Charities Bill [HL]

Lord Sheikh Excerpts

Thursday 5th May 2011 Lords Chamber

[Lord Sheikh]

My Lords, at the outset I should declare an interest as I have formed and entirely fund the Sheikh Abdullah Foundation, a small charity set up in my father’s memory which undertakes charitable work in the United Kingdom and overseas. I have also previously spoken in your Lordships’ House on the subject of the charitable sector. Charities are a fundamental barometer of the cohesion of our society and bring people together for a common cause. I feel that by performing charitable work people attain considerable satisfaction, and the work adds meaning to their lives. There are more than 170,000 charities in this country, an estimate of around 1 million charitable trustees, and our record for charitable donations is the best in Europe. We should therefore be justifiably proud of our charities.

I warmly welcome this Bill. As those of us who are heavily involved in charitable work will be only too aware, the law on the affairs of the third sector have become increasingly complicated in recent years. We should be grateful to the Law Commission, which, working with the Office for Civil Society and the Charity Commission, has undertaken the considerable workload of preparing this consolidation. The fact that the Table of Origins accompanying the Bill runs to 49 pages suggests that the Bill is long overdue—and it is a large Bill, with over 350 clauses. None the less it is important, and the House will want to ensure that its provisions meet the ambitious tests that the Government have set themselves in bringing it forward. I believe that the Government are right to seek to bring together the principal provisions for charities into one piece of legislation, and to take this opportunity to simplify the structure of the provisions, making it easier for those who wish to practise charitable actions to understand and navigate. That will command widespread support right across the entire charitable sector, where the current system is complicated and inaccessible other than to experts.

In part, this Bill arises from a commitment given during the passage of the Charities Act 2006 to consolidate measures into a single piece of legislation. The current legislative basis is fragmented, with key provisions contained in the Recreational Charities Act 1958, the Charities Act 1993 and the Charities Act 2006, all of which have been subsequently amended. The Charity Commission is undertaking a review of its services and this may well result in a reduced role for the commission as part of reducing charity regulation.

Many people in the United Kingdom donate their time and energy to assist the work of various charities as trustees, volunteers and fundraisers. We should do all we can to ensure that their efforts are not undermined in any way by unnecessary complexity. The National Council for Voluntary Organisations has estimated that nearly 31 million people in this country volunteer informally, with over 20 million volunteering formally. We also have the big society deregulation taskforce, chaired by my noble friend Lord Hodgson, which is likely to suggest a number of measures to reduce regulatory burdens on voluntary activity. The Government are also working to implement my noble friend Lord Young’s recommendations on reducing health and safety burdens on organisations.

Cutting red tape and making it easier to volunteer is crucial in encouraging us to volunteer, and I look forward to the implementation of the national citizen service in this regard. The setting aside of £100 million in a voluntary sector transition fund will help many organisations in an environment of reduced public spend. I am also encouraged by the Government’s determination to ensure that charities and social enterprises will have greater opportunities to deliver public services.

Making it easier for people to donate to charity is welcome and the big society bank is an extremely exciting development. By expanding the social investment marketplace and helping to attract extra private sector investment, it is expected that the bank will generate hundreds of millions of pounds for charities, social enterprises and voluntary groups to help fund social projects across the country. The Bill will also assist the Government in the implementation of their big society agenda. We should take this opportunity to applaud the changes in the 2011 Budget such as the innovative 10 for 10 proposal, whereby if one leaves 10 per cent of one’s estate to charity, the inheritance tax will accordingly be reduced by 10 per cent. The Government should be commended on their commitment to civil society, and the charitable sector plays a critical role in delivering that agenda.

One of the key measures of the success of this Bill will be its ability to enable the charitable sector to get on with the excellent job it is doing and to devote less energy to the details of charitable law. We need to ensure that those who donate to charity can have confidence that their resources are being put to optimal use. It is estimated that over 50 per cent of the population make monthly donations to charity, and they want to see that their contributions are making a real difference for the particular cause they support.

Yet even in the area of donations we have not managed to optimise the opportunities. The Charities Aid Foundation has estimated that around £750 million each year goes unclaimed from the gift aid scheme. I welcome the action that the Government have taken on gift aid. In this year’s Budget the Chancellor announced reforms to the gift aid scheme in order to try to encourage more people to donate to charity. Under the new regulations charities will not have to declare gift aid when claiming it on small sums adding up to £5,000 over the course of a year. I hope the Minister will take the opportunity to reassure the House that the Government will ensure that, in the new framework, we can expect a silver service from the Charity Commission.

We should make it easier to establish and run a charity so that administration consumes fewer resources and the real value can reach those in need of charitable support. Our charities do excellent work and it should be our ambition to create the framework for them to go even further. This is what underpins the Government’s approach, and the Bill is but one part of that.

Too often, the good intentions expressed in this House do not translate into good law in the world outside. The Bill is an opportunity to get this right and to make a crucial difference to the charitable sector. In that context, I hope that the Government have given consideration to how best to engage people in the work of charities. Trustees are busy, working together. They have an average age of 57; only one in three is under the age of 50, and only 2 per cent under 30. Experience may bring benefits, but I hope that the Minister agrees that it would be good to encourage a greater number of younger people to get involved in charitable governance.

As the size of the charitable sector increases, there is more pressure on recruitment. We need to make sure that those who want to get involved in the work of charities can find a quick and simple way to match their interests with available opportunities. The perception of a complex regulatory framework can act as a deterrent, but the Bill has a chance to fix that—by consolidating provisions it should make the legislation more understandable and easier to navigate.

The current charitable landscape is encouraging and the Government have decided to address the concerns about complexity around the legal framework at an opportune time. I fully support the Bill.