Charity Law Reform

– in the Scottish Parliament at 4:52 pm on 19th March 2003.

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Photo of Jackie Baillie Jackie Baillie Labour 4:55 pm, 19th March 2003

As members know all too well, charities form a vital part of Scottish life. Their unique qualities mean that they are especially well equipped to provide to the public services that are sensitive to local needs. Social justice, community regeneration and skills development are but a few of the objectives that charities can help us to achieve. Charities are, however, forced to work in a complicated and archaic legal framework that does little to support them.

Existing charity law is based on a statute that was passed in 1601. In May 2001, the report of the Scottish Charity Law Review Commission—the McFadden report—found, not surprisingly, that it was high time, 400 years later, for an update of the law on charity. The McFadden report was the result of a wide ranging year-long consultation process, in which questionnaires and leaflets were sent to every organisation that is recognised as a charity in Scotland, and with large public meetings being held in our major cities.

When the commission concluded its work, its final recommendations were referred back to the charity sector for approval; its response was overwhelming support for the recommendations. In essence, the McFadden report recommended a complete overhaul of the current system. The Executive has accepted the case for charity law reform and has thereby taken an important step towards creating a framework that is fit for the 21st century.

It is now time to move on from positive sounds to positive actions. There are some important implications for legislation, which should not be allowed to fall by the wayside. One of the commission's key findings was that the 1601 definition of a charity no longer fits today's public perception of a charity. The public view of charities 400 years ago was that they were apolitical organisations that pursued objectives such as the advancement of religion, education or poverty relief. These days, such a narrow definition is insufficient.

As members know, there are about 50,000 voluntary organisations throughout Scotland; however, only 28,000 are recognised by the Inland Revenue as Scottish charities. Many organisations that members of the public assume are charities do not have that status, Amnesty International UK and Greenpeace being two examples. Because those charities seek to influence legislation and are, in a sense, political, they are unable to benefit from having charitable status. At the same time, there are many publicly funded organisations—quangos by any other name—that the person on the street would not think of as charities, yet which have charitable status and are subsidised by the taxpayer. It is time that we introduced new legislation to reflect and protect charities today.

McFadden recommended four defining principles for Scottish charities: First, a charity should be for the public benefit. That should be its overriding purpose, which is essential if charities are to maintain their good names. Secondly, they should not be profit-distributing organisations. Thirdly, they should be independent and lastly, they should be able to have political—but not party-political—aims. I acknowledge that there needs to be a debate on what constitutes public benefit and on how we define bodies' independence. As for the political aspect, members need not fear—I do not think that anybody is proposing that the Official Monster Raving Loony Party should become eligible for subsidy. Many charities have a political lobbying arm, but that does not make their aims any less laudable.

Westminster is currently looking into redefining charitable status. It would be ideal if there were a convergence of views between here and Westminster and if we shared our information and thinking. It looks, however, as if legislation will not reach the UK Parliament until 2005, but Scotland need not wait until then because the Labour party, with others, has made an absolute commitment to legislating through a single charities bill.

Let me turn to regulation of charities. In Scotland, charities are not currently monitored to ensure that they comply with the existing body of legislation. They are not required to lodge financial or any other information centrally and, although they are required to provide copies of their accounts on request to members of the public, they do not have to provide core information, such as how many people they employ and what they spend on fundraising.

As organisations that are known for their lack of profit motive and for being run by dedicated staff with loads of committed volunteers, charities are usually rightly viewed with trust and respect by society. In fact, surviving as they do on donations, their good name is their life-blood. However, under today's less than robust legislation, the bad practices of a few charities might muddy the names of the others to the cost of society as a whole. Therefore, there is a clear need for a legislative framework for charity regulation.

In England and Wales, the Charity Commission establishes charitable status and is the centre for charity regulation. It is clear that the independence of that organisation is valued; in fact, the strategy unit in Westminster is working on making England's Charity Commission more independent. We have no equivalent organisation in Scotland, but the McFadden commission shows that there is a widespread belief among charities that that situation must change. I believe that the Executive shares that view and I welcome its stated aim of putting in place a new regulator for Scottish charities that is proportionate, independent, accountable, transparent, consistent and fair. However, I urge the minister to consider putting the proposed new regulator on a statutory footing as part of the key guarantee of independence and stability.

