Charities (Protection and Social Investment) Bill [Lords]

Debate between Peter Kyle and Anna Turley

Tuesday 26th January 2016 Commons Chamber

[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.

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[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.

Care Homes: England

Debate between Peter Kyle and Anna Turley

Wednesday 13th January 2016 Westminster Hall

[Peter Kyle]

I am very grateful for that intervention. I will come to the precept in a moment, when I would welcome further interventions as we talk about the detail of the precept and how it actually, while being welcome on a surface level, will be rolled out in different ways and impact on communities differently. I will keep my eyes open, as the hon. Lady might well want to come back to this when we tackle those issues.

The pressures on care providers will only be exacerbated by the increases in the minimum wage that will come in from this April. However, let me restate my position on the rising minimum wage for the avoidance of any doubt: I believe that those working in the caring professions deserve a pay rise for the fantastic jobs that they do, especially considering that it has sadly become a low-pay sector. I am glad that there is now cross-party consensus on the ambitious rise that is deserved by all those on low pay. However, we must make this work, and it will only work if we are aware of and prepare for what will happen in the areas that this will impact on hardest.

The National Care Association, for example, has estimated that the rise will add at least 5% to payrolls this year and a further 7% year on year by 2020. Without extra resources, local authorities will end up pushing independent, statutorily funded care homes closer to the brink. The excellent ResPublica report from November laid bare the startling and shocking fact that an unfunded living wage could end up with the loss of 37,000 care home places. I know that the Minister and his colleagues will point to two actions that they think will mitigate that, so let me address both of those in turn.

First, there is the social care precept. Introduced in the autumn statement, it gives local authorities the power to raise council tax by an additional 2%, the proceeds of which are ring-fenced for social care. Although all additional funds are welcome, that is a drop in the ocean compared with the additional resources needed. Following the autumn statement, the King’s Fund estimated that the funding gap for social care could be as high as £3.5 billion by the end of this Parliament.

What is more, the precept may well end up generating extra revenue where it is least needed. At present, residential care home funding is split between people who pay for their care themselves and those who have it paid for by their local authority. Self-funders pay 50% more than those funded by councils so, in effect, they subsidise those paid for by the public purse. It is not hard to work out that the homes with a smaller number of self-funders are the ones who are most at risk financially from the cut in funding rates from local authorities. The split varies across the country, but on the estimated figures put together by LaingBuisson in its “Care of Older People UK Market Report”, the number of self-funders in 2014 was only 18% in the north-east, with the majority of other regions hovering around the 40% mark. It is pretty obvious that the power to raise council tax will generate the most revenue in the areas with a higher council tax base, namely the southern regions of England, which—you guessed it—have a higher number of self-funders.

[Anna Turley (Redcar) (Lab/Co-op)]

Does my hon. Friend share my opinion that council tax can be a regressive tax, and that for areas such as mine, which have levels of deprivation and are already hit by a tax that is not particularly fair, this precept is not a progressive tax? Those areas that have already been hit hardest by cuts in local government funding will be hit yet again by this tax.

[Peter Kyle]

I am very grateful to my hon. Friend for making that point. In representing Redcar, she knows better than anyone that people in residential care homes that are heavily reliant on statutory funding will be hit the most because of the cuts that are going into local authorities, and they will be hit again by the precept, which, because of the process that I have just outlined, will be front-loading resources into the areas that need it least. Her area of the country will have people who are more dependent on statutory funding for care home places. The 2% is based on a lower percentage of people paying council tax in the first place and will have to cover more people. That is why the precept is not fair and will not get to the people who need it most.

Charities (Protection and Social Investment) Bill [ Lords ] (Fifth sitting)

Debate between Peter Kyle and Anna Turley

Thursday 7th January 2016 Public Bill Committees

[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.

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[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.

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[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.]

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[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.

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[Anna Turley]

Okay.

[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.

Charities (Protection and Social Investment) Bill [ Lords ] (Third sitting)

Debate between Peter Kyle and Anna Turley

Tuesday 5th January 2016 Public Bill Committees

[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.

[Peter Kyle]

Will my hon. Friend give way?

[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.

Charities (Protection and Social Investment) Bill [ Lords ] (First sitting)

Debate between Peter Kyle and Anna Turley

Tuesday 15th December 2015 Public Bill Committees

[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.

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[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.