House of Lords
Oaths and Affirmations
Food Standards Agency
Lord Rooker
To ask Her Majesty’s Government what plans they have to allow the Food Standards Agency to obtain full cost recovery in respect of meat inspections.
Baroness Chisholm of Owlpen (Con)
My Lords, after two previous unsuccessful projects to achieve full cost recovery in 2009 and 2012, the FSA is seeking solutions by working more closely with the industry to achieve better outcomes. At present the Food Standards Agency has no set timetable to move to full cost recovery, but the Food Standards Agency will be reviewing this during the Parliament.
Lord Rooker (Lab)
Does the Minister accept that the FSA has reduced its costs to the meat industry by 40% in the last five years? The National Audit Office has given a certificate to that effect—that the charges are fair. That being so, why do we continue to allow what is, in effect, the inefficient part of this £6 billion industry to claim up to 95% discounts, costing the public £25 million? Over the years, Ministers—Labour, SNP and coalition—were, to my knowledge, intensively lobbied not to allow the FSA to go for full cost recovery. Will this Government now stand up for the public?
Baroness Chisholm of Owlpen
My Lords, the noble Lord is of course an absolute expert on this subject. He was FSA chairman for four years, I think, if not even more, so he is certainly a terrific expert. The steering group on meat charging, an industry group, was established in 2013 as a mechanism to take forward reform on areas such as the discounts on meat inspection charges. It has an independent chair and is supported and facilitated by FSA staff. It has developed proposals which are currently subject to consultation, which started on 9 March this year and will close in two days’ time. The FSA intends to use the steering group to lead on a review of all areas, including full cost recovery.
Lord Cameron of Dillington (CB)
My Lords, have the Government done an impact assessment on the possible burden on farmers if these FSA charges are introduced, either in the short term in relation to the extra costs being passed on to what are very marginal businesses or in the long term, when some medium-sized abattoirs which are hugely important locally, are closed as a result of these possible charges?
Baroness Chisholm of Owlpen
I thank the noble Lord for his question. This is a very important subject. The FSA does not charge farmers unless they are also the operators of approved premises that slaughter or cut meat; for example, if a farmer also owned and operated a slaughterhouse. As far as smaller abattoirs are concerned, discount proposals which have been looked at by the steering group would allow smaller abattoirs to benefit consistently from the highest levels of discount.
Baroness Walmsley (LD)
My Lords, last week the FSA announced its five-year strategy and at the same time the Chancellor announced millions of pounds-worth of departmental cuts. Can the Minister confirm that the Government are not looking for further cuts from this important arm of government, which would affect the protection of the nation’s health? Would that not be very short-sighted, and in the long term move the costs from Defra straight to the Department of Health?
Baroness Chisholm of Owlpen
I will have to get back to the noble Baroness with a full answer on that subject, but this is all part of the steering group consultation which, as we know, closes in two days’ time. The group has been reviewing all these items during its consultation, and we need to wait to hear what it says before we go further.
Lord Cunningham of Felling (Lab)
My Lords, since local government operates full cost recovery in respect of planning, for example, what is so special about abattoirs and meat-cutting plants? If the Government’s intention is to subsidise the less efficient aspects of the meat industry, why do they not do that openly and transparently and admit that it is a subsidy, rather than disguising it in the costs of the Food Standards Agency?
Baroness Chisholm of Owlpen
My Lords, the official controls carried out by the Food Standards Agency are a requirement under European legislation. The regulation that covers charging is currently subject to review. Final decisions in Europe are not expected until late 2015 at the earliest.
The Countess of Mar (CB)
My Lords, does the noble Baroness agree that while it might be reasonable to charge full costs to the multi-million pound large and medium-sized abattoirs, we need to protect the smaller abattoirs, particularly in rural areas, and those that serve artisan producers, who have specialists? I was once a goat keeper and we took our goats to a small abattoir. When that went, we could no longer take them to be slaughtered. Small abattoirs provide a valuable service and need to be helped.
Baroness Chisholm of Owlpen
The noble Countess is indeed right. In fact, I had a few sheep and used to take them to a private abattoir. This is exactly what the discount proposals will allow for. They will allow the smaller abattoirs consistently to benefit from the highest levels of discount.
Lord Hunt of Kings Heath (Lab)
My Lords, the noble Baroness is speaking for the Department of Health because ultimately it oversees the Food Standards Agency. Can we come back to the question asked by the noble Baroness, Lady Walmsley? Ultimately, this is a question of public confidence in the food chain. Why have the Government cut, in-year, £200 million of the public health budget given to local authorities? Will that not impact on public education programmes on food and obesity? What is the Minister going to do about that?
Baroness Chisholm of Owlpen
I thank the noble Lord for his question—I think. I will get back to him with a full written reply.
Lord Foulkes of Cumnock (Lab)
My Lords, will the Minister confirm that these cuts are those that were agreed by the coalition?
Baroness Chisholm of Owlpen
I cannot confirm that. On the other hand, we must wait for the steering group to come up with the results of its consultation. It is important to remember that the steering group is part of a larger group, which includes the meat industry. They are all working together, with an independent chair, supported and facilitated by FSA staff, to look into all the problems within this industry.
Legal Aid, Sentencing and Punishment of Offenders Act 2012
(8 years, 11 months ago)
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The Minister of State, Ministry of Justice (Lord Faulks) (Con)
My Lords, in 2014 we funded advice and assistance in over 51,000 new social welfare matters and issued over 11,000 certificates for representation at court. We are monitoring the impacts of legal aid reform and will conduct a post-implementation review within five years of implementation.
Lord Bach (Lab)
My Lords, of course I thank the Minister for his Answer, but is he aware that everyone outside the confines the Ministry of Justice believes that LASPO has been a disaster? He referred to 52,000 cases in 2013-14. Perhaps I could remind him that in 2009-10, the number of advice and assistance cases was 471,000. This means that more than 88% of our fellow citizens, who, I need not remind the House, are the poor, the vulnerable and the disabled, who previously benefited from legal advice, are now effectively deprived of access to justice. Two powerful parliamentary committees, the Justice Committee and the Public Accounts Committee, have made severe criticisms of the Act. Does the Ministry of Justice reject all their findings, and does the Minister not agree that, now we have a new Government, this is the right time to review how the Act is working?
Lord Faulks
My Lords, the LASPO Act has not been a disaster. It was necessary to make some sensible and well-directed changes to legal aid. In social welfare, the most important cases concerning people’s housing and their ability to stay in their house are still within scope, but some of the lesser matters are not. Of course we keep the matter under review, but the noble Lord will know that the legal aid reforms did not take place until April 2013, there having been a spike before then. It is important to see how they are affecting people over the longer term, which is why this Government repeat what the previous coalition Government agreed, which is that we will look at the whole system in much more detail, but only within five years and not before.
Lord Howarth of Newport (Lab)
My Lords, given that the Ministry of Justice is one of the departments vulnerable to further depredations by the Chancellor in his drive for economy and to scale down the state, will the Lord Chancellor and his ministerial colleagues in the department this time round stand up to the Treasury and insist that equality before the law and equal access to justice are beyond price in our constitutional heritage and indispensible to a liberal society, and that they will defend them to the hilt?
Lord Faulks
I can assure the noble Lord and the House that all the Ministers in the Ministry of Justice are wedded to the rule of law and to access to justice. But the question that arises out of social welfare law is whether it is always necessary for everybody who has quite real problems to have a lawyer at £200-odd an hour, or whether there are better and more effective ways of giving advice.
Lord Marks of Henley-on-Thames (LD)
The National Audit Office also reported on the LASPO reforms last November. A key finding was that there had been, as predicted, a large increase in litigants appearing in person, with an estimated extra cost of £3.4 million a year. May we now have a full and urgent cost-benefit analysis to assess what changes could be made to improve access to justice without driving up unduly the cost to the public purse?
Lord Faulks
Well, it is interesting that the noble Lord is now very much against the legislation that the coalition Government promoted. Neither his party nor the Labour Party in their manifesto suggested that they would reverse any of these cuts. Indeed, they did not suggest in either of their manifestos that they would look at it any earlier than we intend to do. Of course—
Lord Faulks
No. Of course litigants in person provide challenges. There are a number of strategies, which I have told the House about before, to enable them better to access justice. We remain alert to try to improve those as far as possible.
Lord Mackay of Clashfern (Con)
Is the Minister able to say whether the advice centres that are available to people of all means are sufficiently active to deal with the problems that may or may not arise out of the LASPO Act but, in any case, may require a degree of knowledge of social security legislation which not all lawyers possess but which are very much concentrated in advice centres? Is that not a better way of dealing with this problem than the old system of individual legal advice from individual lawyers?