The way in which the Executive has involved the charity sector in consultation is to be commended. We in the Parliament pride ourselves on our inclusive approach, which sets us apart as an effective democracy, but if we are to come up with a sustainable solution, consultation must be continuous. We must face the fact that if the solution is to last for the next 400 years—as the current legislation has—it had better be sustainable. Consensual legislation will be strong legislation, so a charities (Scotland) act that reflects the McFadden report is crucial to our relationship with the charity sector and to our reputation as an inclusive legislature. Consultation must be seen to be more than mere gesture.

Things are already changing for the better for charities in Scotland. Reform that is suited to Scottish needs and which is informed by local consultation on the charity agenda is a breath of fresh air in a stale and neglected corner of the law. That is illustrated by the comments of an employee of the Scottish Council for Voluntary Organisations, who said:

"Before devolution I was a policy officer with SCVO and spent most of my time travelling to London to persuade politicians down there that issues of interest to the Scottish voluntary sector were worthy of a small amount of parliamentary time. We spent eight years trying to get charity law on to the agenda of the Westminster Parliament, but it was on the agenda of the Scottish Parliament from the word go."

Let us not lose that momentum. Charities are the heartbeat of civic society and they protect our values in an age of cynicism and social fragmentation. However, we should not through haste lose the essence of reform. We need a modern definition of a charity so that we can support organisations that deserve help, and we need a body that is sufficiently independent of Government influence to protect and regulate the sector. I urge the minister to put the commendable work that has already been undertaken to good use and to make rapid progress on charity law reform.

Photo of George Reid George Reid Scottish National Party

Because the stage 3 debate on the Mental Health (Care and Treatment) (Scotland) Bill runs on tomorrow, the clock runs on as well. I will advise members when they have spoken for three minutes, after which they can have an extra minute.

Photo of Tricia Marwick Tricia Marwick Scottish National Party 5:04 pm, 19th March 2003

I apologise for having to rush off before the debate ends.

It will not have escaped Jackie Baillie's notice that I have not signed the motion that we are debating tonight. Although I acknowledge Jackie Baillie's personal commitment to charity law reform, I do not recognise a Scottish Executive commitment to progress reform of charity law as stated in the motion.

Charity law reform should already be a reality. As we come to the end of the Scottish Parliament's first session, it is unacceptable that the Executive has not legislated on the matter. Charity law reform would have found all-party support in the Parliament—I note that members of all parties have asked questions about it from 1999 and, if we look around the chamber now, we can see the great groundswell of support in the Parliament for charity law reform.

The McFadden commission was established in January 2000 and reported in May 2001, as Jackie Baillie said, after which the Executive decided to consult on the commission's recommendations. That consultation ended on 30 September 2001, but although eighteen months have passed, there is still no bill. The Executive has let down the charities and voluntary organisations in Scotland, which realise how vital charity law reform is.

Jackie Baillie was right: for years policy officers from the SCVO urged charity law reform legislation at Westminster and the SCVO had high hopes that, in the first session of the Scottish Parliament, the Executive would introduce such legislation. At the first Justice and Home Affairs Committee meeting in June 1999, I highlighted the need for charity law reform. I said:

"One of the major problems faced by charities and voluntary organisations in Scotland is that there is no regulatory framework for them: charities are allowed to do whatever they want. Unlike the Charity Commission for England and Wales, which has regulatory powers of investigation, the equivalent office in Scotland is small and has virtually no powers. Anybody in Scotland can set up a charity with very little investigation even when things go wrong. ... We would do a great service to the voluntary and charitable sector in Scotland if we could initiate legislation on that."—[Official Report, Justice and Home Affairs Committee, 29 June 1999; c 11-12.]

At that time, I even considered introducing a member's bill on the subject. Unfortunately, I was talked out of doing so by Martin Sime of the SCVO while we chatted at the Parliament's official opening in July—I am sure that he remembers the conversation. He urged me not to introduce a member's bill because he believed confidently that the Executive would legislate: how disappointed he must be.

