Oral Answers to Questions
Peter Kyle Excerpts(6 years, 9 months ago)
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The Prime Minister
My hon. Friend raises an important issue. I set out in my speech in Florence that the UK will honour the commitments we have made during our period of membership. We do not want our European partners to fear that they will have to receive less or pay more during the current budget plan as a result of our leaving the European Union, but we can only resolve the financial implications of the UK’s withdrawal as a part of the settlement of all the issues I spoke about in Florence. Once that is done, of course, the days of Britain paying vast sums of money to the EU every year will end.
Peter Kyle (Hove) (Lab)
The Prime Minister
The British Prime Minister does not appoint judges to the International Court of Justice. There is a process that is undertaken in the United Nations. We wish all the judges who have been appointed by the votes through the United Nations to the International Court of Justice well.
Article 50
Peter Kyle Excerpts(7 years, 4 months ago)
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The Prime Minister
I am grateful to my hon. Friend. As he says, it is the case that the Supreme Court found that there will be no veto for the devolved Administrations, but it is interesting that the SNP argues that a decision to remain in the European Union by Scottish voters should somehow be dealt with differently from the overall result of the referendum. When we had the referendum in Scotland in 2014 on membership of the United Kingdom, I note that the SNP argued the exact opposite. It argued that the result as a whole was the only one that counted and that if parts of Scotland such as Orkney and Shetland voted differently, that should not be taken into account.
Peter Kyle (Hove) (Lab)
The Prime Minister has rightly spoken of unity. How will she respect and give a voice to the people and businesses who are extremely anxious about the journey on which the country has now embarked?
The Prime Minister
Of course we want to give certainty to businesses and others as soon as possible about the arrangements that will be put in place, but this will be a negotiation and there will be a degree of uncertainty. We cannot completely take away that uncertainty, but we can give clarity when we are able to do so, as we have been doing in the past few months.
Report of the Iraq Inquiry
Peter Kyle Excerpts(8 years, 1 month ago)
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Mr Speaker
Order. Somebody has just moaned about not being called to ask a question. I try to call everybody, but although what each individual has to say is enormously important to him or her, it is not necessarily any more important than what anybody else has to say. [Interruption.] Order. I do not need any help in the discharge of my duties. I will call colleagues, but colleagues need to be patient, and I am sure that none of them, for one moment, would be self-important—that is unimaginable.
Peter Kyle (Hove) (Lab)
I am very grateful, Mr Speaker.
From my early and hurried reading of the report, I can see no evidence that anybody acted in bad faith. However, I am very aware that the report refers to a war that started 13 years ago. There have been several conflicts since; we intervened in Libya with airstrikes but not ground troops, and in Syria we did not act for several years. Is there anything about those subsequent conflicts, in which the Prime Minister led, that leads him to disagree with some of the report’s conclusions? That would give us an updated view so that we do not base all our future actions on a report about a war 13 years ago?
The Prime Minister
Questions like that probably need to wait for the debate, because they need longer answers. The only point I will make now is that in the case of Libya obviously we decided not to put in ground troops. That had the advantage of ensuring that there were not UK military casualties, but of course it had the disadvantage that we were less able directly to put in place a plan on the ground. The point I have tried to make today—maybe not as clearly as I should—is that these things are very difficult, by their very nature. We can have the best military plan and the best post-conflict plan—those are definitely needed—but even then there is no certainty that we will ultimately be successful. We should not pretend that there is some perfection that we can achieve. We can do a lot better than was done in the past, but we will never be perfect.
Outcome of the EU Referendum
Peter Kyle Excerpts(8 years, 2 months ago)
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The Prime Minister
I congratulate my hon. Friend on speaking out against racism. We must all continue to do that. He is right that every vote counts the same.
Peter Kyle (Hove) (Lab)
Once the Government agree the terms of the negotiation, is that not when the House should make a judgment on whether the terms of the negotiation match up to the promises made by the leave campaign? This House should make that judgment before the negotiations go forward.
The Prime Minister
This House is sovereign. Under the reforms put through by the coalition Government, this House has all sorts of opportunities to take an issue unto itself and to vote on it. That now happens much more than when I first became a Member of Parliament when it was impossible to do that. My advice would be that the House must accept the will of the country. The next Government will have to bring forward their proposals on article 50 and the rest of it, and there will have to be discussions between the Government and the House about how that goes ahead.
European Council
Peter Kyle Excerpts(8 years, 6 months ago)
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The Prime Minister
Everyone will have to make the choice about what platform they appear on and whom they appear with. I think that the disadvantage of appearing on any platform with either Nigel Farage or George Galloway arises when considering who their friends are, whom they support and the overseas politicians whom they seem to support. Everyone will have to think carefully about whom they want to appear with.
Peter Kyle (Hove) (Lab)
There has been a lot of talk, quite rightly, about the City of London and big multinational companies working here and investing in this country, but the beating heart of our economy is the small and medium-sized enterprise sector. Some 39% of SMEs in this country export to EU countries, so does the Prime Minister agree that it would be madness to slam the door in their face?
The Prime Minister
I think the overwhelming majority of SMEs that export support the case that I am making. Many companies that are not exporters are involved in the supply chain with companies that do export. That is a point that many business service organisations, banks, accountants and lawyers are very well placed to make.
Charities (Protection and Social Investment) Bill [Lords]
Peter Kyle Excerpts(8 years, 7 months ago)
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Anna Turley
My hon. Friend is absolutely right; that is why we support the Bill and the powers it gives to the Charity Commission. My hon. Friend is also right in talking about what is sometimes a lack of clarity and a confusion, which can be costly. We are really keen to get clarity on the grey areas, boundaries and improper balances in the Bill. It is really important that we get those on the record while the Bill has yet to be enacted and before we end up with costly processes in the High Court.
I turn specifically to new clause 1 and amendments 9, 8, 10, 11 and 12, which apply to clause 1, which relates to the Charity Commission’s new power to give warnings.
The Bill introduces a new power for the Charity Commission to issue official warnings to a charity or a charity trustee. The explanatory notes say that the power is intended to be used when the risk of an impact on charitable assets and services is relatively low, but the new power could have a far-reaching impact on charities that receive a warning. The Bill gives the commission complete discretion about publicising a warning. That could have serious reputational implications for the charity involved: the public, the media and funders may well not distinguish between a low-level issue giving rise to a warning and something much more severe. It is important that we consider the issue in the context of the high profile media issues raised recently. After all, official warnings issued by other regulators indicate a serious and high level of concern; under the Bill, the commission can issue a warning on the strength of a low-level breach of trust or just a breach of duty by a charity trustee. Indeed, it is our understanding that it intends to use the warning power in low-level cases.
As all hon. Members know, reputation is paramount for charities and charity trustees. The adverse publicity resulting from a warning could lead to a choking off of donations, grant funding and corporate sponsorships, leading to a closure of services and, potentially, to redundancies. A warning can be used as a trigger for further regulatory action; clause 2 makes a change to the circumstances in which the commission can take significant protective measures in relation to charities so that the failure to remedy an alleged breach of trust or duty specified in a warning is automatically a trigger to more serious action. That seems a startling implication for a power intended to be used in low-level cases and makes it all the more important that there should be safeguards around the exercise of the power.
Our amendments address those concerns in four ways. First, through amendment 9 and 8, they would limit the commission’s scope to publish the warning to a wide audience. The charity and its trustees would receive the warning, but no wider publicity would be involved. The warning would ensure that the charity took the commission’s concerns seriously, but would have no adverse effect on its reputation. If the charity failed to comply with the warning, the commission could take more significant regulatory action at that stage, and that might attract publicity. Low-level concerns, however, would not be publicised, to ensure that the commission’s action was proportionate and did not seriously impact—potentially fatally—a charity for a relatively minor error.
Peter Kyle (Hove) (Lab)
It has been stated numerous times that the Charity Commission often sees itself as a partner in trying to improve and work with charities. Would not the method that my hon. Friend is describing be one more of partnership, using the expertise of the Charity Commission to improve and tackle the challenges that charities face in the front line? That is a much more collaborative approach, aimed at delivering outcomes for the beneficiaries, rather than a public bust-up, which could damage the Charity Commission, charities as a whole and the individual charity concerned.
Anna Turley
On the contrary, it was the gagging Act that rode roughshod over the historic rights of the charity sector to defend and campaign on the causes that charities fundamentally exist to tackle.
Peter Kyle
My hon. Friend makes an incredibly powerful point. This is about freedom of speech for everyone—every citizen and every organisation in this country—but it is also about making sure that the disempowered, both individuals and communities who lack a voice, have advocates that can speak in as unencumbered a way as is humanly possible and with the ferocity that those in our society who lack a voice deserve.
Anna Turley
My hon. Friend is absolutely right. He pays tribute to the charities that do some of the most important work with the most excluded. Such people need a voice and are often those who suffer the consequences of bad policy making in this place. Charities often have to pick up the pieces of such policy making.