Lord Faulks
My noble and learned friend makes a good friend—I mean, a good point: he is a good friend. We have given significant sums to various bodies: £16.8 million to the advice services fund, £107 million to the transitional fund launched in 2010 and £68 million to the advice service transitional fund. It is important that advice is accessed via these means, and I entirely agree that much assistance can be derived thereby.
Baroness Lister of Burtersett (Lab)
My Lords, the Government are threatening a further £12 billion in social security cuts. This is bound to increase the need for advice on social welfare law. Does this not strengthen the case made by my noble friend for bringing forward the review of how Part 1 is working so far?
Lord Faulks
I think that the noble Baroness is referring to universal credit. The point about social welfare reforms I have already answered. Of course the Government are aware of all the potential difficulties that may confront individuals with cuts in either welfare provisions or access to legal aid, which was the subject of the Question. We will be having a careful look at these as they happen, but there must be a systematic review, and that is our intention.
Baroness Ludford (LD)
My Lords, will the Government act to ensure that all company directors are obliged to have legal expenses insurance so that they do not need to have recourse to legal aid if they are prosecuted, for instance, for fraud?
Lord Faulks
I am grateful to the noble Baroness. I know that this was part of the Liberal Democrat manifesto. It is a matter on which, at the moment, we have no plans to legislate. The Liberal Democrat manifesto contains a number of wise things, including the suggestion that we should,
“develop a strategy that will deliver advice and legal support to help people with everyday problems like personal debt and social welfare issues”.
I entirely agree with that.
The Lord Privy Seal (Baroness Stowell of Beeston) (Con)
My Lords, if we follow the convention that it is important that all groups get a turn in each Question, we have not heard from the Cross-Benchers, so I suggest that we hear from the noble and learned Baroness, Lady Butler-Sloss.
Baroness Butler-Sloss
My Lords, are the Government looking at the way in which exceptional circumstances are being dealt with? There is a lot of criticism that they are not being properly dealt with. Will they look at that, if they are not already doing so?
Lord Faulks
I think that the noble and learned Baroness is referring to exceptional funding provisions. There has been less take-up than was originally anticipated, but I am glad to say that the percentage of applications that are granted has greatly increased since April 2013 and is now 25%. That probably reflects the fact that there is a better understanding in the legal profession about exactly what the exceptional funding is supposed to cover, which is a potential breach of convention obligations or EU law. I do not think that I can comment further because the matter is the subject of a judicial review which we are resisting strongly.
Apprentices
Lord Lennie
To ask Her Majesty’s Government what plans they have to expand the apprenticeship programme for 16 to 18 year-olds.
Baroness Jones of Whitchurch (Lab)
My Lords, on behalf of my noble friend Lord Lennie and at his request, I beg leave to ask the Question standing in his name on the Order Paper.
The Parliamentary Under-Secretary of State, Departments for Business, Innovation and Skills and for Culture, Media and Sport (Baroness Neville-Rolfe) (Con)
Over the next five years, we will support 3 million new apprenticeships. We are developing a package of measures to achieve this growth by getting more employers to offer apprenticeships so that many more young people can benefit from this valuable route to a successful career.
Baroness Jones of Whitchurch
I thank the Minister for that reply. She will know that the Lords Library has produced statistics showing that of the apprenticeships available, only one quarter are currently going to young people under the age of 19. On top of this, by the admission of the Government’s own funding statement, funding for apprenticeships is going down. Of the 3 million new apprenticeships that the Government are promising to create by 2020, how many will be for 16 to 18 year-olds? Does the Minister agree that schools should be doing far more to encourage young people to consider alternative vocational entry into work?
Baroness Neville-Rolfe
My Lords, young people will inevitably be a huge focus of the scheme, but it is right not to exclude others because people can need to develop lifelong learning after the age of 19. We will be making a total investment of £1.5 billion in apprenticeships available in the current year, and I am delighted to say that training for 16 to 18 year-olds is fully funded by the Government, with a particular emphasis on English and maths.
Baroness Garden of Frognal (LD)
My Lords, following on from the previous question, what plans do the Government have to invest in careers information, advice and guidance to ensure that not only young people but teachers and parents are fully aware of the value and opportunities offered by apprenticeships?
Baroness Neville-Rolfe
This is a very important point. We need to change the culture so that people see apprenticeships as an important career option. Since 2012, there has been a statutory duty on schools to provide independent careers guidance, including on the apprenticeship options. The careers and enterprise company will help schools to build strong links with employers. This is an area where we can really make a step change. Indeed, we can do that ourselves by the work that we do, speaking in schools and with the youngsters of today.
Baroness Wall of New Barnet (Lab)
My Lords, given that the further education colleges provide the greatest part of the training that is essential for extremely important components of apprenticeships, and given that the Minister has just confirmed that the Government’s target of 3 million apprentices by 2020 is still in place, what is being done to ensure that the FE colleges such as those that are members of the 157 Group, of which I am a patron, have the funds to support this expansion?
Baroness Neville-Rolfe
My Lords, apprenticeships will be a priority area in the spending review. The noble Baroness rightly talks about the role that FE colleges can play, and I look forward to discussing further with her group how we can ensure that that money is well spent and links in with employer demand, which is essentially the approach that we now have to apprenticeships. There is so much more that can be done.
Lord Broers (CB)
My Lords, I of course support the increase in the number of apprenticeships. However, I have heard concern from senior industrialists about the large variation in standards when it comes to what is expected of an apprentice—what knowledge they are meant to have, especially theoretical. There is serious concern about these large variations across industries and other institutions. Are the Government going to become involved in trying to improve the rigour of the standards that are expected?
Baroness Neville-Rolfe
The employer-led approach, with our trailblazers and so on, will actually mean that standards are set that employers want. We have improved quality already, for example by having a minimum duration of 12 months and requiring apprenticeships to be paid jobs. But there is more to do. One thing that we are going to do is hold ourselves to account by reporting every year on progress against the 3-million target, including other details. That plus the target will really make a step change in this area.
Baroness Perry of Southwark
Does my noble friend agree that the shortage of skills in the general population is probably one of the most serious problems that this country faces, and that this Government’s attempts to build up the skills base through this increase in apprenticeships should be warmly welcomed by everyone in the House?
Lord Young of Norwood Green (Lab)
My Lords, while I welcome the Government’s commitment to expanding apprenticeships, including the personal commitment from the Minister, it would help if, instead of referring to 3 million, we recognised that of that 3 million at least 50% are accounted for by the re-skilling of over-25s—not that I deplore that. The real challenge, as the Minister well knows, is to expand the number of apprenticeships in the 16 to 18, and indeed the 16 to 24, age range. What can be done about that when significant numbers of employers still do not participate in apprenticeships? I think it is still less than one in five; that is the statistic.
I therefore have a couple of recommendations. First, does the Minister agree that the Government should consider making apprenticeships a statutory requirement in all public sector contracts? Secondly, will she consider looking at the local enterprise partnerships and local authorities that have the best track record so that best practice can be identified around the country?
Baroness Neville-Rolfe
My Lords, that is a subject for a debate. However, I can say that on the public sector side we will be taking steps to have more apprenticeships where procurement contracts are involved. On the point about the local enterprise partnerships, some of them are doing some brilliant stuff on skills and apprenticeships, which we should publicise much more fully.
Personal Independence Payment
(8 years, 11 months ago)
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Baroness Thomas of Winchester
To ask Her Majesty’s Government what action they intend to take in response to the High Court judgment in R (on the application of Ms C and Mr W) v Secretary of State for Work and Pensions and others [2015] EWHC 1607 (Admin) that long delays in Personal Independence Payments are unlawful.
The Minister of State, Department for Work and Pensions (Lord Freud) (Con)
We are considering the terms of the judgment. We have achieved further reductions in average waiting times for an assessment, and they are now well within the Secretary of State’s target of 16 weeks.
Baroness Thomas of Winchester (LD)
I thank the Minister for that reply. I accept that waiting times have gone right down, but the judge’s comments were pretty scathing about the introduction of PIP before all the systems were fully in place, which, she said, led to the implementation being “inefficient”. Is he confident that the full rollout of PIP to the bulk of DLA recipients, currently scheduled for October, is entirely safe?
Lord Freud
The judge found significant shortfalls in the introduction, as the noble Baroness said, and we agreed at the time that that was simply unacceptable. Noble Lords will probably remember that at the peak of the backlogs we were looking at waiting times of 30 weeks. That was in June; we set a target of less than 16 weeks, and we have now gone down to seven. On that basis we are confident about the full rollout, although we will and are doing it on a safe and controlled basis.