The Executive has let down charities in Scotland. Jackie Baillie spoke about the need for positive action, but it is a pity that we did not have positive action four years ago. I assure members that there will be positive action in the Scottish Parliament's next session, because we must ensure that we have charity law reform. It must be a priority for everybody.

Photo of Lord James Selkirk Lord James Selkirk Conservative 5:08 pm, 19th March 2003

I declare an interest, as I am the trustee of a small charitable trust. I am also active in some other charities, including the Edinburgh support group of Hope and Homes for Children and the International Rescue Corps, and have been active in some others in the past.

Jackie Baillie is to be congratulated warmly on securing this timely debate. The description of a charity that is contained in the Statute of Charitable Uses 1601 continues to be used, which shows that there is a great need for reform. I remember one case, in which I was responsible for reforming the Bastardy Act 1845, which was a desperately patronising document and a disgrace even to be seen. However, that is in the past.

To provide easily accessible information to help to protect against bogus charities—[Interruption.] Does a member want to intervene? They are welcome to do so.

Photo of Mike Watson Mike Watson Labour

Yes, why not? I was just responding to Lord James Douglas-Hamilton's comments on the act the name of which I will not repeat: it seemed to me to be the mother and father of all legislation.

Photo of Lord James Selkirk Lord James Selkirk Conservative

I thank Mike Watson for his contribution.

We need easily accessible information to help to protect against bogus charities and to make it easy for members of the public to see which charity does what in their area.

In the conclusion to its paper "Charity Scotland: What happened to Scottish charity law reform?", the Scottish Council for Voluntary Organisations says:

"Coherent charity law in Scotland would provide a supportive framework for the voluntary sector to grow its already recognised role in community life. It would allow charity trustees to better understand their position, and allow charity supporters to be more engaged in the organisations they care about."

I am sure that the SCVO is right. In co-operation with other organisations, such as the Edinburgh Voluntary Organisations Council, the SCVO has repeatedly called for reform of charity law. The SCVO stresses the importance of partnership between charities and voluntary organisations and the Executive to bring about reform.

The Executive welcomed the publication of the McFadden commission's report and the Minister for Justice said that he wanted to keep the momentum going. The next session of Parliament will provide an admirable opportunity to do that. We support the proposal to create a one-door regulatory office that is proportionate, independent, accountable, transparent, consistent and fair. However, we would like that office to be truly independent. I believe that that is what the charities want.

We welcome the fact that the Executive is committed to keeping under review the need for charities legislation. We think that such legislation will be required and that it should be developed in partnership with charities and voluntary organisations. We would support a charities bill and its subsequent enactment, which would be of great service to the community.

I am glad to support the motion.

Photo of Donald Gorrie Donald Gorrie Liberal Democrat 5:11 pm, 19th March 2003

I congratulate Jackie Baillie on getting the debate. Her personal commitment, as a minister and as a back bencher, to charities is certainly well known. She rehearsed in her opening speech many of the facts and arguments, so I will try not to go over the same stuff.

Personally, I regret the Executive's lack of progress on the issue of charities and voluntary organisations. We have made some progress, but it is regrettable that, in the Parliament's early days, we were ahead of the English in the charities area and now they have surpassed us. They produced two good reports and are doing something about them. To be surpassed by the English on any occasion is a bitter pill to swallow.

We need a stronger bill than the one that the Executive proposes, which defines charities and provides for an independent regulator. We must also address a wider issue. How can we create a society and a government system that encourages, co-ordinates, sustains and monitors charities and voluntary organisations, which have a huge overlap? Monitoring must be related to size. For example, there is no point in small local clubs having to fill in 52-page documents, which the current system tends to involve them in doing. As a basis, there could be a rule that states that each charity has to be registered and that, in order to get a grant, each voluntary organisation has to produce two pages of stuff, for example, which could be on a website and available on paper, setting out their aims, activities, a budget summary, how to contact their officials and so on. That would be helpful. Greater monitoring would be needed for larger organisations, which would have to produce a proper annual return.