Maggie Throup
I oppose new clause 3, because it seeks to alter fundamentally the way in which charities have historically operated in this country. I believe that, in creating a formalised political role for charities in our society, we risk undermining their ability to work independently for the common good, and diminishing their standing in the eyes of the public. I have serious doubts about the need for the new clause, on both a moral and a practical basis. In my view, the status quo already allows charities to lobby Governments in a constructive way, while remaining politically impartial.
Serious concerns have been raised about the additional cost of political campaigning, and the potential impact that the new remit may have on a charity’s abilities to raise funds. We ourselves are acutely aware of the fact that even a very localised campaign can be extremely costly. Extending the scope of charities to allow them to campaign for or against a law, policy or decision at any level of government would inevitably incur a significant amount of additional cost, and I think that the money would be better spent on fulfilling the charities’ original aims and objectives.
Peter Kyle
Does the hon. Lady not agree that the way in which a charity collects and spends its money in order to deliver its charitable mission on behalf of its service users is the preserve of its trustees, and that it is not for us to decide such operational or, indeed, moral matters in the House of Commons? It is certainly not for us, as individual Members of Parliament, to dictate to charities how they should spend their money and deliver their charitable aims; that is up to the trustees.
Maggie Throup
I understand where the hon. Gentleman is coming from, but I believe that new clause 3 will encourage charities to go down that route and, perhaps, stray from their original intentions, however well-meaning they may be, thus inadvertently—not intentionally, I admit—misleading the public. I fear that the inclusion of the new clause could conceivably allow us to reach a point at which a large cancer charity, for instance, spent more on lobbying national and local government than on investment in research on and development of new cancer drugs. I think that that is what the hon. Gentleman was alluding to, but I disagree with him. For me, this raises a number of major issues.
The first issue is the impact on donations. Charities rely heavily on public donations to fight for their specific cause or issue. The Charities Aid Foundation estimated recently that in 2014 alone, £10.6 billion was donated by the British public to a vast array of good causes. By politicising charities, we risk donors turning away from charities whose cause they support because they do not necessarily share the charity’s political agenda or party alignment.
Secondly, the new clause would serve to allow larger national charities, which already dedicate significant resources to lobbying Members in this place, to strengthen their influence over Government policy and decision making. That would be to the detriment of smaller, often local, charities, of which we all have many examples, which would be further marginalised from the decision-making process because they simply could not afford to compete for airtime.
There is also a third point. Like many others, I would be deeply concerned if those charities that are very much a cornerstone of our society—the Royal British Legion, Macmillan, Age UK and the NSPCC, to name but a few—suddenly became vulnerable to infiltration from those who wanted to push a specific political agenda or to use the charity to criticise or support the Government of the day, rather than running it as a force for good.
I am sure hon. Members will agree that we do not really need any more politicians. Yes, it is only right and proper that charities should play their role in shaping our society by seeking to influence Government, nationally and locally, but they also have much more to offer society without widening their scope into out-and-out political campaigning—or, as some might call it, the dark arts. That is why I will be voting against the new clause this afternoon.
Wendy Morton
I join the hon. Member for Clwyd South (Susan Elan Jones) in thanking the many charities that do fantastic work and that we often speak about in this place. We all have many examples that we have often shared with each other.
I welcome the Bill, and it is a privilege to speak today, having spoken on Second Reading and served, with other Members, as the Bill passed through Committee. I believe that it strengthens the powers of the Charity Commission and that those powers are welcome. It will strengthen and improve the relationship between the Charity Commission, charities, trustees and, importantly, the public. The Bill is, indeed, called the Charities (Protection and Social Investment) Bill.
For me, the Bill is about achieving a balance between scrutiny and accountability and trust, responsibility and respect, particularly in the wake of the handful of sad, and often tragic, stories that emerged during the course of last year, one of which has already been mentioned, the collapse of Kids Company.
I am, however, a firm believer that this must be proportionate, as I said on Second Reading. I think of some of the small charities in my constituency, such as Rosie’s Helping Hands, the Aldridge youth theatre—we often do not think of it as a charity, but it is—and, on our doorstep, St Giles hospice. Such charities are often led by the local community and by local people. Local people contribute their time, effort and energies as well as their money, and they give something back to the local community.
I want to speak against some of the amendments, particularly new clause 3 on the power to make representations and amendment 8 on warnings, which I will deal with first. The Bill is at its heart about transparency and restoring trust in the eyes of the public. That is why I feel that the power for the Charity Commission to place on record where warnings have been given is important, and that is why I will vote against amendment 8.
New clause 3 is about the power to make representations, which we have had a lively debate on in Committee and again today. We should remind ourselves of the following two points. First, deliberate abuse of charities has been found to occur only very rarely. The vast majority of charities do good work and are reputable organisations; we must never forget that. We must also remember that charities can, and do, make representations already, often very successfully. As I have said before, all of us as Members of Parliament receive representations from many charities during the course of our work. But there is a difference between non-political campaigning to raise awareness of a particular issue, even if the aim is to change policy or legislation, and what is being proposed in this new clause. I firmly believe this Bill is about strengthening the public’s trust in charities, and for me the idea of enshrining in legislation through this new clause the right to undertake political campaigning activity completely undermines that.
Wendy Morton
I am normally very generous in giving way, but I have almost come to the end of my speech, so I will conclude.
New clause 3 risks moving what is fundamentally the apolitical activity of a charity to something that becomes completely politicised, and that goes against the grain.
Peter Kyle
I am extremely grateful to be called to speak in this debate and to follow the hon. Member for Aldridge-Brownhills (Wendy Morton). I was not able to intervene on her just now, but I want to make the point that, while she was talking about political activity and campaigning in her eloquent speech, which reached out to all parts of the House in many regards, she failed to mention party political campaigning, yet all campaigning is political. Political activity is not always the preserve of party politics. That point has been lost in the debate so far.
Many Members have blurred the boundaries between party political activity and political activity. All social intercourse between different communities, and people within communities up and down the country, is political exchange and should be celebrated. Our new clause seeks to protect the long-standing tradition that charities can engage in political processes within their communities and also seek to influence party politics, but not actually become part of a party political process.
Andrew Gwynne (Denton and Reddish) (Lab)
My hon. Friend is making an important point. All of us as Members of Parliament will from time to time be contacted by charitable organisations that seek to influence policy makers and policy informers to change the laws of the land. For example, it would not be outwith the role of an organisation like Shelter to campaign for MPs to get changes to homelessness policies that we might be debating. That is political.
Peter Kyle
That is an important point, and it has been illustrated well in this debate. The right hon. and learned Member for Harborough (Sir Edward Garnier) spoke eloquently about the co-operation he has had from, and the work he has done with, a charity of which he is a trustee, Unlock. Indeed, his speech was clearly intricately prepared, probably with the support of Unlock. I do not see that as party political at all, because all of us in the House today benefited from his work with Unlock. That illustrates the point that engaging with politicians does not necessarily mean engaging in a party political act. I am grateful for his speech and for his interaction with, and support from, the charity Unlock.
I support new clause 1 and amendments 8 to 12. There are three fundamental benefits to our society from charities and the role they play. The first is that often they can get to hard-to-reach groups. Through their methods and the way they have evolved over time, many charities can work with hard-to-reach pockets of our society that other organisations struggle to reach, which is an incredibly important part of their work.
Peter Kyle
Will the Minister join me in congratulating the charity Unlock on working with the right hon. Gentleman? That partnership between a party politician and a charity produced a fantastic speech. He made some very important points, and that is clearly having an impact on legislation on the Floor of the House of Commons. Is that not to be welcomed?
Mr Wilson
I can see the trap that the hon. Gentleman is setting for me, and I am not going to walk into it. I have further comments to make on the Transparency of Lobbying, Non-Party Campaigning and Trade Union Administration Act, but I thank him for his attempt, lame though it was.
Some people who are currently trustees or senior managers will be caught by the extension of the disqualification provisions. Although the number of waiver applications is likely to increase, we do not think that a significant number of people will be affected by the changes. I would be surprised if it ran to more than the low hundreds, based on the commission’s experience under the existing disqualification regime.
I recognise the concerns that have been raised by my right hon. and learned Friend, and I am happy to commit to producing a report on our assessment of the impact of the disqualification changes. I will deposit it in the Library of the House before the commencement of the automatic disqualification provisions in clause 9. I cannot promise that we will cover every point listed in amendment 1, but I will ensure that we provide a very detailed assessment, as he has requested.
I want to ensure that the disqualification powers in the Bill protect charities from individuals who present a known risk, while at the same time providing for the rehabilitation of offenders and a way back into charity trusteeship or senior management on a case-by-case basis. That strikes me as both fair and proportionate.
Charities (Protection and Social Investment) Bill [ Lords ] (Fifth sitting)
Peter Kyle Excerpts(8 years, 7 months ago)
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Mr Wilson
I thank my hon. Friend for raising that really important question. Charities—particularly education charities—rely on the special relationship they have with their membership. The data protection legislation that has just been passed in Europe means that all sectors will need to move to an opt-in system in the next 18 to 24 months. That means that any organisation will require unambiguous and affirmative consent before being able to process any individual’s data. Workarounds such as assumed consent or pre-ticked boxes will simply no longer be good enough. A change is therefore coming, and it will affect all sectors, not simply the one we are discussing.