Baroness Campbell of Surbiton (CB)
My Lords, during the general election campaign the Prime Minister stated his desire to “enhance” and “safeguard” PIP. Will the Minister say how the Government plan to fulfil that election promise to disabled people and reassure them that their payments will be protected in the Chancellor’s up-and-coming Budget?
Lord Freud
We will continue to support the disabled and the vulnerable in months to come.
Baroness Sherlock (Lab)
My Lords, maybe I can follow that up a little more. The noble Baroness, Lady Campbell of Surbiton, specifically asked for an assurance of the Prime Minister’s guarantee that he would continue to support disabled people and that their benefits would be protected. Let me give the Minister the opportunity to give that. The Government want to make £12 billion of welfare cuts. Will he say today that none of those will fall on disabled people?
Lord Freud
I repeat what I said: we will continue to support disabled people and the vulnerable through that process.
Lord Phillips of Worth Matravers (CB)
My Lords, at the end of her judgment, the judge commented that the Secretary of State appeared to be grappling with the situation in a way which was “entirely appropriate”. Does the Minister believe that was a fair comment?
Lord Freud
I think the judge very much took on board the fact that the Secretary of State realised that something that was simply unacceptable was going on and that we took very large measures to deal with it. Those measures included ramping up the numbers—we ramped up the number of health officials by a factor of four—and we had many more places to do the assessments, and so on. That is what has got the situation under control.
Baroness Gardner of Parkes (Con)
My Lords, is the Minister aware that a great deal of time is taken to reassess the cases of people who have incurable and irreversible conditions? Would it not be of great benefit to the department for those people not to be reviewed so often?
Lord Freud
My noble friend makes a fair point. Indeed, one of the ways in which we have speeded up the process since last June is by making more paper assessments, and it is precisely that group of people for whom we are able to do that.
Lord German (LD)
My Lords, what assessment has the Minister made of people with Motability cars who may be waiting for a decision or who are seeking an appeal? While you can back-date cash requirements for people who make appeals and are successful, you cannot back-date a motor car.
Lord Freud
My Lords, of course, the people who are being reassessed, whether through a natural reassessment or through the full rollout, will continue to receive their DLA rates, as they were, until they get the conclusion of the PIP assessment. Therefore, there is no question of them losing a car in that period.
Baroness Farrington of Ribbleton (Lab)
My Lords, I did not quite understand the Minister’s reply to my noble friend. Did he say that the Government will protect disabled and vulnerable people during the forthcoming cuts, as the Prime Minister said they would, or did he say that they will not protect them?
Lord Freud
To clarify matters, I said that this Government would support disabled and vulnerable people through this process.
Lord Alton of Liverpool (CB)
My Lords, the Minister will recall that, during the debates on personal independence payments, warnings were expressed from all sides of your Lordships’ House about the dangers of rolling out this programme too rapidly, with some people possibly left exposed. He has told the House how long the average waiting time will be. Can he now tell the House the average amount of money involved for disabled people who have not received the funds that they are entitled to? What emergency provision is made for people who are, after all, some of the most vulnerable in our midst?
Lord Freud
The delay is of course unfortunate for people and we have said that that is unacceptable. The money is back-dated to the point of claim. Where people have a serious problem, we have a complaints process which they can use and we can try to make redress through that.
Veterinary Nurses (Protection of Title) Bill [HL]
International Development (Official Development Assistance Target) (Amendment) Bill [HL]
Welfare of Women (Fertility Treatments) Bill [HL]
Carers (Leave Entitlement) Bill [HL]
Duchy of Cornwall Bill [HL]
Charities (Protection and Social Investment) Bill [HL]
(8 years, 11 months ago)
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The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con) (Maiden Speech)
My Lords, the House will be aware that I am now the Minister in charge of this Bill, rather than my noble friend the right honourable Lord Taylor of Holbeach. I am grateful to him for introducing the Bill when I was unable to. I am happy to assure the House that I, too, believe that the provisions of this Bill are compatible with the convention rights and would have been content to sign the necessary statement had I been in a position to do so when the Bill was introduced.
It is with the greatest sense of honour and humility that I stand before your Lordships today, and I also put my arguments to the House with some trepidation. Some 22 years ago, I was sitting in the Gallery of your Lordships’ House watching a debate on which I had written a brief for Conservative Peers. The noble Lord, Lord Williams of Elvel, had been passed a copy of my brief and proceeded to dismantle and shred its arguments one by one, with grace and charm, paying tribute to the brief’s author along the way. As they say in Sicily, it was nothing personal, just business. It made me realise the great contribution that this House makes to public debate by scrutinising policies and testing the arguments that underpin them. In our fast-moving world, where the digital revolution is accelerating the pace of change, the temptation to act quickly is greater than ever. Now, more than ever, we need the chance to deliberate, review and kick the tyres of policy—and that brings me to the Bill before your Lordships today.
Like so many of your Lordships, I am a trustee of a charity, the Foundation Years Trust. Set up by Frank Field, its purpose is to understand what more can be done to help disadvantaged children in the first, all-important years of their lives. Among my fellow trustees is the noble Lord, Lord Hall of Birkenhead. I mention that not simply to declare my interest but to observe that charities are organisations in which a sense of shared purpose overrides political allegiances.
Down the generations, long before Lord Beveridge and the foundation of the welfare state, people have formed little platoons to battle against the five giants of want, disease, ignorance, squalor and idleness, at home and abroad, overcoming great challenges, sometimes at risk to life and limb. Only today, I read that the readers of the Sun knitted, for the charity Loving Hands, an amazing 500,000 items of clothing for children in need around the world. Quiet acts of generosity like this show that charities still have a very special place in people’s hearts, at a time when the public’s trust in so many other institutions and professions has plummeted. A recent opinion poll revealed that charity workers are among the most trusted and respected in society today. I am sorry to add that, according to this poll, the least trusted in our society are government Ministers, narrowly beating journalists and bankers. Having worked in banking, in journalism and now in government, I am somewhat concerned about what this says about me.
Charities must earn the public’s trust and generosity. They must never take it for granted. The vast majority of charities know this full well and are run responsibly and competently. It is in their interests, and the interests of society as a whole, that the charitable sector is properly regulated. Furthermore, charities must have the freedom to innovate and find new ways of fulfilling their mission. That is the purpose of the Bill before your Lordships today: to strengthen the public’s trust in charities, and help charities to do more.
Before I outline the measures in the Bill, I would like to pay particular tribute to my noble friend Lord Hodgson of Astley Abbots. He has laboured hard, over a number of years, to help charities flourish. This Bill implements some of the recommendations from his thorough review of the Charities Act 2006. His insight and advice have proved invaluable, and long may his wise contributions continue. Likewise, I would like to thank the noble and learned Lord, Lord Hope of Craighead, for ably chairing the Joint Committee on the Draft Protection of Charities Bill, and other noble Lords on that committee for their helpful pre-legislative scrutiny. Many others in your Lordships’ House have also helped to shape this Bill today, and I am sure that it will provoke further debate. My door is always open to meet and discuss its measures.
The bulk of the proposals in the Bill relate to the Charity Commission’s powers. As I am sure noble Lords will know, the Charity Commission registers and regulates more than 164,000 charities in England and Wales. In 2013, following a high-profile regulatory failure, the National Audit Office reviewed the commission’s regulatory effectiveness. Its report found that,
“the Commission does not do enough to identify and tackle abuse of charitable status”,
and,
“is not regulating charities effectively”.
The NAO made a number of recommendations to improve the commission’s regulation of charities and to strengthen its powers. Further calls for stronger powers were made by the Prime Minister’s extremism taskforce and the Home Affairs Select Committee. When the NAO published its report, the previous Government published proposals to give the commission new powers. After public consultation, these proposals were refined and a draft Bill was published. Following pre-legislative scrutiny, further changes were made. Thanks to all of this and the contributions of so many noble Lords, the proposals have been well scrutinised and the Bill before your Lordships today is much improved as a result.
The measures in the Bill are, of course, just one strand of a much-bigger strategy to improve the commission’s regulatory effectiveness. The commission now has strong leadership; it has set itself new priorities; and it has received an additional £9 million over three years. This will help it move more of its services online and, crucially, bolster its capacity to identify and tackle abuse and mismanagement in charities. The NAO has followed up its report and acknowledged that good, early progress has been made.
