Clause 67

Charities Bill [Lords] – in a Public Bill Committee at 1:00 pm on 13 July 2006.

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Statements indicating benefits for charitable institutions and fund-raisers

Amendment moved [this day]: No. 128, in clause 67, page 71, line 14, at end insert—

‘(6) After subsection (9) insert—

“The Charity Commission shall have power to initiate criminal proceedings in respect of offences under subsection (9).” ’.—[Mr. Andrew Turner.]

Photo of Roger Gale Roger Gale Conservative, North Thanet

I remind the Committee that with this we are taking the following: Clause stand part.

Amendment No. 131, in clause 68, page 73, line 22, at end add—

“60C Fundraising by sale of products and services

(1) Save in the case of small outlets, where the sale of any goods or service is represented as benefiting a charity or charities, the vendor shall indicate either the proportion or the amount of the sale price which will be passed to the charity or charities for their unrestricted benefit.

(2) Indications under subsection (1) above may be made in diagramatic form, and shall be made in writing, the font-size of which shall be no smaller than the price of the goods or service.

(3) For the purpose of this section, a “small outlet” is an organisation which is not obliged to register for Value Added Tax purposes.”.’.

Clause 68 stand part.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

It is a great pleasure to see you in your place, Mr. Gale. Let us hope that we will not see you there for long.

The last words I used before we broke for lunch, although lunch is only a fleeting hope in the minds of most members of the Committee, were “10 pence”. I apologise; I should have said 10 per cent. Boots has a standard rake-off—or return—to charities of 10 per cent., but that varies hugely from outlet to outlet.

I am pleased to say that during the break I was able to discuss with the Parliamentary Secretary the purport of the amendment. He has assured me that clause 67(4) has the effect of tightening the law currently set out in section 60(3) of the Charities Act 1992. The 1992 Act states that “any commercial participator”—I had not understood that that meant a shop such as Clinton Cards—that makes any representation that

“charitable contributions are to be given to or applied for the benefit of one or more particular charitable institutions,” is obliged to make a statement, which is broadly in accordance with the effect of my amendment. I am deeply concerned by the apparent failure of even respectable outlets such as Boots, Tesco and Marks and Spencer to recognise that duty under the law, but I am pleased that the Government propose to tighten the provision.

I shall now move on to what might have been a stand part debate on clauses 67 and 68, which again has benefited from discussions over lunch. I have received representations from the Association of Fundraising Consultants that the existing law, particularly section 60(2) of the 1992 Act, is not working effectively. The association’s solution is to reduce the impact of that law and to set aside the changes that the Government propose to make to that section of the Act.

People are genuinely concerned about how much of their money is spent on fundraising. A lot of people say, “Well, it’s all charity money,” and—to revert to an earlier debate—in law, of course, it is all charity money, because it is there for the charities to dispose of in whatever way it wishes, as long as it is for the general charitable purpose. None the less, people are concerned about fundraising and the amount of money that may be devoted to it by certain charities. Some charities spend as little as £300 to raise £10,000, whereas some spend in excess of £900 to raise the same sum. On average, it is the largest charities that have the worst return on money spent on fundraising, and the smallest charities that have the best return on the money that they invest. That offers a lesson: people are entitled to know how much of the money is being spent on what might be described as a job creation scheme for professional middle classes, and how much of it will genuinely help real people at the front line, which is, after all, the purpose of most people’s charitable giving.

I have a lot of sympathy with the suggestion of the Association of Fundraising Consultants that the amendments to the 1992 Act proposed in the Bill would not have the effect that the Government desire, because they would not be sufficiently robust to stand up against the wide range of different ways in which professional fundraisers are funded. However, the principal point made by the AFC is that charities, and charity trustees in particular, should have a clear responsibility for deciding how effectively money is spent on fundraising. That is my position, also.

I am grateful to the association for the information it has provided. I fear that neither the existing provisions, nor the proposed provisions will be good enough for what the Government want to achieve and, I suspect, what most people want to achieve, which is to ensure a high rate of return on money spent on fundraising. We are not getting that from the largest charities at the moment.

Photo of Martin Horwood Martin Horwood Shadow Minister (Environment, Food and Rural Affairs)

It is a pleasure to see you in the Chair, Mr. Gale. Some of the statements that have just been made by the hon. Member for Isle of Wight (Mr. Turner) contained so many red herrings that he could open a fish shop. Despite my background, I shall not take his pejorative statements personally, especially his comments on fundraising by the larger charities, which the Parliamentary Secretary described from a sedentary position as an outrageous slur. I have to concur.

The hon. Gentleman was wrong about many things. The ratio of expenditure to income is important and it is dealt with properly by most of the larger charities. According to the type of fundraising pursued, those ratios sometimes look worse and sometimes look better. The areas that benefit from a large volunteer input, which is, in effect, free naturally achieve a good ratio; that is often true of small charities, as the hon. Gentleman rightly pointed out. However, some small charities indulge in special events fundraising of the type that is relatively inefficient, such as large gala dinners that make only a little more than they cost to put on. Such issues are a matter of detail and variation throughout the whole charities sector and his wild generalisations were pretty wide of the mark.