Peter Kyle (Hove) (Lab)
The Minister has repeatedly asserted in his opening speech that charities need to heal the wounds resulting from the challenges they faced last year and from the public dismay that greeted some of what happened. However, would it not be more honest to acknowledge that the Government also played a role in undermining public confidence in charities last year? Will he take this opportunity to reaffirm that the Cabinet Office will no longer put millions of pounds in funds into charities that are trading insolvently—something that greatly undermined public confidence in not only one charity, but the Government themselves?
Mr Wilson
That really is a very strange point to make. What we saw over last summer was a number of large charities clearly targeting vulnerable and elderly people in the most immoral way and on a scale we had not seen before. The Government had no role in making that happen or even allowing it to happen. Since we discovered the scale of what was going on, we have acted extraordinarily swiftly. We have set up a new single regulatory body in a very short time, given it the powers to be successful and made sure it is funded sufficiently. We have got the sector’s backing, and a whole series of other things are now happening to make sure that that body is up and working so that the sector does not make the terrible mistakes it has made in the past.
It is also important to recognise that it is a small number of large charities that have let the whole sector down and that, by and large, small charities have had nothing to do with this. We are therefore having to focus on a fairly narrow section of the sector, but that work is important, because we have seen the figures for those who trust charities go down to below half the population—it was previously much higher—and that has had an impact on how people feel about donating to charities. A lot of the work that the Government have done over the past five or six years has been about building the idea that people should give of their time and money to volunteering and charities, and that has been a big success for the Government.
Peter Kyle
I am grateful to the Minister for giving way again. He spoke with great passion about solving the problems that a small number of charities faced, and indeed created, with some of their fundraising practices last year. However, he also quoted figures for the damage done to the voluntary sector’s reputation, and I invited him to face up to the fact that the Government also played a role in damaging the sector’s reputation last year by overriding officials’ recommendations not to put more money into Kids Company. In doing so, the Government put millions of pounds into a charity that was trading insolvently, creating a national scandal that was reported throughout the media, which damaged the sector itself. Yes, the voluntary sector needs to own up to its challenges, but will the Government take a lead? Will the Minister say that the Government will no longer fund charities that are trading insolvently?
Mr Wilson
Look, there are at least three separate investigations into what happened at Kids Company, two of which are due to report by the end of this month, I think. It is important that we all wait to see what those reports say. If lessons can be learned, the Government will certainly learn them and do what we can to ensure that such things do not happen again, but to pre-empt that in this Committee would be wrong.
I was talking about the change in the nature of fundraising regulation if we had to invoke this power. It would no longer be governed by a self-regulatory system; instead, the Government would be able to invoke statutory regulation by mandating the Charity Commission with that task. Were that function to be passed to the commission, clearly it would require additional funding or would charge fees under section 19 of the Charities Act 2011.
I hope that I will never feel compelled to use this power, as it would mean that the self-regulatory system had failed. More importantly, it would mean that large charities had failed to put their house in order. However, the seriousness of the abuse in the past year or so and the impact it has had on public trust in charities has made it clear that a robust backstop is needed to ensure that the public feel that they can give with confidence and to prevent the same sorts of scandals being repeated.
Anna Turley
That logic refutes the need for any special advisers, who are of course paid by the public purse to implement a political manifesto.
Peter Kyle
Does my hon. Friend agree that there is ample charitable law stating that charities exist to serve their beneficiaries? They do not exist to serve special advisers or any other part of society; they exist to support their beneficiaries. That is the beginning, the middle and the end of the story as far as charities are concerned.
Anna Turley
My hon. Friend is absolutely right. That is their full purpose, and they should feel entirely able to stand up and challenge the Government of the day, whoever they may be, and any political party if they feel that their policy does not support their charitable objectives.
Anna Turley
I think that is perfectly acceptable, if people want to go to any party political event and offer their views. They may go to it and disagree with the party and challenge it. As far as I am concerned, we are in danger of separating politics from the realities of campaigning and policy making. Politics has to be open and accessible and must not exist in a vacuum. Many people are deeply involved in politics, from councillors and MPs to activists; there is not a small box for people to sit in because they are in one category but not another.
Peter Kyle
Does my hon. Friend agree that there are many ways to achieve social change? One is to go into communities and work with individuals on the frontline, and another is to change public policy. An individual using the front-line method can change hundreds of people’s lives, but changing public policy can change millions of lives for the better. Is not it right that charities should seek to bring about front-line change and involve themselves in public policy simultaneously?
Anna Turley
I agree that that is part of their core objectives and part of what they have done for centuries. I am happy to support that.
Anna Turley
I do not understand the point that the hon. Gentleman is making, because gift aid is made automatically to charities that people may or may not support. A taxpayer may be paying gift aid to a charity whose aims and objectives they may not support. That is the logic.
Peter Kyle
May I invite my hon. Friend just to clarify one point? We are talking—are we not?—about charities having the ability to support individual policies. They are not being invited or allowed to support political parties.
Anna Turley
My hon. Friend makes a really important point. This measure is not about party political campaigning; it is about lobbying and putting pressure on the Government, and on all political parties—[Interruption.]
Anna Turley
I disagreed with everything until the hon. Lady’s last point. Charities totally value their independence. Previous legislation has sought to stifle their independence and to prevent proper challenge and scrutiny of Government in the build-up to an election, but the new clause seeks to protect that.
Peter Kyle
Does my hon. Friend agree that what would damage the trust of people who give so much to charities and of beneficiaries is to see Government discussing and making policies for an area that concerns them directly while the charity stays mute because it is not allowed by law to intervene or even talk publicly about that area?
Anna Turley
My hon. Friend makes an important point. When people support a charity—whatever the issue, whether it is cancer treatment or supporting the elderly to have a dignified older age—they want to see it making a difference, and that is in everything, from campaigning and having a loud voice nationally to seeking to secure changes to our society.
Peter Kyle
The Minister talks about the importance of independence and the fact that beneficiaries need to see charities being independent-minded. They absolutely do, but does he not accept that to be independent, charities need to be able to choose the terms on which they engage with public policy? It is interesting that the hon. Member for Worthing West (Sir Peter Bottomley), who sits on the Government Benches, has invited Donald Trump to his constituency because he thinks it will be an important statement of free speech in our country. Is it not strange that we live in a world where Donald Trump and billionaires are invited here to demonstrate the principle of freedom of speech, while we are discussing charities’ freedom of speech being inhibited in the run-up to a general election, when the voices of the disempowered are needed the most?
Mr Wilson
My hon. Friend makes the points powerfully. He has returned a number of times to a point that is relevant and of huge public interest: charities should not use Government funding for political activity. That should be clear from the terms and conditions attached to any Government funding of a particular charity. For political activity, charities can use other funding, such as voluntary donations or earned income from trading. I understand what he says, and I have set out clearly the Government’s view .
Peter Kyle
The hon. Member for Tonbridge and Malling makes an important point. Empowered individuals absolutely have the right to speak for themselves, as does any citizen of this country. The problem we have is that some citizens in this country do not have the ability to be heard or to voice their concerns—the disempowered people, who are often hidden away from general discussion and from public policy. That is why civil society organisations need the power to speak vocally on behalf of the people who do not represent themselves equally in a democracy. Does the Minister not agree?
Mr Wilson
Whatever time of year it is. The hon. Gentleman singles out elections. We have Lord Hodgson looking at this. The Charity Commission has looked at the incidents that took place during elections. So far, I have seen no evidence of any chilling effect, and I await Lord Hodgson’s report to support the hon. Gentleman’s case.
Attempting to put into statute a provision of case law risks changing the boundaries of what is permitted. It just is not feasible to encapsulate all the nuances of case law in a simple single statutory provision. We have already explored those risks in the context of clause 9 and the protection of charity assets, and it would be no different here.
It is not clear whether new clause 2 would permit charities to support political parties, for example, by allowing charities to undertake political campaigning without defining exactly what that means. Given our earlier conversation about the Badger Trust, I think even the hon. Member for Redcar is not clear about what constitutes political campaigning and what does not. The new clause is just one example of where a well meaning attempt to codify case law in a statutory provision can go badly wrong, resulting in potentially significant unintended consequences.
There is also a risk that the new clause would permit charities to overstep the current mark in another way: under the law as it stands, charities cannot engage in campaigning to such an extent that it calls into question their charitable status. If the only thing the organisation does is non-party political campaigning, one would question whether it is an organisation with political rather than charitable purposes. That is already encompassed in case law, but it is not clear to me whether new clause 2 would encompass that restriction, potentially opening up charitable status to political organisations. That would clearly damage public trust in charities, which I am sure the hon. Lady does not intend.
Peter Kyle
To clarify, the new clauses are about trying to get better value for the public from private and selective education. To use a previous argument of the hon. Member for Tonbridge and Malling, where taxpayers’ money is—
Peter Kyle
—taken by force and given to selective education, we need to ensure that the public who pay for it get full value for it.
