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

– in the House of Lords at 3:08 pm on 14th September 2015.

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Amendment 1

Moved by Baroness Hayter of Kentish Town

1: After Clause 14, insert the following new Clause—

“Conduct of charities: regulation of fundraising

(1) All charities raising funds of over £1 million per year must be members of the Fundraising Standards Board and abide by the Code of Fundraising Practice.

(2) In section 64A of the Charities Act 1992, as inserted by section 69 of the Charities Act 2006 (reserve power to control fund-raising by charitable institutions)—

(a) in the title omit “Reserve”;

(b) in subsection (1) for “may” substitute “must”.”

Photo of Baroness Hayter of Kentish Town Baroness Hayter of Kentish Town Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Cabinet Office) 3:17 pm, 14th September 2015

My Lords, we come to the Third Reading of the charities Bill. I will also speak effectively to Amendment 2, which is clearly related to Amendment 1. Amendment 1 stands in my name and that of my noble friend Lord Watson, and it deals with an issue which is as yet unresolved—namely, the appropriate way of regulating fundraising by charities from individual donors.

By way of background, although chugging and cold calling have long been issues of frequent complaint, it was the very sad case of the death of Olive Cooke, herself a lifelong donor and a volunteer poppy seller, which brought to light the unacceptable behaviour of a number of the big fundraising charities and the inadequacy of the current scheme of self-regulation. Although it was we who first raised the issue here, since then there has been widespread acceptance by the Government, the charities and even the so-called regulatory bodies—the code-setting institute and the Fundraising Standards Board—as well as by the Commons Public Administration and Constitutional Affairs Committee, which is carrying out its own inquiry, that the self-regulatory system failed. It failed to maintain appropriate standards, it let down donors and let down the wider public—which brings us to today.

When similar, indeed identical, amendments were tabled on Report, following Committee in the Commons, the Government accepted the need for change and tabled amendments of their own. However, at that time, they were not fully convinced of our two proposals—first, that membership of the current voluntary membership body, the FRSB, and adherence to the appropriate code should be mandatory; and, secondly, that the Charity Commission’s reserve powers on fundraising should be activated.

However, given that the Government accepted that we had not reached a final position on this and that further amendments might be required, the Government asked Sir Stuart Etherington, chief executive of the NCVO, to chair a group, which includes the noble Lord, Lord Wallace of Saltaire. I believe that Salts Mills in Saltaire was the venue for some of the wonderful photography in the BBC’s “An Inspector Calls”, broadcast last night. The committee also comprises the noble Lord, Lord Leigh of Hurley, and my noble friend Lady Pitkeathley, and was set up to consider whether further change might be needed and to report back to the Government. Regrettably, we find ourselves in the slightly odd position of having Third Reading this afternoon, just days before that committee is to report. This is, therefore, very much work in progress, and we will be sending the Bill to the other place a bit unfinished.

I know that the Minister is not behind this timetabling. I think, like me, that he would like to have this issue properly debated and decided upon here, because I know that he is genuine in wanting a robust system in place. If I was suspicious—and I never am—I would think that the Government were wanting to seize the initiative themselves, make a good announcement from the platform at the Tory party conference and take the credit. If so, I will cheer them on, given that we are not seeking change in order to get the credit but to make sure that we have the right solution.

However, it is clear that we do not yet know the best way forward, although I think that everyone accepts, including the big charities and the new chair of the Fundraising Standards Board, who appeared before Bernard Jenkin’s committee, that membership of the board must become compulsory and that the board, which should be independent of the charities it regulates, must in some way have more power than naming and shaming, which is open to it now. There is also general agreement that the weak and unsatisfactory fundraisers’ code must be beefed up. Furthermore, it seems obvious that such powers are bound to entail some role for the Charity Commission, either via a portal, whereby the standards board can report misbehaviour to the commission for subsequent investigation and statutory action, or via such a board being commissioned, licensed or authorised by the Charity Commission, such that there is a degree of statutory oversight to ensure independence and the board would have to satisfy the commission that the code and its procedures were robust and fit for purpose, and will work independently of its regulated community.

