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

Debate between Tom Tugendhat and Rob Wilson

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.

--- Later in debate ---

[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 .

--- Later in debate ---

[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.

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

Debate between Tom Tugendhat and Rob Wilson

Tuesday 5th January 2016 Public Bill Committees

[Mr Wilson]

I did not note many questions in the hon. Lady’s speech, but I am grateful for her strong support for the clause. There have been some worries in the sector about the financial burden on charities as a result of the clause. Overall, we estimate the cost to the charity sector to be about £1 million over 10 years, which is marginal compared with the benefits of greater transparency about how charities will safeguard the public from poor practices. That is a very positive investment.

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

Having sat through sittings of the Select Committee on Public Administration and Constitutional Affairs and listened to stories of misery from various people, and seen the rapid reaction of the Government on this issue, I would like to pay a little credit to both the Government and the Opposition. They have worked closely together to produce what is a very effective response to the malpractice of various of our charities and what, I hope, will go far in securing the greater confidence that the public have the right to have in our charitable sector.

[Mr Wilson]

It is very kind of my hon. Friend to make those comments. It is true that the Opposition have worked effectively in the other place and, indeed, in this place. I deliberately set up the Etherington review as an all-party review because I wanted every party to be involved and to have a stake in ensuring we get this right. By and large, the Etherington review, all of whose terms I have accepted, has proved to have produced a very effective report, and we need to get on with implementing all parts of it.