Anna Turley
I totally agree, and I will come on to that point shortly. I want to make it clear that my view of pulling up the ladder is selective education, but I will move on, because we can have a whole conversation outside the Committee on that. I agree with the good work that many independent schools are doing; it is just not enough, in my view.
A recent report by the Social Market Foundation showed that UK children who are privately educated are likely to earn almost £200,000 more between the ages of 26 and 42 than those in state schools. Independent schools seem to be stretching further away from even middle-class families, who have been priced out of private education because of an “endless queue” of wealthy people from outside Britain pushing up fees. Andrew Halls, the head teacher of King’s College School in Wimbledon, south-west London, recently said that local lawyers, accountants and military officers had stopped sending their children to the school because of the costs. He said that in many cases, such schools have become
“finishing schools for the children of oligarchs”.
It is simply not appropriate that while the social and financial advantages to independent school pupils persists, they are subsidised by the British taxpayer through the charitable status. My hon. Friend the Member for Hove made the point that I was going to make about the view of the hon. Member for Tonbridge and Malling on value for money. Charitable status is now an outdated and inappropriate financial privilege that is impossible to justify without substantial action from independent schools, which is what the new clauses seek to achieve.
Charitable status currently means that trustees of school charities have a responsibility to ensure they are running the school for the public benefit. Public benefit is part of what it means to be a charity, to operate as a charity and to report on a charity’s work. The Charity Commission produces guidance for charity trustees on each of those aspects of public benefit and the particular issues that relate to the different charitable purposes that the law recognises. All charity trustees have a duty to have regard to the Commission’s public benefit guidance and must report each year on how they have carried out their charity’s purposes for the public benefit. The Commission publishes those reports on the online public register of charities and checks a random sample of them. Trustees must therefore take action to ensure that the school does not solely benefit those who pay fees, yet the critical point is that it is up to the trustees to determine how that is achieved, and that is what we seek to challenge.
During the Bill’s passage through the other place, these new clauses were voted down on the understanding that the Charity Commission would pursue non-legislative routes. The Charity Commission updated its guidance in October last year, but the only change was to “encourage” schools to show in their annual reports how, for example, they have shared sports facilities; there is no compulsion to do so. It can only be concluded from that limited reaction that there is no desire for any progress on this issue. Indeed, it goes against the very principle of why people send their children to independent schools. Why would someone pay to send their children to schools for the facilities if other local children who do not pay get to use them? There is no inherent incentive for independent schools to share their facilities.
Jo Churchill
I could not agree more—it is not always necessary to tell people how to behave well.
The school has forged great community links and the council and people in my constituency got another sports ground for very little investment. It helps social cohesion and health outcomes, among other things, as the hon. Member for Redcar alluded to.
My underlying belief is that people should be allowed to choose what is right for themselves and their family. The clauses would legislate choice and good behaviour out of the system to a degree, and that is regressive. Indeed, if my memory serves me correctly, the hon. Member for Hackney North and Stoke Newington (Ms Abbott) chose to send her son to a private school. As a mother, I can understand her need to make that choice about what is best for her child. Should we deprive others of that choice? I do not think so, but the new clauses could begin to do that.
The worry is that the clauses will not allow small schools that offer specialisms in areas that the hon. Member for Redcar discussed to continue to do so across the board, particularly for gifted music scholars, those who are talented at sports and budding linguists. All have benefited from education in the independent sector. Many of these schools offer bursaries and 100% scholarships to youngsters whose parents would not normally be able to afford the fees. Similarly, and of the utmost importance, some of the best education for our children with dyslexia or autism occurs in the independent sector, easing the burden on state schools to provide special needs support.
Peter Kyle
As an acute dyslexic, I understand the benefits that can be bestowed on students who are lucky enough to have parents who are able to send them to such schools. Does the hon. Lady accept that she is citing best practice in the private schools sector, and that the new clauses seek to extend best practice throughout the whole sector?
Jo Churchill
No, I am not. I am standing here and saying we must be allowed to choose. I am the mother of four children, two of whom are acutely dyslexic. They have both been educated fully in the state system at a school that is excellent. What I am saying is that independent schools must be allowed to function as they see fit and to pay back in a way that is appropriate; the Charity Commission will be the regulatory body, as will Ofsted and the ISI. An organisation cannot be compelled to devolve out, because all that will do is create yet more unfairness.
Independent schools are often a vital resource, depended on by local authorities. That has to be considered, because we cannot account for all the specialisms. Many local authorities use such provision to help disadvantaged children to get on. More than 66,000 pupils in the independent sector have special educational needs. For that reason, we should be very cautious of doing anything that ties the hands of schools.
I believe that we should empower school leaders—and I mean all school leaders. Leaders in this sector often assert that the clear vision, ethos and purpose on which they are founded and the freedom to deliver allows them to excel. That should be there for all schools to allow them to bring rounded people into society who have the same fair chance at everything.
All schools with charity status currently have to demonstrate a charitable purpose. A strong Charity Commission will hold them to account. It should not be for us in this place to over-regulate. There are excellent examples of this Government promoting schemes that help, such as the National Citizen Service. My children attended the scheme with children from the independent sector and children who had been in dire straits with different authorities. All went on the scheme together, which allowed them to learn, experience and become well rounded.
Jo Churchill
There is no point. First, smaller schools, which make up more than half the number of independent schools, could not afford to put on a programme on such a vast scale. Secondly, a scheme exists to get social mobility between different areas and have children learn from each other. I am worried by the over-prescription of this measure and the need to regulate something that does not need to be.
I feel able to comment as somebody who believes in choice. The choice I made for my four children was to educate them entirely in the state system. The point at which they had any degree of paid provision was when they were in nursery. As they were all born during the previous Labour Government, I could not access any provision I did not pay for.
Jo Churchill
That is not actually the case. With the extension of provision to two-year-olds and three and four-year-olds, there will be considerably more than I was granted.
After many years as a school governor at a high-achieving secondary school in the state system and a primary school for those with special educational needs, I believe that independent schools have to abide by the obligations placed on them, and the Charity Commission is there to do a job. To prescribe their behaviour further is not only unnecessary but may well force small specialist schools out of existence due to the red tape and cost of administration. It is nothing to do with what they deliver.
These proposed new clauses are ill considered and should be rejected. They will not give any of us what we all desire, which is an excellent education for all our children, so they become well rounded individuals who can contribute to society and have an equal chance of doing what they wish.
Mr Wilson
I start by congratulating my hon. Friend on her excellent speech, which was clearly based on an enormous amount of personal knowledge. I also thank all Members of the Committee for their contributions over the past four or five sittings. We have had an excellent Committee stage, where we have given the Bill a rigorous check on what it should and should not do. I look forward to Third Reading and Report.
I agree that we should do more to promote stronger partnerships between independent and state schools. Where I differ from Opposition Members is in how we go about that. We should recognise that many strong partnerships already exist, as my hon. Friend and other hon. Members have said, and they are growing in number and impact.
Before I go into detail, I want to clear up a point the hon. Member for Redcar made about Lord Moynihan’s views. Lord Moynihan actually agreed with us that encouraging charities to do more to share facilities was a better approach than legislating to force them to do so. That ought to be on record so as to make clear Lord Moynihan’s views.
Peter Kyle
When I was an adviser at the Cabinet Office I had the benefit of working on the 2006 Charities Bill, later the Charities Act 2006, which brought in the public benefit test. We discussed public schools then and considered drafting and implementing an amendment not dissimilar to the new clauses at that stage of legislation. At that point, we had representations from independent schools, which strongly said that they would improve community relations and that self-regulation and actions from within the sector would deliver demonstrable change. Can the Minister tell the Committee the degree by which the sector has improved in the intervening years and whether that will extend further without the need for legislation?
Mr Wilson
I thank the hon. Gentleman for that point. I will come to it later in my speech, rather than deal with it up front.
There are both principled and practical reasons why legislating to force charitable independent schools to do more is wrong and could be counterproductive. Let me start with the principled argument against these new clauses. Public benefit is a requirement at the centre of the definition of a charity. All charities, regardless of their size or charitable purpose, must exist for public benefit. Public benefit itself is not defined in statute, but has a meaning given by a body of case law that has been built up over several hundred years, which sets out clear principles but gives the definition the flexibility needed to deal with a wide range of types of charities. The way in which a charity demonstrates its public benefit and the extent to which it does so is for its trustees to decide, taking into account the circumstances of the charity and other relevant factors. It is not for the Charity Commission to interfere unless charities fail to meet the requirement.
An Upper Tribunal ruling in 2011 set the parameters for charitable independent schools. Public benefit must be real and not tokenistic, but beyond that it is not for the Charity Commission to dictate to schools the type or amount of public benefit they provide. That should be a matter for the trustees of the charity, who must take into account the charity’s circumstances.