There is no doubt that the key players accept the thrust of this, although we regret that some of the charities and perhaps the Institute of Fundraising itself have not quite accepted the independence that a new system requires. Their letter to the

Sunday Times was outwith any discussion with the Charity Commission or ourselves, which suggests that they want to hold on to a self-regulatory model, which has failed the public.

We are not wedded to any particular model, provided that it is independent and effective in order to enable complaints to be heard, and drives up standards. We are clear that such changes need to happen. We are happy to await the recommendation of the Etherington committee, albeit we wish that the timetable was different. The amendment therefore is to make it clear that the Bill as its stands, and as it will go to the Commons, is not yet adequate. The amendment is to allow the House also to hear from the Government how far their thinking has progressed over the summer. I beg to move.

Photo of Lord Wallace of Saltaire Lord Wallace of Saltaire Liberal Democrat Lords Spokesperson (Foreign and Commonwealth Affairs)

My Lords, I should admit that I spent the weekend in Yorkshire, where, to my surprise, my neighbours do not hate people outside Yorkshire and nor do they in fact hate each other. We had a very pleasant weekend. I should also admit that, some months ago, I enjoyed watching the filming of that part of “An Inspector Calls” in our very beautiful village.

We are concerned here with the future of charities. I have found it very constructive to be involved in the thorough Committee and Report stages that we have had on this important Bill. I think we all recognise that as government spending shrinks in the next three or four years, charities will have to play a more important part in looking after a range of good causes and disadvantaged people across our country. That means that the importance we attach to the regulation of charities—the subject of this amendment—is something that requires continuing attention. It also requires active support for philanthropy, and I trust that the Government will pay active attention to encouraging visible philanthropy. I was glad to see the Financial Timeshighlighting this last week.

Having been involved in the committee to which the noble Baroness referred, which will present its report to the Government shortly, I am slightly more sceptical about standards across the whole universe of charities than I was before. Clearly, there is need for tighter and more visible regulation. A number of charitable trustees have not understood how active and responsible their role should be, and these matters need to be addressed.

There is a continuing role for this House in providing oversight to the charitable sector. Perhaps we should consider, in future years, whether a sessional committee of this House might look at some aspects of the charitable sector. As we saw in Committee and on Report, there is some very valuable expertise in this House.

I think that all of us here accept that charities are not comparable to commercial enterprises, as I and others have heard it suggested on one or two occasions. Charities have a privileged status both in legal and taxation terms. The standards of behaviour that we rightly expect of them reflect that privileged status. These high standards should apply to the whole diverse field of charities: to the development charities, as well as to private schools; to libertarian think tanks, as well as to medical charities. We are entitled to expect that their trustees enforce that.

As a backstop, we need to consider what level of regulation is enforced and implemented and how that regulation is organised. We will indeed be reporting on that. I have some sympathy with the noble Baroness when she says that the role of the Charity Commission also needs to be re-examined as a backstop to whatever formal regulation the sector itself provides.

Having said that, I trust that when our report is presented there will be an opportunity to debate it, and certainly, when the Bill comes back from the Commons, there will be another opportunity to make sure that we have moved matters forward. I merely emphasise again that the charity sector is extremely important to our society and to aspects of our economy. It deserves, therefore, to be fully regulated and as transparent as possible.

Photo of Lord Leigh of Hurley Lord Leigh of Hurley Conservative

My Lords, I declare my interests in charities as listed in the register of interests. I was going to declare my interest in the fundraising regulation review panel, but I am grateful to the noble Baroness, Lady Hayter, for doing it for me.

