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Bogus Charity Bag Collections

– in Westminster Hall at 11:00 am on 13th October 2010.

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Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford 11:00 am, 13th October 2010

It is an honour and a pleasure, Mr Gray, to be speaking on this important issue under your chairmanship. This is not the first time that bogus charity collections have been raised in this Chamber. In February 2007, Jo Swinson held an Adjournment debate on the matter; the then Minister, charitable organisations and consumers wholeheartedly welcomed the debate, and it certainly raised awareness of a growing problem. However, despite the positive response from the then Minister, we meet three years on and the problem is more widespread, not less, and nothing much has changed. I hope that this time this Minister will be able to offer not only warm words, but real action.

House-to-house collections of donated goods are a crucial source of income for many charities-those with and without shops. For example, last year they contributed more than £22 million to the British Heart Foundation for the fight against heart disease, and 43% of sales income came from goods donated through doorstep collections. Age UK raises approximately £25 million per year from charity bags, which accounts for around 60% of the stock sold in their shops.

Even for the vast majority of charities that do not have shops, house-to-house collections form a massive part of fundraising. Legitimate private collection companies-some of which are better than others-are used to collect on behalf of many charities. Their professional fundraising ability means that companies such as Clothes Aid collect around £2 million per year on behalf of their tied charities.

Charity bag collections are a convenient way for people to recycle unwanted textiles. Our increasingly busy lifestyles mean that it is hard to find the time to drop clothes into a shop, and, given that shops themselves are often located in pedestrianised areas, it becomes incredibly difficult to make large donations following a spring clean, or a post-diet or a pre-winter wardrobe update. Like millions of people, I put my clothes in a charity bag and pop them outside my door before heading off to work. I do so in good faith, with the belief that they will be put to excellent use and raise vital funds for whichever charity is collecting. Sadly, it appears that that trust can sometimes be misplaced.

On 13 July, a flyer was posted through the door of my constituent, Mr Philip Wilson. It simply stated that clothes, shoes, blankets, towels and other such items were urgently needed by Breakthrough Breast Cancer; that Clothman Ltd, which it stated was a commercial participator that helps raise money for Breakthrough, would pick up the bags on Wednesday; and that £100 from each tonne collected would go to the charity. It carried the Breakthrough branding, had a woman pictured on the front, a registered charity company number and website details. It also had a mobile telephone number that you could call for further information.

The leaflet looked genuine and a normal charity supporter would not doubt it. However, on this occasion the leaflet went through the wrong door-or the right door, depending on how one looks at it. Mr Wilson is mid-Kent's fundraising co-ordinator for Breakthrough Breast Cancer, and therefore knew that his charity did not do door-to-door charity collections. He contacted the local council, the trading standards office and the police, but, despite a collection van being stopped mid-act, the operator was allowed to continue for allegedly having the correct registered charity number on the flyer. Of course, the flyer was fake, but the number was legitimate. That incident illustrates the difficulties that genuine charities face.

I first became acutely aware of bogus charity collections during the summer recess, when BBC South East televised an in-depth undercover investigation, which highlighted a spate of incidents across Kent. That investigation was already under way when Mr Wilson contacted the BBC and, shortly after, he came to my surgery. It has become clear that what happened in Chatham in mid-July has happened and continues to happen daily in streets up and down the country.

There are two major problems in combating this criminal activity: one, the legislation and, two, the often relaxed attitude of the police. Taking the police response first, I understand that the theft of a single bag of clothes may not seem like a high priority, but when it is estimated that the theft of clothes is in excess of 36,000 tonnes per year, at a cost of more than £14 million to charity, it should be taken more seriously. There are some examples of a good police response. Derbyshire police have recently conducted a successful undercover operation into this specific crime, and other forces have made individual arrests, but usually the attitude of the police is that they face tight budgets and bogus collections are not a key target or high priority.

The second challenge is the reluctance and/or capability to perform cross-border policing on level 2 or 3 crime. For example, Clothes Aid recently passed over intelligence on a small gang stealing in Bedfordshire, Hertfordshire, Essex and the Met area, but each force has refused to take the lead because it is "cross-border". That reaction ignores the fact that this is, quite simply, an organised crime, which is cross-county and growing.

If I may, I shall move on to the legislative aspects. For a charitable collection to take place, a licence must be applied for under the House to House Collections Act 1939 and the House to House Collections Regulations 1947. The Local Government Act 1972 transferred all licensing to the local authority, except in London. Larger charities can apply for a national exemption, but without a licence or an exemption doorstep collection is illegal. Although it is feared that as much as 50% of house-to-house charity collection is bogus, Charity Bags notes that only one in 10,000 illegal clothing collections in the UK is subject to enforcement action or prosecution by the local council.