There is a wide range of ways in which charitable independent schools can and do provide benefits, including academic partnerships with state schools, sharing sporting or other facilities and expertise, and providing bursaries and other financial assistance to those who cannot afford the fees. There is also the important indirect benefit of relieving the taxpayer of the cost of educating 7% of the nation’s children. It is for the trustees to determine the way in which their charity provides a public benefit. The law places the decision on which approach or combination of approaches the charity takes in the hands of the charity’s trustees.
It would be wrong to single out one type of charity in legislation and stipulate one particular type and the extent of public benefit that it must provide. No other type of charity is treated in that way, and it would set a very dangerous precedent. What would be next? Religious charities, overseas aid charities or campaigning charities? Once the precedent has been set, the risk is that the temptation to interfere would be too great for some to resist, and specific legislative requirements could creep in over the years for different types of charities. If unchecked, there is a real danger that over time charities would be opened up to significantly increased state interference—whether or not politically motivated—which could seriously undermine the charity sector’s independence. In this Committee, all parties have sought to protect the independence of charities and trustees.
Charities (Protection and Social Investment) Bill [ Lords ] (Fourth sitting)
Peter Kyle Excerpts(8 years, 7 months ago)
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Mr Wilson
I understand what my hon. Friend says, and I believe there would be a level of support among the public for that. There certainly are commercial confidentiality considerations, in the same way as there are for Government contracts, but I will look seriously at what he said and come back to him.
To take that point a little further, there are questions about how extensive the problem of poor fundraising is for charities. The hon. Member for Redcar said that it is a small problem that affects a small number of charities. By and large that is true, but the Fundraising Standards Board received 52,000 complaints in one year, so the activity is deep-rooted. That is why it is important that we introduce these measures and try to do something about it. I believe that these two measures, coupled with the others, will help to stop some of the poor practices. They will ensure that there is oversight and accountability among the trustees and that fundraising is overseen directly.
Peter Kyle (Hove) (Lab)
It would be nice if the Minister said how many of the 52,000 complaints that he has mentioned were upheld. For context, we should bear in mind that the charitable sector, despite the very focused challenges in recent months, is still the most trusted sector in society.
Mr Wilson
The hon. Gentleman will have seen in the recent reports that trust has gone down to 2008 levels as a result of some of the stories that have been heavily profiled in the media. The issue is not whether 52,000 complaints were upheld; it is that 52,000 people felt that they had to complain about being inundated with telephone calls or direct mail containing information that, in many cases, they obviously did not want to receive. Clearly, the public are seriously concerned about the targeting of elderly and vulnerable people in particular. I believe we are doing the right thing in introducing these measures and changing the law to ensure that charities are directly accountable for the fundraisers that act on their behalf. They must ensure that those fundraisers act in a proportionate and moral way that reflects the best practices of the charity itself.
Peter Kyle
Does the Minister agree that the trustees of a charity are ultimately responsible for safeguarding the way that money is spent and for upholding the moral activity of the charity?
Mr Wilson
That is exactly what these measures are for. They will ensure that trustees look at the things they should be looking at: how their fundraising is conducted and how it interfaces with the public. The two measures will ensure they do that through the annual report and the contracts that they sign with third parties. It is for exactly those reasons that we are making these changes.
Question put and agreed to.
Clause 14 accordingly ordered to stand part of the Bill.
Clause 15
Power to make social investments
Question proposed, That the clause stand part of the Bill.
Charities (Protection and Social Investment) Bill [ Lords ] (Third sitting)
Peter Kyle Excerpts(8 years, 7 months ago)
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Mr Wilson
I will respond to a few of the points made by Opposition Members. On the issue that not all housing associations have signed up for the deal, as I said earlier, 93% of the total housing association stock is covered by those housing associations that have said yes to getting involved in this deal, which is voluntary. The message from the Opposition seems to be that the deal is not voluntary, but compulsory. It is quite the opposite; 93% of the housing stock in England has signed up for this deal.
Peter Kyle (Hove) (Lab)
The Minister cites the example of 93% of housing stock being covered by housing associations. Will he give the percentage of housing associations that are signing up to the Government’s plans?
Mr Wilson
I think it is somewhere in the region of 75% of housing associations, which is a substantial majority. We want as many housing associations as possible to sign up, and we want as many tenants as possible, throughout the country, to have the opportunity of homeownership.
Mr Wilson
I am glad to hear the hon. Gentleman say that he wants more homeowners in the country. One way to do that is to enable people to buy their own home in this way—1.3 million extra tenants will be able to have the advantage and security of owning their own home, which is a laudable ambition for any Government.
As for whether the right place to discuss the detail is here or on the Floor of the House, the Housing and Planning Bill is back before the House tonight and we are discussing a lot of things that relate more to housing matters and that Bill than to charitable matters. The right place to raise some of these issues would be later tonight on the Floor of the House.
On the Charity Commission’s powers, and in response to the point made by the hon. Member for Redcar, the Charity Commission did not ask for the responsibilities that have been inserted by this clause in the other place, but it did ask for many of the other responsibilities and powers that we are passing to it in the Bill.
The finances that will be released to housing associations through the sale of properties is substantial, as the hon. Member for Ilford North said. As it is a like-for-like replacement, the amount of affordable housing stock should increase substantially. We are undertaking a pilot with five housing associations. It is under way and should enable us to hone and inform the detail of the final scheme that we put in place.
I hope that that answers the main questions raised by Opposition Members. It is important to note that the Government have begun the process with the announcement yesterday of 13,000 new affordable houses, which we will build on Government land and contract directly rather than going through local authorities or housing associations. That is a big step forward to try to break the logjam that we have seen in affordable housing in the past couple of decades. By the end of the Parliament, we hope that we will have been able to deliver 200,000 new starter homes that are affordable homes for first-time buyers under the age of 40, which will give people with the ambition of owning their own home a first step on the housing ladder. That is a laudable aim for any Government to have.
Anna Turley
It is an important point in terms of ambition versus reality, but I appreciate your point, Mrs Main, and I will stick to the clause. I was interested to hear that about three quarters of housing associations have signed up, because the housing association in my area has not signed up and has strong views against it. I am also not convinced that the Minister has a plan for like-for-like replacement. The Government’s record on that is not strong.
The Chair
Before I call the hon. Gentleman, may I say that this is the Charities Bill and I hope that we will not go too far discussing housing numbers and so on?
Peter Kyle
I am grateful, Mrs Main, and I hope that I will not stretch the latitude you have given us. My hon. Friend is correct in expressing concerns from the charitable sector about like-for-like replacement, because that is about the sequestration of charitable assets for private use. Does she share my concern that in Brighton and Hove, which I represent, and other such cities, like-for-like replacements will almost certainly be built in areas very different from those in which the original properties are sold because of the constraints on the land in that area, so charitable assets that were deemed to be in one place will end up in other locations?
Anna Turley
My hon. Friend makes an extremely important point. The issue is the charitable ambitions of housing associations in supporting those who are most vulnerable and in need. The danger is that we are moving away from that.
Mr Wilson
I will be brief. I think I failed to answer one of the questions asked by the hon. Member for Redcar which has been raised again by the hon. Member for Cardiff Central. I will try to deal with the two areas.
One concern is that the disqualification power, in particular condition F, is too broad. The hon. Member for Redcar is right to say that it is a significant new power. The intention in clause 11 is not to use those powers frequently, as I said in my opening remarks. However, it is absolutely essential to have the criteria to enable the Charity Commission to address conduct that could seriously damage public trust and confidence in charities but would not be caught by conditions A to F.
The condition therefore needs to be considered in the context of the other criteria for the exercise of the disqualification power, namely the test of fitness and the fact that the disqualification is desirable in the public interest to protect public trust and confidence in charities. It is a tripartite matter: all three things have to be looked at together. The Charity Commission has published draft guidance on how it would exercise the powers. I have been through that in some detail.
On the other issue, I would say that there are excellent safeguards to make sure that the powers are not in misused in any way. There are six points to bear in mind that are all safeguards. First, an individual must meet new, tougher criteria to become a trustee in the first place. They are not automatically disqualified under clause 10 because we have broadened the automatic disqualifications, as we discussed in relation to the previous clause.
Secondly, if the Charity Commission then decides to disqualify the trustee, three new criteria have to be met. As I have said, those are conditions A to F. The individual has to be deemed unfit to be a charity trustee, as defined by Charity Commission guidance. Thirdly, the Charity Commission must be satisfied that disqualifying is in the public interest. Those are quite tough criteria, but then the commission has to give notice of its intention to disqualify and give a period for representations to be made, which it then has to take into account before any decision is made.
If the decision is made to disqualify, disqualification only takes effect after a period of time has elapsed, during which the individual can lodge an appeal to the charity tribunal. Another safeguard has therefore been slotted in. If the decision is appealed to the tribunal, the tribunal will be able to confirm or overturn the disqualification. A really important point is that in making the decision, the tribunal would consider the case afresh. It would not just go over what the Charity Commission looked at. It would look at it as a completely blank sheet of paper. I think those safeguards should reassure the hon. Lady that this is not a power that is going to be misused in any way.