As she says, we are not yet in a position to present our report. On 10 July, Minister Rob Wilson rang me to ask us to start this report. That was an interesting call because, on 9 July, the Prime Minister had thanked me for accepting. But it shows that it is being taken seriously at a very high level. We will have an appropriate moment to thank Sir Stuart Etherington and Elizabeth Chamberlain of NCVO and Susann Hering from the Cabinet Office for the report, which we hope will be published extremely soon. If it is to be published at the Conservative Party conference—I do not think that is the plan—I will personally welcome the noble Baroness, Lady Hayter, and invite her to sit with me and listen to every word. I hope there will opportunity for further debate in this House when amendments come back here.

We met during August—it was a most interesting August—a large number of people, not just the IoF and FRSB but pretty much all the chief executives of the top 20 charities and chief executives of much smaller or medium-sized charities. The comment that has been made is correct: there is an element of denial, which is disappointing. The charity sector is quite rightly under massive review. It is astonishing to discover that the charity sector as a whole—within the wider definition of charities— raises some £68 billion a year, and the voluntary donation of the organisations that we recognise as charities, perhaps excluding organisations such as the Arts Council, is some £8 billion a year. I do not think that any of the chief executives in the top 20 earns a salary of less than £100,000, and more than 30 of them earn a salary of £200,000 or more. They therefore have great responsibility to a wider community. As the noble Lord, Lord Wallace of Saltaire, said, they have two inherent, enormous advantages. The first is the favourable tax treatment they receive and the second is the public’s good will and trust. As one of the people we met in our review said to us, charities defy every rule of economics. No economist can understand it, because people are giving money for nothing in return; the rules break down. This special position of trust needs to be protected.

So we have specific ideas which do not involve the compulsion that the amendment suggests. The thrust of our comments is to try to instil in some of the charities the idea that they are no more than a conduit through which donors can make donations to the good cause, and they have to understand that donors are the source. Some of them seem to think that donors are cows that can be milked, but the reverse is true: it is the donors’ money that enables them to do what they want to do, and they should perhaps regard donors a little more as shareholders than as people to be attacked.

It is most appropriate that the Bill talks a lot about the roles and obligations of trustees, but that is not the subject of this amendment, which focuses on the fundraising review and regulations, so I shall restrict my remarks to that. Before I sit down, I congratulate the noble Lord, Lord Bridges of Headley, on taking through his first Bill. His maiden speech was at Second Reading and we are grateful to him for seeing this Bill through.

Photo of Baroness Pitkeathley Baroness Pitkeathley Deputy Chairman of Committees, Deputy Speaker (Lords) 3:30 pm, 14th September 2015

My Lords, mindful of the rules at Third Reading, I will say that I have great sympathy with my noble friend’s amendment but share her concern about the sad accident of timing that has befallen us as far as this Bill is concerned. Like her, I would have felt a lot better if the report of which I have been privileged to be part could have been received, with its recommendations understood, so that the Bill could have been sent to the Commons complete and with the work done. Be that as it may, I hope that when the report comes out Members will be satisfied with its recommendations.

In her introduction, my noble friend said that she was looking forward to seeing how the Government’s thinking had changed over the summer. What has been very striking is how the thinking of charities, and perhaps particularly of some charities’ trustees, has been influenced over the summer by focus on the negative aspects of fundraising. If they did not get it before, many of them get it now—and not before time. I hope that the report will be influential and welcomed and will make not only charity staff and chief executives but trustees much more mindful of their responsibilities in regulating their fundraising activities. Too many trustees have been content to take the money without being too fussy about how that fundraising has been achieved.

Wearing another hat, I chair the Professional Standards Authority for Health and Social Care. We have a concept of right-touch—not light-touch—regulation. We say that, amongst other things, right-touch regulation should be proportionate, consistent, transparent and accountable. I hope we can achieve that with charitable fundraising and, most of all, that in the future it will be far more effective.