We must also consider funding. There must be co-ordination of direct Government funding and lottery funding for core costs. I am sure that members will have heard charities and voluntary organisations state repeatedly that the issue is core costs versus project costs. There is an understandable political desire for new projects. Unfortunately, we live in a contract culture, which results in unsettling, flavour-of-the-month funding and a lack of core funding. There should be far more core funding, which should be directed nationally and have proper advisory arrangements, so that the voluntary sector, local authorities and others are advised on the giving of any money. Good charities and voluntary organisations that do a decent job should get sufficient core funding and be told to get on with it.

We should also fund the continuation of existing projects. Many good projects are wound up after three years, which is a ludicrous waste of money. Then somebody invents a new project and an organisation has to tell lies to qualify for new funding. The whole thing is a recipe for dishonesty and disorganisation. We must have a better system of funding core costs and existing projects.

We should co-ordinate the supervision and funding of such projects through national funding and lottery funding. We must get a grip on the lottery in Scotland, instead of relying on some of what is done in London, such as the New Opportunities Fund and the fund for charities. We must co-ordinate Government giving, lottery giving and local government giving to make best use of the available money. We should avoid duplication of regulation, so that charities are not deaved by incessant requests to fill in more and more forms. A problem lies in keeping the body of charities independent while having some co-ordination at the Government level.

We must have a system that encourages a new breed of voluntary local community organisations, which I am sure that all parties want to encourage. We are working hard to get communities to pull themselves up instead of having initiatives parachuted in. The system must make it easy to start such organisations, which should be monitored with the lightest touch and given financial help when they need it.

The subject is important. I welcome the debate and hope that any of us who is lucky enough to reach the next parliamentary session pursues the issue strongly.

Photo of Robin Harper Robin Harper Green 5:16 pm, 19th March 2003

I congratulate Jackie Baillie on initiating the debate and on the motion, which I signed. I agree with Tricia Marwick that four years is a long time for 50,000 organisations to wait for a definition of and help with their status in Scots law.

I will give an example of the problems that the lack of a definition has caused. In the chamber during the passage of the Water Industry (Scotland) Act 2002, the Executive promised relief on water charges. However, the criteria for water charges relief are so narrow that only 4,000 of the 50,000 charitable organisations qualify under the regulations, whereas the Executive announced that 80 per cent of organisations would qualify. That is an enormous problem that the Executive must deal with and which can be addressed only by charity law reform. That is one reason why we should get down to charity law reform as soon as possible.

Charities and trustees lack knowledge about their legal status. Charities were recently invited to apply for grants to help them with village halls. Of those who filled in forms and got them back, 50 per cent found to their intense surprise and horror that they were personally liable for their charity's debts. They were unaware of that because we do not have a proper definition of charities or a proper body of law to which people can refer.

I apologise for leaving the debate early, but as co-convener of the cross-party group on architecture and the built environment—that is a long name to remember—I am standing in for Rhona Brankin at a meeting of the group, because she is not terribly well. I will have to dash off to help.

Jackie Baillie said that the Executive has been good about co-operating with and talking to charities, but the view has been expressed to me that the Executive has recently gone into hugger-mugger and is talking to itself. It has not responded much to charities' inquiries about recent charity law developments. When asked for further advice on charities' position in Scots law, the Executive's response was that it would give charities money to produce an advice handbook for trustees. I believe that that is already being done, but on what basis can a handbook for trustees be produced when we hope for new charity law?

My plea to the Executive is for the promised charity law reform to occur in the first year of the new Government. Whether the Executive forms the new Government is a matter to be settled on 1 May. Let us have some promises from somewhere—preferably from everywhere—that the Parliament will address the issue.

Photo of Johann Lamont Johann Lamont Labour 5:20 pm, 19th March 2003

I congratulate Jackie Baillie on bringing the debate to the Parliament. I had been looking forward to it, but then we heard from Tricia Marwick and Donald Gorrie—being so cheery must keep them going. I thought that the Parliament had put the voluntary and charitable sector at the heart of its programme and debate. The Social Justice Committee has and so has the Parliament, and we need to consider how to progress in that context rather than taking the view that we do not have an understanding or commitment to the voluntary sector. Any constituency MSP could have nothing other than huge admiration for the role of charities and the voluntary sector.