However, there is no point in the Charity Commission working harder to seek out abuse if the commission cannot act effectively when it finds abuse. So the bulk of the Bill is devoted to ensuring that the commission has new or extended powers, of which I would like briefly to highlight five. First, a new official warning power would enable the Charity Commission to take a more proportionate approach to low-level misconduct and mismanagement. The Charity Commission already can and does engage with charities when this happens, but it finds that up to 30% of charities contacted fail to respond adequately to its guidance.
Secondly, the existing criteria, which automatically disqualify a person from being a charity trustee, would be extended to include people with unspent convictions for money laundering, terrorism offences, bribery, misconduct in public office and perjury, and individuals subject to a terrorist asset-freezing designation. Disqualification would be extended to senior management positions as well.
Thirdly, the Bill would give the Charity Commission a power to disqualify individuals whose conduct makes them unfit to be a charity trustee. The commission would be able to act subject to three tests: criteria would have to be met relating to the person’s past or present conduct; the commission would have to consider the person unfit to serve as a charity trustee; and the commission would have to be satisfied that disqualification was expedient in the public interest. The power is accompanied by several safeguards, including for the tribunal to consider the matter afresh on appeal.
Fourthly, the Bill would give the Charity Commission a power to direct that a charity be wound up following a statutory inquiry; and fifthly; trustees have been known to resign from a charity before the commission removes them, and then to become trustees of another charity. The Bill would close this loophole.
I know that, like me, your Lordships will want to be satisfied that there are appropriate safeguards governing the use of all these powers, so it is worth reminding the House that, under the Charities Act 2011, the Charity Commission has a duty to act in a way which is proportionate, accountable, consistent, transparent and targeted only at cases in which action is needed. Furthermore, the exercise by the commission of all of the proposed powers in the bill regarding trustees is open to legal challenge, principally by a right of appeal to the Charity Tribunal.
The second purpose of the Bill is to help charities to make social investments so that they can fulfil their mission in new and innovative ways. Traditionally, charities with money to invest have either sought to maximise financial returns or made grants to further their charitable mission. Social investment is different because it involves investments that both further the charitable mission and expect to generate a financial return. At present, charities have over £60 billion of assets under management, but just £100 million of those are in social investments. By clarifying the law and trustees’ duties, the Bill aims to give charities the confidence and certainty to invest in this growing sector. I should express my thanks to the Law Commission for England and Wales for looking at this point and recommending the new social investment power, which the Bill would implement.
To conclude, the charities in this country deserve our heartfelt thanks and support. They embody all that is great about our nation and bring out the best in our society: a generosity of spirit and a willingness to make sacrifices to help those in need. The Bill will strengthen the public trust and confidence in our charities so that they can do better still. I look forward to hearing your Lordships’ views, and I beg to move.
Baroness Hayter of Kentish Town (Lab)
My Lords, it is a great privilege as well as a great pleasure to have heard the Minister’s maiden speech—I assume, in this case, written by himself—and to welcome him as a trustee of the Foundation Years Trust, a charity that aims, as he said, to develop and action the findings of Frank Field’s review of poverty, a review that was set up to prevent poor children becoming poor adults. The noble Lord’s work at Santander and Quiller Consultants, which advises multinational companies, may be slightly less relevant to this Bill, but we hope that it will be of use to him on his other portfolio. However, the experience that the House might appreciate most is indeed his time as a political secretary at No. 10, so if anyone can find his way around Whitehall, we trust that it is him. However, what my party would like is some of his political nous. Not only was he involved in the perhaps unexpected 1992 election victory, but a year ago he placed a bet on an overall Tory majority in 2015 of 12. So I congratulate him on his flutter and indeed on his assured maiden over at the crease. We wish him well in the tasks ahead.
Perhaps I may also pay tribute to the noble and learned Lord, Lord Hope of Craighead, on his pre-legislative Joint Committee report, and to the committee members, including my noble friend Lady Warwick of Undercliffe, who unfortunately cannot be with us today but I know will play an active role later in our proceedings, and my noble friend Lord Watson of Invergowrie, who joins me on the Front Bench for this Bill, along with my noble friend Lord Kennedy of Southwark.
I turn now to my own declaration of interests. I have been the chief executive of two charities and the director of corporate affairs of the country’s largest one. I have been the chair of a small charity and I remain a trustee of two. It will therefore be no surprise that we support independent charities, harnessing as they do philanthropy, volunteering and social commitment. We celebrate the million trustees who give of their time, expertise and dedication to help make Britain a kinder, more interesting and caring society.
I hope that the Minister will be relieved to know that the Bill poses us no problems, and we are content to support its Second Reading. But there are some additional powers for the Charity Commission, and responsibilities for charities that should be added.
Let me start with a concern arising from the recent lobbying Act—it is before the Minister’s time, so he does not have to take the pain for this—which undermines the freedom of charities to speak out on behalf of beneficiaries. I was moved by the maiden speech of the right reverend Prelate the Bishop of Leeds last week, when he quoted from the Book of Proverbs:
“Open thy mouth for the dumb”,
or, in his words,
“give a voice to the experience of those who otherwise are silenced”.—[Official Report, 1/6/15; col. 209.]
That is what charities have long done, but the Government sought to curtail that in the lobbying Act. We will seek to spell out in the Bill the common-law position permitting charities to speak out on issues in line with their objectives. This will give confidence to trustees that they are free to further their objectives in this way.
We are not against the right to buy, but we query the Government’s plan to force housing associations to sell their assets, against their will, regardless of their trust deed, their source of funds or the decision of their trustees. Ninety per cent of housing associations are charities and their property is not state property, so it is not the Government’s to dispose of. It is private property; it may have been donated for a particular cause, such as providing homes for autistic or disabled people, the retired, the homeless, recovering substance abusers or, indeed, a religious community; or the property might be built on rural exception sites in the National Planning Policy Framework, intended for affordable housing in perpetuity. Not only might it be a breach of covenant to use these assets for other purposes, but once sold and resold a sheltered block or a therapeutic or supportive community could be broken up as new private owners or tenants of buy to let with different lifestyles move in.
Charity assets are preserved by legislation for public benefit and may be used only for the purposes defined in the charity’s trust deed. Furthermore, charity law requires a charity to dispose of its assets in furtherance of its charitable objectives, and that does not mean simply for money. Indeed, the second part of the Bill, which the Minister has outlined, allows charities to use their funds as social investment, and we welcome this. Funds will also be used in the provision of homes for the homeless. But that will be completely undone if such homes have to be sold off, and then no doubt resold, as the owner can cash in on the Government’s subsidy.
There are small almshouses, there are “supporting people” charities, and there are large charities such as Peabody—150 years old, with 27,000 homes and its own Act of Parliament. Its chair has said:
“Peabody’s assets belong to us. They are not the government’s to sell”.
All are governed by charity law, based on principles dating from Elizabethan times to preserve charitable assets. Do the Government propose to amend charity law so as to override the trust deed or trustees’ wishes in order to implement their policy?
The Bill will rightly exclude people who have supported terrorism from being trustees, as well as people involved in money laundering or just subject to an IVA. But the Bill does not exclude people convicted of serious sexual offences; they would be debarred only after a complaint to the Charity Commission, leaving the responsibility for checking with other trustees, who may themselves have been involved in such activity or, if completely innocent, be unaware of the background of a new trustee. This cannot be right when charities have access to children or others with vulnerabilities. We want the Bill to add being on the sexual offences register to the automatic exclusions, which will still be subject to the normal waiver provisions.
We will also look to strengthen the Bill so that vulnerable people and children are properly protected. There are some worrying cases where charities become closed shops when abuse is uncovered. The Charity Commission should be able to investigate the fitness of trustees and consider replacing them where the charity fails to deal with abuse allegations. It is surely right for the commission, in regulating trustees, to have a duty to safeguard and protect children and vulnerable adults. Suspected child abuse should be as big a red flag as suspected financial misconduct. Could the Minister let us know the Government’s thinking on this issue?
Your Lordships will be aware of the tragic suicide of Olive Cooke, a 92 year-old poppy seller.
Baroness Corston (Lab)
My noble friend will be interested to know that one of the best experiences of my 13 years as Member of Parliament for Bristol East was my friendship with Olive Cooke. She had a face that could light up a room. She was one of the kindest people I knew. I always looked forward to her letters, giving me general and continual advice. Her outstanding contribution—selling more poppies for Remembrance Sunday than any other person in this country—is well documented. But the fact that a person who was, on the face of it, such a strong woman should feel driven in part to her death by being, in a way, prejudiced by her commitment to charitable giving, which was legendary, is quite a stain on our charitable sector.
