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

Part of the debate – in the House of Lords at 7:10 pm on 10th June 2015.

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Photo of Lord Watson of Invergowrie Lord Watson of Invergowrie Labour 7:10 pm, 10th June 2015

My Lords, I am pleased to add my name to those of other noble Lords who have welcomed the Minister to your Lordships’ House, and to congratulate him on a distinguished maiden speech. There cannot surely be many legislatures where a maiden speech can be delivered from the Front Bench—although I was privileged to be an elected Member of the resumed Scottish Parliament in 1999, when, of course, all ministerial speeches were maiden speeches.

The noble Lord is perhaps fortunate in being allowed to cut his ministerial teeth on one of the least controversial Bills likely to come to your Lordships’ House in this parliamentary Session, but that does not mean, I suspect, that our days in Committee will be tame. We on these Benches will seek to improve the Bill where we believe that that is necessary—although, given the Minister’s experience to date, I have no doubt that he will take that in his stride, his tender years notwithstanding. I say that from the slightly unnerving position of facing a Minister more than 20 years my junior.

We have heard an interesting debate reflecting the considerable experience of noble Lords in various forms in relation to the charity and voluntary sector. I like to call it the third sector—a term which I think my noble friend Lord Chandos used—but perhaps that seems to be a bit out of favour at the moment. However, we understand clearly what we are talking about. As those contributions demonstrated, the Bill is not one likely to cause much controversy or disagreement, providing, as it does, for greater freedom for the Charity Commission to act where there has been abuse within a charity, either by the charity itself or by a trustee. The new powers for charities to make social investments were a welcome, if surprise, addition to the Bill, not having been part of the draft Bill that was the subject of pre-legislative scrutiny between November last year and February this year.

I was fortunate in being a member of the Joint Committee of both Houses which undertook that scrutiny, and I pay tribute to the noble and learned Lord, Lord Hope of Craighead, who chaired the committee with distinction and who has brought his wealth of experience to bear on the debate today. Like him, I welcome the Government bringing forward this Bill without delay.

The Government have accepted many of the Joint Committee’s recommendations, although it is disappointing that a comparison of the Bill with the undertakings given by the previous Government in response to the committee’s report reveals that eight commitments given then have not been met. Clearly, I do not expect the Minister to respond to those points this evening, but I and colleagues will raise them in Committee, seeking to ascertain what changed between March and May—apart, that is, from the disappearance of the Liberal Democrats from government.

The Charity Commission has a statutory role in maintaining public trust and confidence in charities—a duty which is more necessary than ever at a time when criticism of charities, not least in terms of fundraising, is increasing. However, the commission also acts as the regulator for the sector. It could be argued that there is an inherent contradiction in those two roles rather in the manner that applies to the BBC Trust, but the commission has those dual responsibilities and it is important that it has the necessary powers to ensure that charities are compliant with their legal obligations. Many noble Lords, most notably perhaps the noble Baroness, Lady Pitkeathley, and the noble Lord, Lord Low, made the point that one must not be pursued at the expense of the other. However, I think that the noble and learned Lord, Lord Hope, captured it best when he said that the two were inextricably linked—as I believe they are.

The Association of Chief Executives of Voluntary Organisations stated, in a briefing which I believe all noble Lords will have received, that,

“timely, expert advice from the Commission can prevent problems before they arise”— a sound point which I believe should never be lost sight of. That said, regulation of charities is, of course, essential, although it should be proportionate. The Charity Commission must ensure that charities are given sufficient room to operate without excessive intervention and regulation.

Although, as I said, the Bill is to be welcomed, there are nevertheless some concerns relating to certain measures, either because they are too vague or too wide—both issues have been referred to by noble Lords today—as well as some provisions that might be added to those already in the Bill. The first of those relates to the additional offences that automatically disqualify someone from acting as a trustee of a charity. The addition of offences under terrorist legislation has, of course, some merit. However, given the breadth of the definition in the Bill, it is quite likely to have a negative impact on some NGOs working overseas, particularly in conflict zones. This was referred to by several noble Lords, who in a sense reflected the experience that they have had with various charities.

These measures could also impact disproportionately on some Muslim charities, as was mentioned by the noble and learned Lord, Lord Hope, and, in a slightly different manner, by the noble Lord, Lord Green. However, the comments which struck me most were those made by the noble Lord, Lord Hodgson, who, in highlighting the awful plight of the Yazidis in the face of so-called Islamic State, gave a very good example of how a charity could get into real difficulty. However, I take issue with the noble Lord’s description of these people as freedom fighters. I believe that they are absolutely nothing of the sort. They are psychopaths with a medieval mindset who must be rooted out and put out of business as soon as possible, however that may be done. However, that is an important example of some of the difficulties that charities can get into.

An example was given to members of the Joint Committee scrutinising the draft Bill of an NGO seeking to provide humanitarian aid in a conflict zone, where perhaps the only means of getting aid to people desperately needing it is to make a payment to so-called “gatekeepers” controlling access to those zones. These “gatekeepers” might be representatives of organisations deemed to be terrorists, and any money paid to them could be treated under this Bill as assisting terrorism—but how else could the humanitarian aid be delivered, and would it be in any way appropriate to pursue a charity, or individuals involved with a charity, for simply delivering humanitarian aid?

