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

Wes Streeting Excerpts

Tuesday 5th January 2016 Public Bill Committees

[Wes Streeting (Ilford North) (Lab)]

Happy new year to all members of the Committee. I support my hon. Friend the Member for Redcar in defending the inclusion of clause 9 in the Bill. In the Minister’s response to the inclusion of the clause and the debate in the House of Lords, he cited extensively the changes made to the Government’s approach to the disposal of housing association stock. That context is particularly important. Given the fact that the Government attempted an appalling land grab on housing association stock, to the extent of threatening housing association providers that did not comply with the objectives of public policy with taking their assets by force of statute, it is unsurprising that the Lords chose to include the clause, so that the assets of those housing associations could be protected. The Government’s approach may have changed—many housing associations have chosen to back down from confrontation with them—but the way in which housing associations were effectively press-ganged by the Government is totally unacceptable and not the way to do partnership.

I wonder whether as many housing associations would have rolled over if we were closer to the end of the Parliament than to the beginning, although I appreciate that many housing association trustees were placed in an invidious position. I might have wished them to take a stronger stance, but given the pressure they were put under by the Government perhaps it is unsurprising that they rolled over.

When I read the Lords’ debate on the clause, I was struck by the contribution from Lord Beecham, who said that although the clause appeared because of Government policy on housing associations, it could have wider application. For example, he cited charities running medical services and the National Trust. However, given that many parts of the voluntary sector are effectively involved either directly or indirectly in providing public services or picking up the slack when public services have been cut, it is not beyond the Government’s wit or imagination to find other areas where they might like to steamroller around and seize charitable assets.

At the heart of clause 9 there is an important principle that dates back to Elizabethan times: many people who give to charities make those gifts or bequests for specific charitable purposes. It should not be possible for the Government—not only this Government, but any Government—to direct charities to use those assets for different purposes, however well intended, desirable or, indeed, undesirable the Government’s objectives may be.

The clause is important because it provides protection not just in relation to housing associations—the Minister makes the case that that may be unnecessary given the change of approach—but more generally, so that if a Government, whatever their political leaning, want to use charitable assets for purposes for which they were not gifted or bequeathed, they will have to accept that those assets are protected. If not, they will have to amend legislation or provide a specific exemption, which would generate a very worthy debate in this House or in the Lords. For those reasons—and, as I have said, given the appalling way in which the Government conducted themselves immediately after the election—I strongly support the inclusion of clause 9 and support my hon. Friend the Member for Redcar in voting to keep it.

[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.

--- Later in debate ---

[Mr Wilson]

After that excitement, we can get on with the proceedings of the Committee.

Under the current law, there are several criteria that disqualify a person from being a charity trustee. The automatic disqualification provisions date back to the Charities Act 1993 and represent an important way of protecting charities from those who might seek to abuse their position of trust, whether for personal financial gain or to access vulnerable people for abuse. The existing criteria for disqualification include any unspent conviction for an offence involving deception or dishonesty; where the person is an undischarged bankrupt or disqualified company director; and where the Charity Commission or court has removed the person from serving as a trustee.

Clause 10 does two things. First, it adds new criteria for a person to be automatically disqualified from being a charity trustee. Secondly, it extends disqualification beyond trusteeship to cover the chief executive and chief finance officer positions in a charity. The existing criteria for automatic disqualification remain unchanged.

In practice, the Charity Commission’s experience has been that the existing criteria are useful but too narrow, and that they do not cover several areas that ought to merit automatic disqualification, including convictions for serious terrorist offences, money laundering or bribery. Many people would be surprised that those offences do not already result in automatic disqualification, although in some cases there may be an overlap with existing disqualification if the offence involves dishonesty or deception.

I would like to say something about terrorist and extremist abuse of charities. The Charity Commission recognises that that type of abuse may not be relevant to most charities, but it is an increasing area of commission casework and an area of great concern. The commission has an important role in helping charities to prevent that type of abuse from occurring in the first place and in ensuring that abuse is reported and stopped and that charities are better protected in the future. It has detailed guidance for charities on how they can protect themselves from that type of abuse.

The Charity Commission also works closely with the police and other agencies where concerns are raised. In 2014-15, the commission made 506 disclosures of information to the police and other agencies as a result of concerns about charities involving terrorism or extremism—up from 234 disclosures in the previous year. It undertook 80 visits or monitoring cases to charities at risk of terrorist or extremist abuse. It also received 11 serious incident reports and undertook 32 pre-investigation assessment cases and 20 formal investigations. The new automatic disqualification provisions in the clause, along with case-by-case disqualification, which we will discuss shortly, will help to protect charities from terrorist or extremist abuse.