Peter Kyle
School academies are often registered with the Charity Commission and are registered charitable entities and trusts in their own right, so some school governors of academies are also trustees. Both Ofsted and regional school commissioners can remove governors, so that will have implications for removing trustees. Clearly, different regulatory bodies have an impact on the governance arrangements of charities at the moment. Has the Minister had discussions with the Department for Education to see whether there is a conflict from this new set of regulations with other Government Departments, such as Education?
Mr Wilson
I have not had any direct conversations with the Department for Education, but my officials are in contact with that Department regularly across a number of these areas. I would be slightly surprised if that had not been discussed at some point, but the commission will be looking at all these things and taking them into account—[Interruption.] Ah, a note has appeared on my desk. Apparently, there is no conflict with other regulators’ powers and practices, so I hope that reassures the hon. Gentleman.
Charities (Protection and Social Investment) Bill [ Lords ] (First sitting)
Peter Kyle Excerpts(8 years, 8 months ago)
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Peter Kyle (Hove) (Lab)
It is a pleasure to serve under your chairmanship, Mrs Main.
The relationship between the regulator and charities is a sophisticated one, and it is important that the Charity Commission plays a supportive role as well as a challenging one. Does my hon. Friend agree that the ability to send a warning notice without notice is a sign of failure in the relationship between the regulator and the charity, rather than one of support or challenge?
Anna Turley
My hon. Friend makes a really important point. The relationship is long standing, sophisticated and complex. It is right that there is an opportunity to give notice of a warning in the Bill. Our issue is that there is no significant timeframe and no notice of the timeframe. I will explain why that is such a critical issue, but my hon. Friend is absolutely right; it is important that there is a nuanced and balanced relationship and opportunities for both sides to state their case in any dispute.
I will now focus on the amendment. The Bill helpfully ensures that before issuing a warning, the commission must give notice of its intention to do so. However, there is no indication in the legislation of timescales for a warning. The briefing from the commission states that
“the Commission has confirmed it will ensure that a reasonable time for representations is given”.
It continues:
“The timing is likely to vary for warnings in different cases, depending on how much engagement and warning the charity has had during engagement with them, and there may be times when the timescales might have to be relatively short (if, for example, it relates to a time critical incident)”.
It states that operational guidance for its staff will be published. However, this seems very vague and gives total discretion in this situation to the commission. What is a reasonable time? Could that mean a matter of hours or a phone call before a press release is sent out? We know the potential damaging implications for a charity of publicity around the warning.
Anna Turley
I completely agree with my hon. Friend. A later amendment sets out the right of appeal to the charity tribunal, which we think is an important safeguard. Even without that appeal, giving no notice whatsoever could entail significant risks, particularly with regard to reputational damage, as the Human Rights Act sets out.
Peter Kyle
My hon. Friend is being generous with her time. Trustees of boards of charities are volunteers, and they give up their time very generously. Quite often, boards are cautious in their approach. Does my hon. Friend think that seeing warning notices handed out to other charities might well be a deterrent to people giving up their time and lead to uncertainties over governance arrangements?
Anna Turley
My hon. Friend makes another excellent point. We know how difficult and challenging it can be around the country to get good trustees and to get people to stick with it. Trustees are under a lot of pressure because of regulations and time commitments. There is the risk that the measure will disadvantage trustees and deter them from putting themselves forward. If a warning has been published, the reputational damage could be huge.
The Lord Chief Justice referred to “ludicrous time limits”. He also said that he could understand why it was felt that the Charity Commission had behaved in an extremely high-handed manner and that there was a real danger that the Commission, if allowed the scope to use this new power in a disproportionate way, may well do so, however well meaning its intentions.
We are not seeking to remove the power to publish a warning, because we think that it is important. The ability to publish a warning should be there, because of the opportunity it gives to create greater weight behind a warning. However, we think that before that step is taken there should be significant opportunity for a charity to challenge it. That is what our proposed 14 days’ notice seeks to do.
The power to publish a warning, the potential impact of which cannot be overstated, means that the public, media and funders will become aware of it. They will not be able to distinguish between a low-level issue that is giving rise to the warning and something that is much more severe. In the court of public opinion, such issues often become conflated. This year we have already seen a huge media furore relating to the charitable sector. Although relevant to only a small number of charities, it has had a substantial and damaging effect on trust in the sector. The publicity could lead to a choking off of donations and the loss of grant funding and corporate sponsorships, leading to closure of services and redundancies.
To give advance notice of 14 days of a warning, as our amendment proposes, would allow a charity to ensure that steps can be taken immediately to remedy a situation, where it is a small administrative error, to explain any extenuating circumstances and to challenge that with the Charity Commission. It would allow the conversations mentioned by the Lord Chief Justice in the High Court case to take place in a supportive and trusting environment.
We believe that there is no reason why there should not be a 14-day notice period ahead of a warning. We hope that the Government will support our amendment.
Mr Alan Mak (Havant) (Con)
It is a pleasure, Mrs Main, to serve under your chairmanship. I welcome the Bill and will refer to clause 1, as well as to other provisions.
Charities play a vital role in civil society and local communities across Britain. They care for the sick, feed the hungry, raise money for veterans and protect the natural and built environment. They rely on generous public support and confidence in order to continue their vital work. Deliberate abuse of charities is relatively small, given the size of sector. However, it needs to be tackled robustly to protect public trust and confidence.
The Bill, particularly clause 1, would equip the independent regulator, the Charity Commission, with the tools that it needs to tackle more effectively the types of abuse it faces. That in turn should protect charitable donations and reassure the giving public that charities are well regulated. Clause 1 inserts into the Charities Act 2011 new section 75A, which provides the Commission with a power to issue an official warning to a charity or a charity trustee. That warning may be given where there is a breach of trust or duty by a charity or trustee, or other misconduct or mismanagement in the charity. Breach of duty can also include non-compliance with a commission order or direction. That warning system is similar to powers vested in other regulators, but it is a more reasonable and proportionate way to deal with breaches of the 2011 Act and fiduciary duties or other mismanagement episodes, particularly where the risks and impacts on charitable assets and services are relatively low.
Before I had the privilege of entering this House, I was fortunate to be a trustee of a small but successful children’s charity working across the UK. My experience of working with donors, funders and beneficiaries suggests that the new powers in clause 1 will be welcomed by all those in believe in the proper governance and oversight of charities by bolstering public confidence in charities.
The new power is a more proportionate use of the Charity Commission’s powers, and a better alternative to a number of other remedial powers such as suspension or removal of trustees, or restitution action against trustees. An example of where the power might be used is where a charity makes unauthorised payments, for example, to a connected company or for the benefit of a particular trustee. In such a case, the size of the sums involved may mean that it is disproportionate to take stronger action but the Commission could issue an official warning on future conduct, as stipulated under clause 1.
Another case might be where the charity’s governing documents have been breached. For example, there has been a failure to call elections or annual general meetings, which would compromise the proper functioning of the charity and public faith in the charitable sector. The powers in clause 1 would be a proportionate and effective means of ameliorating that situation.
Peter Kyle
It is a privilege to speak under your chairmanship, Mrs Main. Like the hon. Member for Havant, I have served on charity boards. In fact, I was involved in founding two charities and have seen them grow and thrive. My role included the challenge of recruiting trustees to two charity boards.
I have seen the charitable sector from many different perspectives, including working for almost six years for an umbrella organisation in the sector. I can see from different perspectives the challenges but also the opportunities that the voluntary sector provides to society. It is embedded fully in civil society, and increasingly delivers public services, which are often integrated in the welfare state. That is a fantastic and growing part of our voluntary sector, and we should be proud of it.
The delivery of public services is an aspect of the voluntary sector that does indeed need greater regulation and scrutiny. The public needs to know, since the sector is funded by taxpayers’ money, that it is scrutinised accordingly. I therefore welcome many aspects of the Bill.
Peter Kyle
The Minister is shaking his head. I look forward to his speech and to hearing his views, because he has kindly listened to mine. Trustees are cautious people: they are volunteers and they are not often law experts. They want to make sure that the organisation for which they voluntarily give up their time does not make headlines for the wrong reasons, which means they often become cautious. I cannot see exclusions in the legislation on the application of warning notices.
For example, I hope the Minister will say that tweets and public statements that criticise Government policies will be excluded from the issuing of warning notices. He might not be able to give an example, but if the practice is allowed to continue unhindered, it may well give the impression to boards of trustees that the Government criticise bold and forthright statements that are made by trustees when their client groups are challenged, or public policy is not rolled out in their best interests. We need a very clear and unequivocal statement from the Minister, on the record, that that is not the case and that warning notices will not be used to challenge the advocacy role of charities.
Charitable organisations reach right the way through our society. For example, many academy schools are charitable trusts registered with the Charity Commission. Schools, therefore, might well be issued with warning notices. There are many areas of public service that come under the remit and regulation of the Charity Commission. I am chair of governors of a school which is registered with the Department for Education as an academy school and with the Charity Commission as a charitable trust. Has the Minister looked at these complex registration challenges and regulatory circumstances and made sure that the right exclusions are put in place to reassure trustees that the Government will always protect their interests and their independence?
