Charities Bill [HL]

My Lords, it is only right that I should begin by thanking the noble Baroness for her characteristically sincere and indeed touching tribute to our late colleague Lady Blatch. When I came into the House four or five years ago—a daunting experience, as we all know—my noble friend was one of the people who especially went out of their way to make me feel welcome and at home. I shall miss her; I am sure that we will all miss her. But equally I know that her family will be warmed by the noble Baroness’s words. I thank her most sincerely for them. The House will also be grateful to the noble Baroness for her thorough explanation and introduction—or perhaps I should say reintroduction—of this important Bill. But for those of us who have been involved since its earliest Second Reading, on 20 January 2005, it is hard to avoid a sense of déjà vu. As the noble Baroness pointed out, the original presentation of the Bill on 21 December—I always wondered whether it was symbolic that publication occurred on the shortest day of the year; but never mind—was the culmination of a very long consultation process. She referred to the extensive pre-legislative scrutiny and indeed the wide-ranging Second Reading debate and the eight Grand Committee sittings. I should like to add my thanks to those she gave to the authorities of the House for the new procedure of binding together all the Grand Committee proceedings in one volume. That is extremely helpful to those of us who have to work with Committee stage debates. I should like to place on record my thanks to the authorities for that. As the noble Baroness pointed out, one very desirable consequence of this elongated and long drawn out process has been that the sector has had ample opportunity to make known its views and to have points and issues aired and discussed. We on these Benches recognise that the Government have listened carefully to the debates. We are very grateful that they have been able to accept many of the amendments that we have tabled. We believe that the Bill is now clearer in its meaning and purpose, and that that in turn will communicate a clearer message both to charities—which need to understand the ramifications of the charity legislation—and the public, whose positive perception of charities is fundamental to the sector’s continuing success. Inevitably, many of the amendments now included in the Bill are technical. However, as the noble Baroness pointed out, a number of them are highly significant. The addition of the definition of the word ““religion”” meets a widespread demand, although I am sure that Ministers will be aware of concerns among groups such as the British Humanist Association about the circularity of the definition adopted. It is not quite clear why we are not able to go straight to the definition which is tried and tested under Australian and New Zealand law. The attempt to provide increased insulation from political pressure for the Charity Commission by the insertion of the subsection in Clause 6 is very welcome; so too is the requirement for the commission to follow best regulatory practice, and the restructuring of the make-up of the commission’s members to ensure that at least some have experience of operating smaller charities. Avoiding a ““one size fits all”” approach to charity regulation was a central concern. That was aired frequently in meetings with interest groups and representatives from charitable and support organisations. The Bill has been amended to keep a degree of flexibility so that multinational charities, local community charities, exempt charities and foundations established by private individuals can be regulated and treated appropriately, albeit differently, to reflect their particular circumstances. We therefore now have the opportunity to put the final touches to a Bill that has already been much improved. First, it is proper for me to declare that I have a number of charitable interests, all of which are disclosed in the Register. Given the nature of the Bill, two of those are of particular importance. I declared them at the first Second Reading and I do so again now. I am honorary fellow of St Peter’s College, Oxford—which will cease to be an exempt charity under the Bill—and chairman of the college’s foundation, a registered charity. I am also a governor of Shrewsbury School, one of the seven great schools as defined in the Public Schools Act 1868, another registered charity that has hitherto enjoyed the presumption that is to be lost under this legislation. I am mindful of the fact that we discussed the Bill’s background in depth at the first Second Reading and shall therefore try to avoid too much repetition. However, as a first important general point I should like to make it clear again that on these Benches we remain in support of the Bill’s principles and of the policies that underlie it. The Government have, as was pledged by the noble Baroness at the first Second Reading, been open to persuasive argument. We are grateful for the improvements that they have already taken on board. However, we still have some areas of concern. Some of these are points of clarification or of detail. Our major concerns are restricted to six headings. First, the structure of the commission will be a subject that we shall continue to probe because we feel that more can still be done to achieve an entirely independent Charity Commission. This point has been much discussed both on the Floor of the House and in Committee. It is important to reiterate that we seek to be reassured that the Charity Commission will truly be insulated from political pressures of any kind. It is good that the Government have taken some steps towards achieving that independence by inserting the clause to which the noble Baroness has already referred. However, paragraph 5(2) of Schedule 1 still stipulates inter alia that,"““The appointment of a chief executive [of the commission] requires the approval of the Minister for the Civil Service as to the chief executive’s terms and conditions of service””." Further, as an independent body, the commission still requires the Minister’s permission as regards staffing levels, rates of pay