I do not have huge sympathy for the case putby the Association of Fundraising Consultants. The importance of the clauses designed to strengthen section 60 of the 1992 Act arises from the fact that weaknesses have been identified in the application of that provision. The hon. Gentleman was right to mention charity Christmas cards. The issue is not the costs that are taken by the charities, but those commercial participators—the organisations such as supermarkets and other retailers that help charities to fund raise, but are not themselves professional fundraisers—that represent themselves as raising charitable funds for a benevolent or philanthropic purpose but, in practice, do not ultimately give much money to the charity in question. That is a legitimate concern. In recent years, I have been worried about the fact that, although section 60 of the 1992 Act was well drafted and well intentioned, it has been pretty widely ignored. When walking down an average high street, one sees many examples of things that purport to be charitable or imply that they are for a charitable purpose that simply ignore section 60 of the 1992 Act. I therefore broadly welcome clauses 66, 67 and 68.

It is right that we seek to tighten protection for efficient, legitimate fundraising. The onus is on the Parliamentary Secretary to take on his responsibilities as Minister for the third sector. He should consider the enforcement and the practical application of the provisions and ensure that the Charity Commission and others concerned with enforcement find a mechanism to make it easy for people to report breaches. I suspect that many breaches are inadvertent and quite innocent. The hon. Member for Isle of Wight mentioned businesses such as Tesco and John Lewis, which contribute a great deal to charity. Perhaps I should declare an interest as the director of fundraising who managed to secure the designation of Tesco charity of the year for the Alzheimer’s Society. I worked closely with Tesco and I think that its record on corporate responsibility and support for charity is very  good. If it has inadvertently breached the law, I am sure that it was not with the intent of deceiving the public.

Nevertheless, the fact the breaches occur fairly routinely clearly opens the door for less scrupulous individuals to make a healthy profit out of apparently charitable sales and activities that do not benefit charities very much. So broadly speaking, I welcome the clauses.

Photo of Ed Miliband Ed Miliband Parliamentary Secretary (Cabinet Office)

This had been a good-tempered Committee until the hon. Member for Isle of Wight launched a scathing attack on the hon. Member for Cheltenham (Martin Horwood) through his comments on the professional middle classes, but I am sure that good humour will prevail eventually.

I shall talk briefly to amendments Nos. 128 and 131. The first seems like it was discussed a long time ago by the hon. Member for Isle of Wight. I hope to reassure him by pointing out that there is an offence suchas the amendment proposes under section 60(9) ofthe Charities Act 1992. The commission is not a prosecuting authority in that or any other respect, but his amendment would make it so by giving the commission the ability to initiate criminal proceedings. That would constitute a significant change in its role. As I said, the criminal offence exists and it is for the commission to draw offences to the attention of the police and for the Crown Prosecution Service to authorise a prosecution where appropriate.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

Is it within the capacity of trading standards authorities to prosecute such cases?

Photo of Ed Miliband Ed Miliband Parliamentary Secretary (Cabinet Office)

It is. But let me say more generally—this relates to amendment No. 131 as well—that I take the points made by the hon. Members for Isle of Wight and for Cheltenham. There is concern about the failure to enforce the existing regime adequately. Clause 67(4) strengthens that regime and makes clearer the requirements on commercial participators to provide information on the destination of moneys derived from the sale of goods and services. However, I acknowledge that the commission needs to investigate breaches properly and to make it clear that it is happy to do so, and to draw attention to the ability of members of the public to take up issues with them. It will not be for the commission to decide to prosecute, but it has a big responsibility.

I hope that the hon. Member for Isle of Wight is reassured about the strengthening of the provisions. Let us hope that it will make a difference in practice. With that, I hope that he will withdraw his amendment.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

The “wild allegations” were supported by information from the National Council for Voluntary Organisations and printed in its voluntary sector almanac for 2004. That information shows that every £10,000 raised by charities with an income of less than £100,000 costs £311 and every £10,000 raised by charities with an income in excess of £10 million costs £929.

Photo of Martin Horwood Martin Horwood Shadow Minister (Environment, Food and Rural Affairs) 1:15, 13 July 2006

That is because smaller charities often do not employ paid staff. It is nothing to do with the efficiency of the fundraising, but to do with the fact that larger charities tend to employ staff and smaller ones do not.

Photo of Andrew Turner Andrew Turner Conservative, Isle of Wight

I sense a vested interest, although not a current one. I welcome the fact that charities recruit volunteers to do their fundraising.

Section 60(3)(c)(i) of the 1992 Act says that the commercial participator shall accompany the offer for sale with a statement clearly indicating:

“what proportion of the consideration given for goods or services sold or supplied by to be given to or applied for the benefit of the institution or institutions concerned”.

It is frightening to find that, however good it is generally, Tesco has not read that bit of the law. I am sure that it would not avoid reading the relevant bit of the food safety legislation, but perhaps I am wrong.

I accept the Parliamentary Secretary’s acknowledgement that it is not the Charity Commission’s responsibility to prosecute; in fact, it should draw things to the attention of the police or trading standards. I also welcome the suggestion that the Charity Commission must investigate potential breaches a lot more rigorously.

The Parliamentary Secretary did not answer well the points raised by the AFC, but he is attempting to strengthen the law, not to introduce unnecessary regulation, and we will have to judge it by its effect. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 67 ordered to stand part of the Bill.

Clause 68 ordered to stand part of the Bill.