Photo of Lord Moynihan Lord Moynihan Conservative

My Lords, in the context of the regulation of funding and the regulatory framework for charities, I have a brief question for my noble friend of which I have given him notice. On Report, my noble friend gave a number of commitments to the noble Lord, Lord Wallace of Saltaire, myself and the whole House on the question of public benefit. A lot of work has been done on this during the summer. He said that the Charity Commission would issue new guidance on public benefit and running a charity, that it would do further work on public benefit reporting guidance, that the ISC was going to provide guidance, that the Charity Commission would undertake a 12-month research programme and the ISC would launch a website this autumn. All of that would then be subject to a debate a year on, when the House could see how much progress was being made.

It is appropriate to mention to the House that a lot of work has been done. I could not be more grateful personally, and all those interested in the subject will also be grateful to the ISC and the Charity Commission for a very good start. We hope that, as the Opposition Front Benchers made clear during the latter stages of the debate, the website will be proactive regarding the facilities and engagement with local communities and be a point of contact—an effective method of linking with their local communities schools with charitable status and outstanding facilities.

I am certain that noble Lords in all parts of the House will continue to push for change not just in the sports world but in the arts world, and for engagement between schools that are endowed with superb facilities, excellent teachers and coaches, and the wider community. I would therefore be grateful if the Minister took this opportunity to update the House on the work undertaken during the summer and join me in offering congratulations on the good start, although there is clearly a long road to travel before we achieve the sort of developments that are essential to meet the mood expressed in the House in a number of previous debates. We must ensure that we have the material necessary to have a full debate in a year’s time.

Photo of Baroness Barker Baroness Barker Liberal Democrat Lords Spokesperson (Voluntary Sector)

My Lords, it has been a pretty miserable summer for the charitable sector and it has not been a great summer for the Charity Commission either. It is in the nature of being a charity to go through periods of being tested, and good charities come out the other side a lot stronger. One can but hope that that will happen as a result of what has transpired over the past few months.

I am not a member of this august committee—I never made it to the shortlist—but I had the great privilege of attending one of its sessions. It was really interesting—one of the most interesting breakfast discussions that I have had for a very long time. While it was absolutely true, as the noble Lord, Lord Leigh of Hurley, said—he was also present on that occasion—that some people still did not quite get it, as the noble Baroness, Lady Pitkeathley, said, a lot of people in the charitable world now absolutely understand that they cannot continue as before and that things must change.

I applaud the amendment moved by the noble Baroness, Lady Hayter, as it is keeping the pressure up on the issue, but I think that it is premature in terms of process. What was most interesting over the summer was the number of people who wanted to chat to me about the ongoing issues. Time and again, people within the charitable sector talked not just about the severe economic pressures but their wish that that sector could be better than the commercial sector and better regulated than the private sector.

I hope that the report from Sir Stuart Etherington’s committee is hard hitting, not ambiguous in any way and issues a real challenge to charities. I am mindful that charities have to continue to raise funds and that people want to continue to donate to them. Although the reputation of individual charities has taken a battering over the summer, they are still among the most efficient and effective organisations tackling some of the biggest problems in our society.

The Charity Commission has not covered itself in glory this summer either, and I want to think long and hard about what responsibilities were given to it and the reserve powers to oversee fundraising. Charities know about the lives of vulnerable people much better than anybody else, and I want to give them the chance to come forward with a regulatory system that is better than the private sector’s.

I, too, add my congratulations to the Minister, who has conducted himself throughout our proceedings in the most exemplary way. He has been extremely good to work with and I thank him very much. In saying that, I do not want him to accept the amendment moved by the noble Baroness, Lady Hayter, and I ask him to ensure that, when the Bill returns from the Commons, we are given sufficient time, through the usual channels, to pay detailed attention to these matters.

Photo of Lord Low of Dalston Lord Low of Dalston Crossbench

My Lords, I refer to my interests, which are declared in the register: I am vice-president of the RNIB and have had a long-standing involvement in the charity sector; and, most recently, I have been asked to chair a commission by ACEVO— the Association of Chief Executives of Voluntary Organisations—on better charity regulation.