and conditions of work. Is that really independence? The noble Baroness, Lady   McIntosh, who I believe we shall have the pleasure of hearing later, made that point powerfully at Second Reading at col. 914. I share the noble Baroness’s view that the commission should have the organisational and structural freedom to make its own way and attract men and women of quality to work for it. Secondly, we wish to discuss further the functions and duties of the commission. Specifically we wish to discuss whether the Bill should include a provision requiring the commission to facilitate the development of and innovation in the charitable sector. The danger of a risk-averse regulator setting its face against new developments would be wholly deleterious to the growth and responsiveness of the sector. It is a truism that we live in an age of rapid social and economic change. One of the strengths of the voluntary sector is its ability to respond quickly and flexibly to new needs. This flexibility must not be put at risk. We also wish to discuss whether the commission should have a greater obligation to differentiate between advice and regulation. The danger of regulatory creep has been well covered in our previous Committee stage debates. All parties agree that the performance of the commission is fundamental to the efficacy of this legislation. We hope therefore that some final touches can be made to ensure that its role as charity regulator—balancing the need to ensure compliance and engender accountability on the one hand while encouraging charitable endeavour on the other—is clear to all. Thirdly, we shall wish to return to the levels at which registration with the commission is required and at which formal annual audit of accounts or independent examination of accounts needs to be undertaken. I was reassured by the noble Baroness’s promise of a future look into these numbers but as presently structured these latter requirements are unnecessarily complex. They are different for charities which are companies as opposed to charities which are trusts. They involve sometimes income thresholds, sometimes asset thresholds and sometimes both. Charities move into different categories at £5,000, £10,000, £90,000, £100,000, £250,000, £500,000, £1.4 million and £2.8 million. I appreciate the interrelationship with the provisions of the Companies Act but this is ridiculous. If we really want to make charity law easily understood, we must and can do better than this. I cannot believe that the integrity of the regulatory system would be imperilled if we reduced the number of layers. Fourthly, we shall wish to return to aspects of the operation of the Charity Appeal Tribunal. We believe that improvements can still be made regarding its scope and operation. Like the joint scrutiny committee, we argue that the Attorney-General and the commission should both be given the power to refer issues to the tribunal, anticipating problems that might arise. I am delighted to hear that the noble Baroness hopes to bring forward amendments to address that issue. We look forward to seeing them when they are finally tabled. The key objectives for the procedures of the new tribunal must be that it is user friendly, cheap and speedy if it is to prove its worth. Fifthly, public collections were perhaps less scrutinised in Committee due to time constraints. As I said at the previous Second Reading in January, the issue of fundraising, especially fundraising from the public, is important, particularly as it is the aspect by which public confidence in the sector could most easily be shaken. The proposals in Part 3 of the Bill were not perhaps given as careful a review as the rest of the Bill. We should take this second opportunity to ensure that the proposed legislation covering public collections will be effective without being overly bureaucratic. As an example of what I mean, today’s papers carry pictures of the Prime Minister welcoming representatives of Alexandra Rose Day to No. 10 Downing Street. Alexandra Rose Day is a charity that works with other charities to help the elderly and the handicapped. We have been told of local authorities refusing to issue collection certificates because Alexandra Rose Day did not deal directly with the handicapped and elderly but   worked through other charities. That is not a reasonable attitude and the Bill should give powers to make sure that that kind of thing cannot happen. The success of self-regulation of fundraising by the voluntary sector itself needs to be carefully considered. In her letter to me dated 14 March the noble Baroness informed me of the publication of a consultation paper by the Home Office on the criteria which would be used to assess the success of the self-regulation. We look forward to hearing from the noble Lord, Lord Bassam of Brighton, when he winds up the debate how that consultation process is proceeding. The sixth and final issue that remains to be addressed is the question of charity law consolidation—again referred to by the noble Baroness. I recognise her encouraging words and the encouraging words of the noble Lord, Lord Bassam, in Committee. However, enabling the regulatory requirements for charities to be understood by the sector itself, especially among smaller charities, is a fundamental motive for the modernising of charity law. Charity law will not be fully demystified, let alone made comprehensible and accessible, until the various Acts have been consolidated. We believe that the level of scrutiny the Bill has so far enjoyed has improved it. We are very grateful to the Government for accepting many amendments. A well drafted, clear and balanced Bill is being constructed and only a handful of issues, albeit some of them important, remain. In conclusion, my grandfather who fought on the Western Front in the First World War had a favourite phrase that enlivened my childhood, by which he called for a special effort from me. The phrase was, ““One more heave and we shall be in Berlin by Christmas””. We are not going to Berlin and I hope that we will act before Christmas but one more heave should take this Bill to its well deserved and long anticipated place on the statute book.