Charities Bill [HL]

Section 8 of the 1993 Act gives the Charity Commission the power to open an inquiry into a charity or group of charities and to publish a report or statement following such an inquiry. The opening of a Section 8 inquiry gives the commission access to other powers under the 1993 Act in respect of the institutions or persons that are the subject of the inquiry. The commission’s policy is normally to inform all charity trustees and relevant officers of the decision to open an inquiry under Section 8 of the Act. A standard letter is sent to all trustees on the opening of an inquiry. On the rare occasions when notification to the trustees of an inquiry opening needs to be delayed for a short time, the commission’s policy is that this decision is made by a senior inquiry manager and noted on the files. This may be done on the rare occasions when there has been real suspicion of continuing criminal activity, typically fraud or child abuse, and the commission has not wanted to prejudice its inquiry or a possible police investigation. Examples include cases where steps need to be taken to protect assets, where the commission is working in partnership with the police and does not want to alert the charity at that time, or where data protection matters relating to a particular individual need to be resolved before others are notified. The first part of Amendment No. 35 would require the Charity Commission to open a Section 8 inquiry on reasonable grounds and to communicate those grounds within seven days only to those who are subject to the inquiry. We do not accept the amendment. First, the Bill places the commission under a duty to follow best regulatory practice, which includes the principles under which regulatory activities should be proportionate, accountable, consistent, transparent and targeted only at   cases in which action is needed. Therefore the commission must have reasonable grounds for opening a Section 8 inquiry. Secondly, there are circumstances in which it would not be appropriate for the commission to provide notification of the inquiry and the reasons for its decision to open it; for example, in cases where serious allegations have been made which may at some point lead to a criminal investigation and prosecution or the use of the commission’s protective powers. In such cases, providing notification of the inquiry to those involved could be entirely counterproductive and hamper the conduct of the inquiry and any subsequent criminal investigation or use of the commission’s powers to protect the charity’s assets. The second half of Amendment No. 35 and Amendment No. 48—to which reference has been made already and which we will debate later—would mean that those who are the subject of a Section 8 inquiry would be able to append their own comments to the commission’s report or statement. On this point I refer your Lordships to the answer that I gave during the previous Session, in Grand Committee on 14 March this year, in response to Amendment No. 135 (Hansard, col. GC 440). Essentially, we do not agree that the amendment is necessary or desirable for the following reasons. First, it is the commission’s normal practice to give persons affected by a Section 8 inquiry the opportunity to make representation to the commission before it finalises and publishes its statement on the inquiry and decides on what, if any, further action is to be taken. However, the commission’s statement does not purport to be a consensual summary of the inquiry—it is the statement of the regulator. Secondly, the commission has a duty to ensure that the statements it publishes about its inquiries are factually accurate and are not defamatory. As has been discussed at length, the Bill also places the commission under a duty to follow best regulatory practice in performing its functions. This would include the conduct of a Section 8 inquiry and its report of that inquiry. Finally, anyone affected by an inquiry is at liberty to publish their own account of it, and they would not expect to have to append the comments of the Charity Commission to such an account. For those practical reasons and, in extreme cases, in order to protect the interests and assets of the charity involved—and also in the interests of possible criminal proceedings to be taken in the future—I hope that the noble Lord, Lord Hodgson of Astley Abbotts, will see the force of our argument and understand why, although in some senses it may appear desirable, his amendment is not acceptable and we cannot take it on board.