I certainly would like to see the suggestion made by the noble Lord, Lord Low, taken up—namely, for the Charity Commission to bring together the various organisations involved in providing such aid to discuss the matter, and, I hope, find a way forward. Both Australia and New Zealand already have legislation that exempts NGOs in such situations. However, in response to the Joint Committee seeking the Government’s views on the prospect of similar legislation being introduced in this country, the noble and learned Lord, Lord Hope of Craighead, was told by the then Home Office Minister that the previous Government were quite unsympathetic to the prospect. When the Bill goes into Committee, there will be an opportunity for an amendment on the matter to be considered. Will the Minister give an undertaking that, in advance of Committee, he will hold discussions with his opposite number in the Home Office to seek to bring about a more flexible and practical response to this important matter?

Further, in relation to additional offences that automatically disqualify a person from being a charity trustee, there is a lack of any mention of a person placed on the sex offender register. The Charity Commission has published a strategy for dealing with safeguarding issues associated with vulnerable groups, but it seems strange, to put it mildly, that those found guilty of behaviour serious enough to have them placed on the sex offender register do not constitute a category to which automatic disqualification applies. My noble friend Lady Hayter raised this issue. We believe that this should appear on the face of the Bill, and I hope that it will be possible for this to be achieved in later stages as we progress.

Charities depend, of course, on the trust and confidence of the public, and high standards of fundraising practice are essential to uphold levels of public trust. Recent events and media reporting that many noble Lords will have seen have highlighted that all is not well in this area of the charity sector, although the ability of the Bill to introduce meaningful changes may be limited. However, we shall see. The Fundraising Standards Board needs to raise its public profile and convince the remaining 35% of charities that voluntarily raise more than £1 million a year to affiliate to it.

On the latter point, perhaps it is now time to adopt the suggestion of the noble Lord, Lord Hodgson, to require all such organisations to be part of the Fundraising Standards Board. That was in his report of 2012, but he suggested that it should be revisited if the situation regarding fundraising was not resolved satisfactorily. Recent events demonstrate that that is where we are just now, and I can tell the Minister that it is a view supported by the CEO of the board itself that the time has now come to require charities within that sector—that is, those that voluntarily raise more than £1 million a year—to be part of the board. This could be achieved by the Minister for the Cabinet Office utilising the reserve powers given to that office by the Charities Act 2006 to introduce regulations,

“in connection with regulating charity fund-raising”.

Of course, the Minister is in an ideal position to progress that, should he choose to do so.

Other important issues have emerged from today’s debate, one of which is the ability of the Government to force housing associations that are charities to sell off properties against their will. I am rather surprised that only my noble friend Lady Hayter has raised this issue, because it certainly is exercising a lot of minds within housing associations, the vast majority of which are indeed charities. Perhaps the Minister can tell us whether he anticipates that in order to progress the policy that the Conservative Party announced during the election campaign and now intends to implement, primary legislation will be necessary so that properties that are owned by housing associations—in other words, not public property—can indeed be sold off, as the Government intend.

Many noble Lords referred to the vexed question of the demands for the additional responsibilities being placed on the Charity Commission to be matched by the resources to enable those additional responsibilities to be carried out. Although the Prime Minister announced last year that additional funding would be provided to coincide with the introduction of new powers, concerns remain about the resourcing of the commission, which saw a significant reduction in funding during the previous Parliament, as many noble Lords said. The additional powers will be effective only if the commission has the resources to use them properly.

Clause 14 states:

“The Minister for the Cabinet Office must carry out reviews of the operation of this Act”,

with the initial one being required within five years of the Bill becoming an Act. We believe that to be too long a delay and that three years would be more appropriate. To some extent, this relates to my previous point about adequate resources being made available, but in any case a shorter period than that envisaged in Clause 14 would enable any changes required to be identified and acted upon as soon as possible; thereafter, five-yearly reviews would be reasonable. This does not cut across the recommendation by the Joint Committee that there should be a broader review of the operation of the Charity Commission: rather, Clause 14 refers to this Bill specifically, so if that is what is carried forward, it should be three years rather than five years in the first instance.

Although it is not explicitly part of the Bill, an important issue was raised by my noble friends Lady Hayter and Lady Pitkeathley: a charity’s ability to speak out on behalf of others in pursuit of its objectives. My noble friend Lady Pitkeathley commented on the reduction in the number of charities involved in the recent general election. I believe that that is a natural consequence of the lobbying Bill which went through your Lordships’ House last year, and it represents a democratic deficit because it ought to be perfectly possible for charities to enter the debate without adopting a party-political stance—indeed, it is perfectly possible—and it is much to be regretted that many felt constrained from doing so during the election campaign.

There were also some excellent contributions on the question of social investment, not least from the noble Lord, Lord Hodgson, to whom we are indebted for highlighting this issue some years ago. But I particularly enjoyed the contribution of my noble friend Lord Chandos, whose thoughtful and thought-provoking comments I found very interesting. I look forward to hearing those developed further in Committee.

In conclusion, perhaps there has not been too much disagreement on these Benches or indeed the Benches opposite, but there is no shortage of issues for noble Lords to get involved in when the Bill enters Committee. I am sure that that will prove enjoyable for all noble Lords who have participated today, not least the Minister.