Charities Bill [HL]

My Lords, I, too, declare an interest, having been involved with charities in one form or another for most of my adult life. I also apologise to your Lordships: due to a clash with a Select Committee meeting, I was unable to be here for as much of the debate as I would normally have wished. I shall try to concentrate on what are in my view the important issues. There is no doubt of the importance of the legislation, nor of the length of time, detailed scrutiny and public consultation that has gone into its preparation. That was surely the right approach, not only because of the length of time since the law governing this vital sector was last overhauled but because of the value of the sector to our whole British way of life. Add to that the increasing role   played by charities—large and small—in helping governments of all persuasions to achieve their legislative programmes and the need to ensure that we get the right balance between freedom to innovate, which is a crucial ingredient for charities, and appropriate regulation, the case for getting the legislation right becomes overwhelming. It should also go without saying that our aim must be to achieve that with as little bureaucracy as possible. Having said that, I am one of those who wish that the Bill had managed to complete all its stages in the previous Parliament. By the time that Bill was before us, many of the suggestions of the pre-legislative committee of both Houses had been taken aboard. As we have already heard, in Committee in the House of Lords it was clear that Ministers had been further convinced by amendments and arguments advanced on a number of important issues. However, that was not to be. I, too, congratulate the Government on having further revised the Bill to reflect many, if not all, of the compelling arguments that were advanced in Committee. I mention specially two examples; namely, the strengthened independence—it may not be as perfect as the noble Lord, Lord Swinfen, would want it—given to the Charity Commission through one of the Bill’s new provisions, which ensures that the commission is not to be subject to direction or control by Ministers, and the fact that the commission’s annual report is to be laid directly before Parliament, not via a government department. There is also the use that the Charity Commission makes of its powers. It needs and is to have increased powers and resources, as well as additional responsibilities. However, as your Lordships will remember, there was considerable concern at some of the commission’s past actions, which were felt by the Association of Charities and others to have been both wrong and an abuse of its powers and which also, sadly and perhaps more important, resulted in considerable damage to the image and the finances of the charities concerned. As the noble Lord, Lord Swinfen, has already said, an amendment requiring the Charity Commission to use its powers ““fairly, proportionately and reasonably”” was therefore, unsurprisingly, tabled last time but was rejected in this House by the Minister on the ground that that duty already existed in law. But the Government seem to have changed their mind. As we have heard, the revised Bill now incorporates a new paragraph, which was referred to by the Minister when she opened the debate. It requires the Charity Commission to have regard to the principles of best regulatory practice,"““including the principles under which regulatory activities should be proportionate, accountable, consistent, transparent and targeted only at cases in which action is needed””." Of course, that will give some reassurance to charities, but I remain puzzled about why the new wording of the clause, now that it is accepted that it is needed, including as it does ““proportionate””, does not include—again, as the noble Lord, Lord Swinfen, said—the original amendment’s two other words; that is, ““fairly”” and ““reasonably””. It is even more puzzling when one considers that the Charity Commission in its latest mission statement section on proportionate legislation, which was published in March this year, used all three words pegged firmly together. I would be grateful for the Minister’s explanation on that point and, above all, reassurance that fairness and reasonableness will be part of what is expected from the Charity Commission in its dealings with charities. Remembering again that we are dealing with charities with limited funds, not huge businesses that can afford to test disagreements with a regulator in the courts, I certainly support the National Council of Voluntary Organisations’ renewed suggestion for a suitors’ fund—that has also been supported by other noble Lords, to be available for the appeal tribunal to draw on if the need arose to take a test case to a higher court. Another concern of the national council reinforces my view that, although it is important for the Charity Commission to give advice to charities on appropriate occasions, there should also be some more independent experts available to give advice—either the national council or another equally involved organisation—not least when the Charity Commission could find itself with a situation where a conflict of interests might exist. As I know from my Equal Opportunities Commission experience, the combined statutory duty of enforcing the law and promoting equal opportunities, on occasion, created difficulties. Surely it also makes sense to make statutory the existing role of the Independent Complaints Reviewer—a point put forward previously by the noble Lord, Lord Phillips, and mentioned by the noble Lord, Lord Swinfen—so that the Independent Complaints Reviewer has real power, if a situation requires it, to investigate the commission’s behaviour and, where necessary, award proper compensation for a charity’s financial loss. If those additional changes could be made, combined with the improved appeals procedure, which has been mentioned already, and, above all, the welcome establishment of a Charity Appeal Tribunal, an important and mutually respected way forward for charities and the Charity Commission will have been achieved. My last point concerns the Bill’s public interest test. That fundamental principle has been broadly accepted as the qualification for recognition of charitable status. Such a qualification is doubly important for charities where high fee paying is involved—such as independent schools and universities—and views have been expressed that a higher test of public benefit should be applied in such cases. The noble Lord, Lord   Borrie, who dealt with one of the concerns of the university sector, said, rightly, that the added requirement should not include more bureaucratic processes. I join the noble Lord in hoping that when the Minister sums up the debate he will give that reassurance firmly again. The independent schools—some 80 per cent of which fall into this category—are broadly supportive of what is proposed and confident about how the proposed changes will affect them. In any event, more and more of them are involved—with government encouragement, I add—in teaching partnership schemes with LEA schools and/or provide some other fairly visible public benefit in their local community. It also needs to be remembered that the parents who pay those fees save the taxpayer the cost of educating their children. I believe that the Independent Schools Council puts the benefit/gain ratio that for every £1 of tax break gained, £3 is returned. During the previous Bill’s progress, the Government made it clear that they had no intention of trying to remove the charity status that such schools enjoyed, so long as each could justify their inclusion. To that end, there is to be no attempt at a definition of ““public benefit”” in the Bill—though, as we have already heard, the Charity Commission, after appropriate consultation, will set out how it intends to interpret its responsibilities in that respect. The revised Bill contains an amendment—again originally proposed in your Lordships’ House by the noble Lord, Lord Phillips—requiring trustees of charities to have regard to the guidance produced by the Charity Commission. That certainly appears to make sense. Beyond that, however, we should take great care. As your Lordships know, there are those—the noble Lord, Lord Borrie, may be one; I was not certain—who wish to abolish any form of independent education and, to that end, remove the charitable status of many such schools. Thus far, the Government have rightly resisted that pressure. It would be helpful to have the Minister’s clear assurance that that position will be firmly maintained. I have no doubt that others who are to follow in the debate may have other views. There are, of course, other aspects of the Bill that will need to be more fully discussed. I look forward—as I am sure will other noble Lords—to what I believe and hope will be relatively short Committee, Report and Third Reading stages of the Bill.