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

Tom Tugendhat Excerpts

Thursday 7th January 2016 Public Bill Committees

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

I beg to move, That the clause be read a Second time.

May I begin by congratulating you, Mr Hamilton, on your promotion to a shadow foreign affairs post? I know that you will put your enormous experience to good use on behalf of your party.

Most people will be familiar with the issues surrounding charitable fundraising by large charities that surfaced last summer, and which I referred to in some detail in relation to clause 14. As I said, I accepted Sir Stuart Etherington’s recommendation to give charities a final chance to make the self-regulation of fundraising work. The new system has my complete support, and the public are eager to see improved fundraising and signs that charities are listening to and acting on their concerns. It is now up to the sector to make the improved system of self-regulation work in a timely and effective manner, and I will keep a close eye on the progress being made.

Charities rely on the generous charitable giving and voluntary work of the British public and so need to deliver on the public’s expectations. Otherwise, we must be prepared to step in and act. I do not want to have to do that, but I want to be prepared in case it becomes necessary. Public trust and confidence in charities has already been rocked because of the poor practice uncovered last summer. In a survey last year, only 48% of people—less than half—said that they trusted charities. A more recent survey found that 76% of the public wanted tougher regulation of charity fundraising. We cannot allow further damage to public trust, which is why it is imperative that we have the right tools to act if it becomes clear that the new system is not sufficiently supported by charities. For that reason, I propose an amendment, through new clause 7, to the existing reserve powers in the Charities Act 1992. This will act as a safeguard should self-regulation fail.

Proposed new section 64B of the 1992 Act will extend existing powers in relation to fundraising regulation to compel charities to comply with the requirements and guidance imposed by the fundraising regulator. It will also allow the Government to require charities to be registered with a body for the purpose of regulating charitable fundraising. Under this provision, Ministers will have the discretion to mandate with the regulation of charity fundraising any body whose principal function appears to be in line with that purpose. The provision makes it clear that that may not be a body maintained out of money provided by Parliament. That will be the case with the new fundraising regulator currently being established by Lord Grade of Yarmouth, the interim chair, and Stephen Dunmore, the interim chief executive, which will be funded by the sector itself.

Most of the largest charities have already committed to registering with the new body once it is established, and I am sure that any charity showing initiative and commitment in that way will be a welcome sign to both the public and Parliament. However, should any charities be found to be dragging their heels, this power could be used to compel them to register with the fundraising regulator. It could be used as a first statutory step should charities prove insufficiently proactive in their support of the new self-regulatory system.

Self-regulation will not work if charities decide to wait and see what the finished system looks like before pledging their support. It would be starved of both the necessary mandate and the financial resources even to begin its work. This power will therefore be a vital safeguard to ensure that self-regulation is given a proper chance to succeed. If needed, the power would further act as an early warning sign to charities, flagging it up to them that they are falling behind the expectations that the public, Parliament and the Government have of what is necessary to make self-regulation work. I would challenge any fundraising charities and, in particular, large, sector-leading charities that did not sign up to the new self-regulator to consider their obligation to safeguard the public and their trust in charities more generally. It would certainly be a poor reflection on what is largely a dedicated, compassionate and well-run sector if the Government were forced to invoke this power. However, I will not hesitate to do so if that becomes necessary.

The new clause also introduces proposed new section 64C into the 1992 Act. The new section extends the existing reserve power to regulate fundraising, to enable the Government to confer the function of regulating charitable fundraising on the Charity Commission. That is a significant power, which would change fundraising regulation completely.

[Tom Tugendhat (Tonbridge and Malling) (Con)]

For clarity, may I ask a brief question on the Minister’s slightly earlier point, which he has just moved on from? Is it only charities that will have to opt in, or will other organisations have to?

[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.

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[Anna Turley]

I thank the Minister for his intervention but, as I will say, the sector has made it clear that it feels stifled, particularly in the lead up to general elections, when there are serious debates about the future of Government policy. That is what this new clause seeks to prevent.

The lobbying rules affect charities because of their non-partisan campaigning activity. Organisations can campaign for changes to law or policy where such a change would support their charitable objectives. Although under charity law campaigning cannot be the continuing or sole activity of a charity, it is an entirely legitimate activity for charities to pursue. Under the current rules of the Political Parties, Elections and Referendums Act 2000, some of that activity is already regulated by the Electoral Commission when an organisation has been deemed to produce election material. For many charities and voluntary organisations, raising awareness of the issues affecting the people and causes they support is a routine and important part of their work and central to their charitable objectives.

