I should like to use the Adjournment debate to raise an important aspect of the regulation of charities. Britain is a charitable nation. At least one in four adults regularly engages in some form of voluntary activity. In England and Wales, 171,000 charities are registered with the charity commissioners. The total turnover of charities is no less than £13 billion. Charities are thus big business.
The advantages of being a registered charity are considerable. Charities are exempt from income and corporation taxes, capital gains tax and capital transfer tax, and attract 80 per cent. relief on the uniform business rate. Moreover, charitable status inspires public confidence and stimulates donations.
Individuals contribute through their taxes too. The Government's annual contribution to charity stands at £2·5 billion, of which £500 million is granted indirectly through tax benefits.
To maintain public confidence in the charitable sector, certain safeguards are vital. They include the protection of charitable funds from fraud and the prevention of their use for non-charitable purposes, such as political campaigning. It is that latter abuse on which I shall dwell tonight.
The most flagrant case so far has been Oxfam. As providers and organisers of famine relief, the charity has received strong support from the public. Yet I wonder how many of those donating or collecting or giving up free time to serve in Oxfam shops over the years knew that Oxfam was pouring funds into projects funded by the—
On a point of order, Mr. Deputy Speaker. Will you point out to the hon. Gentleman that there is a requirement placed upon him to declare an interest arising from a visit that he made to Namibia, which was sponsored by the International Freedom Foundation, the organisation which provided him with the brief that he is using tonight?
Yes, Mr. Deputy Speaker. My visit to Namibia, which was hosted by the International Freedom Foundation, is declared in the Register of Members' Interests. I repeat that, in case the hon. Member for Workington (Mr. Campbell-Savours) missed that point.
As I was saying, I wonder how many of those donating or collecting or giving up free time to serve in Oxfam shops over the years knew that Oxfam was pouring funds into projects run by the Marxist Government of Nicaragua, including the building of a shower block for a prison, the provision of first aid kits for Sandinista paramilitaries and a training school for Sandinista party activists.
In 1989, Oxfam, with another controversial development charity—Christian Aid—was instrumental in setting up the Southern Africa Coalition, a non-charitable pressure group to campaign for sanctions against South Africa. Anyone who has experience of training and self-help schemes for blacks in the townships and squatter camps, as I have, knows the contempt in which Oxfam is held there for the blockages that it has erected to black enterprise, although that is not the point that I am pursuing tonight.
There has also been deep Oxfam involvement in political campaigning regarding Cambodia, and only this month, The Daily Telegraph unearthed Oxfam donations to a left-wing movement in Bihar in India dedicated to the class struggle—in at least one documented case, by recourse to arms.
I was a trustee of Christian Aid in 1979. I seem to recall that we sorted out where the charity had gone wrong in its work in southern Africa, and that the remaining work was noncontroversial. I am not arguing that my hon. Friend did not make that point—I merely say that, for the sake of balance, it is worth putting that on record, and I have a vested interest in making the point.
My hon. Friend admits that it was a mistake; on that, we are clearly agreed.
Complaints reached such a pitch that the Charity Commissioners set up an inquiry, which reported last month. It concluded that Oxfam's trustees had
exceeded the charity's objects and the law which restricts charities from undertaking political activities.
The report said that the trustees
do not appear to differentiate between stating a possible solution to a problem in a reasoned fashion and campaigning to have that solution adopted.
The commission concluded that Oxfam's unacceptable political activities must cease. Yet it took the view that Oxfam's trustees had acted in good faith and therefore decided to take no action to seek reimbursement of the misapplied funds or to refer the matter to the Attorney-General. This is the fourth occasion since 1981 on which Oxfam has been found guilty of conducting political campaigns and it appears undeterred by reprimands from the commission. Even after the latest inquiry, Oxfam remains defiant. Its chairman, Mary Cherry, responded to the commission report by saying:
We have come to see that our primary object of relieving poverty, distress and suffering cannot be achieved without advocacy on behalf of the people we are trying to help"—in other words, "We will go on as before.
Oxfam has undoubtedly been encouraged in that attitude by a very cosy relationship with the commission in the past. In July 1987, an internal briefing to the trustees of Oxfam by Bruce Coles, the charity's legal adviser, commented on how the private guidance from the then chief commissioner—Mr. Dennis Peach—departed considerably from the commission's public statments. It is significant that he added:
we are fortunate in having a liberal-minded Chief Charity Commissioner"—
in other words, one who would always give Oxfam the benefit of any doubt.
Notwithstanding the good work that Oxfam does in famine relief, that is a highly unsatisfactory state of affairs. A fraud is being committed if money donated for charitable purposes by the public—either directly or through taxation—is siphoned off to pay for political campaigns. Oxfam has been found guilty of such fraud, yet it is in that area that the commission is proving incapable of taking the necessary steps.
