Charities (Protection and Social Investment) Bill [Lords]

Rob Wilson Excerpts

Thursday 3rd December 2015 Commons Chamber

[The Minister for Civil Society (Mr Rob Wilson)]

I thank all hon. Members for their excellent contributions to this debate. Clearly, these issues are very important to them and their constituents. May I add my welcome and congratulations to the hon. Member for Sheffield, Heeley (Louise Haigh) on her first outing at the Dispatch Box? I am sure that it is the first of many.

It is clear that the House has great respect and admiration for the good work currently being done by charities throughout the UK. I also know that hon. Members have much experience and expertise of charities in the voluntary sector, which was demonstrated during some of the speeches today.

There is also a strong desire to protect the privileged position that charities hold in the eyes of the public, as was demonstrated in the latest world giving index, which found Britain to be the most generous nation in Europe. We also have a strong, diverse and growing charity sector. Over the period of the last Parliament, the number of registered charities in England and Wales increased by more than 2,000 to 165,000. Their combined income has grown by more than £10 billion, and is now just short of £70 billion a year.

Before I address the remarks that have been made by hon. Members, let me take the time to echo a point that has been made throughout this debate. The vast majority of charities in this country do excellent work and are run by good, honest and generous people. They wish to help those most in need and make the world a better place. I particularly wish to pay tribute to charity trustees, without whose unpaid efforts there would be no charity sector. For their selfless passion and commitment, they have my respect and sincere thanks. However, their good work is threatened by a small minority who seek to abuse charitable status for their own ends. The Bill will help the independent regulator to take robust action against that small minority. By doing so, it will reinforce public trust and confidence and protect the reputation of charities as a whole.

The powers in the Bill have broad support from the charitable sector and the public. The charity commissioner has been involved throughout the process of developing these proposals. The sector has also been subjected to public consultation and pre-legislative scrutiny, both of which helped inform and refine the proposed powers.

Some have argued that the Bill would give the Charity Commission too much power, or that some of the powers are too broad. In response, I say that the Bill seeks to achieve a balance. The new commission powers need to be broad enough to make them useful. If they are too narrow they would be impractical and go unused or would leave loopholes to be exploited by the unscrupulous. Charities also need to know the circumstances in which the commission will use its powers.

Although this Bill achieves the right balance, I wish to draw the attention of hon. Members to a couple of key safeguards. The Charity Commission is subject to a general duty under section 16 of the Charities Act 2011. That means that the commission must be satisfied that the exercise of any of its powers would be in line with the principles of best regulatory practice, including that it is proportionate, accountable, consistent, transparent and targeted only at cases in which action is needed.

[Fiona Bruce]

I thank the Minister for drawing our attention to that section. It is a pity that it was not invoked when the whole interpretation of public benefit was being debated, and that the Charity Commission did not refer itself back to it then. My concern is that this Bill could be in force before there is a clear definition of non-violent extremism. The Government’s counter-extremism strategy says that this Bill would give the commission powers to disqualify trustees for wide reasons, including past conduct and a variety of other abuses, such as extremism. In the same strategy, there is also reference to non-violent extremism. Will the Minister address that point?

[Mr Wilson]

I thank my hon. Friend for her contribution this afternoon and her question. She raises some extremely important issues, with which I intend to deal in full. As she has asked, let me just deal with the public benefit and religion issue first. Religious charities play a hugely important role in our public life. Over 25% of registered charities have a religious purpose and are often working in some of the most hard-to-reach communities. The advancement of religion is one of the oldest charitable purposes, and there is no question but that it is under threat. There are more than 25,000 registered religious charities, almost all of which have no difficulty in demonstrating their public benefit.

My hon. Friend mentioned the Plymouth Brethren in her speech. Its case was an exception, and I am pleased that it was resolved in a sensible way, even though it took too long. I will come back to some of the other issues that she raised later in my comments.

All the proposed commission powers in the Bill have a right of appeal, in most cases to the Charity Tribunal, ensuring that there is independent judicial oversight of the exercise of the commission’s powers. There have also been some questions, notably from my right hon. and learned Friend the Member for Harborough (Sir Edward Garnier), about the rehabilitation of offenders.

The Government believe that individuals with serious convictions should not be able to hold the position of charity trustee and have control over charitable funds and fundraising activities until those convictions are spent or a waiver from disqualification is obtained from the commission. The waiver regime exists to enable disqualified individuals who wish to be a charity trustee to apply to the Charity Commission for their disqualification to be overturned.

A waiver application would be considered on a case-by-case basis, and the Charity Commission would take into account the nature and seriousness of the conduct that had resulted in the conviction and consequential disqualification.

A decision by the Charity Commission not to grant a waiver could be appealed to the Charity Tribunal, which would consider the matter afresh. That strikes me as a fair and proportionate system that on the one hand protects charities from individuals who present a known risk, and on the other hand provides for the rehabilitation of offenders and a way back into charity trusteeship on a case-by-case basis.

