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

Part of the debate – in the House of Lords at 6:06 pm on 10th June 2015.

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Photo of Viscount Bridgeman Viscount Bridgeman Conservative 6:06 pm, 10th June 2015

My Lords, it is a great privilege to follow the noble Lord, Lord Low, with his outstanding experience particularly in the field of charities for the disabled.

After a maiden speech there is sometimes a perfunctory statement from the following speaker that we hope to hear future interventions from the maiden speaker. However, glancing at the forthcoming business, and indeed at this Bill, I see that we are fortunate in not having to wait long to hear again from the noble Lord—who in this case is my noble friend the Minister.

It is a paradox that charity is one of the noblest of human sentiments—a point which my noble friend Lord Borwick expanded on—but, in the context of the administration of charities, it is also, as my father would have said, open to abuse by individuals who are less than totally satisfactory. I note that the Joint Committee, so ably chaired by the noble and learned Lord, Lord Hope of Craighead, outlined three issues on which regulation is required: honest mistakes that trustees make, persistent mismanagement of charities, and deliberate abuse where people go out of their way to abuse their position in a charity for personal gain or some other non-charitable purpose. The committee added that the third was, fortunately, the rarest, but also hard to assess accurately. It is therefore appropriate that a major part of the Bill—Clauses 2 to 12—deals with the question of disqualification.

In England and Wales it is the duty of the Government, through the Charity Commission, to tread the fine line between policing the administration of charities with a firm hand but, at the same time, with an appropriate—if not light, then certainly imaginative and helpful—touch. I suggest that the Bill is a further small but significant step towards giving effect to those intentions. I pay tribute to the work of the Joint Committee, chaired by the noble and learned Lord, Lord Hope, and the statutory review by my noble friend Lord Hodgson of Astley Abbotts, together with the Law Commission’s work on social investment. Their work has contributed to the creation of a Bill that is not only reasonable and constructive but, if I may say so, realistically constructive.

The tightening of the provisions on disqualification is timely. Of the many loopholes that have been closed I particularly welcome the action to address the glaring anomaly that permitted disqualified trustees to hold other trusteeships or, indeed, senior management positions in charities. That is addressed in Clause 10(2) with the introduction of new Section 181A, to which my noble friend Lord Hodgson referred.

Clause 1 inserts new Section 75A, which provides the commission with the power to issue a warning to a charity or a charity trustee. This is particularly welcome as it reinforces the concept of proportionality without the need for a statutory inquiry. The Explanatory Notes—I echo the words of my noble kinsman Lord Chandos—have been particularly helpful on the Bill. They give three useful examples of when the warning power could be used, relating respectively to unauthorised payments, governance problems—for instance, a repeated failure to call AGMs—and where a statutory inquiry would be disproportionate. The introduction of this procedure has many advantages, not least in freeing up time for the commission to concentrate on more serious matters.

Another significant feature of the Bill is Clause 13, concerning social investments. This has been well covered, particularly, again, by the noble Lord, Lord Chandos. I am grateful to the Minister for his helpful guidance on this part of the Bill. I particularly welcome new Section 292A(5) introduced under this clause. It addresses the distinction between a loss of investment and a total loss of funds—again, referred to by the noble Lord. However, I had some difficulty with this new section, as did my noble friend Lord Borwick, but the Minister has been very helpful in clarifying that a social investment has to satisfy the two conditions set out in proposed new Section 292A(2): first,

“directly furthering the charity’s purposes; and”,

secondly,

“achieving a financial return for the charity”.

The implications of social investment are quite considerable because of the additional obligations on trustees imposed under new Section 292C, and I have no doubt that this will come back in Committee.

This is a valuable complement to the previous charity Acts and the commission is to be congratulated on giving effect to the many valuable recommendations submitted to it. I have no doubt that they will be further refined as the Bill makes its way through this House and another place.