I have not taken a large part in the proceedings on this Bill because I felt that its provisions were pretty uncontroversial. Indeed, that has emerged from the debates as the Bill has gone through its various stages. It has been discussed in matters of detail but the proposals have been broadly—indeed, widely—welcomed. I, too, pay tribute to the Minister for how he has conducted the debates on the Bill. He was kind enough to consult me at an early stage to take my views about the Bill. I appreciated that very much, and I appreciate how he has conducted the Bill from the point of view of the Government.

I was not planning to speak today at Third Reading but, listening to the debate, as I have been, I am prompted to make just one remark. It is perfectly true that charities have not had a very good summer, particularly on fundraising, but we have to be careful of tarring all charities with the same brush. I am sure that noble Lords have not intended to do that, but we need to be aware of it—I am sure that Sir Stuart Etherington’s committee will be. The charities sector reflects a good deal of diversity. It is important that we register the point that, as well as the bad practice that has been exposed, there is still quite a lot of good practice among charities. It is important that we retain a sense of perspective in that light.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Labour 3:45 pm, 14th September 2015

My Lords, I am very grateful that the noble Lord, Lord Low, said what he did. I declare my interest as a former charity chief executive and having had a connection with the charity sector for many years; and as a regulator on four separate occasions, though not in the charity sector, I can speak on regulation with some insight.

There has been a bit of a witch-hunt this summer. I am not saying that charities are getting it absolutely right, but there has been a huge focus on those charities that, from time to time, were getting it wrong, and on the admitted gross inadequacies of the Fundraising Standards Board. I do not quibble that we need an independent and effective regulator, but I hope that we are not going to be dragooned by the witch-hunt that the Daily Mail has led in quite an extreme fashion, to the point where charity fundraisers are now being followed around in the streets, in public places and in meetings of charitable donors and beneficiaries, just in case something can be picked up that can be used by the newspaper.

We have also had a bit of a knee-jerk reaction from some of the other players. The Information Commissioner is steadily redefining his position on data protection issues in charities, to the point where a charity now cannot phone a volunteer, who may have volunteered for that charity for many years, unless there is express permission in place that the charity may phone them. If they have signed up to the telephone preference scheme that would also prevent the charity from phoning.

We are in the position where some of the interpretation of the existing regulation is becoming incredibly counterproductive, to the point where my concern is that charities that are trying hard, that had good codes of practice, that have trustees who are interested and that enforce their rules with the agencies that work with them, are now being penalised. That makes their business not just of raising money, but of talking to their donors, who in many cases are also beneficiaries, more difficult.

I cannot support the amendments in the name of my noble friend Lady Hayter. The Fundraising Standards Board is so unfit for purpose that when the Government or the charitable sector make a decision following the Etherington review, I very seriously advise that they do not call it the Fundraising Standards Board, but that whatever new regulatory function comes forward is called some entirely new name. I would also be extremely nervous about enhancing the role of the Charity Commission in this area. I do not think, in the 45 years that I have been connected with charities, that I have ever seen a Charity Commission that feels more hostile to the sector that it undoubtedly is regulating, but which it is also there to promote and enhance. I believe that the Charity Commission needs to examine its soul on how it is currently behaving and how it has done for the last year.

I am sure that the Etherington review will talk a huge amount of sense. The noble Lord, Lord Wallace, and the noble Baroness, Lady Pitkeathley, both have in-depth knowledge of what they are talking about and are people of huge stature. I hope that whatever emerges from the Etherington review can go forward on a voluntary rather than a statutory basis. I believe that charities are very willing to look at how the public can be reassured. However, we need to make sure that all these changes, and all the anxiety that has been evinced over the summer, do not result in our lurching to a position where charities incur considerable costs in ensuring compliance with a statutory regulatory regime. Right regulation may not be light regulation, and therefore may involve considerable compliance costs. The one thing we do want to make sure is that charities are able to carry out the huge amount of work that they do for the public good in the best, most effective and publicly acceptable way, and in a way that has least dead-weight regulatory cost, because that is in the interests of the beneficiaries we all serve.