Several hon. Members rose—
Maggie Throup
I completely agree with my hon. Friend. That is probably why the measure is in the Bill. It mimics what is happening across the board with other regulators.
Peter Kyle
I am extremely grateful to the hon. Lady for giving way. If a charity has reached the point where its trustees are destroying evidence, does she not agree that it has probably reached the point where a warning notice is not sufficient in the first place?
Maggie Throup
The problem is that if the evidence has been destroyed, no one knows whether it was there. That is the case I want to make. We want to make sure that correct action can be taken in a timely fashion.
Wes Streeting
I am grateful to the hon. Gentleman for making those points. It is absolutely right that charities benefit, particularly from gift aid. As an avid, although somewhat despondent, viewer of “The X Factor”, I notice that the Chancellor has generously waived VAT on the winner’s single, which I am sure we will all be rushing to buy.
The Chair
Order. Before the hon. Gentleman intervenes, we are way off the point of the clause. We widened the debate to include clause 1 because many Members wanted to speak, but “The X Factor” and VAT are far beyond the scope of the debate. If the hon. Member for Hove was going to intervene along those lines, I caution that he might wish to reconsider.
Peter Kyle
My intervention was going to be on regulation in general and its burden on the charitable sector, but I will happily withdraw if the Chair so wishes.
Mr Wilson
It is a great pleasure to serve under your chairmanship, Mrs Main. This is a Bill on which there is a great deal of consensus across the House. I think we all accept that the regulatory powers of the Charity Commission needed to be brought up to date, to support the regulator in tackling cases of abuse in charities.
The Bill has already been through significant scrutiny. The previous Government first published their proposals for public consultation just over two years ago, in December 2013. Those followed criticism of the Charity Commission’s powers by the National Audit Office and were based on proposals put forward by the commission itself. There was broad support for the measures from charities, particularly small ones, although some measures received mixed reactions from charities and their representative bodies.
The proposals were refined as a result of consultation and a draft Bill was published in October 2014. The draft Bill was subjected to extensive pre-legislative scrutiny by the Joint Committee on the Draft Protection of Charities Bill, ably chaired by Lord Hope of Craighead, a former deputy president of the Supreme Court. I pay tribute to its detailed scrutiny, which led to a number of improvements and refinements being made. We should also note that the Bill has already been considered in detail in the other place, in a largely collaborative and consensual way. That, too, led to sensible refinements to the Bill. I very much hope that we can continue working together in that spirit of cross-party consensus on most aspects of the Bill for the benefit of the Charity Commission and the public.
Before moving to clause 1 and the amendments on official warnings, I want to make three more general points. First, I repeat what I said on Second Reading: the vast majority of charities are run well by decent, honest people who selflessly want to do good for the benefit of others. When considering these powers, it is important to remind ourselves that they will help to protect public trust and confidence in charities generally and will target only the minority involved in abuse.
Secondly, I want to place on record my thanks to the staff and the leadership at the Charity Commission, who are transforming the commission into a modern, proactive, risk-based regulator and who will use the new powers in a targeted and proportionate way. I was pleased to see that, when the National Audit Office returned to the commission just a few months after publishing its report, it found that it had made “good, early progress” against all its recommendations. That progress is down to the effective leadership and hard work of everyone at the commission.
The third point is an overarching one relating to the Charity Commission’s duty to act in line with the principles of better regulation, human rights and equalities duties, some of which have already been raised. These all require the commission to carefully consider a number of factors when exercising its powers. The duty is set out in section 16(4) of the Charities Act 2011:
“In performing its functions the Commission must, so far as relevant, have regard to the principles of best regulatory practice (including the principles under which regulatory activities should be proportionate, accountable, consistent, transparent and targeted only at cases in which action is needed).”
The Charity Commission also has a published risk framework that explains this regulatory approach to protecting the public’s interest in charity and how it assesses risks and manages its resources. The commission’s risk framework sets out the criteria it uses to determine whether it should open a statutory inquiry and where it is likely to use its temporary and/or permanent powers. In assessing regulatory issues that come to its attention by whatever means, the commission needs to be as sure as it can that the facts are correct and that it does not act on a false or unproven premise. It relies on information as evidence in its case work when making decisions.
The commission also has to act fairly and needs to be able to explain its actions to trustees and those directly affected by its decisions when it exercises legal powers. The commission may be called to justify its actions by the first-tier tribunal for charities or by the court. In doing so, the commission needs to show that its action has been taken on the basis that relevant issues have been properly considered. In assessing information and deciding to use it, it is important that the commission acts fairly and consistently in line with the principles set out in its guidance. The commission also considers its decision-making, as it is bound to, in accordance with the relevant statutory duties, namely those relating to the best regulatory practice, proportionality, human rights, the Equality Act 2010 and wider public law considerations.
I will now turn to clause 1 before responding to amendment 2. I will also try to respond to all the issues that hon. Members have raised during the wider debate on clause 1. The clause gives the Charity Commission an important new power to issue an official warning. This is one of the most important new powers in the Bill and is considered to be a normal power in the toolbox of modern regulators. It is already a staple tool of other regulators, such as the Care Quality Commission, the Financial Conduct Authority, the Pensions Regulator and the Solicitors Regulation Authority, to name a few.
An official warning could be issued to a charity trustee or to the charity itself where the Charity Commission considers there to have been a breach of trust or duty or other misconduct or mismanagement. The power would enable the Charity Commission to publish a warning, which it has said it would do in most cases. The commission has also said that it would not publish all warnings. The decision to publish would be in line with its current policy on publishing the announcement of statutory inquiries, which depends on whether publication is in the public interest. The Charity Commission would not publish an official warning if it considered that it would not be in the public interest to do so.
The Charity Commission does not expect to use the power too often. It is hard to put a precise number on it, but the commission estimates that it would be in the dozens of warnings each year, rather than the hundreds. Let me give two examples of when the Charity Commission might consider issuing an official warning—let us remember that these are low-level activities. One example is when a charity is consistently a little late in submitting its accounts. An official warning would remind the trustees of the seriousness of their non-compliance. We recognise that this is already a criminal offence, but it is rarely investigated or prosecuted as such. An official warning would be a much more proportionate response to encourage trustees to rectify the position.
The second example is when a charity makes unauthorised payments to a connected company or payments that benefit a trustee. If the size of the sums involved meant that it would be disproportionate for the Charity Commission to take firmer action, it could issue an official warning on future conduct. As one would expect, the power is subject to a number of important safeguards.
Peter Kyle
On its website, the Charity Commission already highlights in red those charities that submit their accounts late. The commission has said that this has had a significant impact on behaviour in the sector. Is the Minister saying that this is not enough? Can he give the precise number of charities where this is not working and where there will be an impact?
Peter Kyle
We are all very grateful to the Minister, who has been generous with his time, for allowing us to probe for more detail. The Joint Committee also recommended a minimum notice period to make representations on a draft warning before it was issued. My hon. Friend the shadow Minister suggested a 14-day period, which seems extremely reasonable. Does the Minister agree?
Mr Wilson
I would like the hon. Gentleman to be a little patient. I know I am going on a bit—these are issues that need a detailed explanation—but I promise I will come to his point and answer all the questions that have been put.
On process, we have set out in proposed new section 75A(5) of the 2011 Act the matters that must, as a minimum, be included in a notice of an official warning. These include the grounds for issuing the warning and action that the Charity Commission considers should be taken to rectify the warning. The Charity Commission must give notice of a warning, set out a period for representations to be made and take account of any representations before issuing or publishing a warning. We consider these changes to significantly improve the official warning power and we were grateful for the Joint Committee’s recommendations.
Let me turn now to amendment 2, which seeks to require the commission to give at least 14 days’ notice of an official warning in every case. I can see why the hon. Member for Redcar is attracted to that, as it would ensure that trustees had sufficient time in all cases to consider the notice of intention to issue a warning and co-ordinate any representations they might wish to make.
The commission will set out in guidance how it will operate the official warning power. The Charity Commission has said it would give publicity about this and is keen to work with sector representatives on the implementation of the power. That would be done before the statutory warning power is commenced. The guidance will set out the commission’s normal approach. The commission has confirmed that it will ensure that a reasonable time for representations is given, as is the case currently when trustees comment on the content of inquiry or operational compliance case reports before publication.
The time period between giving notice and issuing warnings will vary in different cases, depending on the level and extent of previous engagement with the charity, and the subsequent level of compliance. As a starting point, I would expect that to be 14 days, but there may well be cases in which a shorter notice may need to be given.
Let me give some examples of where a shorter period may be appropriate. A charity may have been strongly advised on several occasions, both under compliance visits and in writing, about taking small but repeated amounts of cash overseas to buy supplies for a medical centre, with no audit trail and no evidence of expenditure, when an equally legitimate banking arrangement was in existence, and the centre was a registered facility. A disaster happens in the same area and as a result the demand for the charity’s services and funds rises sharply. The commission becomes aware on a Wednesday that a payment is due to be taken in cash overseas by that Friday.