The extension of automatic disqualification in the clause covers other areas, such as money laundering, where added protections are needed. Let me give the Committee an example. A police investigation resulted in a number of convictions for fraud and money laundering offences, which related to funds applied by a charity in relation to contracts to house and support asylum seekers. Those convicted of fraud were disqualified from acting as trustees, because fraud is a crime involving deception or dishonesty. However, those convicted of money laundering were not disqualified, because the offence of money laundering does not fall within the existing criteria. The latter persons are no longer charity trustees, but as the law stands there is no bar on their becoming trustees again.

The new criteria for automatic disqualification proposed in clause 10 also include cases where a person has been found guilty of contempt of court in civil proceedings where a false statement or disclosure is made; cases where a person has been found guilty in the High Court of disobedience to a commission order or direction; and designation under terrorist asset-freezing legislation.

The existing disqualification provisions do not prevent individuals from being appointed to non-trustee positions of significant authority in charities. It is counterintuitive that someone can be disqualified from acting as a trustee of a charity, only to continue their abuse by taking up the post of chief executive, in which they could exploit that influence. The commission has seen that happen in some cases, with disqualified trustees taking up other senior positions in other charities and subsequently committing abuse. The clause would deal with that by preventing disqualified individuals from acting in top management positions, thereby reducing the risk of abuse. The top management positions covered by the extension of disqualification are the most senior executives—usually the chief executive officer, along with the finance director or chief finance officer, if there is one.

The clause also provides a power for the Minister for the Cabinet Office to make regulations to amend the list of criteria. The Minister is required to consult if the regulations add a new offence, and such regulations will be subject to the affirmative parliamentary procedure, requiring debate and approval before they can be made. We included the requirement to consult in response to a recommendation from the Joint Committee on the Draft Protection of Charities Bill, following pre-legislative scrutiny.

Finally, and perhaps most importantly, the existing regime of waiver under section 181 of the Charities Act 2011 will also apply to any persons disqualified under the new criteria, enabling such persons to apply to the Charity Commission for their disqualification to be waived in relation to a particular charity.

[Wes Streeting]

Will the Minister tell us how many waivers the Charity Commission has granted in the past 10 or 20 years?

[Mr Wilson]

Six waivers were granted between 2008 and 2014. Every application for a waiver in that period—six out of six—was granted.

The waiver provisions are important as they enable disqualified individuals who can show that they have turned over a new leaf to take up positions of responsibility in the charity sector. Of course, there is nothing to prevent disqualified individuals from volunteering or working for the charity in other roles, subject to disclosure and barring service checks where necessary.

As I said on Second Reading, waiver applications will be considered on a case-by-case basis. The Charity Commission will take into account the nature and seriousness of the conduct that resulted in the conviction and consequential disqualification. The commission has said that it will also take into account the type of charity concerned. In particular, it already accepts that charities working to rehabilitate offenders will often be able to make a compelling case for a waiver. The experience of someone with an unspent conviction might well be vital to the trustee body’s understanding of its aims and how best to pursue them. The commission will also take into account evidence that the person no longer represented any particular risk to charity. For example, if someone had a lifetime disqualification from an unspent conviction —say, 30 years ago—they might be able to show clearly that they had long since changed their life around. An application for a waiver would usually require the support of the charity’s trustees. A decision of the Charity Commission not to grant a waiver could be appealed to the charity tribunal, which would consider the matter afresh.

It is right that the Charity Commission looks beyond the benefits for the individual and considers the risk and benefits involved not only for any charity directly concerned, but for charities generally. The proposed disqualification powers will protect charities from individuals who present a known risk, while providing for the rehabilitation of offenders and a way back into charity trusteeship on a case-by-case basis. That strikes me as a fair and proportionate system.

As I have just told the hon. Member for Ilford North, in the past four years there have been six applications to the Charity Commission for a waiver from disqualification where the disqualification resulted from an unspent criminal conviction. All those applications were granted. I know that charities involved in rehabilitation have expressed some concern about the provisions, and I am keen to discuss with them how we can support charities involving ex-offenders through the waiver process while protecting the charity sector from known risks.