Charities Bill [HL]

Lord Ponsonby of Shulbrede Excerpts

Wednesday 7th July 2021 Grand Committee

[Lord Ponsonby of Shulbrede (Lab)]

My Lords, I thank the Minister for introducing the Bill. This debate has demonstrated the great experience in this Committee. Before I get into my speech, I want to comment particularly on the two speeches by the noble Baronesses, Lady Fraser of Craigmaddie and Lady Greengross. The noble Baroness, Lady Fraser, is, I understand, the current serving chief executive of a charity, and the noble Baroness, Lady Greengross, was for many years chief executive of Age Concern. They both made different points, though similar in nature, about the detail of the rules. My wife was a charity CEO for 25 years, and I recognise the nature of those concerns and the detail of how you sort out the rules. It is the constant concern of CEOs, as I can attest, to make sure that the rules of charities are properly followed for the benefit of the interests of the organisation that they are running.

We in the Labour Party support this Bill. Charities are a force for good in our country. Millions of people regularly donate to them and support their primary objective: to help our fellow citizens. Some 170,000 charities in England and Wales are registered with the Charity Commission, with a combined annual income of around £74 billion. The purpose of this Bill is to address some of the nitty-gritty administrative issues that affect the running of charities. This will mean that more time and money can be spent on the charities’ primary purposes rather than burdensome administrative compliance. The Minister rightly made the point that this will be disproportionately beneficial to smaller charities.

From the Law Commission’s Eleventh Programme of Law Reform—including the initial review in 2012 by the noble Lord, Lord Hodgson—through to the most recent Law Commission reports, there has been extensive consultation and collaboration across the sector to arrive at today’s Bill. As the Library briefing states:

“The bill includes changes to simplify the law around … changes to a charity’s governing documents … payments to trustees in certain circumstances for goods and services … using funds for ex gratia payments or using funds obtained in connection to specific fundraising campaigns for other purposes … utilising permanent endowments; and disposals of charity land.”


The Law Commission’s recommendations were first published in 2017. The Government accepted most of the changes, many of which seemed technical in nature. However, as the briefing points out, the Law Commission highlighted a central point around

“the important balance between regulating charities and ensuring they have the freedom to act to the best of their abilities and in the public interest”.

At the all-Peers meeting kindly hosted by the Minister on 24 June, I made a point regarding responsible investments by charities that are in line with their purpose and values. I understand that two court cases exploring the definition of “responsible investment” are under way, and there is a draft guidance confirming that charities are free to adopt their own investment criteria. Since that date, I have received a helpful note from the Charity Commission confirming that it will put on hold the publication of its final guidance pending the outcome of those cases, that the law remains permissive in this area and that trustees can engage positively with responsible investment considerations should they choose to do so.

The noble Baroness, Lady Hayman, spoke to this point; my noble friend Lord Chandos challenged a number of the points that she made. I must say, this is an interesting debate that we will no doubt have again in future fora and future months, but I would be grateful if the Minister could confirm that this Bill will have no impact on the final guidance or the outcome of the court cases.

I have been fortunate enough to talk to two senior lawyers, Nicola Evans and Joe Coleman, who were intimately involved in the preparation of the Charity Law Association’s response to the consultation. They have given me some idea of the extent and breadth of the consultations undertaken. I raise two issues; they may be more suited to being raised in Committee, but I raise them here anyway. First, I understand that the Law Commission was not consulted on the extension of powers to stop the use of working names for a charity. This is a sensitive issue as it involves a clash of jurisdictions between intellectual property law, corporate law—as operated through Companies House—and the Charity Commission. I have heard that there is concern that this lack of consultation could lead to unforeseen circumstances. A second point that has been raised with me is on whether a surveyor’s report should be required when a charity sells land. It was felt that, given the huge range and size of charities, a single or simplistic rule would be inappropriate.

I understand that because of the nature of this Bill there are many detailed points and that some more contentious points are not part of this Bill. Nevertheless, I hope we can examine some of these detailed points as the Bill progresses through the special procedures for Law Commission Bills.

I highlight a couple of other points made by noble Lords during this debate. Both the noble Baroness, Lady Goudie, and the noble Lord, Lord Stevenson, raised the monitoring of borrowing by endowments. This is an important point and I would be interested to hear the Minister’s response on that.

I also thought that the idea that the noble Lord, Lord Naseby, had over breakfast this morning, of an equivalent of gift aid for the social care sector, was an interesting one, and I look forward to him developing that on future occasions.