In that context, the Commission would want to issue a warning to the charity regarding its financial practices to minimise the ongoing risk to charity funds. Its warning would set out what the issue was—unacceptable lack of financial controls—and how that could be remedied, such as by using the banking arrangements already in place, considering a branch transfer and also ensuring that receipts are obtained for supplies purchased to satisfy the trustees’ duty to account.
A second example is where the commission might become aware of a charity that is conducting fundraising activities—raising money from the public—in an aggressive manner or with poor financial controls. It thereby poses a risk to charity property and public trust and confidence, for example by not collecting in sealed buckets or by depositing money into personal accounts. The commission is then informed that the charity is due to participate in a fundraising event in the next seven days. Currently, in that situation, in order to protect the charity the commission would have to open an inquiry and issue directions, which would take up significant time and resources. An official warning could address the issue at an earlier stage. The commission would need to issue its notice and publish the warning within a seven-day turnaround period.
As a final example, the commission might receive a whistleblowing report providing evidence of a low-level property or asset transfer that the trustees propose to enter into. The information provided by the whistleblower and a meeting with the trustees includes evidence that the proposed property disposition or asset transfer is not being conducted in accordance with the requirements of the Charities Act and their duties as charity trustees. If the transaction proceeds, a breach of trust and loss to the charity will occur. The proposed deadline for entering into the transaction is five working days from the last meeting, and the commission would want to issue a warning about following charity law requirements when engaging in property acquisitions.
In those examples, the issues identified in the charity are limited and specific. Opening an inquiry would be time consuming and in a sense misleading, as it may suggest that there are wider or more serious issues in the charity that need addressing when this is actually not the case. It would be wrong to prevent the commission from issuing an official warning in those circumstances, where an official warning may be the most appropriate and proportionate response to the misconduct or mismanagement in question. It would not be practical for the commission to be limited to a particular timeframe. The commission would always intend to give trustees fair notice, but this period may differ depending on the nature of the case. The commission’s guidance will deal with other matters, including its policy on when official warnings will be archived or removed. Its current policy on inquiry reports is that they are archived after two years.
I hope that I have been able to explain to the Committee how the official warning power will be used by the commission and that hon. Members will agree that it represents an important new tool for the commission in tackling lower-level misconduct and mismanagement. We do not want to create a power that results in more bureaucracy and red tape where it is not needed.
I now want to return to some of the issues raised in the debate, many of which were raised by the hon. Member for Redcar. Let me begin with misconduct and mismanagement and whether there will be guidance on this. The commission’s statutory responsibilities allow it to investigate issues that pose a significant risk to charities and to check abuse. Abuse is misconduct or mismanagement in the administration of a charity. The words “misconduct” and “mismanagement” should be interpreted as they are commonly understood. The premise is supported by case law. Misconduct includes any act or failure to act in the administration of the charity which the person committing knew or ought to have known was criminal, unlawful or improper. Mismanagement includes any act or failure to act in the administration of the charity which may result in charitable resources being misused or the people who benefit from the charity being put at risk.
Concerns of abuse are always taken seriously, but the level of the commission’s response will be proportionate and determined by the risk factors attached to the specific circumstances of the case as required by the commission’s risk framework, which I mentioned in my original comments. The commission’s updated CC3 guidance already sets out what types of action could constitute misconduct or mismanagement—I am sure hon. Members will be going away quickly to read that.
Let me turn to operational compliance cases, which are likely to be regarded very differently from official warnings. The Charity Commission already publishes details of some of its operational compliance cases when they give rise to wider lessons for charities. It is difficult to see how publishing an official warning would be any different, or why it would carry more stigma for the charity or trustee concerned. Charities exist for public benefit, so there should be transparency and accountability to the public, who are their ultimate beneficiaries.
The issue was raised of the real danger of the commission being allowed to extend the scope of its powers in a disproportionate way, with reference to the recent high-profile case of the Joseph Rowntree Charitable Trust and Cage. The reference to the JRCT-Cage litigation is a bit misleading in this situation. The court made no finding that the commission acted disproportionately—in fact, the court made no finding at all; the case was settled. Proportionality was not even one of the grounds of the challenge in the case. Furthermore, at the conclusion of the hearing, the Lord Chief Justice expressly stated that, of course, nothing at all that we have done comments in any way whatsoever on the underlying issues. Using the case is therefore a little unfair, if I may say so. It is one out of more than 500 regulatory compliance cases over the first six months of this year, so it is not representative.
Peter Kyle
I am grateful to the Minister for giving way, and I hope that it gives him a chance to catch his breath, because he has been rattling through the issues.
The Minister said that he was addressing serious concerns within the organisation. However, the point about the warnings being issued is that they are low to medium-risk warnings. Does he accept that the public sometimes do not know the difference in the types of warning and see only that a warning has been issued against a charity, and that there might well be big brand repercussions for what is a minor warning.
Mr Wilson
It is important that we do not have a situation in which charities can do no wrong. If charities cross the line, even in a low-level way, it is right that the Charity Commission should proportionately and sensibly be able to issue an official warning. That is why I fully support the principle of such warnings.
Campaigning was mentioned briefly by the hon. Gentleman early on his comments. To be clear, charities may not engage in party political campaigning. Where they undertake any types of campaigning to support their charitable purposes, they must avoid adverse perceptions of their independence and political neutrality. In addition, charities may not embark on campaigning to such an extent that it compromises their legal status as a charity. Charity Commission guidance CC9—I can see Members scrambling for CC9—is clear about what is and is not permitted. It makes it clear that charity law recognises that non-party political campaigning may be a legitimate activity and it sets out the general principles.
As long as charity trustees act within the legal framework, they are permitted to undertake activities that may include statements, lawfully and properly. That is relevant across all media platforms.
Peter Kyle
Those of us who run campaigning charities are very familiar with the regulations to which the Minister refers—
Peter Kyle
I see my hon. Friend nodding, recalling his days in charities.
The point is that for those in government, it is policy and it is not always party political, but those of us who are familiar with the regulations know that sometimes charities need to speak out absolutely. The Minister’s predecessor once said publicly that charities ought to “stick to their knitting”. Charities find that kind of statement offensive, and trustees interpret it as an indication that they should not get involved in public campaigns that might impact on Government policy. Will he say that charities should do everything beyond knitting, including challenging the Government? It does not have to mean that they are involved in party politics—
The Chair
Order. The hon. Gentleman is making a speech. The Minister may decide not to indulge in discussion of knitting, if it so pleases him.
Mr Wilson
Clause 5 would insert into the Charities Act 2011 a new section 79A to enable the commission to remove a disqualified charity trustee if they continue to remain in their position once disqualified.
The clause aims to close a loophole in the current legislation. The Charity Commission does deal with cases where a trustee knows that he is disqualified, but that he does not commit a criminal offence unless he “acts” as a trustee and so remains on the charity’s books as a trustee, but maintains that he does not “act” as one.
Under the law as it stands, in those circumstances the commission sometimes has to put pressure on disqualified individuals to step down from their trustee position. An example of where that may be necessary is where a trustee is disqualified by virtue of bankruptcy pursuant to section 178 of the Charities Act 2011. However, disqualification does not automatically remove the person from the position of trustee. Similarly, the charity’s governing document does not remove the individual either. In those circumstances, the commission or trustee body has to try to secure the resignation of the individual.
Mr Wilson
I will finish this paragraph and then give way.
The individual might refuse to co-operate and not resign, which means that the trustees may not be able to operate quorately or appoint new trustees. If the disqualified individual continues to maintain their position, that will open them up to potential criminal and civil liability, but that does not help the charity to move forward. This new power would enable the commission to remove the disqualified trustee in order to allow the charity to continue to function.
Peter Kyle
I apologise for interrupting the Minister mid-flow; I thought he had reached the end of the paragraph. Perhaps those drafting his speeches are putting too much into one sentence.
I agree wholeheartedly with the intentions behind the clause. Will the Minister inform the Committee how frequently it is expected the powers will be used? It strikes me as being a rare occurrence that somebody would be declared bankrupt and yet not voluntarily stand down from a charity. I do not know of any such case.
Mr Wilson
I know that my officials like to pack a lot into my speeches, so they have longer paragraphs. Obviously it is important that we have proportionality. This is the sort of issue that arises dozens of times a year, so it is a regular occurrence and we need to take action to try to control and eradicate it.
Another example might be where a charity trustee is disqualified by virtue of having been convicted of theft. The person refused to resign his position, which was problematic for the charity because it affected their quorum for business and decision-making purposes and there was no power to remove a trustee within the charity’s constitution. The trustee board is already at its maximum size and is unable to act further. This new power would allow the commission to remove the trustee so that the charity can continue to operate quickly and safely.
The commission has estimated that the power would be used dozens of times each year to remove people who were refusing to stand down even when they had been told they were disqualified. This indicates that there is an issue to deal with. It is important to equip the commission with powers to take steps to remove a disqualified trustee from their role quickly and effectively. The new power was welcomed by the Joint Committee on the draft Bill and I commend it to the Committee.