Baroness Hayter of Kentish Town
We have, indeed, heard many tributes to Olive Cooke from her family, from her friends and from the successor to my noble friend in Bristol for all the work that she did not just in selling poppies but in her charitable work. While her family do not think that the action of charities and their fundraising were responsible for her death, it is clear that Olive was persistently contacted by many charities and, being the generous and caring person of whom we have just heard, found it hard to say no.
Since the media coverage of her death, hundreds have come forward to say that they too have come under pressure. A major concern is where elderly relatives, sometimes suffering from dementia, have been targeted. Meanwhile, Croydon has become the 100th authority to have to crack down on chuggers, and at the weekend the Mail on Sunday reported some underhand methods of a private company working for Oxfam, the RSPCA and Cancer Research UK that broke every rule in the book to make money for itself as well as for the charities.
Many, including the vulnerable, feel hassled and harangued by charities, including by cold calling. I have my doubts whether cold calling is ever acceptable. Indeed, we strengthened the Consumer Rights Bill in an attempt to stamp it out. I regret the Government’s failure to live up to their promise to provide call-barring facilities to the particularly vulnerable, but while cold calling from a charity might elicit a donation, it could be at the expense of the trust that people have in charities, as the Minister just described. Furthermore, securing one donation can lead to a ratcheting up of demands, as many stories, including that in the Mail, have demonstrated. Indeed, the UK Giving report showed that a majority of donors agreed:
“I am worried that if I give I will just be asked for more”.
The sad case of Olive Cooke and the Mail’s exposé show that existing self-regulation is not working. A third of fundraising charities are not even members of the Fundraising Standards Board. We will investigate how we might use the Bill to strengthen the commission’s role in ensuring that charity fundraising is properly regulated, possibly by requiring charities to sign up to the industry’s code and to belong to the standards board, or by giving the Charity Commission stronger reserve powers. Olive’s law, or at least getting all charities to be regulated by the FRSB, would be a lasting testimony to this woman’s lifetime of work for charity.
We support the Bill and its protections, but they will never work if there is no one to answer the phone or investigate concerns. ACEVO, the Charities Aid Foundation and the Charity Finance Group all question the feasibility of increasing the Charity Commission’s case load without a commensurate increase in its budget—a budget halved since 2007-08. We recognise the need for savings and for the effective use of resources, but does the Minister think it is realistic for government to give more work to the commission while drastically reducing its resources? We support an effective, robust regulator for the healthy development and growth of the charity sector. I look forward to working with the Minister on his first Bill to enable it really to contribute to the aim that I think we both share.
Baroness Barker (LD)
My Lords, I declare an interest as the owner of a consultancy third-sector business. I am also an honorary officer of the All-Party Parliamentary Group on Social Enterprise.
I commend the noble Lord, Lord Bridges of Headley, on his excellent maiden speech. He introduced the Bill with great style and great knowledge. It is normal to be nervous when making one’s maiden speech but he need have no fear of being shredded today. I look forward to working with him on the Bill.
Reform of charity legislation usually happens at a pace which is somewhere between slow and glacial, so it was a great privilege to be a member of the committee that scrutinised the draft Protection of Charities Bill. The committee was chaired by the noble and learned Lord, Lord Hope of Craighead. Such was his skill, and the diligence of our advisers, that, starting in the first week of November 2014, we held 13 evidence sessions, heard from more than 35 witnesses and concluded our report by 28 February 2015. As a result, I see the noble and learned Lord as the Usain Bolt of charity legislation, and I shall continue to think of him as such in the days ahead.
The Charity Commission was established in its present form under the Charitable Trusts Act 1853, and I suspect that the first debate on the subject of its effectiveness probably took place in around 1854. Every regulator is subject from time to time to criticism from the bodies that it regulates. The CQC and the FSA have their critics, but none draws fire like the Charity Commission.
There are those who find the commission immensely helpful and who value its reports and guidance. There are also those who find the commission so defensive, distant and legalistic that dealing with it is a bit like having your family solicitors tied up in Jarndyce v Jarndyce. Then there are people like me, frequent users of the Charity Commission’s services, who are at times very much supported by what it does but at other times frustrated by its slowness to change.
The leadership of the commission changes periodically, and relationships between the commission and the sector change as a consequence. However, the underlying lack of a clear consensus about what sort of regulator the commission should be means that the relationship between the commission and the sector is never as good as it should be. There is now general agreement with the recommendation of the noble Lord, Lord Hodgson, that, if the commission had to prioritise one area of work, it should be that of its unique role as regulator. However, the commission’s reluctance to signpost charities to other sources of advice or to develop relationships with other sector bodies which could give advice that would not have the same statutory standing as its own but would help poor trustees who are seeking help to get it much more quickly, still generates great frustration. I make these remarks in order to explain why some voluntary organisations have reacted as they have to the Bill, in its present form and its draft form.
The Minister eloquently set out for us the antecedents of the Bill: the review of the 2006 Act by the noble Lord, Lord Hodgson; the National Audit Office report into the handling of the Cup Trust; and the Public Accounts Committee report on the same subject. We also know from the available data that there are approximately 350,000 charities in this country, including excepted and exempt charities, and about 800 small charitable industrial and provident societies. They have an annual income of £64 billion. Yet there is very little evidence of abuse in the charitable sector. Over the period 2007 to 2014 there were only 526 investigations into charities.
As we look at the provisions of the Bill, we have to answer two questions. First, are the provisions of the Bill necessary to retain and improve public trust and confidence in charities? Secondly, does the Bill pass what I call “the Lord Hodgson test”—because it was set out in his report—that:
“Regulation needs to be proportionate, transparent and comprehensible”?
On the whole, I think it does. A number of provisions are welcome. Giving the Charity Commission a new power to issue warnings as a lighter-touch form of regulation of charities is a good thing. Giving the commission the power to remove trustees following an inquiry and to do so within a time period that means that trustees will no longer be able to avoid being subject to the commission’s powers by resigning will strengthen trustees’ responsibilities in this regard. It is important to be able to close that loophole.
It is also important that, as in Clause 6, once the commission has opened a statutory inquiry, it should have the power to direct a charity not to take a particular course of action. It is a bit odd that it has an existing power to direct that something be done but does not have a power to direct that something not be done, when we could be talking about charitable assets.
All those powers are welcome. In particular, the power in Clause 13 to enable charities to make investments in social enterprises that are consistent with their charitable objectives is fine. Much more needs to be done in order to build the social investment market in this country. It is still extremely difficult to find venture capital, for want of a better term, for activities that have a social element as well as a profit element. But it is really important that we give charities this power to put their money where their mouth is.
However, as the noble Baroness, Lady Hayter, has already suggested, there are three key areas in which the Bill needs to be strengthened. The first is the power under Clause 3 that the commission will have to consider any other evidence of a person’s conduct—not just their conduct within a charity—when it has opened a statutory inquiry. In addition, the power is not limited in time, so it could mean that a charity trustee is hauled over the coals for something that they did when they were a very young person. That clause is drawn too widely.
I can see the sense behind the new power that the commission will have under Clause 7 to direct the winding-up of a charity. At the moment the commission cannot do that. It seems to be a sensible step but the basis on which the commission would exercise that power—the criteria it would use—should be open to considerable discussion before the power becomes finalised.
Finally, on Clause 9, “Automatic disqualification from being a trustee”, the noble Baroness, Lady Hayter, is right. It is in some ways desirable that the reasons for automatic disqualification should not be, as they largely are now, financial. It is possible that somebody could be guilty of conduct which was undesirable and harmful to a particular charity, or to charities in general, but which was not of a financial nature. However, as the power is drawn at the moment, and given the references to the counterterrorism legislation and the potential chilling effect that it may have on people who work within Islamic charities and are perfectly upright individuals, we need to exercise real caution and give that great consideration. One of the most impressive witnesses to come before the committee was Christopher Stacey, the director of Unlock, a charity that works with people who have criminal convictions. He gave compelling evidence to the committee that stopping people who have criminal convictions from having anything to do with a charity could be wholly counterproductive. We need to take great care before we make any such blanket disqualification.
On the whole, the Bill is reasonable. Given the historic and ongoing tensions in the relationship between the commission and the sector, it would be right and wise for us to have a thorough and full discussion of those three or four points which need further attention.
Lord Hope of Craighead (CB)
My Lords, I, too, wish to congratulate the Minister on his excellent maiden speech and to say how very much I look forward to working with him, along with others who have participated in this Bill so far, as it goes through the House.