The commission's ethos is undoubtedly to smooth over any problems or disputes with the charity in question, especially in matters of alleged political abuse of status. The commission appears to become pro-active only in cases of fraud and mismanagement of trusts and charities, but does not appear to regard the abuse of taxpayers' money for political campaigns as worthy of serious redress.
What is the hon. Gentleman's view of three other institutes which have charitable status—the Adam Smith Institute, the Institute of Economic Affairs and the Social Affairs Unit? I remind him that the Adam Smith Institute promoted the abolition of the Greater London council and advocated student loans and water privatisation, to mention but a few of its campaigns. What does he think about the charitable status of those institutes?
I can hardly comment on them. I do not know whether any complaint has been made about them to the Charity Commissioners. If complaints have been made, I am sure that they will be investigated in the same way as those against Oxfam.
As I was saying, the commission's ethos is undoubtedly to smooth over any problems. The fact that once a formal inquiry is launched the commissioners will not make the results public unless the charity being investigated gives them explicit permission to do so is also an unacceptable state of affairs. That paradoxical situation results in the very people to whom the commission is ultimately answerable—the general public— having no access to the commission's most important workings and findings. That situation is clearly compounded by the average length of a formal inquiry, which is about two years.
In 1987 the Woodfield report was commissioned by the Home Office to examine the efficiency of the Charity Commission. However, the report focused almost exclusively on cases of fraud and financial mismanagement, paying little or no attention to the growing political abuse of taxpayers' money. The law covering the political activities of charities is explicit and unambiguous. The commission states:
Political activity—like the elephant—is difficult to describe but easy to recognise. In relation to charities politics does not only mean 'party politics' but political activity as defined by the High Courts in many cases over the years-that is: seeking to influence government policy (local or central, at home or abroad); or advocating changes in the law or the retention of the existing law.
Surely that has been superseded by the White Paper "Charities: A Framework for the Future". Paragraph 2·43 states:
Ministers welcome the advice and the guidance which charities can offer to Members of Parliament, to central and local government, and to other public authorities on a wide range of social problems. Charities should feel free to take the initiative in offering advice and opinions and in proposing changes in the law and should not need to wait to be invited to do so. The Government firmly believe, however, that such activities must remain ancillary to a charity's primary purposes, which must be clearly charitable and nonpolitical.
Is my hon. Friend really suggesting that the massive work that Oxfam and Christian Aid do—I declare an interest as an unpaid board member of Christian Aid—is ancillary to
their political campaigning? The money is spent on all the charitable activities for which those organisations are renowned.
I reply simply that advice is one thing and campaigning is quite different. I draw my hon. Friend's attention to the fact that in 1991 the High Court ruling which rejected the application for charitable status of the human rights organisation Amnesty International clearly asserted that any body campaigning for the changing of laws of either the domestic or a foreign Government cannot operate as a charity.
Despite such clear guidance, the commission's record and view towards infringements are unacceptable. Oxfam, the subject of the latest inquiry, is far from being the only development charity breaking the legal guidelines, but its activities are especially significant. Not only is it the United Kingdom's largest charity, with an income of £62 million, but it has been the object of a stream of complaints from the general public, resulting in four previous official commission inquiries, which at best can be described as whitewashes. The complaints involved Oxfam's support for the World Disarmament Campaign in 1981, and for the Nicaraguan Government in 1985, the pamphlet "The Arms Race Kills" in 1985 and its pro-Palestinian position in 1989. Indeed, in response to the 1985 "The Arms Race Kills" pamphlet, the commission concluded that
Oxfam may have strayed into an area of political controversy unrelated to their activities",
but went on to say that
We do not propose to take this matter any further".
The trustees of Oxfam clearly hold the commission's regulatory ambitions in contempt. Despite Oxfam receiving some £12·5 million per annum from the taxpayer and the evidence of abuse of status over the past 10 years, the commission seems satisfied with public smacks on the knuckles, accompanied by private reassurances of support and cover to the charity's legal advisers.
Clearly, the Charity Commissioners perform a necessary role in providing a supportive service for those running existing charities or contemplating new ones. That should also involve advice on where the bounds of charitable status lie, as clearly defined in law. However, it is equally clear that the commission cannot, and should not, be expected to continue to act as defence counsel, judge and jury in cases of political abuse of charitable status. To expect it to advise Oxfam on how to stay within the commission's interpretation of the law and simultaneously to uphold the public and taxpayers' interest is a contradiction which cannot be resolved within existing structures.
We do not expect the national health service or local government to police themselves. Instead, we have set up a range of ombudsmen who together offer the prospect of independent and just redress after investigating complaints. The ombudsman system has won almost universal praise. I submit that we need a charities ombudsman as well.