People have also raised concerns about the official warning power and the fact that there is no right of appeal to the Charity Tribunal. There is a right of appeal, which is judicial review. That is the same position as now, where the commission publishes its operational compliance case reports on non-inquiry cases that have attracted public interest and that highlight important lessons for charity trustees.

The Bill provides for a period of time to allow representations to be made in relation to an official warning, which the commission would be obliged to consider. There is then the option of judicial review. We consider that proportionate.

A right to appeal an official warning to the tribunal would be disproportionate and could tie the commission up in red tape, rendering the power impractical for its intended purpose. The last thing that we want to do is give the Charity Commission powers that it cannot use, and for which it could be criticised for failing to exercise several years hence. The Joint Committee that undertook pre-legislative scrutiny agreed that, with the appropriate safeguards in the provision, judicial review was the appropriate route for appeals.

Let me turn now to fundraising. I was deeply disappointed to see the extent of poor practices by large charities in relation to their fundraising. That matter was widely exposed by the media earlier this year following the sad death of Olive Cooke. Since then, further damaging cases have come to light, and once again the reputation of charities has been put at risk by the actions of a small minority. Public trust and confidence in charities have not been this low since 2007, and charities now rank 12th in the list of most trusted institutions, below supermarkets and television and radio stations. Only 48% of people said they trusted charities.

In response to the fundraising scandals, we acted swiftly to amend the Bill in the other place to reinforce charity trustees’ responsibilities and accountability for the charity’s fundraising. Clause 14 will encourage charities to exercise greater control and oversight of those who fundraise for their organisation. It will ensure that there are proper processes for dealing with vulnerable people and will generally safeguard the public. Large charities will make this commitment public through their annual reports so that anyone can hold them to account for how they interact with them.

I asked Sir Stuart Etherington to conduct an independent review of how fundraising regulation could be improved to safeguard vulnerable people and better respect the public’s wishes about how and whether they are contacted. He was supported by a cross-party panel of peers. I have since accepted the review’s recommendations in full, and I am now encouraging the sector to move quickly and firmly to show that it gets the public’s anger and concern and is committed to making self-regulation work.

I also expect the sector fully to back the new fundraising regulator, both financially and through compliance with its rulings. In the past few weeks, I have announced that Lord Michael Grade has been recruited as the interim chair of the new body and will oversee the set-up and initial phase of operations. I am confident that he is the right man to lead this important task and that the sector will unite behind him to address these urgent issues and restore public trust in fundraising.

The new regulator will also host the fundraising preference service, a tool that will allow people to opt out of receiving fundraising requests and that will stop charities wasting resources on approaching those who do not wish to hear from them. A working group is currently being set up to establish how the service will work in practice. In addition to a simple reset button, there will no doubt be a few more nuanced options should people wish to opt into certain charities only. Crucially, it will provide everyone with a way to get off charity contact lists they no longer wish to be on.

Charities need to demonstrate that fundraising and its self-regulation can work in the best interests of the public. They will have the chance to do so at a summit tomorrow, when the next steps for implementing better self-regulation will be announced. I hope that this will be a constructive and collaborative meeting where charities show their commitment to the new self-regulator and to meeting the public’s expectations. Should they fail to do so, I stand ready to step in to safeguard the public and their trust in charities.

For that purpose, I will seek to add two reserve powers to the Bill: one to compel charities to sign up to the new regulator and a second to mandate the Charity Commission with regulation should the sector fail to rise to the challenge. I also welcome the commission’s revision of its guidance for charity trustees on fundraising, which it has published today. It reminds trustees of their duties and responsibilities in relation to fundraising, including the need to protect their charity’s reputation and that of the wider sector.

The Bill also provides support to social investment. As many will have seen in the autumn statement, the Government have shown a strong commitment to social investment, having invested £80 million to grow social impact bonds in the UK. For charity investors, the power of social investment enables them to increase their mission impact and sustainability by making investments that provide a financial return as well as furthering the purpose of the charity. Although most charities can make social investments under the current law, it can be complex and costly to do so. The new social investment power for charities in clause 15 was recommended and drafted by the Law Commission to overcome that complexity and reduce the costs of investment for charities. It was widely supported on consultation.

The UK is already recognised as a world leader in social investment, an area in which the Government have taken pioneering action. For example, we have set up Big Society Capital and stimulated the use of social impact bonds to deliver services to some of the most disadvantaged in society through initiatives such as social outcomes funds. With the power of social investment conferred on charities by the Bill, we take another step forward in building a sustainable social investment ecosystem.