As has been mentioned, I have a particular interest in the Bill, as I had the privilege of chairing the Joint Committee which carried out the process of pre-legislative scrutiny during the last few months of the last Parliament. It was plain to us all from the outset that we would have to operate within an unusually tight timescale. I am not sure whether it was necessary to go quite as fast as Usain Bolt but we necessarily had to put our skates on to get through the business in time. The draft Bill was not published until 22 October last year and our committee was not fully constituted until the beginning of November. Nevertheless, we were able to complete our work and submit our report by the end of February.
I wish to pay tribute to the various people from each House, both Members and supporting staff, who made this possible. Every member of my committee played a full part in its work, in our taking of evidence and in our deliberations afterwards. I had particular reason to value the insight and knowledge that some of them brought to bear on our discussions. We took evidence in each of the six weeks that elapsed between our starting work in mid-November and the start of the Recess. There was a further week in January when Parliament resumed, and we completed our deliberations in the middle of the following month. I think we all felt, by the end, that we had achieved what was asked of us. I am by no means saying that we answered every point; wider debate in this House will obviously give rise to much more informed discussion than we were able to bring to bear. But as we said in our report, pre-legislative scrutiny of the kind that we were carrying out, which brings interested parties into the legislative process at an early stage, is a wholly welcome development. It is hard to think of a sector better suited for that kind of exercise than the charity sector, which has so many people all round the country interested in it.
I hope that by our work we have shown what can be achieved, even at relatively short notice, and that we will see more of this kind of process being used in future. Of course, all this would not have been possible without the outstanding support that we received throughout from our clerk, Duncan Sagar, ably supported in his turn by Matthew Korris and Claire Morley. I should mention also Nicole Mason and Jessica Mulley, and Stephanie Biden, who was our special adviser. It was on the shoulders of Duncan Sagar and his team that much of the heavy work rested and we could not have been better looked after or better served.
We appreciated also from the outset the importance of giving as many people and as wide a range of bodies within the sector as possible an opportunity to be heard. I am grateful to all the witnesses who came to give evidence to us orally and to the many more who gave evidence to us in writing. Among the bodies on whose behalf evidence was given were the Charity Commission itself, the National Council for Voluntary Organisations, the Charity Law Association, the Wales Council for Voluntary Action, the Muslim Charities Forum, Unlock, and Bond. The full list of all witnesses is set out at the end of our report. It was a very wide-ranging exercise and, by the end, we were very well informed.
The purpose of the Bill, as the noble Lord has explained, is to improve the powers that are given by statute to the Charity Commission as regulator. The aim is to strengthen the public’s trust in that process, and to enable the commission itself to root out abuse where it can be found and to protect charities from those deemed unfit to be charity trustees or senior managers. As the noble Lord made clear, the process of drafting the legislation did not come out of the blue. It was prompted in part by a series of requests from the Charity Commission itself for new powers to enable it to perform its functions more effectively, and by some well-directed criticism of its operations by the National Audit Office and others. Then there were several reviews, including the notable review carried out under the outstandingly able chairmanship of the noble Lord, Lord Hodgson of Astley Abbots, which drew attention to the need for new and strengthened powers. Our task as a committee was to scrutinise the Bill’s proposals in the light of the evidence which we received—it was an evidence-based exercise—to see that these proposals measured up to the challenges and, if they did not, to consider the respects in which they might be improved. We did the task we were asked to do and made a number of recommendations. We were, broadly speaking, encouraged by the way the last Government responded to them in March just before they went out of office.
However, for many of us, there was a very big question mark at that point as to what was going to happen and what was going to be done to the work that we had done. Our hope was that the draft Bill would not be forgotten when a new Government returned after the general election. The Charity Commission also made it clear that it was keen that these new and strengthened powers should be given to it as early as possible. So the fact that the Bill has been brought forward as quickly in the legislative programme as it has been is especially welcome, and I thank all those behind the scenes who have made this possible.
As William Shawcross, the chairman of the Charity Commission, said in his response to the Bill’s mention in the Queen’s Speech, it is a vital piece of legislation from the commission’s perspective if it is to have the powers that it needs to stop individuals from abusing charities. His enthusiasm for the Bill is beyond question, as is the commission’s desire to make best use of these powers alongside those that it already has to police the sector. I think I can say that it is plain, from the evidence which we received, that the commission has turned a corner since he took over the chairmanship. Under his leadership, the performance of the commission has improved significantly. It is in that encouraging context that this Bill should be viewed.
The inclusion of a power to make social investments, which was not before us when we looked at the draft Bill, is much to be welcomed too. As it stands, the Bill is not just about regulating; it is about enabling, too. It is no doubt particularly encouraging to the Law Commission, which does so much valuable work in seeking to find ways of improving our legislation, to see one of its proposals brought forward so quickly.
There are a few points arising from our report that, as chairman, I should mention. First, there is a need for a balance to be struck between too little and too much. It is tempting for legislators, when giving powers to regulators, to set those powers about with condition after condition in an attempt to eliminate any risk that they might not be properly and fairly exercised—yes, there should of course be safeguards, but there must be a balance. There may come a point where the restrictions on the exercise of the power and the hoops that must be jumped through before they can be exercised are so many as to make it impracticable or too cumbersome for those powers to be used at all when they are most needed. As the Bill now stands, the balance has been struck in the right place. I hope that the Minister will bear this in mind as we move through the remaining stages of its passage through this House. I was encouraged by what he said in this respect in his opening speech.
It is worth mentioning, too, that the commission itself has to balance the way it performs its regulatory functions against the need to increase public trust and confidence in charities generally. The Bill does not say anything about the pastoral element of its work, which enables it to encourage and assist charities in what they do. However, the fact is that these two objectives—the one I just mentioned and the regulatory function—are linked to each other. The best way to increase public trust in charities is to ensure that they are properly and scrupulously regulated by an efficient and properly funded regulator. Exercise of the powers that are dealt with in this Bill are likely to affect only a very few charities, but the fact that they are designed so that they are capable of being used when needed should serve to increase public confidence in the sector generally.
Secondly, there is a need to think very carefully about the way that legislation designed to counter terrorism may inhibit the work of charities operating abroad in areas controlled by organisations that are on the proscribed list. We heard evidence—I found it very compelling, as did others on my committee—from the Muslim Charities Forum about the problems these charities face in getting aid through in view of the risk of arrest and prosecution that their workers face when they return home. We recognised that a lot of arguments must be gone through in dealing with this problem. We say in our report that we realise that this Bill is not the right vehicle for revisiting legislation about combating terrorism generally. However, here is a very serious issue that we should not lose sight of if we are to retain the support in the battle against terrorism of all sections of our community, including those charities I mentioned whose work is much to be commended in the field of dealing with Muslim people in our country.
Lastly, there are some matters that we hoped might be addressed in the Explanatory Notes but are not there and some points of detailed drafting where our recommendations have not been entirely reflected in the Bill as it now stands. The speeches so far have made it clear that we are now at a stage where there can be a wider debate about the way the Bill is drafted and the points that are in it and are not, which we could not engage in during our work as a Joint Committee. This is not the time to go into detail, particularly as, from the committee, there are no issues of principle with the Bill. However, there are some points where we feel greater clarity is needed.
On the drafting, our concern was simply to find the best way of expressing things in language that is fit for purpose and that everyone can understand. We drew attention to the use of the word “privy”, which is still there in the Bill. That word, apart from use in jest, has largely dropped out of common use and surely it is possible to find a more modern way of making the same point. Then “unwilling” appears in one clause. That does not easily accommodate people who, when asked by the commission to do something, say, “Yes, we are entirely willing to do that but do not have the power to do so and therefore are unable to do it”. “Unwilling” does not entirely encompass inability and it may be right to look again at that use of language as well.
Of course, we can return to these and other points in Committee. For the time being, it is sufficient to say that I am happy to welcome this Bill and support the Motion that it be given a Second Reading.
G7
(8 years, 11 months ago)
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The Lord Privy Seal (Baroness Stowell of Beeston) (Con)
My Lords, with the leave of the House, I will now repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement on the G7 in Germany earlier this week. I went to this summit with two clear aims: to advance our economic security and to protect our national security. The two are, of course, interlinked, because you cannot have one without the other and, at this summit, we made some progress on both.
First, on economic security, we reached important agreements on trade, global poverty, green growth and corruption. On trade, I was determined to progress the EU’s trade deals with G7 countries, which could together be worth around £20 billion to our economy every year. The G7 agreed to step up efforts on the EU-Japan deal, and to accelerate immediately all work on the EU-US trade deal. It is over 700 days since we launched negotiations at the G8 in Lough Erne, and every day without a deal is costing the global economy £630 million. So we agreed to finalise the outline of an agreement by the end of this year.