In a letter leading up to the general election last year, more than 160 signatories from the charitable sector, including Save the Children, the Salvation Army, Oxfam, Greenpeace, Age UK and Amnesty International, said that the legislation should be scrapped and that it is having a “chilling effect” on charities’ work.

[Tom Tugendhat]

One of the things the hon. Lady is talking about is the identification of political campaigning, particularly in the run-up to an election, and I understand why she feels that charities should have the right to campaign on issues about which they feel passionately. However, I am uncomfortable that taxpayer-funded bodies, which, let us face it, is exactly what charities are—the tax break means that the taxpayer is paying for this—are paying for a revolving door of special advisers and press advisers from political parties, notably one political party, to come back, take Government money and lobby the Government. I find it absolutely extraordinary that we are asking the British public to pay to be lobbied on their own behalf. It is very odd.

[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.

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[Anna Turley]

I will respond to the hon. Gentleman’s point and to the previous point before taking the next intervention. There has been a commission report. I appreciate that the hon. Member for Stafford takes the view that there was no difference in the last election, but there is evidence to suggest that charities felt that the Act has impeded the way they behave. I will talk about that further a bit later, if I may, but I will take the next intervention now.

[Tom Tugendhat]

The hon. Member is being extremely generous in giving way. Forgive me, but I come back to the simple point that the taxation element of this is really important. Regarding the element that comes from the taxpayer—the 25%, the gift aid, or whatever it happens to be—that break is money taken by force. Let us not forget what it is; tax is money taken by force. It is not a charitable gift and it is not an extra donation; it is money taken by force from people across our nation, and it is absolutely essential that we do not force people to support one political party or another. It is up to people themselves, because it is a free association and a free choice to support a political party, a campaign or perhaps an issue. However, she seems to be calling for charities to be enabled to use that money for political lobbying, which has to be wrong.

[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.

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[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.

[Tom Tugendhat]

rose—

[Anna Turley]

I am going to make some progress, if I may—I apologise to the hon. Gentleman.

The new clause seeks to prevent what the shadow Minister for the Cabinet Office, my hon. Friend the Member for West Bromwich East (Mr Watson), described last month as

“a fundamentally illiberal Government that railroads proposals through Parliament without debate and seeks to limit scrutiny whenever and wherever possible”.

It is the same mind-set that regards

“the FOI Act…as an irritant and the Human Rights Act…as nothing but an inconvenience”

and that goes in for

“squeezing the finances of the political parties who oppose you becomes not just acceptable but desirable.”

The lobbying Act was a part of that fundamentally illiberal approach and an attempt to gag charities. It came from the same fear of public scrutiny and accountability. The new clause seeks to protect that important freedom.

In 2010, the coalition agreement promised that the Government would

“throw open the doors of public bodies, to enable the public to hold politicians and public bodies to account.”

How much, it seems, has changed, yet the Government still seek to ensure that charities are accountable—and rightly so. From today’s papers we can see that they are considering extending the Freedom of Information Act to charities that deliver public services. I would be happy to extend the Bill process if the Government wish to table further amendments to that end, so that we may have that discussion. Transparency, accountability and freedom to challenge must work both ways.

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[Wes Streeting]

It is a pleasure to serve under your chairmanship, Mr Hamilton. I add my voice to those congratulating you on your new role in the shadow foreign affairs team. I am sure your experience will be greatly appreciated throughout the whole House.

I confess to feeling some responsibility for this discussion. The question we should always ask when debating any potential law is: what is the problem we are trying to fix? I understand the problem the new clause is trying to address. It is, as my hon. Friend the Member for Redcar described, the chilling effect that was undoubtedly caused by the gagging law passed by the previous Parliament. I will talk about that chilling effect shortly, but it is worth remembering why that gagging law was passed in the first place. It was, of course, because some very foolish Liberal Democrat MPs and a few Conservatives made the decision prior to the 2010 general election to sign a pledge in a Committee Room down the corridor with me, as president of the National Union of Students, that clearly stated, “I will vote against any increase in tuition fees and will campaign for a fairer funding system.”

The irony was that, prior to the general election, I was hauled in by members of the Liberal Democrat party leadership, who subsequently joined the Cabinet, to explain why the NUS had gone so soft and was not demanding abolition of all fees in line with Liberal Democrat policy. That would have been laughable in itself, given subsequent events, were it not for the fact that previously, as leader of the NUS, I was dragged up to a particularly dreary Liberal Democrat spring conference at Harrogate expecting to endorse its new graduate tax policy as the “Labour” president of the NUS. Of course, it was never a party political role—[Laughter]—but nevertheless, there I was, ready to endorse the Liberal Democrat graduate tax policy, which never came to fruition.

