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

Part of the debate – in the House of Lords at 6:31 pm on 10th June 2015.

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Photo of Baroness Pitkeathley Baroness Pitkeathley Deputy Chairman of Committees, Deputy Speaker (Lords) 6:31 pm, 10th June 2015

My Lords, I declare my interests as president, vice-president, patron and former chief executive of various charities, as co-chair of the All-Party Group on Civil Society and Volunteering, and as someone who has spent the large part of a very long working life working in or with the charitable sector.

In those roles, I have been familiar with, connected with and at times frustrated by the work of the Charity Commission. I commend the improvements that it has made to its performance over recent years and I support the new powers given to it in this Bill. I would also like to praise the work of the pre-legislative scrutiny committee under the chairmanship of the noble and learned Lord, Lord Hope of Craighead, which suggested improvements to the Bill. The House should also be mindful, as it has been throughout this debate, of the excellent work done by the noble Lord, Lord Hodgson of Astley Abbotts, in his review of the Charities Act 2006, which was an important background to the provisions we now see in the Bill. Of course, like others, I pay tribute to the excellent maiden speech of the Minister, and look forward to working with him as we proceed.

This is a good, useful and welcome Bill. We shall in Committee be able as ever to suggest improvements, strengthening and so on and, as we shall be in the Moses Room, there will be opportunities for useful discussions about the role and future of the Charity Commission, so here I will raise only one or two cautionary thoughts. While I am fully supportive of extending the powers of the Charity Commission to regulate in the interests of public trust, there are dangers about focusing too strongly and solely on the commission’s enforcement role. The commission has an important role too as an adviser, particularly on charity governance.

The quality of charity governance is equally as important in promoting trust in charities as is tackling abuse. It is welcome that trustees will be able to be removed or disqualified, and no doubt we shall have much debate about how judgments are to be made as to the fitness or otherwise of trustees. What is seen as damaging or unfit in one charity might be seen as appropriate by another, especially bearing in mind the huge range in size and type of charity. Many are tiny and run from someone’s kitchen table, as we know. Some are large multimillion pound enterprises barely distinguishable from businesses. We must ensure that in our enthusiasm for propriety we do not damage or interfere with the spirit of voluntarism, which is the lifeblood of the charitable sector. I am sure that your Lordships’ House, in its inimitable way, will be able to achieve this important balance. With regard to the advisory role of the Charity Commission, we should also remember that advice early in the process of registration can head off many a problem at the pass, preventing larger difficulties that need a stronger reaction down the line. In this regard, the new warning power will be very welcome. In my experience, the charitable sector should look to the commission for advice, support and guidance as well as policing.

I am aware that lobbying and campaigning by charities is not the subject of this Bill, but we cannot fail to have noticed that in the recent general election campaigning charities were not as prominent as they have been in the past. That may be because the agenda for the election was less focused on topics of concern to charities, but it may also be due to a certain nervousness about speaking out given the clear disfavour that has been expressed in some quarters about this type of activity, not least in your Lordships’ House this evening. This is of particular concern to me as former CEO of Carers UK, whose campaigning—absolutely non-party-political campaigning—has been fundamental in raising the carers issue to the importance that it now enjoys. As this is Carers Week, I feel justified in reminding your Lordships that we should bear in mind the importance of charities representing the views of underprivileged sections of our society as we examine this Bill

In drawing attention to the role of the Charity Commission as adviser as well as regulator, I am only too well aware of the resources problem that the commission can face. The Bill gives the Charity Commission increased powers but no lasting increase in its budget. Whether in the long term this is feasible is something that we must all—the Government, the charitable sector and the commission itself—be extremely concerned about.

I turn now to the social investment section of the Bill and declare a further interest as chair of the Big Society Trust, which oversees the work of Big Society Capital—a leading wholesaler in the field of social investment. The Bill introduces a power for charities to make social investments and sets out trustees’ duties in relation to social investments. The social investment market has grown significantly, as we have heard, and helped many charities and social enterprises, but too many are not able to access the capital they need. It may be that they are not investment-ready, that loans are considered too risky for a charity to take on, or that the transaction costs are considered too high. Charity trustees have been particularly reluctant to venture into this area. In this regard, the encouragement and support given to trustees in the Bill will be especially welcome.

I also want to draw the House’s attention to the setting up, in a collaboration between the Cabinet Office, the Big Lottery Fund and Big Society Capital, of Access, the Foundation for Social Investment. Through two programmes—the growth fund and the capacity-building programme—Access aims to fill the gap which many charities at present find exists when they try to access social investment for innovative projects that they want to put in train for their beneficiaries. The noble Baroness, Lady Kramer, may be interested in the Access foundation. Finance will be provided that blends grants with loans, which will help to provide reassurance about the risks of this type of finance. The foundation will also be able to make smaller loans, perhaps up to £150,000, and to reduce the costs of those smaller investments. Many charities are nervous when taking on this type of finance for the first time, so the support and capacity building provided by Access will be especially welcome to many charities and perhaps particularly to their trustees.

Social investment never has been and never will be the solution to all the resource problems of the charity sector, especially at this time of growing need for so many of the recipients of charitable services. But it can make a useful and important contribution, enabling charities to be more sustainable and deliver greater impact, so the provisions in Section 13 are very welcome. I look forward to detailed consideration of the Bill in its further stages.