We want all countries to grow, including the poorest, for their benefit and because we all benefit from the wider increase in global growth. So we should never forget what has been called the ‘bottom billion’. We agreed the importance of setting ambitious goals at the UN in September that can eradicate extreme poverty by 2030, and we also reaffirmed our previous commitments on aid. Britain is keeping its promises to the poorest in the world, and we encouraged others to do the same.
I turn to green growth, where there were important agreements about the global deal that we hope to reach in Paris at the end of the year. It needs sufficiently ambitious emission targets to keep the goal of limiting global warming to 2 degrees within reach. It needs binding rules with real transparency and accountability so countries have to follow through on their commitments, and it needs a long-term goal for emission cuts at the upper end of the IPCC recommendations, so that businesses have the confidence to invest in low-carbon technology. We also reaffirmed our strong commitment to mobilise the climate finance that is so essential for developing nations and making sure they sign up to an agreement.
There was a new element that I added to this G7, and that was fighting corruption. We met just after the FIFA scandal, but the point that I made was that corruption is not just wrecking an institution that is vital for football; it is also sitting at the heart of so many of the problems we face around the world today. Cutting corruption by just 10% could benefit the global economy by $380 billion every year. Corruption does not just threaten our prosperity; it undermines our security too. So at this summit I was determined that we should do more to confront this issue. In Britain, we have passed the Bribery Act, with a 40-strong team of criminal investigators to enforce it, and we have ensured that all our 28 country aid programmes include anti-corruption measures, but we need the full support of our international partners, and we made some progress in Germany.
We reaffirmed our commitment to the issues around tax and transparency that I first put on the table in Lough Erne two years ago, and we will work with the OECD and the G20 to finalise an international plan to stop companies from artificially shifting their profits across borders to avoid taxes. The G7 will push for a targeted monitoring process to ensure its implementation. Over 90 countries have agreed to share their tax information automatically by the end of 2018, and the G7 urged others to follow suit so more people pay the tax that is due.
Britain has become the first major country to establish a public central registry of who really owns companies, and now other countries have to follow with the implementation of their own national action plans, a key step in countering money laundering and corruption. We also agreed that leaders would give special focus to corruption in the run-up to the UN in September and the G20 in Turkey, culminating with a major anti-corruption summit in London next year.
On national security, there were a number of issues discussed, beginning with ISIL in Iraq and Syria. We have a three-pronged strategy. First, we are helping to train Iraqi security forces so they can defeat ISIL on the ground. We have already trained over 1,200 Kurdish troops in Irbil, and at the summit I announced that we will now deploy an additional 125 military personnel to expand this training effort across Iraq. Secondly, I met Prime Minister Abadi and reiterated our support for his efforts to build an inclusive Government that brings the country together against the common enemy that is ISIL. Thirdly, we need to do more to tackle the causes, not just the consequences, of this terrorist threat, and that means defeating the poisonous ideology of extremism at home and abroad.
In Syria, there is no greater recruiting sergeant for ISIL than President Assad’s war against his own people, so the G7 called for a genuine UN-led political transition as the only way to bring peace and defeat terrorism in Syria.
In Libya, there is a real danger of ISIL terrorists exploiting ungoverned spaces to establish a new base from which to plot attacks against European countries, while criminal gangs are exploiting an open corridor to make Libya the new gateway to Europe for people-smuggling. So we agreed to give our full backing to the UN-led effort to put in place a national unity Government in Libya and we agreed a comprehensive approach going after the gangs that are trafficking people, stabilising the countries from which these people are coming and continuing to play our full part in the humanitarian rescue mission. Britain is playing its part in all of these things, with HMS ‘Bulwark’ picking up another 2,500 people at the weekend.
We are also stepping up our efforts to support Nigeria. I met President Buhari during the summit and also discussed with President Obama how we could best help Nigeria to tackle corruption and win the fight against Boko Haram. The National Security Council has agreed that this will be a specific priority. We are setting up a new cross-government unit dedicated to this task, and we will be offering significant help, including training the Nigerian army to help in its work to defeat Boko Haram.
I turn to global health. Playing our part in fighting disease overseas is not just a moral obligation; it is the single most effective way of preventing diseases infecting people here in the UK. So, following the Ebola outbreak, it was right that the G7 devoted significant time to how best to try to prevent a future global pandemic. At the summit, I announced that we would create a new £20 million UK research and development fund focused on breakthrough medicines. We are also leading by example in promoting greater transparency over clinical trials and forming our own crack team of medics that can deploy rapidly to tackle infection outbreaks anywhere in the world, learning the lessons of the slow response to the Ebola outbreak, chiefly by the World Health Organization.
Finally, this was, of course, the second year running that we have met as a G7 rather than a G8. President Obama summed up the choice facing President Putin: he can either continue to wreck his country’s economy and continue Russia’s isolation, or he can recognise that Russia’s greatness does not depend on violating the territorial integrity and sovereignty of other countries. The G7 was clear and unambiguous about its position. Diplomatic efforts must succeed in restoring Ukraine’s sovereignty and territorial integrity, and existing sanctions must remain in place until the Minsk agreements are fully implemented. We expect Russia to stop transborder support of separatist forces and use its influence on them to bring the violence to an end. We were clear that we,
‘stand ready to take further restrictive measures in order to increase cost on Russia should its actions so require’.
Fully implementing Minsk also requires action from Ukraine, so it is vital that President Poroshenko’s Government have the support needed to deliver the necessary political and economic reforms. The UK is already helping through our good governance fund, and we will continue to look at what more we can do, but we must not forget that the Ukrainians are the victims and not the aggressors.
Following the general election, with our economy growing, deficit falling and unemployment tumbling, people can see that Britain is back. We are working for trade deals, fighting corruption and leading the battle against poverty, disease and climate change. We are fighting ISIL over the skies of Iraq, saving lives in the Mediterranean and standing firm with sanctions against Russia’s actions in Ukraine. On every front we are playing a leading role in advancing prosperity and security around the world and, in doing so, delivering both the economic security and the national security on which our future depends. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Baroness Smith of Basildon (Lab)
My Lords, I am grateful to the noble Baroness the Leader for repeating the Prime Minister’s Statement. We welcome the conclusions of the summit, including the reaffirmation of the G7’s aid commitment and the commitments to fighting corruption and to fighting disease overseas. As the noble Baroness made clear, this is the second G7 summit from which, rightly, Russia has been excluded. There should be consequences for what it is doing in Ukraine. Russia should continue to be excluded until President Putin changes course, and sanctions must remain. EU sanctions will expire at the end of July. The Statement says that they should be rolled over and that the G7 stand ready to take further restrictive measures. Is the noble Baroness able to tell the House whether the Prime Minister will be arguing at the next EU Council for those sanctions to be strengthened?
At this summit, the Prime Minister acknowledged that sanctions are also having an impact on those who are opposing them, so we welcome the fact that G7 leaders agree that more must be done to support EU member states that are being particularly affected. Can the noble Baroness provide any information on what that means in practice—the practical measures that might be taken?
In the Statement, the noble Baroness referred to the fight against ISIL. We have all seen the absolute horrors of what is happening in Mosul. It is extremely worrying and indeed distressing to see ISIL’s advances in recent weeks, particularly into Ramadi. That strong and united approach to tackling ISIL therefore continues to be vital. We back the UK’s contribution to that effort, and we welcome the extra 125 military trainers being sent to Iraq at the request of the Iraqi Prime Minister. As the Statement says, the Iraqi Government must be supported in their efforts to push back ISIL’s advance and restore stability and security across the country. So is there now a further need to accelerate the recruitment, training and equipping of Iraqi forces? As the noble Baroness will recognise, an inclusive and enduring political settlement is vital. It would be helpful if she could tell the House if our Government are continuing to press the Iraqi Government to do more to reach out to Sunni tribes, and how this is being acted on. After all, those tribes are key to this.
Moving on to other issues, the summit also reached important conclusions on the global economy and on climate change. Regarding the discussions on TTIP, can the noble Baroness confirm whether the Prime Minister sought specific assurances from President Obama that our National Health Service will be protected and, if he did, what was the response?
On climate change, we welcome long-term goals but they are of value only if they are taken seriously and if they change short-term behaviour to ensure that they are actually achieved. In December, the UN climate change negotiations will take place in Paris. What is the UK doing to ensure that the EU negotiates on the more ambitious targets that we have already called for?