Photo of Johann Lamont Johann Lamont Labour

If the member lets me finish my point.

In its deliberations on the voluntary sector, the Social Justice Committee said that there had to be progress on charitable law. I am sure that the Executive will take that on board.

I want to make a few points before I move on to the substance of what I want to say. The issue is not just about legislation; it is about respecting and understanding the sector, and the Executive has an excellent record on that. We should also not be over-legislating for the sector. I was speaking to a constituent who, for the past 25 years and because she wanted to, ran a lunch club for a group of local pensioners. She has now stopped running the club because of the level of regulation and the lack of respect for the expertise of the women who ran the club out of the goodness of their hearts. They have simply stopped running the club. We have to be careful about that.

I welcome the work done by Jean McFadden and I recognise the degree of commitment that the commission has shown and the body of evidence that it has provided for us to use in moving forward.

As Jackie Baillie said, many organisations are charitable that we might expect would not be, and others are not charitable that we might expect would be. Given the perceptions of what a charity should be, which we might or might not share, that is central to the debate. We want to make the decision based on principles that have been developed through discussion and debate rather than through the deliberations of the Inland Revenue. That is why we need legislation.

The discussions will not always be easy, particularly for organisations that imagine that they are charities, and which might currently be charities, but whose benefit to the public might not be evident to the rest of us. The role of co-operatives highlights the importance of that debate—and I declare an interest.

The co-operative movement is broad and encompasses a range of groups and organisations. Because co-operatives often provide dividends to their members, they would be excluded from charitable status under what is being proposed—the McFadden commission considered the issue. However, co-operatives genuinely benefit the public in their communities, not least because they offer work opportunities to people within local communities and often provide a service that no other organisation would be able to provide. Co-operatives are rooted in an understanding of what their local communities need. Their position would be tested in the debate surrounding a charities bill, and discussion of such interesting and challenging issues could be developed.

We would be kidding ourselves on if we thought that there was a lack of will simply because the issues that have to be addressed are complex. We want charities legislation that can add to the support for the important work of charities and voluntary organisations in our communities not just because of what it concludes and what is enacted, but because of the legislative process, which allows further discussion and acknowledgement by all who are involved in making decisions of the key role of charities, organisations and people within our communities who genuinely provide a public benefit for us all.

I congratulate Jackie Baillie again. I am sure that the debate will put down a marker that this is one of the important jobs that must be done in the next Parliament, to build on the excellent work that has already been done and to recognise the key role of the voluntary and charitable sectors in Scotland.

Photo of Linda Fabiani Linda Fabiani Scottish National Party 5:24 pm, 19th March 2003

Like my colleague Tricia Marwick, I did not sign up to Jackie Baillie's motion. That was not because I did not want it to be discussed—I want it to be discussed—and it was not because I have any problems with the commitment of Jackie Baillie and loads of other members to reforming charity law. However, I wonder a wee bit about the Executive's commitment—after all, four years down the line and four social justice ministers later, we do not yet have a bill on charity law reform to look at. Way back in 1999, the then Minister for Communities, Wendy Alexander, pledged to reform charity law in Scotland. However, after the McFadden report, it was an inordinately long time before the Executive responded properly.

Charity law reform is a social justice issue—it is interesting that social justice ministers have spoken about it and that the Social Justice Committee has been pushing it. Hugh Henry should not take this point personally, but I am concerned that the issue is now under the justice remit—last week in the chamber, Jim Wallace answered questions about charity law reform. That worries me, because the ethos of each portfolio and department is different. The social justice ethos is, "We can do this and we want to do it, so how are we going do it?" I often feel that the justice ethos is, "Why can't we achieve this?" I worry that that has held things up.