That is an important example because, even as president of the National Union of Students, which is arguably one of the most small “p” political charities where candidates stand on political tickets—I was elected as a Labour president of the NUS—there was never any doubt in my mind about who I was accountable to and who I served. I was elected first and foremost—in fact, only—to serve students. If that meant going up to a wet and windy Liberal Democrat spring conference to stand alongside its leader and endorse a policy that, sadly, did not come to pass, I was prepared to do it.

In the same way, I told Lord Mandelson, when he was Business Secretary, that unless there was student representation on the Browne review, he would find me and 100 other student union presidents outside the Business Department holding up signs saying, “Students let down by Labour”. The point is that, whoever is in government, if sometimes they take decisions that impact on beneficiaries or communities that we serve under the auspices of our charitable objectives, we must have the muscle to hold their feet to the fire.

That happens today to Labour politicians up and down the country, whether it is the Labour-led Welsh Assembly Government or Labour in local government. Look at the work that the Refugee and Migrant Forum of Essex and London does. It threatened to take the Government to court over their terrible “go home” vans and was prepared to turn up at its local Labour council to say it must do more to support refugees and migrants.

The Ilford Salvation Army does a load of great work on homelessness, and I want it not just to provide for homeless people with direct provision, but to turn up at the door of their local councillors or Members of Parliament asking them to explain why public policy is having a detrimental impact on those people and how it needs to change.

[Tom Tugendhat]

The hon. Gentleman is making a powerful case for the ability of charities to explain themselves, and I fully support that. Will he point to the part of the Bill or any element of it which prevents that and therefore creates the need for the words “political campaigning”, not just campaigning on issues?

[Wes Streeting]

We are debating new clause 2. Members can see it but, for the benefit of those watching, let me point out that I do not see any reference in it to party political campaigning. It would simply enshrine in legislation the right of charities to undertake political activity. That is important, because a chilling effect followed the gagging law, which had a number of practical implications. For example, charities spent ridiculous amounts of time with spreadsheets trying to calculate their national spend versus constituency spend, and whether they were close to the spending limits and whether that would affect their collaboration with other charities.

I thought the Conservatives were the party that wanted to scrap red tape, yet they have generated a whole load of red tape for voluntary sector organisations whose funds would be better spent on helping their beneficiaries through either direct service provision or lobbying and campaigning. Students unions at the last general election were afraid to hold hustings events. Of course they should do that—it is nonsense that they should not hold those events. The gagging law had a chilling impact.

[Tom Tugendhat]

The hon. Gentleman is being extremely generous in giving way. I do not know about his hustings events, but most of mine were held in churches, which are almost by definition charities. The number of charities that were afraid to hold hustings in my community was zero, so I am baffled as to why he feels that some were afraid about that.

[Wes Streeting]

I am simply citing the representations I have had from my old colleagues at the National Union of Students about the impacts of the gagging law. It is important to put that forward. I was the head of a charity at not one but two general elections. First, I was president of my university’s students union back in 2004, where our “Get out the vote” campaign in Cambridge undoubtedly contributed to the loss of an excellent Labour MP, in the form of Anne Campbell—she had abstained on the Second Reading of the Higher Education Act 2004, which I am sure contributed to that. Secondly, during the 2010 general election, I was president of the NUS.

At that time, charities were well constrained from party political activity and endorsing political parties, and there is unlikely to be a single charity campaigner in the country who cannot cite CC9 of the Charity Commission’s guidance chapter and verse, which is clear about the restrictions on charities in party political campaigning. The gagging law passed in the previous Parliament was a solution in need of a problem. There were no previous problems; it was just that the Liberal Democrats got scared of the consequences. Alas, even the gagging law could not save them.

Finally, on the general attitude to the voluntary sector’s political representation and campaigning, too many Members of Parliament seem to be happy to turn up and have photographs with guide dogs at party conferences, pop along to their local Barnardo’s outreach and have photographs with service users and be there for photographs, leaflets and press releases, yet when it comes to being confronted with the consequences of the decisions this place has made under successive Governments, they do not like the hard truths.

We need to think about the voluntary sector’s reach and its broad focus on speaking up for and serving the most disadvantaged in our society—people who do not know how to find their way into the corridors of power. Incidentally, those in the sector are not like the many commercial organisations that have also had significant amounts of public money, but which can none the less exercise their muscle in Committees, in the corridors in this place and on the Floor of the House. These are charities that speak up for some of the most dispossessed and disadvantaged in our society, and when they say that the gagging law has had a chilling effect, it is incumbent on us to listen and to take this simple, uncontroversial measure to ensure that every charity knows that they are empowered to make political representations to speak truth to power on behalf of their beneficiaries.

