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

Part of the debate – in the House of Lords at 7:25 pm on 10th June 2015.

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Photo of Lord Bridges of Headley Lord Bridges of Headley The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office 7:25 pm, 10th June 2015

I am brought up short. The noble and learned Lord is quite right: Mo Farah would be much better. Thanks to the noble and learned Lord’s hard work, and the work of so many others in this Chamber, I am pleased but not entirely surprised that rather than wheeling out the wrecking ball for this Bill, your Lordships have simply started to stick little pins into it before the House, to test, to probe and to clarify a little bit more. I very much welcome this, my first experience of legislative acupuncture, an experience I am told will leave me feeling invigorated, refreshed and revitalised.

Turning to address the points made, I hope to cover as many as I can, starting with some of the more detailed comments. The noble and learned Lord, Lord Hope, asked whether we could amend Clause 8 to make it clear that there are other circumstances in which a third party may be unable to comply with the Charity Commission direction. I am sympathetic to this point as we want the provisions to work effectively. We will need to look at this in some more detail before Committee, as we will other words such as “privy”, which I think the noble and learned Lord also mentioned.

My noble friend Lord Lindsay referred to the complementary role that standards and accreditation could play alongside the new powers proposed in the Bill in addressing governance and trustee issues. I agree and I welcome the work being done by the United Kingdom Accreditation Service and the NCVO to explore the potential that standards and accreditation have to offer in the charity sector.

My noble friend Lord Hodgson made a number of incisive points, as one would expect. He asked for the tribunal appeal rights to be consolidated and simplified. While recognising his point, it is important to note that not all Charity Commission decisions are subject to appeal and the existing table of appeal rights provides a useful checklist of what decisions can be appealed and who can appeal them. The Charity Tribunal itself has, I am told, not expressed concerns about it in practice. My noble friend Lord Hodgson also asked for time to implement the Law Commission’s recommendations. I am sorry to say that I cannot give any guarantees, but my noble friend knows that the Government will look favourably on deregulatory and simplification measures.

A number of comments were made about the social investment aspects of the Bill, and I am very encouraged and heartened by the interest that your Lordships paid to this. The noble Viscount, Lord Chandos, for example, made a number of perceptive points about social investment, as did the noble Baroness, Lady Kramer. I would very much like to meet with both of them to pick their brains, as they clearly have a lot of experience in this sector. I know that the noble Viscount sits on a number of foundations, and it is quite clear from the noble Baroness’s very eloquent speech that she, too, has a lot to offer.

My noble friend Lord Borwick made some very interesting points on the definition of social investment, including a slightly detailed point on mixed-motive investment. I will not detain the House on that point now but I would be delighted to discuss it with him, as I would with my noble friend Lord Bridgeman. As regards the naming of charities, a point which my noble friend Lord Borwick brought up, I simply point out that it is an offence to call yourself a charity if you are not; and as regards charitable income, charities must now declare income from central and local government in their accounts.

I turn to my noble friend Lord Moynihan’s remarks about independent schools, and pay tribute to the extensive and fantastic work that he has done in this area and on sports in general. He made some interesting points about the public benefit test. I would like to make it clear that charities already have to report on their public benefit in their trustees’ annual report. However, I would be happy to meet my noble friend before Committee to discuss the points that he has raised. Likewise, I would like to discuss the public benefit issue with the noble Baroness, Lady Brinton, who also brought this up in a number of ways.

Perhaps I may turn to some of the substantive points in the Bill itself. Clause 3, as noble Lords will remember, will enable the Charity Commission to take account of other relevant evidence of a person’s conduct in the context of a statutory inquiry into a charity. I think that the noble Baroness, Lady Barker, and the noble Lord, Lord Low, raised concerns about this. I would simply point to several safeguards on this point, and I shall do so quickly. First, there must be a statutory inquiry open and the Charity Commission must be satisfied that there is misconduct or mismanagement linked to the individual in that charity before it can rely on conduct from outside the charity in its decision-making. Secondly, when exercising its powers the commission must provide a statement of reasons which sets out the evidence it relied on in making the decision. This would include any evidence it relied on from outside the charity. Finally, there is a right of appeal to the Charity Tribunal in relation to the exercise of the commission’s compliance and remedial powers, ensuring judicial oversight of the exercise of the power.

The noble Baroness, Lady Barker, and the noble Lord, Lord Low, also referred to Clause 7, which contains a power to direct a charity to be wound up. As your Lordships will know, the commission’s usual practice is to restore a charity to health following an inquiry. However, in some very rare cases—and I stress they are rare—it would be more appropriate for any remaining assets to be transferred to another charity. The commission can already do that under existing powers, but now the commission will have the power needed for the shell to be wound up. This power is available only in the context of a statutory inquiry where there is misconduct or mismanagement, or risk to charity property. In addition, the commission must be satisfied that the charity does not operate, or that its purpose could be more effectively promoted if it were to cease to operate, and that the exercise of this power is expedient in the public interest. There is also a requirement for the commission to publish details of a proposed winding-up order and invite representations. A winding-up order can be appealed to the tribunal. So, there are a number of safeguards around that clause too.

Two points were made on Clause 9, which concerns the automatic disqualification powers that the Charity Commission is to be given. The noble Baronesses, Lady Hayter and Lady Barker, and the noble Lord, Lord Low, among others, raised this point. I am sure that we will discuss this further in Committee. As regards their wish for sex offences to be added to the list, I would simply say that there is an existing regime to ensure the suitability of anyone in a charity with unsupervised access to children and vulnerable adults. Whether they are a trustee, an employee or anyone else, they must all have had a Disclosure and Barring Service check. It would be impractical for the Bill to break down the charities type by type and prescriptively list criteria for automatic disqualification in each case. Charities should be trusted to make their own decisions on how suitable a potential trustee is when recruiting. Where charities fail to take their safeguarding responsibilities seriously, the Charity Commission can and does intervene to take regulatory action.