Photo of Lord Lexden Lord Lexden Conservative

My Lords, as a former general secretary of the Independent Schools Council, I wish to add to the comments of my noble friend Lord Moynihan to underline the seriousness with which the council takes the obligations and undertakings that it has given during our debates, and to make clear that it looks forward to remaining in touch with those Members who take an interest in its affairs as it seeks to build up the not inconsiderable partnerships that it already has with state schools and local communities to the benefit of all three participating parties.

Photo of Baroness Chalker of Wallasey Baroness Chalker of Wallasey Conservative

My Lords, I have read the proceedings on the Bill in earlier sittings of your Lordships’ House. I was not able to be present because, as many noble Lords will know, I have responsibilities in Africa connected with many of the charities which fall into the categories we are discussing. I support what the noble Baroness, Lady Young of Old Scone, has just said. The interactions between certain charities and the Charity Commission of late reflect a sad situation. I believe that Sir Stuart Etherington’s committee will give us very valuable advice. I realise that it cannot report before we finish our discussion on the Bill. However, it must be very clear that future regulation has to be very transparent because there have been too many occasions when certainly I have wondered at the meaning behind the work of certain charities. Therefore, we need to have clear guidance determining charities’ declarations of the management of their organisations. Many of them are now so large that they require much more financial supervision than they have at present. I am certain that the committee will respond on that basis.

I will say no more at present but I, too, emphasise that it is important to have a further debate in the months ahead when the Bill comes back from another place. I very much hope that I can arrange to be here rather than in Africa when that happens.

Photo of Lord Bridges of Headley Lord Bridges of Headley The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

My Lords, I thank all those who have just spoken and those who said some very kind words about me. I would like to put on record my thanks, and those of the Government, for the significant contribution to the fundraising review that my noble friend Lord Leigh of Hurley, the noble Baroness, Lady Pitkeathley, and the noble Lord, Lord Wallace of Saltaire, have made, as well as our thanks to Sir Stuart Etherington himself. They have given up their time and expertise over the summer to help develop a new approach to tackling the problems of fundraising that have been exposed in the media in recent months.

I fully accept that, as a number of noble Lords have said, the timing of the debate today is somewhat unfortunate, given that Sir Stuart is not due to report until later this month. However, as I am sure your Lordships understand, this was agreed through the usual channels and needs to fit in with the competing demands of other parliamentary business.

My honourable friend in the other place, the Minister for Civil Society, Rob Wilson, has engaged over the summer with the noble Baroness, Baroness Hayter, and other noble Lords who have been supporting Sir Stuart Etherington’s review. He has committed to continue that engagement when he pilots the Bill through the other place. I am very keen that your Lordships continue to debate and discuss these issues while the Bill is in the other place. My door is open to anyone who has been unable to express views as the Bill progressed up to this point or who has thoughts on the Etherington review’s findings when they are published. We will also, of course, have an opportunity for further debate in this House on any amendments that may be made to the Bill. I would entirely support such measures, as I know that this House has an immense amount of expertise on the matters that we are discussing.

Before responding to the points raised in this afternoon’s debate, and looking at the specifics of the amendment, it is worth reminding ourselves, as a number of speakers have, that the vast majority of charity fundraising is undertaken responsibly. The noble Baronesses, Lady Barker and Lady Young, made that point, and I entirely agree. It is the actions of a minority of charities, albeit high-profile ones, and in relation to particular fundraising methods, that have damaged public trust and confidence. Furthermore, charities need to ask the public for donations in order to carry out their vital work. In addressing the poor fundraising practices of the few, it is important to keep those points in mind and not to overburden the majority of charities, particularly small charities, whose fundraising activities are not at fault. As I said before while debating other points relevant to the Bill, it is absolutely critical that we get this balance right and keep a sense of proportion in what we may do.