In the Charities Act 2006, the previous Government introduced a new licensing and regulatory regime for house-to-house collections, but secondary legislation is required for it to be implemented. I was concerned to read that the Minister and the Charity Commission have publicly stated that they do not believe that to be a priority. Given the effect on public trust and the financial cost for charities, I respectfully disagree, and I suggest that anything that helps combat this organised criminal activity should be a priority. I urge the Minister to introduce secondary legislation at the earliest opportunity. A better licensing system is only one aspect of the changes required to combat the problem. Since most stolen clothing is exported, I would like to see more robust monitoring from border police and better international intelligence communication.

There needs to be tougher enforcement action against bogus collectors, from the van driver up to the mastermind operator organising the entire ring. The current level of deterrence is laughable, and bogus collectors continue to act with impunity. Consideration needs to be given to whether the bogus operators breach other important legislative and tax requirements, from employment duties through to tax evasion. Finally, the charity industry needs to work together to improve collection codes. I hope all relevant organisations will participate in the consultation on the new code of conduct recently published by the Institute of Fundraising.

Photo of Therese Coffey Therese Coffey Conservative, Suffolk Coastal

First, I congratulate my hon. Friend on securing the debate, because it is important. One concern raised with me by a constituent was about the transparency of the revenue that goes to charities. I encourage my hon. Friend to include that as part of the consultation; there is a variety of information. There is also the unscrupulous practice of certain collectors picking any charity bag-not their own-and re-bagging it. I support my hon. Friend's actions.

Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford

My hon. Friend makes a good point. Furthermore, we could consider a register of reputable door-to-door collectors to provide the donor with easy access to trustworthy information. Transparency is extremely important to combating the problem, and we need to work with the charity industry and the legitimate private companies that operate under contract with those charities, to ensure that it exists.

Photo of Jo Swinson Jo Swinson Liberal Democrat, East Dunbartonshire

I thank the hon. Lady for giving way and congratulate her on securing the debate. Sadly, we still have to discuss this issue because it remains a problem, although I and other Members have been raising it for some years.

The hon. Lady mentioned working in partnership with the charity industry, and that touches on the nub of the issue. As she said in relation to cross-border agencies, many agencies-whether trading standards or the police-do not take responsibility. Would it be possible, perhaps using the Minister's good offices, to get the relevant agencies together to hammer out a solution, rather than having everybody saying that it is not their responsibility?

Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford

The hon. Lady should be congratulated on, and recognised for, all the hard work that she has done on this issue over the past three or four years; her debate in 2007 certainly started the process of increasing awareness. The fact remains that there is no communication across all the agencies and regulators involved. She raises a good point, which I hope the Minister will take on board.

The charity industry should consider a register of reputable door-to-door collectors to provide donors with easy access to trustworthy information. I now have a greater awareness of some of the bogus activity that takes place, and I recently received through my door leaflets that looked dubious. To be honest, however, it is difficult to find out whether collection organisations are legitimate, and giving consumers easy access to such information will greatly improve the public's trust in collections and the amount that is donated to charity.

As a nation, we are generous donors to charity, which means that hundreds of charities benefit from millions of pounds, and that pays for many different services that the state cannot provide. Furthermore, our clothing donations help fulfil environmental and waste targets. However, of the three primary ways of donating clothes-shops, banks and bags-two are under threat from thieves. All charities that collect door to door now worry about theft. Half of all donors who no longer give clothes cite scam collectors as their reason for not doing so.

Bogus collection has grown from a small-time deception to a nationwide organised crime, costing charities millions of pounds in lost revenue. Unless the issue is taken seriously right from the top, the scam will continue. I urge the Minister to deliver more than a few warm words and instead to lead the attack so that the public can give with confidence and charities can receive the donations that they deserve.

Photo of Sarah Newton Sarah Newton Conservative, Truro and Falmouth 11:12 am, 13th October 2010

I thank my hon. Friend Tracey Crouch for securing the debate. I want to say a few words in support of her on what is an important issue right across the country.

A company operating in my constituency and across Cornwall has been distributing and collecting charity bags for second-hand clothes. The company is called InterSecond Ltd and it has been appointed by its parent company, Azzara, which is registered in Lithuania. InterSecond could be a company or a charity-it is impossible to find out. Its bags have highly misleading logos, which could easily be confused with those of UK breast cancer charities.