Another issue that could have held up reform is the on-going problem that we have with the authorities that deal with the voluntary sector. The amount of knowledge and expertise within the voluntary sector and the fact that people in the voluntary sector can run the agenda themselves are sometimes not recognised. That is down not so much to members of the Parliament or ministers—I do not doubt for a minute that our social justice ministers have all recognised the value of the voluntary sector—as to officials, who sometimes have a problem with recognising those facts. I talk from experience, having worked for a voluntary organisation. I know that there is a perception that people who work for voluntary organisations or charities are not right up there in knowing how to move forward—they are perceived as a bit wishy-washy. I would like ministers to take that problem on board.

There is an on-going example of that problem. I notice in the Executive's response to the McFadden report that the Inland Revenue charities register will be overhauled and reviewed, so that charities that no longer exist are removed from it. The Scottish Council for Voluntary Organisations has taken such an approach for 10 years, with its charities register in Scotland database, which is constantly updated and as a result is the most modern and up-to-date register of where charities are at in Scotland today. Why cannot we use that? Why cannot the Executive say, "The information is there; we don't need to waste time or money on doing another survey of the Inland Revenue register"? I ask the minister how much that will cost, how long it will take and whether the process will delay reform yet again.

I have two quick points to finish. Can we get the ethos of social justice back into charity law reform? Can we all make the commitment that, no matter who is in the Executive after 1 May, charity law reform will be a high priority on everybody's agenda?

Photo of Brian Fitzpatrick Brian Fitzpatrick Labour 5:28 pm, 19th March 2003

I speak with some trepidation, given the substantial experience of many of the members who have spoken in the debate and their contributions to the work of charities in Scotland. I am delighted to congratulate Jackie Baillie on bringing the motion, which I support, to the Parliament. There is nothing wrong with injecting a bit of politics into members' business—I do it myself—but we have heard three extraordinarily graceless speeches. I wonder whether, on reflection, members feel that this was the debate for those speeches, but that is a matter for them to decide.

Photo of Brian Fitzpatrick Brian Fitzpatrick Labour

On gracelessness? Certainly.

Photo of Linda Fabiani Linda Fabiani Scottish National Party

That is the kind of attitude that I have problems with—the attitude that, as the debate is about the voluntary sector and charity law, it is not about politics. The debate is serious and it is a political matter. We should respect people by recognising that.

Photo of Brian Fitzpatrick Brian Fitzpatrick Labour

I am obliged to Linda Fabiani for that corroboration of my point.

I wanted to make a point about the way in which people come to be involved in charities and the importance of making sure that we do what we can to reduce the legislative burden—an important point was made earlier about the need not only for a legislative framework, but for simplification. People who become involved in charities come from all sorts of backgrounds and have all sorts of motivations. My involvement stems from the fact that I was asked to become involved in the Head Injuries Trust for Scotland, partly because it was felt that lawyers instinctively know lots about charity law. What frightened me was the tremendous responsibility that can fall on trustees and directors of charitable companies, as Robin Harper said. The responsibility for carrying a substantial enterprise on which a number of employees, exercises and endeavours depend—and the knowledge that that is being done on the side, as it were—falls not only on lawyers, but on many people across Scotland who give their time to try to create better circumstances.

Partly because of some of the funding issues that Donald Gorrie mentioned, the charity that I was involved with ended up having to shut its doors. Another reason for that was the burden on the trustees and charity workers whereby, at times, we felt that we were navigating the legal arrangements for the charity rather than trying to find a funding solution. Anything that can be done to assist and enable charities is to be welcomed.

I sympathise with Robin Harper's position, but I am not sure that it is appropriate to say that giving advice and guidance to trustees is a bit of a waste of time. The problem that he outlines about the liability of trustees in relation to the letting of a hall is precisely the kind of situation in which straightforward advice would be helpful. On reflection, he might recognise that point.

I would like an overhaul of charity legislation. Many good things happened in the 17th century, but we need to move on.

Photo of Brian Fitzpatrick Brian Fitzpatrick Labour

I was thinking of 1603, actually.