I now turn briefly to interventions and speeches. My hon. Friend the Member for South West Wiltshire (Dr Murrison) asked about the transparency of direct debit fundraisers. Professional fundraisers are already required to state how much they are paid for asking the public to donate, but I would be happy to discuss the matter further in Committee. I was delighted by the contribution from the hon. Member for Edinburgh East (Tommy Sheppard), who spoke for the SNP and may well have set a precedent under English votes for English law: he said that the SNP would not be taking part in any other stages of the Bill. I hope that that precedent will now stand.

I thank my hon. Friend the Member for Erewash (Maggie Throup) for an uplifting speech and her comments about her inaugural volunteering day. I hope it sets a precedent for other MPs. It is great to see that that will now become an annual event, and I certainly wish it well. I also thank the hon. Member for Clwyd South (Susan Elan Jones) for supporting the fundraising preference service. For the sake of fundraising in the future, it is important that it works. I also thank my hon. Friend the Member for Aldridge-Brownhills (Wendy Morton), who told us the wonderful story about poppy knitting in one of her villages. It demonstrates the value of civil society and the contribution of charities. She is absolutely right that a small kindness can make a big difference.

For several reasons, legislating for a maximum trustee term does not appeal. The evidence is that 50% of charities are carrying at least one trustee vacancy, and we must be mindful that the role is a voluntary one. My hon. Friend the Member for Erewash mentioned the impact on small charities and made an important point about minimising the burden of regulation, as did the hon. Member for Clwyd South. We are keen to minimise the burden of regulation on small charities. For example, the new reporting requirement on fundraising in clause 14 will apply only to charities with incomes over £1 million, and the new fundraising self-regulator will need to consider exemptions for small charities from the fundraising preference service.

My hon. Friend the Member for Newark (Robert Jenrick) made a strong speech that clearly set out how big charities were causing great concern for some smaller charities. It is certainly our intention to try to protect them. The Opposition raised concerns about campaigning. To be clear, charities cannot engage in party-political campaigning, and where they undertake any other types of campaigning to support their charitable purposes, they must avoid adverse perceptions of their independence and political neutrality. In addition, they must not embark on campaigning to such an extent that it compromises their legal status as a charity. The Charity Commission provides clear guidance, in CC9, about what is permitted. It makes it clear that charity law recognises that non-party political campaigning can be a legitimate activity for charities and sets out the general principles.

A concern was raised about whether the commission should be able to publish official warnings. Charities exist for public benefit and depend on public support, so there should be transparency and publication of official warnings when the regulator considers it necessary to intervene, unless there is a good reason not to publish them. There should always be an opportunity, though, to make representations about the factual accuracy of a statutory warning before it is published, and a process for representations is included in the Bill. Concerns were also raised about the scope of official warnings being too broad. We consider the scope to be right and clear. Under the Bill, a warning can be issued in respect of a breach of a statutory provision, breach of a commission order or direction or breach of a trust or duty.

I will turn briefly to the concerns about extremism raised by my hon. Friend the Member for Congleton (Fiona Bruce). Extremism or the terrorist abuse of charities of any kind is very rare but must be addressed to protect public trust and confidence in charities. Although it may not represent most of the Charity Commission’s compliance work, it represents a serious risk to public trust and confidence. The reforms proposed in the Bill are not specifically focused on counter-terrorism or extremism—they would enable the commission better to tackle all types of abuse of charity—so the Bill does not seek to define extremism, nor should it. Charities and their work can be an important protection against extremism. We have no intention, as I said, of undermining freedom of religion or freedom of speech, and the Bill has been certified as compatible with the European convention on human rights.

[Susan Elan Jones]

rose—

[Mr Wilson]

I am going to finish there as I know that many Members want to get away from the Chamber today.

This Bill is about protecting charities and safeguarding their place in the public’s mind. It is about ensuring that charities will not fundraise in a manner that victimises the most vulnerable in our society, and it is about giving charities a new way to utilise their assets through social investment. Charities rely on the public’s trust and confidence. Abuse, where it happens, must be rooted out. These measures have broad support, as my right hon. Friend the Minister for the Cabinet Office said earlier: 83% of the public and 92% of charities support new powers being introduced for the commission.

Charities play a vital role in our communities and this Bill aims to bolster their position in the public’s trust and help them to continue the good works they have being doing for hundreds of years, continuing our country’s long and rich tradition of charity. On that basis, I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Charities (Protection and Social Investment) Bill [Lords] (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Charities (Protection and Social Investment) Bill [Lords]:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 7 January 2016.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Proceedings on Consideration and up to and including Third Reading

(4) Proceedings on Consideration and proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of any message from the Lords) may be programmed. —(Sarah Newton.)

Question agreed to.

CHARITIES (PROTECTION AND SOCIAL INVESTMENT) BILL [LORDS] (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Charities (Protection and Social Investment) Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided. —(Sarah Newton.)

Question agreed to.