Cornwall council, the licensing authority for charities' door-to-door collections, has not given InterSecond a licence and is actively pursuing an investigation into the complaints that it has received. BBC Radio Cornwall is warning people across the county that InterSecond's activity is bogus and that they should not make donations. Such bogus activities are not only misleading, but rob legitimate charities of much-valued income.

Will the Minister consider two actions that he could take? First, when organisations apply to the licensing authority, companies or charities based outside the UK that are beneficiaries of the collection's proceeds should have to give evidence to the licensing authority that any claims made are true. Secondly, the licensing authority should have the ability to pre-approve the information that will be printed on the bags to make sure that it is not misleading. Clear guidance to licensing authorities would really help.

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office 11:14 am, 13th October 2010

It is a great pleasure to serve under your chairmanship, Mr Gray. I warmly congratulate my hon. Friend Tracey Crouch not only on securing the debate, but on presenting her arguments extremely forcefully. It is also important to register the presence of Jo Swinson, who performed a similar useful exercise back in 2007, so she represents some continuity in terms of pressing the case for continued action on this extremely emotive and difficult issue.

As my hon. Friend said so well, we clearly have a problem. We all know, even just from walking the streets of our constituencies and knocking on the doors, that the public are more and more exposed to leaflets, bags and requests for information, and that is irritating them. There has been a change in the economic incentives underlying the behaviour that my hon. Friend is concerned about. Prices for second-hand textiles and clothing are at about £700 to £900 a tonne, so there is some serious money to be made.

The Fundraising Standards Board tells me that there has been a 100% increase in complaints to it over the past year. The media and various Members of Parliament are taking an interest in the issue, which is clearly serious. However, this is not so much about the sums involved or the cash cost to charities, which outside bodies estimate at between £5 million and £15 million a year. What concerns me is the issue of public confidence in charities at exactly the time when we want to encourage more people to give. This is clearly an important issue of public confidence.

Three types of collection activity potentially damage the sector's reputation. The first is outright fraud, which involves fake charities adopting the names of real charities for their collections, pretending to be charitable and stealing clothes that are left on doorsteps; my hon. Friends the Members for Chatham and Aylesford and for Truro and Falmouth (Sarah Newton) identified such activities. The second area of activity involves misleading literature that gives the impression that there is a charitable beneficiary, when that is not in fact the case. The third area of concern is the actual theft of bags of clothing left out for legitimate charities to collect.

All that behaviour is absolutely reprehensible, but the question is what we can do about it, and I take on board the point that the issue has been raised over some time. A lot of activity is going on, but the question is how effective it is, and it is important to review that. There are three levers that the Government can pull: more and clearer regulation, enforcement and education. The Government's position is that the challenge and the priority relate more to enforcement and education than to further regulation.

The regulatory base that is in place is sufficient, and, as my hon. Friend the Member for Chatham and Aylesford will know, collections are regulated under the House to House Collections Act 1939 and the House to House Collections Regulations 1947. Where collections are undertaken by a commercial collector on a charity's behalf, the necessary commercial participation agreement under part 2 of the Charities Act 1992 must be in place. As a Government who see themselves as being in the business of deregulation rather than of adding to regulation, our instinct is therefore not to reach immediately for the regulatory lever, not least because we would be concerned about imposing additional costs and burdens on those who perform their activities in a wholly legitimate way.

My hon. Friend rightly pressed me about the implementation of the Charities Act 2006. She will be aware that it is due for review next year-there is a requirement on the Government to review its workings and implementation-and I have already made an explicit commitment in public that a review of the issues before us will be an explicit part of that process.

The honest answer to my hon. Friend is that if I thought that full implementation of that measure would transform the landscape and make a huge difference, I would have carried that out some time ago. In fact, the advice that I have received is that the net impact of implementation could be marginally deregulatory, in the sense that it would effectively replace the requirement to get a local authority licence to operate in a specific area with a requirement to get certification from the Charity Commission to operate anywhere. I am not entirely persuaded that that would solve the problem, but research is being conducted and, as I have said, there will be an explicit review of the issue in the context of the review of the Charities Act 2006. My hon. Friend has that undertaking from me.

Enforcement was a central concern of my hon. Friend. We look to various players in the field to make a difference and an impression: local trading standards officers, the police and, of course, those responsible for regulating advertising standards in the context of leaflets that are arguably misleading. The debate has prompted me to review what is going on, and on the face of it I am reasonably encouraged by the level of activity and what that tells me about the underlying concern of the agencies responsible.