The opportunity to conduct that overhaul will be available to us in the next session of Parliament. It can be done through an Executive bill or through a bill lodged by an MSP who can build consensus in the chamber—perhaps Tricia Marwick could give us some lessons on that. I hope that such a bill will make progress and I hope to hear the minister speak on that point later. There is a compelling argument for placing the regulator on a statutory footing. I would like the minister to respond to that point, too.

Photo of Hugh Henry Hugh Henry Labour 5:33 pm, 19th March 2003

Jackie Baillie has done us a favour in giving us an opportunity to focus yet again on the critical role that charities and voluntary organisations play in the life of the country, as many members have testified is the case.

It would go against my grain if I were not to rise to some of the political comments that have been made. I do not want the debate to deteriorate into petty party-political point scoring, but I say in passing that there are some who joined this Parliament four years ago whining, moaning and groaning and who are clearly determined to end the session doing the same thing. I did not recognise the description that I heard tonight of the Parliament's and the Executive's view of the voluntary and charitable sector.

I have noted some points and I will reflect and report back on them. Donald Gorrie regretted the lack of progress made by the Executive and I will certainly feed his comments back to Jim Wallace, who has taken a close interest in the matter during the past four years. I do not think that the criticisms and some of the concerns that were raised are entirely accurate. That said, there are some things to which we need to give due consideration.

It is important to put on record our appreciation of the work that charities do throughout Scotland. As members have testified, charities deliver a wide range of services. Their work with disadvantaged and marginalised groups plays a key part in achieving greater social justice in Scotland. I know that Jackie Baillie feels very strongly about that.

Charities also provide a range of expertise that is not available in any other organisation in Scotland. Without charities' knowledge, skill and expertise, Scotland and many of its inhabitants would be much the poorer. The changes in charity regulation that we are putting in place are designed to support and encourage that work, while reassuring the public that their money is being well used and that support is being properly provided.

Our response to the McFadden report contains responses to all 114 of the commission's recommendations and sets out plans for the way forward. I hope that members have had the opportunity to reflect on our response to the report, as we responded at length. We are grateful to the McFadden commission for the important work that it carried out. The McFadden report was a diligent and worthwhile piece of work, which deserved a careful and thorough response. I believe that that is what it received—indeed, one commissioner described our response as well worth the wait. The commissioners do not accept the suggestions that have been made that the Executive responded negatively to their report.

We accept the thrust of the report, which is that there should be better regulation and support of charities in Scotland. Our plans will provide, for the first time, an up-to-date register of Scottish charities and a central source of support and advice for charities, their trustees and the public. Our plans will also provide a regulator—the office of the Scottish charity regulator—whose functions will include the routine monitoring of charities, including scrutiny of their annual reports. I believe that those plans address the gap in regulation, which has clearly been a cause of concern for some time. We are working on many of the tasks that need to be undertaken to bring the OSCR into operation early next year.

As Robin Harper and one or two other members remarked, the definition of a charity is key to the question of which bodies receive the benefit of charitable status and so fall to be regulated. We agree with McFadden that the current definition of a charity is outdated. Jackie Baillie and other members mentioned the long history of the legislation in that respect. We believe that a new UK-wide definition is desirable. Although none was in prospect at the time that the McFadden commission was carrying out its work, I believe that there is the prospect of such a definition.

The Cabinet Office strategy unit produced a report on charities and the wider not-for-profit sector. Johann Lamont made a valuable contribution about that sector. We need to consider some of the issues in relation to co-operative organisations that she raised, including how money and resources are owned and distributed.

The Cabinet Office strategy unit report gives us an opportunity to consider a modernised definition of charities that is based on the principle of public benefit and a wider range of purposes. Such a definition could encompass issues such as the promotion of human rights, which is all too often ignored, and the advancement of amateur sport, in which many organisations in this country play a valuable part.

I believe that the strategy unit definition reflects the spirit of the McFadden recommendations. Indeed, the SCVO has described the continuing role of the Inland Revenue in determining charitable status as unnecessary and problematic. It would probably be possible to legislate for charitable status to be conferred in Scotland by the regulator, using either the UK or a different definition.