There are two separate, easily definable areas of administering and scrutinising charities: the day-to-day administration and assistance, which should be carried out by the charities' trustees with assistance from the Charity Commission, and the investigation of complaints. It is neither practicable nor reasonable to expect the Charity Commission to carry out both functions—a task riddled with conflicts of interest.
That issue lies at the heart of charity and charities. Charities are predominantly funded—directly through donations and indirectly through taxation—by the general public. The fact that under the present system the decision whether complaints from ordinary citizens should be taken up lies in the hands of the same body which renders advice to charities makes a mockery of public accountability. In the rare event that a formal inquiry is launched, the Charity Commission has no responsibility to report its full findings either to the complainant or to the public as a whole. In the case of Oxfam, indications are that this conflict of interest has resolved itself in favour of the charity concerned and against the public interest. Only with the creation of an independent body, such as an ombudsman, directly responsible to the public and accountable to Parliament, can the uncertainty of the present system be resolved.
I recommend to the Government the suggestions for reform made recently by the International Freedom Foundation, to which the hon. Member for Workington (Mr. Campbell-Savours) referred, and with which I am quite happy to admit that I have some association, but in which I have no direct interest and from which I receive no direct payment. That group's complaints against Oxfam were vindicated by the commission's recent inquiry.
The suggestion is that responsibility for the investigation of complaints against English and Welsh charities should be removed from the Charity Commission. The remainder of its work should remain with it, and it would remain responsible to the Home Office and to Parliament for the fulfilment of those duties.
Secondly, it is suggested that we should create an ombudsman for charities with supporting staff and central Government funding, modelled on the successful example of existing ombudsmen. Complaints of political and other abuse of charitable status would be sent to the ombudsman who would be responsible to the public for examining and adjudicating on complaints within the existing clear definition of abuse.
The mainstream of public confidence in the charitable sector is essential if the unique contribution that it makes to society is to be enhanced, but that public confidence is now at risk. The small minority of charities that are ineptly run, fraudulent or wish to play politics with taxpayers' money bring disgrace to the whole community. New structures are needed to bring them back into line with the law.
In 1991 the hon. Member for Reigate (Sir G. Gardiner) was the leader of an investigative team for the International Freedom Foundation to Namibia. He was also a guest of the South African foreign affairs department in Cape Town. His speech was no more than the rantings of the ultra-right in British and American politics. His objective tonight is to do immeasurable damage to the activities of Oxfam, which helps millions of people in very difficult circumstances across the world.
The hon. Member for Reigate refused to comment about the Adam Smith Institute because he knows that it organised a conference on privatisation in London in June 1988. It is also a registered charity. He is also aware that he makes the position of the Institute of Economic Affairs extremely vulnerable, in so far as his activities and those of his friends in the IFF invite complaints to be made about that organisation, whose activities are patently political. He also invites complaints about the Social Affairs Unit, whose authors once argued that the root cause of apartheid was not racism, but socialism and trade unions. One of its authors argued that one man one vote was undemocratic in relation to South Africa. That organisation is a registered charity.
The hon. Member for Reigate is getting into a very difficult area in which many organisations may be vulnerable. He should use his words with great care in future.
It is clear from the intervention by the hon. Member for Workington (Mr. Campbell-Savours) that my hon. Friend the Member for Reigate (Sir G. Gardiner) has raised a very important subject which is likely to be of considerable interest to hon. Members.
The system of charities that has grown up in this country is unique and much prized. It is quite easy for us to forget that many of the major services that we take for granted today in health, education and social welfare, were built on foundations laid down over generations first by the Church and later by concerned individuals who gave of their time and resources not because they were asked to do so, but voluntarily and for the good of their communities.
As we have heard, charities now engage in an immense range of activities from running the village hall to caring for the disadvantaged and protecting the environment. They operate at all levels, from the small local village through to the international arena. Some survive with virtually no resources, other than people's goodwill. Others are well endowed. Some are very small and some are, in effect, multi-million-pound international corporations.
My hon. Friend is right to say that charitable status carries with it many advantages. The tax reliefs provided by the Government are considerable, as is the contribution made by both central and local government towards funding particular charities or charitable projects. He is right, too, to say that, if public confidence in our charities is to be maintained, proper safeguards must exist to ensure that the money donated for charitable purposes is used for those purposes and is not misapplied—in any way or at any time.
Over the years, a complex legal framework has been built up to ensure that charitable endowments are preserved for the benefit of the community, that trustees apply the highest standards of stewardship and that abuse is prevented. The Charity Commissioners play a key role in this, for it is they who are charged with the task of supervising and monitoring charitable activities and with investigating abuses of charitable funds.
Since the last major piece of charities legislation in 1960, the charity world has changed dramatically. As we have heard, the number and variety of charities has grown enormously, as has the amount of money donated to them. The Government believe that the system for supervising charities needs updating in the light of those developments.