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[Mr Wilson]

I simply do not agree with the hon. Gentleman’s characterisation of the law as it stands, because charities can and do campaign on policy and political issues today. Members of my party are particularly charitable people, although they are not charities themselves, and if, on the basis of promoting freedom of speech, they want to invite people to come and speak in their constituency, they should be free to do so.

[Tom Tugendhat]

Speakers on both sides of the Committee have been extremely generous in giving way, so I will be as brief as I can. Will the Minister identify that there is a difference between executing Government policy, such as free schools, and lobbying to achieve political party aims? They are two separate things. Will he also identify that there is a difference between freedom of speech for individuals, which we all enjoy in these islands, thank God, and have done for many hundreds of years, and the freedom of organisations that receive taxpayers’ money—money taken by force, I remind the Committee —to lobby in a different way? The two are necessarily different.

[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 .

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[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.

[Tom Tugendhat]

Forgive me for intervening once more, but on that point, does the Minister believe that it would be wise for charities to identify how much they spend on their core activity and how much on campaigning?

[Mr Wilson]

My hon. Friend raises a question of enormous public interest. Only last year the Charity Commission looked at whether charities should be required to submit details of their campaigning spend as part of their annual return process, details of which would have been published on the register of charities. The commission concluded that such a requirement would create a significant amount of work for charities and decided not to include that in the annual return for 2015. However, the commission did note the huge level of public interest in the issue and said it would look at the matter again. I welcome that and encourage the commission to keep the matter under review. I hope that clearly answers my hon. Friend’s question.

Even in the unlikely event that the boundaries of law were not shifted by an attempt at statutory definition, one would still expect legal challenges to test whether the law had in fact changed, by design or otherwise. There is further risk in putting this in the Bill since it would risk politicising charities’ right to campaign. Ministers, rather than the independent regulator and the courts, would be responsible for the provision, which could leave it open to political interference over time.

I hope the Committee will agree that one advantage of case law provision is that it is in the hands of an independent regulator and the courts and is not subject to ministerial intervention. As I said, my noble Friend Lord Hodgson of Astley Abbotts is currently reviewing evidence of the impact of 2014 Act on charities and other organisations in the run-up to the election. I understand his report is expected reasonably soon, and I look forward to seeing the findings and whether there are lessons to be learned.

I also point the Committee to the Charity Commission’s recent publication of the cases it investigated in the run-up to the 2015 general election. From looking at those cases, one gets a good impression of the independent regulator properly exercising its regulatory role in this area in a very proportionate way.

I hope that I have given the reassurances that Opposition Members seek about charities’ right to speak out for their beneficiaries, while cautioning against the dangers of statutory provision, and hope they will not press the new clause.

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[Anna Turley]

I appreciate the Minister’s intervention. I am a realist and a pragmatist in all things. I recognise the huge contribution made to this country by many independent schools, faith schools and other schools that would not necessarily be my first choice for my children. I am not advocating their abolition, but rather that they should deliver over and above what they currently do and justify taxpayers’ money supporting them through their charitable status.

[Tom Tugendhat]

The hon. Lady is making some interesting points, and it might surprise her to know that I do not disagree with a lot of them. The best independent schools do exactly what the Bill proposes. Tonbridge School in my constituency does exactly that. Lord Moynihan is a very wise man, because he sends his children to Tonbridge School and appreciates what really good independent schools can, and indeed should, do.

I would argue strongly that it is not independent schools that have caused the division in society to which the hon. Lady refers, but rather the withdrawal of the ladder for the many others. The very best schools in my constituency—I must declare an interest: I am a governor of Hillview, a non-selective secondary school—do indeed provide that ladder and reduce the social division to which she refers. It is therefore not simply a question of identifying an independent school; it is about an entire educational range.

[Anna Turley]

I agree with much of what the hon. Gentleman says. We have seen the damage that selective education has done, and the pulling up of the ladder has had a quite devastating impact. I do not believe that it is acceptable. Having been educated in Kent—I am going back to far too long ago—I have a strong view that there was quite a divisive approach to education in that county. Selective education is damaging to social mobility, and I share the hon. Gentleman’s desire to challenge that in all its forms. I also recognise that many independent schools do an extremely good job in supporting the state sector.

[Tom Tugendhat]

Just for the record, I actually do support selective education.

[Anna Turley]

I appreciate that the hon. Gentleman supports state education—

[Tom Tugendhat]

Selective education.

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[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—

[Tom Tugendhat]

Taken by force.

[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.