Photo of Fiona Hyslop Fiona Hyslop Scottish National Party

The Minister for Social Justice and I were both members of the Social Justice Committee before Johann Lamont became a member of the committee. At that time, the committee was asking for legislation. I want to concentrate on the process and not the pace of progress. Will the Deputy Minister for Justice reassure the chamber that social justice officials and justice officials are drafting the legislation?

Furthermore, if there is a problem with the Inland Revenue definition of charity, does the minister think that it would be appropriate to seek some form of reverse Sewel motion to allow the Parliament to have a wider remit over the issue of definition in any legislation?

Photo of Hugh Henry Hugh Henry Labour

I was about to say that, as far as using the same definition or a different one is concerned, we have ruled nothing out. However, we should bear it in mind that the Inland Revenue would still be an important part of the process. For example, eligibility for tax relief is a reserved issue, but is central to the viability of many charities and represents a key attraction of charitable status.

On Fiona Hyslop's first question, I absolutely assure her that the social justice department plays a critical part not just in relation to legislation but in considering the role of charities in the voluntary sector. I would not dare to contemplate any discussion on the matter without allowing the Minister for Social Justice to have her say.

Photo of Cathy Peattie Cathy Peattie Labour

As Johann Lamont pointed out, the voluntary sector does not just include organisations that are involved in social justice; it covers sport, the environment, the arts and so on. The list is endless. It is important to recognise that the voluntary sector is diverse and wide.

Photo of Hugh Henry Hugh Henry Labour

I agree entirely with that comment.

I want to return to points that members made about the need for legislation and about putting the regulator on to a statutory footing. Following the McFadden report, we made it clear that there would be no opportunity to introduce a charities bill in the current parliamentary session. Unfortunately, I cannot commit the Parliament or Administration in the next session to introducing such a bill within the parliamentary timetable. Instead, we have been trying to concentrate on setting up the new regulator. I completely respect the right of interested individuals to make the case for legislation that they believe is necessary; indeed, Jackie Baillie has articulated many of those views. However, I do not believe some members' claims that it is all or nothing. Although no legislation has been introduced, we should not ignore the many good things that are happening in the sector. I do not think that what we are doing is a waste of time, and the new arrangements will provide a good basis for developing proposals for regulation.

Photo of Lord James Selkirk Lord James Selkirk Conservative

Is the subject suitable for a committee investigation, or even a committee bill, given that such bills have been one of the Parliament's triumphs?

Photo of Hugh Henry Hugh Henry Labour

That is entirely a matter for the new committees of the next Parliament. Over the first four years of the Parliament, the committees have demonstrated their vigour and the wide-ranging nature of their interests. I am sure that some of them will consider the work of the broader range of charities that Cathy Peattie described.

On the regulator, we believe that the agency model is an established and effective way of delivering regulatory functions. It means that we do not have to wait for a legislative opportunity to set up the regulator—its work can begin immediately. In response to Brian Fitzpatrick and other members, I make it clear that we have not ruled out putting the regulator on a statutory footing in time, if experience shows that that is necessary.

In due course, there will be a need to introduce a new legal form for charities such as the charitable incorporated organisation. We also need to extend trustees' investment power and improve the procedures and powers of the Scottish charities nominee. Moreover, there might be a further review of proposals to put the register of charities on a statutory footing in order to extend the regulator's powers, which might include the power to grant charitable status.

This important debate has come towards the end of the parliamentary session. As a result, it is only right that we yet again give due recognition to the work of thousands of organisations and tens of thousands of people throughout Scotland in improving and sustaining the quality of life for individuals who are sometimes vulnerable and isolated.

We pay tribute yet again to the expertise and dedication of those involved and we recognise the absolutely critical role that charities play in the fabric of life in Scotland, whatever shape or form they take.

As Johann Lamont said, we are offering tremendous support to the charitable sector. We should celebrate and recognise not only its work, but the work that Parliament has done. Tonight's debate should be about a positive recognition of what has been achieved, although we recognise that more is still to be done.

As Lord James Douglas-Hamilton said, in the next session, we hope to work in partnership to make the work of charities in delivering for communities easier, and thereby to improve directly the quality of life throughout Scotland.

Meeting closed at 17:46.