Charities (Protection and Social Investment) Bill [HL] — Second Reading (Continued)

Part of the debate – in the House of Lords at 5:57 pm on 10th June 2015.

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Photo of Lord Low of Dalston Lord Low of Dalston Crossbench 5:57 pm, 10th June 2015

My Lords, I join everybody else in welcoming the Minister to his new position and in congratulating him on a most accomplished and confident maiden speech. I do not think he has any need to feel trepidation. He has made an extremely auspicious start in the way he has lost no time in reaching out to stakeholders with an interest in the Bill, and that, too, I very much welcome.

As for my own interest, I have a long-standing interest in the charitable sector due to my 40-year involvement with the RNIB, of which I am now vice-president. Most recently, I have been asked to chair a commission on third-sector regulation by ACEVO, the Association of Chief Executives of Voluntary Organisations. These interests I now declare.

I think that I can speak quite briefly, especially given the authoritative contributions that we have heard already from the noble and learned Lord, Lord Hope of Craighead, and other members of the joint scrutiny committee, notably the noble Baroness, Lady Barker, and the noble Lord, Lord Hodgson of Astley Abbotts, who have laboured tirelessly in this particular vineyard for a considerable period.

The Bill has come forward with a remarkable degree of consensus. It confers powers to strengthen the hand of the Charity Commission in regulating charities, which the commission has itself been seeking, and as a result it has the commission’s strong support. It has been subject to pre-legislative scrutiny, which has led to the Bill being strengthened to include two further powers which the Charity Commission was asking for that were not in the original Bill but are now included as a result of the Joint Committee’s recommendations. It also enjoys a broad welcome from the two leading umbrella bodies in the sector, the NCVO—the National Council for Voluntary Organisations—and ACEVO, which acronym I have already deconstructed, so I do not think there is much that is contentious in the Bill.

Following consultation by the Law Commission, Clause 13 removes any doubt that charities may engage in social investment: that is to say, in investments that both further the charity’s purposes and achieve a financial return for the charity. Measuring social impact might be a little more subjective and problematic. From a charity’s point of view, that will make it easier to undertake such investment, so it is very welcome.

The Charity Commission has made it clear that the Bill is aimed principally at strengthening the commission’s hand in dealing with the most serious cases, and that for the vast majority of cases it will have no direct impact. ACEVO has accordingly expressed some concern that this will tilt the balance more towards the commission’s enforcement as opposed to its advisory role, which is arguably of even greater importance in raising and maintaining standards of good practice, a tendency that can only be reinforced by recent reductions in the commission’s budget, which is down almost 50% in real terms since 2007. So care needs to be taken to maintain the right balance here. I was encouraged that the noble and learned Lord, Lord Hope of Craighead, underlined that point.

I will mention one or two provisions where there is room for some concern about the breadth or vagueness with which they have been drafted. I will do this quite briefly, because I am conscious that I am picking up on pretty much the same provisions which the noble Baroness, Lady Barker, drew attention to. Concerns have been expressed that Clause 3(3)(b) and condition F in Clause 10(7) go too far in specifying the range of conduct the commission can take into account in exercising its powers of disqualification. Clause 3(3)(b) identifies,

“any other conduct of that person that appears to the Commission to be damaging or likely to be damaging to public trust and confidence in charities generally or particular charities or classes of charity”,

and condition F is,

“any other past or continuing conduct by the person, whether or not in relation to a charity”.

Those are indeed quite wide. The NCVO has concerns that past conduct could be brought into decision-making where it is not relevant to the case in question, since what is damaging to public trust and confidence in charities involves what they describe as an open and potentially subjective test. We will want to look at those provisions carefully in Committee to make sure that the right safeguards are in place.

As regards Clause 7, which gives the commission broad powers to direct the winding-up of a charity, ACEVO believes that the commission should be required to consult the charities sector on the criteria to be used in deciding whether to direct that a charity should be wound up.

Care also needs to be taken that we do not cast the net too wide when specifying the offences that can lead to automatic disqualification, which are covered in Clause 9. The Bill expands the list of criminal offences that automatically disqualify a person from being a charity trustee beyond those that involve only deception and dishonesty. In particular, anti-terrorism legislation includes offences that have an element not only of clear and deliberate wrongdoing but of inadvertent involvement. The criticism of the current criteria is that they are too narrow and fail to capture other behaviours that should automatically disqualify an unsuitable person from acting as a charity trustee.

The NCVO does not object to the addition of new offences to the list. However, the inclusion of a number of offences under terrorism legislation has raised concerns due to the extraordinary breadth of the definition of terrorism and the unforeseen impact that that could have on the work of international NGOs. The Independent Reviewer of Terrorism Legislation has expressed concern about the fact that criminal offences under UK anti-terrorism legislation are also capable of impeding the legitimate activities of international NGOs in conflict areas. It has therefore been suggested that the Home Office, the Treasury and international NGOs should meet to discuss how the objectives of antiterrorism legislation can be met without prejudicing the ability of NGOs to deliver humanitarian aid. It should also be remembered not only that participation in voluntary action can play an important part in the rehabilitation of offenders but that ex-offenders can also benefit others on the basis of their experience. For example, the Prince’s Trust specifically employs ex-offenders for many of its jobs.

So there is a general welcome for the Bill, to which I subscribe. Where questions have been raised, there is a good deal of agreement on what those are. I hope and believe, therefore, that after due scrutiny in Committee your Lordships will be willing to give the Bill a fair wind so that it can reach the statute book without undue delay.