objectives, this may in some circumstances reasonably be regarded as intended to promote the election of those candidates and, as such, would require compliance with the rules in PPERA. That echoes our earlier debate about when what would not be registrable becomes registrable. In such cases, Parliament decided through the passing of the 2000 Act that such activity should be regulated as it could potentially influence electors during an election. Indeed, Parliament chose then—as indeed we replicate in this Bill after amendment in the other place—to go down the road of an objective test. It may well be that it is not a subjective thing by the charity but seen objectively it could fall within the provisions set out in the Bill.

I find some of the arguments against difficult. The noble Baroness, Lady Pitkeathley—who is now in the Chair, so am I allowed to say this?—in a point picked up by my noble friend Lord Tyler, seemed to suggest that the limits on charities would be much more flexible. They would not be as tight as they would be on non-charity third party participants. Indeed, I think that was reflected in the opening comments made by the noble Baroness, Lady Hayter, when she seemed to suggest all the things that Beatrice Webb could have done if she had registered herself as a charity and that none of these things would have been available had she not been a charity.

As my noble friend Lord Phillips said, charities are not allowed to engage in partisan politics and charity law is pretty strict. Trustees of charities are only too well aware of the limitations. Sometimes I got the impression during the debate that we were comparing a free for all—if you registered as a charity—with the registration and regulation of controlled expenditure that would apply to third parties that are not charities under the provisions of this Bill. I do not think that is a proper comparison. That is why I think there is a genuine dilemma, as my noble friend said.

The Electoral Commission is clear that charities should not be exempt from the PPERA regime. That point was made clear by the noble and right reverend Lord, Lord Harries. The position has been endorsed by the Commission on Civil Society and Democratic Engagement which states in its report that,

“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 have taken the view that the nature of the PPERA test and the constraints of charity law will inevitably mean that the circumstances in which charities are caught by the PPERA rules will be rare.

There have been some important points made that I want to reflect on as I do not think it is as quite clear cut. There are clear views on why Parliament did what it did in 2000, and why that has been endorsed by the Electoral Commission and by the commission chaired by the noble and right reverend Lord, Lord Harries. The Government should be cautious about taking as significant a step as exempting charities from the regulatory regime. We would want to see more evidence and would pray for reassurance that this would not create a loophole. There are issues about—and this is an unfortunate expression that has been used in some discussions I have had—a “sliver” of activity, which could take charities which are abiding by charity law into an area which would nevertheless be regulated under the PPERA regime. I would want to be satisfied that it would not lead to avoidance, although I certainly hear the strong arguments asking whether there is any point in setting up a charitable arm which is going to be restricted by charity law. However, it is clearly an issue. It was raised by the Electoral Commission, the Commission on Civil Society and others, and was queried by the noble and learned Lord, Lord Hardie.

The noble Baroness, Lady Mallalieu, raised a point that was mentioned when I talked to people involved in the charitable sector in Scotland at the end of last week. Although charities could have their activities restricted because of charity law if they engaged in any activities which could otherwise have taken them into PPERA regulation, what we do not have is transparency. Transparency is an important issue, which I would ask my noble friend to reflect upon. I am more than happy to have these discussions.

The points made by my noble friend Lord Hodgson on important operational issues are why I would not rush forward to say that we will accept an exemption. However, there are concerns about double-regulation which have been expressed to me, and many will sympathise with those who have the potential to be regulated by both the Electoral Commission and the Charity Commission.

I thank my noble friend for raising this issue. The position which has been taken up until now, as endorsed by the Electoral Commission, has commended itself to the Government. However, some important challenges to that position have been raised and I would therefore not wish to shut the door on further consideration of it. I would be happy to engage not only with my noble friend in picking up some of these points, but also with others who clearly take a strong view that charities should be in the same position as non-charitable organisations in respect of the application of this part of the Bill.

Finally—I know that my noble friend will make the point in his wind-up if I do not respond to it in advance—he said, and I know from previous conversations, that the Charity Commission should perhaps be given more money and resources. This is not the debate, nor am I the Minister with any responsibility, to commit more funds to do that. I hope that I am not misrepresenting my noble friend Lord Hodgson, who I think was making the point that if more resources were going, there were perhaps greater priorities than undertaking a task on electoral regulation which is already done by the Electoral Commission. That is a point, and one I am sure that my noble friend Lord Phillips will articulate when he comes to wind up. In the mean time, I ask him to withdraw his amendment.

[Lord Phillips of Sudbury]

My Lords, I thank everybody who has taken part in this debate. It has swayed to and fro in the best traditions and everybody has made useful points. I have not the time to cover all the offerings, and your Lordships would not want me to at 10.23 pm. However, one or two things I must just say.

The first is to take up the point my noble friend made at the end of his speech, concerning the role of the Charity Commission. My noble friend Lord Hodgson spoke very forcibly about the disparity between the theory of charity law and the actuality of oversight. I accept that, and there is no shadow of doubt in my mind but that if my amendment is accepted on Report, it must and can only be on the basis that the Charity Commission will do a more thorough job than it currently does. I fully accept that, but I am hopeful that that is something which would be very much in the Government’s mind, because if we take a third of a million charities out of the regulatory oversight of the Electoral Commission, we can make major savings, part of which can be deployed in beefing up the Charity Commission’s efforts.

Having said that—forgive me if I bang home the point that I have lived in this sector, so to speak, for 40 years—in my experience there is astonishingly little abuse of charity law. There is an astonishingly high level of public trust as well, and there is a deep revulsion in the sector of trying to play games with it, let alone corrupting it. I emphasise, however, that that does not take away from the point I started by making: there needs to be better enforcement.

The noble Baroness, Lady Hayter, gave an example whereby, I think she said, you could have a biased charity that concentrated its efforts in certain constituencies in order to achieve a certain outcome. That would not be allowed under charity law. It is not that daft. It looks at the whole picture and the substance of what a charity does and if a charity pretended not to be engaged in partisan pursuits but actually was—by, for example, putting its effort only into constituencies where the candidate that it wanted to win was holding a view that it was pushing—that would be wrong and illegal. I am not saying that it would always be picked up by the Charity Commission, but people are on the qui vive these days. I think noble Lords will agree that complaints to the Charity Commission are made regularly and without inhibition.

[Baroness Hayter of Kentish Town]

The point is not to support the candidate in order to get that candidate elected but to put pressure, usually, on a Minister to have those views heard, be it about drink-driving or something else. That is why, believe me, we do not do this stuff without the Charity Commission okaying it, because it is not to influence how people vote but to use the fact that the Minister is in that particular constituency to go there. It is not to get people to vote, so it is acceptable.

[Lord Phillips of Sudbury]

I am sorry if I misunderstood. Perhaps we can talk about this outside the Chamber, because this is not the place or the time to go into it in any more detail. All I am saying, and I will assert it without equivocation, is that the law is clear. I say that it is clear, but the law is there and it is well used and old and practical. The Charity Commission needs more resources but the amount of abuse is minuscule in relation to the size of the sector and I remain utterly opposed to lumbering this sector, of all sectors, with double regulation.

The non-charitable NGO sector includes some wonderful organisations but also some very shady ones. There are, I am afraid, a number of non-charitable NGOs that are used for violent political purposes. Money is poured into them, either for commercial or extreme political purposes, and there is nothing to stop them, as things stand. We have quite different categories to deal with and that is why it is entirely right, sensible and practical to have separate categories in terms of regulation. To lumber the charity sector with double regulation should be the last of our intentions. That is my fundamental point and on that note I beg leave to withdraw the amendment.

Amendment 160 withdrawn.