One point on which I think there is now broad agreement is that the current system is too complex and has failed to deliver the standards that the public and Parliament expect. I owe a nod to my noble friend Lord Hodgson of Astley Abbotts, who got this spot on in his 2012 charity law review when he said:

“Potential donors are currently faced with a confused landscape, with unnecessary duplication or division of functions … To date the sector has tended to dance around these issues”.

It would appear that we are only now catching up with him. The current system has to change if we are to meet one of the overriding objectives of the Bill: to maintain and strengthen public trust and confidence in charities. The exam question posed to Sir Stuart Etherington and his review earlier this summer was: what should those changes be?

We have acted with the amendments to the Bill on Report, which will require charity trustees to take proper responsibility for their charity’s fundraising and, in larger charities, to be more transparent and accountable about their fundraising activities in their annual reports. These changes will help, but Sir Stuart’s review will provide the blueprint for the future of self-regulation.

I am sorry to disappoint noble Lords, but I do not want to pre-empt the outcome of Sir Stuart’s fundraising review—and if the noble Baroness thinks that it is going to be published at the Conservative Party conference, I will make sure that I accompany her there. I know that several of the largest charities have already committed to making changes and supporting the recommendations of the fundraising review. As the noble Baroness, Lady Pitkeathley, said, this change of heart is about time, too. It is to be welcomed, as the whole charity fundraising sector will need to get behind the recommendations of the review and swiftly implement the necessary changes. As I said on Report, the response of sector leaders to Sir Stuart’s recommendations will in part answer the question of whether fundraisers and the charity trustees who oversee them accept the need for and fully embrace change.

We take the view that charities should have the opportunity to redeem themselves and that they are capable of putting their own house in order and making self-regulation work so as to restore and protect the public trust and confidence on which they depend, as well as to show, as the noble Lord, Lord Wallace, said, that they are fulfilling the responsibilities that charitable status confers.

Some have suggested that we should legislate to make charities submit to self-regulation. That would effectively be statutory regulation, not self-regulation. We will need to see what Sir Stuart recommends, but we do not want to legislate for a new bureaucracy. In particular, we do not want to entangle with red tape the vast majority of small charities which have not had anything to do with the unacceptable practices reported in the media. Our preference therefore remains self-regulation, not a government-regulated solution.

This brings me to Amendment 1, about which let me say this in the spirit, I hope, of constructive criticism. The first part of the amendment would mandate membership of the FRSB for charities raising over £1 million per year and would require fundraising charities to comply with standards set by the code of practice of the Institute of Fundraising—a body other than Parliament or the Minister. There would, therefore, be a real risk that we would have a delegation of power without proper accountability. The second part of the amendment would require the Minister to exercise the power to make regulations in connection with regulating charity fundraising. These would regulate standards that fundraisers would have to meet. It is unclear how this would work alongside the sector- owned Code of Fundraising Practice. If these powers were exercised they would basically mean statutory regulation, which as I have said is not the Government’s preference.

As I said earlier, my honourable friend the Minister for Civil Society has committed to engage with noble Lords once we have seen Sir Stuart Etherington’s review and as the Bill proceeds through the other place. I, too, welcome the recent letter from the 17 charity executives to the Sunday Times. It is a good sign of progress, but we will need charities’ actions to live up to their words in the months ahead, as they strengthen self-regulation in a way that the public and Parliament expect. I hope that in light of the debate this afternoon and the commitment for continued engagement, the noble Baroness will feel able to withdraw her amendment.

Before I sit down, I turn briefly to the point raised by my noble friend Lord Moynihan about the issues raised on Report regarding the charitable status of independent schools. I, too, thank the Charity Commission and the independent schools which have spent a lot of time working together during the summer to take forward the commitments from Report. I met them both last week and I know that they have been engaging with noble Lords on the work they are doing to promote sports, music and arts partnerships between the independent and state sectors, as my noble friend Lord Lexden said, and that they are committed to continuing that engagement.