The Government's proposals for legislation were published in the 1989 White Paper "Charities: A Framework for the Future". The proposals are designed specifically to enhance the Charity Commissioners' investigative and remedial powers, so that they may identify abuse or potential abuse at an early stage, and deal with it effectively. We think that these powers, together with the new duties and responsibilities to be laid on charity trustees regarding the preparation and submission of their accounts and their accountability to the public, will result in a far stronger framework for oversight and control of the charitable sector in the future. Work is well advanced on preparing the Bill, and we hope that there will be an early opportunity to introduce the legislation.
My hon. Friend has raised the question of political activities and charities. There is, of course, a crucial difference here between what is permissible for charitable and non-charitable organisations. A non-charitable body can support any causes that it wishes, provided that: it keeps within the general law. A registered charity, however, cannot have political objects; it is constrained by law to the reasonable advocacy of causes which directly further its objectives. Although it can, perfectly properly, draw attention to the problems that it encounters which affect its work, it may not go on to seek improperly to influence Governments either at home or abroad.
I am aware of concern that a few charities are overstepping the line between acceptable comment and unacceptable political campaigning and my hon. Friend has mentioned one tonight. As he is no doubt aware, in the case of Oxfam, the commissioners took action. Indeed, as he pointed out, they investigated the charity's activities, and although they recognised the value and importance of the work of the charity, and its experience in the field, they nevertheless censured its trustees for exceeding the limitations on charities and political activities. The law allows the commissioners to publish reports of their inquiries where they propose to take action on them. The commissioners' report on Oxfam was published in May. We intend to legislate to enable the commissioners to publish their reports much more freely which I believe would meet my hon. Friend's argument on this issue.
We know of nothing to suggest that charities in general experience difficulties in complying with the restrictions on political activities, but I understand that the commissioners are revising the guidelines, which they issue so that they are clearer. We think, however, that the law as it stands strikes the right balance between allowing charities to undertake reasonable activities and restraining them from acting in overtly political ways.
There is bound to be room for dispute over the application of the general guidance to particular cases, but to alter the guidance by legislation might well have the disadvantage of laying down inflexible rules instead of allowing the law to develop in the light of particular cases which may present features which cannot now be foreseen.
No, I shall not give way, because I have only a little time and I want to finish my reply to my hon. Friend.
Where charity trustees overstep the mark, the commission, particularly with its new post-legislative powers, will be able to check them. We have, therefore, no plans to change the law in this respect.
My hon. Friend also suggested that the commissioners' activities in providing advice, guidance and a variety of legal services to charities are incompatible with their investigative role. The Government, however, see no conflict between the commission's different roles. The commissioners' function is to promote the most effective use of charitable resources. Advising charities on the best use of their resources does not prevent them from taking action; nor does it make them less likely to act to remedy malpractice where this is found.
My hon. Friend suggested that an ombudsman for charities could be created along the lines of other ombudsmen, to take over the commissioners' investigative role. The Government do not recommend this solution. The various ombudsmen, including those for the national health service and local government which my hon. Friend mentioned, exist in general terms to investigate and expose injustice or loss to individuals arising from maladministration, poor service or unfair treatment. Those who complain about charity activities rarely fall within that category. Their complaints and concerns, nevertheless, merit consideration and have to be dealt with. But whether an ombudsman is the way forward is more doubtful.
For example, in deciding complaints, the ombudsman would have to assess whether the action by a charity was acceptable in relation to charity law generally and to the charity's trusts in particular. This is a judicial function quite unlike that exercised by other ombudsmen. They are, in general, precluded from dealing with any complaint that has been, is being, or can reasonably be taken to court; they exist to deal with cases where no judicial remedy is available. That is not the case in the charitable sector.
The Charity Commissioners exercise quasi-judicial functions; they are equipped to consider the broad range of complaints put before them and to take action where appropriate. Appeals can be brought in the High Court against their decisions on charitable status, on the appointment of trustees or their removal on grounds of maladministration and misconduct either by the AttorneyGeneral-who in law is the protector of charity—or the charity's trustees or, in certain circumstances, by other persons affected by the commissioners' decision. The commissioners' administrative decisions are also open to challenge through the judicial review procedure. There seems to us to be no conflict between the commissioners' investigative and advisory roles, so the Government doubt whether there is a need to create such an animal as a charity ombudsman.
The Government are confident that the legislation proposed in the White Paper and the continued vigilance of the public will result in a better service for charities and greater public confidence in the charitable sector, which I believe was the ultimate aim of my hon. Friend in initiating this Adjournment debate.
Question put and agreed to.
Adjourned accordingly at eighteen minutes to Twelve o'clock.