For example, I welcome the work that the Fundraising Standards Board is doing with the Trading Standards Institute to develop a toolkit to guide all trading standards officers through the relevant legislation and through what evidence is needed to tackle bogus charity collections and effect successful prosecutions. As my hon. Friend will know, the process in relation to detection and evidence is extremely difficult. However, there is clearly partnership work going on to develop a toolkit that will help trading standards officers in that difficult work.

Photo of Tracey Crouch Tracey Crouch Conservative, Chatham and Aylesford

I thank the Minister for what he has outlined, but I dispute whether it is difficult to detect the people in question. Quite often they clearly state where they will be, and at what time. It is misleading or misguided to think that it is difficult to catch them and find evidence. It is often very easy to catch the perpetrators in the act. I feel that sometimes it is not a question of catching them; it is a question of the process afterwards-prosecuting them. That is where the slow-down is.

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

I understand and accept my hon. Friend's point. As to difficulty of detection I was thinking not so much of the person in the van as of the mastermind in the control room-the real villain of the piece. I also think that the public will play an increasingly important role in detection and evidence. For example, in my constituency we have rolled out the concept of neighbourhood and street champions, people who have value as the eyes and ears of public agencies, on a range of issues. In the present context they could play an important role in detection and evidence-gathering.

I was trying to summarise some of the welcome activity that I detect is going on among various agencies who are trying to work together to develop better practice. The Institute of Fundraising has a current consultation on its code of fundraising practice on house-to-house collections. That code will apply to all collections of money and goods made house to house, whether they are carried out by volunteers, fundraising organisations or third party agencies.

I note that the National Association of Licensing and Enforcement Officers is doing some work on developing guidance for local authority licensing officers on house-to-house collection of goods. I have looked again at what the Advertising Standards Authority is doing as the UK's independent regulator of advertising. Again, I am satisfied that it takes the issue seriously and that its connections with the Office for Fair Trading are reasonably robust, so as to create the opportunity to act against those who mislead the public through advertising material.

The police's sense of their local priorities clearly presents an issue, but the Office of the Third Sector, as was-it is now the Office for Civil Society-has been in regular contact with the Association of Chief Police Officers. I give my hon. Friend the Member for Chatham and Aylesford a personal undertaking to write again to ACPO to press the issue, and to raise the matter of cross-border co-operation that she specified.

The level of fines and the effectiveness of deterrence also needs to be considered. I understand that one of the maximum fines, for collecting without a licence, is about £1,000. There seems to be a mismatch between that and the price of a tonne of textiles, so again I shall write to the Ministry of Justice to explore its appetite for a review of the level of fines and deterrence.

To deal briefly with education, I have reviewed what has been done. My hon. Friend will know that the Office of the Third Sector was instrumental in co-ordinating the "Give with Care" campaign. It distributed about 500,000 leaflets around the country. That was relaunched in 2010. The Charity Commission has been extremely proactive, and keen to raise awareness of fraud and theft. The media, Members of Parliament and various other stakeholders have played an important part in raising the profile of the issue, notifying the public and encouraging them to report suspicious behaviour and perhaps to be more rigorous in checking the claims made on the material shoved through their letter boxes.

I acknowledge that there is a problem, and I congratulate my hon. Friend on raising it again. The more I look at the matter, the less easy it is to see an easy, quick-fit solution. The nature of the activity is in the shade and at the margin of the law. As I have tried to stress, our instinct is that the question is much more one of enforcement and education than regulation. There is a lot of activity and there are many programmes. The question has been raised-and I join in asking it-whether the activity is sufficiently robustly co-ordinated. Despite the levels of activity, there is always scope to do more and think harder about the issue. My hon. Friends the Members for Chatham and Aylesford and for Truro and Falmouth have both put some concrete, specific ideas on the table.

I want to close with an invitation to my hon. Friend the Member for Chatham and Aylesford: given the scale and complexity of the problem, it is time to convene a round table of those people who are actively engaged in trying to reach a solution. I will do that, and my hon. Friend is invited to participate in that event, given the leadership role that she has played, through tabling her early-day motion and obtaining the debate.

The challenge will be for the people around that table to think afresh, review what we are doing and consider whether we could take cleverer, more co-ordinated and more robust actions to get on top of the problem. There is clearly a significant risk that the problem will undermine the confidence of the British public in giving to charity, at exactly the time when we want them to give more.

Sitting suspended.