I can tell the House that next month the Charity Commission will publish revised guidance which sets out illustrative examples of the ways in which an independent charitable school can carry out its purposes for the public benefit and a revised sample trustees’ annual report for a fee-charging charitable independent school. The Independent Schools Council has committed to raising awareness among its members of this new guidance and examples. I repeat that I hope that noble Lords with an interest will continue to engage with the Charity Commission and the ISC as they continue this work over the coming months and years, especially on the other two items that we also agreed on Report, which I know are proceeding to be dealt with.

Photo of Baroness Hayter of Kentish Town Baroness Hayter of Kentish Town Shadow Spokesperson (Business, Innovation and Skills), Opposition Whip (Lords), Shadow Spokesperson (Cabinet Office) 4:00 pm, 14th September 2015

My Lords, that turned out to be a more educative and perhaps more interesting debate than I had hoped. I join the Minister in thanking everyone who has contributed. I apologise to the House that I forgot at the beginning to declare that I, too, am a trustee of a couple of charitable trusts.

I start with the same emphasis made by the noble Lord, Lord Low, my noble friend Lady Young and others on not tarring all charities with the same brush, and on the incredible importance of charitable work. I think that I have spent more of my professional life running charities than anything else, so I am absolutely aware of that. I will make a couple of comments because the follow-on is that, when I was able to raise funds, it was very much because of the public’s good will and trust, in the words of the noble Lord, Lord Leigh of Hurley. They trusted not only that we would use their money effectively but that we had the expertise and specialism to look after the sort of clients that we had. We, as the charitable sector, must never lose that.

My noble friend Lady Pitkeathley said that she thought that charities’ thinking had changed over the summer, and if ever your Lordships’ House helped in that, it should take some credit for it. I am perhaps not thinking that they have all got there completely. The noble Baroness, Lady Barker, said that she wanted the Etherington report to be hard-hitting. I do not really know the noble Lord, Lord Leigh, so well but I know the other two Peers and I certainly know Sir Stuart, and I think that I could trust those four not to pull their punches.

I hope that what the Government said is not pre-empting that by appearing to rule out any statutory response. The noble Lord, Lord Wallace of Saltaire, used the word “backstop”, which is close to what I was suggesting. My judgment is that a pure self-regulating system will no longer be acceptable. I absolutely concur with my noble friend Lady Young that the letters FRSB should not be used: it will not be a fundraising standards board, whatever it is. I also doubt whether it will continue as voluntary. When he gave evidence in front of Bernard Jenkin, its new chair, Andrew Hind, seemed to rule out the possibility of it remaining completely voluntary. If we can find something that is a backstop rather than a red-tape regulation, that may be the right way forward. As I said in introducing the amendment, it was to give us the opportunity for this debate; we have an open mind on what is the correct way forward.

I make only one other point, which the noble Lord, Lord Wallace of Saltaire, mentioned, which concerns the role of trustees. The Independent Schools Council seems to have grasped it. I hope that the trustees—if they are called that—of the various schools take that message on board as well and look proactively at what might be done with the state system. When I met the Charity Commission recently, it said that in its research it was going to ask to what extent fee-paying schools ask the local community, “What would be best for you?”, so that it is not just paternalistic giving but real response to needs.

Having said that, before I beg leave to withdraw the amendment and we send this slightly unfinished Bill down the corridor, I take this opportunity to thank the noble Lord, Lord Bridges, who as everyone said, has really played a blinder over all this. It has been a real pleasure to work with him on the Bill. We must also thank the Minister at the other end, who has also met us and been very responsive. I also thank the Bill team, who, as ever, we have worked rather hard, and my noble friend Lord Watson, who joined me on the Front Bench for the first time, I think, and has done an awful lot of the heavy lifting on the Bill. With those thanks, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

In the Title

Amendment 2 not moved.

Title agreed.

A privilege amendment was made.

Bill passed and sent to the Commons.