Obviously we welcome serious action to tackle fraud, whenever and wherever. In his Statement, the Prime Minister specifically referred to FIFA. Last week my noble friend Lord Bach, as shadow Attorney-General, raised in your Lordships’ House the question of whether there is any UK investigation into British involvement in the allegations regarding FIFA. In response, the noble Lord, Lord Faulks, said:
“The SFO has been aware of allegations relating to FIFA for some years. It is keeping the situation under review and is ready to assist”—
not to get involved or take action—
“in any way it can. We do not think there is a lack of resources”.—[Official Report, 4/6/15; col. 521.]
That was rather a strange response, but can the noble Baroness update the House on what has happened regarding that investigation—if there is one—since 4 June?
It is somewhat embarrassing, though, that yet again during important international negotiation discussions, so much of the press coverage around the G7 summit was not about the global economy, climate change or ISIL, but about the internal row in the Conservative Party over Europe. Even the Conservatives’ most loyal and supportive newspapers, and there are quite a few of them, described Mr Cameron’s attempts to have a clear line as “a shambles”. Many of us here remain unclear about the Prime Minister’s position. It would be genuinely helpful to your Lordships’ House if the noble Baroness could take the opportunity today to clarify the Government’s position. Can she tell us what the Government’s reform proposals are and what the red lines are? Can she say clearly now whether, when the Prime Minister has finished negotiating and comes back asking for a yes vote, he will insist that Ministers who do not agree with him will have to resign or be sacked?
I appreciate that the noble Baroness may personally prefer the approach of the Mayor of London, who is also the MP for Uxbridge and South Ruislip and a renowned Daily Telegraph columnist—not a Minister, although he attends Cabinet. He said that Ministers should be able to vote whichever way they want. That will make for an interesting Cabinet meeting next week. If the noble Baroness could clarify the Government’s position I would be grateful, and it would be helpful.
A number of very important issues were discussed during the summit, and there were some useful and helpful responses, many of which we support. However, it is disappointing that another international summit which is vital to our national interest has ended, yet again, in the usual place, with a Conservative Prime Minister fighting his own party on Europe. In any such negotiations national interest must always come first. I look forward to the noble Baroness’s response.
Lord Wallace of Tankerness (LD)
My Lords, I, too, thank the noble Baroness the Leader of the House for repeating the Prime Minister’s Statement on the G7 summit. As the noble Baroness, Lady Smith, indicated, there is much in the summit and in the Statement which can be welcomed: the further steps to promote trade deals; the ambition to set goals at the United Nations in September to eradicate extreme poverty by 2030; the steps being taken to tackle corruption; specific support for Nigeria; initiatives to fight disease overseas; support for the efforts of Prime Minister al-Abadi in Iraq to build a more inclusive Government to bring his country together in challenging ISIL. However, I remember that when the House was recalled to debate Iraq last September, there was an expectation that the new Iraqi Government would reach out to include the Sunni community. It would therefore be useful to know what encouragement and support has been given to Prime Minister al-Abadi in these intervening months to achieve that goal.
I will not follow the noble Baroness, Lady Smith, and will resist the temptation to ask the Leader of the House what her immediate thoughts were when she heard the “Back Me Or Resign” headlines on Monday morning. However, if she chooses to share that with the House, I am sure that we will all be quite interested. However, does not the very fact that Downing Street had to spend time and energy throughout Monday to correct a so-called “misinterpretation” by the entire travelling media pack just illustrate the fault-line at the heart of Britain’s foreign policy? While the Government and government-led public debate at home obsess about a referendum on European Union membership, our voice is, inevitably, diminished on the profoundly serious global issues which are the focus of such summits: the Middle East, Ukraine, global climate change and the plight of refugees in the Mediterranean.
While the Prime Minister may have tried to make a robust rebuttal of claims by some US envoys that we are becoming “Great Shrinking Britain”, should it not concern all of us who believe that as a nation we can and should be a positive force in the world, punching above our weight, that the perception of some of our closest allies is that our contribution and influence are waning? It would therefore be very welcome if in answering some specific questions, the Leader of the House could give answers which, by their substance, show that we are not a shrinking Britain.
The Statement refers to Russia, Ukraine, and implementing Minsk, and to welcome commitments by the G7 which state that diplomatic efforts must succeed in restoring Ukraine’s sovereignty and territorial integrity. In any future developments or negotiations, will the UK, as a signatory to the Budapest memorandum, play a full part, or, as in Minsk earlier in the year, will we leave it to France and Germany?
We welcome the long-term goals for climate change, but with regard to the bold but very welcome commitment by the G7 to decarbonise the global economy by the end of the century, how do the Government expect the UK’s commitment to be taken seriously if persistent rumours materialise that the Energy and Climate Change Secretary will announce restrictions of the renewables obligation for onshore wind developments currently in the planning stage? The Prime Minister’s Statement referred to businesses having the confidence to invest in low-carbon technology, but what signals will be sent to potential investors in new renewables projects such as wave or tidal power if the Government can change the support regime at such short notice?
Finally, it is right to pay tribute to those, including those on HMS “Bulwark”, who are engaged in humanitarian rescue missions in the Mediterranean, and right to acknowledge the measures agreed at the G7 which address that issue, including the backing for UN-led efforts to put in place a national unity Government in Libya. However, surely a far more fundamental approach will be required to address the underlying causes of why people are fleeing their homes. Can we look to the United Kingdom Government to give leadership in the G7 and other forums to pursue initiatives which, in their magnitude, match the scale of the problem?
Baroness Stowell of Beeston
I start by congratulating the noble Baroness, Lady Smith, on her election as Leader of the Opposition in this House. This is the first opportunity that I have had to do so from the Dispatch Box. Regarding both her comments and those of the noble and learned Lord, Lord Wallace, on Europe and their questions about the European referendum—to which my party has been committed for a long time and in which it is pleased that, following yesterday’s historic vote in the House of Commons, there will now be an opportunity for all the people of this country to participate—I say to them that it is ironic that they are now asking me questions about that when only about a month ago they did not wish to support that opportunity for everybody. They know very well that our manifesto commitment is that the Prime Minister will negotiate for reforms in Europe that are in the interests of the UK and, indeed, of Europe. All of us in government are signed up to that commitment, and when the Prime Minister has concluded his negotiations he will put a question to the United Kingdom for the people to decide in the in/out referendum. We very much support that process, which has now started.
I should correct the noble Baroness. Boris Johnson attends the political Cabinet; he does not attend the Cabinet in the normal sense of the word.
Moving on to the point that the noble and learned Lord, Lord Wallace, made about Europe distracting the Prime Minister in some way in his contribution to the discussions at the G7, I would say: far from it. In all the discussions over the two days in Germany, the Prime Minister was very much able to show that the UK is both setting the agenda and leading the way on some of these very important issues.
I am grateful for the support that I heard from both opposition Benches for what we are doing to ensure that sanctions against Russia are very much in place. The noble Baroness asked me about the European Council in June. We will most definitely be seeking the full rollover of those sanctions. The Minsk agreement is not fully implemented and the sanctions will remain in place until it is. If Russia were to extend its aggression, we would certainly consider the extension of sanctions, but the first aim is to make sure that we get them rolled over while Minsk is not being implemented.
The noble Baroness asked about the effect on some of the countries that are imposing sanctions and what actions might be taken to support them. We need to be quite careful about singling out individual countries in that way, because the whole purpose of imposing these sanctions is to show that the rest of us want to abide by the collective rules that apply across the world. If we impose sanctions on somebody who has broken those rules, we do so knowing that there is a cost to us but it is one that we are willing to bear. The principle of maintaining the fundamental international rules is so important that when somebody breaks them we are willing to take some cost. However, the bigger cost is on Russia with the sanctions that it is now having to cope with.
I am grateful to the noble Baroness and the noble and learned Lord, Lord Wallace, for the support that they offered today for what the UK is doing in our campaign regarding ISIL in Iraq. In that context, there were certainly questions from both about what more we are doing to encourage and ensure that Prime Minister al-Abadi moves his Government towards becoming more inclusive. That is something that we pursue at all levels, and the signs are clearly that he is seeking to achieve that himself. We are giving support to Iraq so that the Iraq armed forces are in a strong position to be deployed against ISIL. We are training them up to do the necessary work in their own sovereign territory.
The noble Baroness, Lady Smith, asked about TTIP, the EU and US trade deal, and specifically whether the National Health Service would be protected. I can give her an absolute guarantee on that. Over the last few months, there have been commitments, guarantees and clarifications from both the current relevant European Commissioner and his predecessor. Given that this trade deal is so important to the prosperity of this country and so many others, I would urge that, rather than focusing on the potential risks associated with TTIP, which do not exist, a better approach would be for us to unite in support of applying some pressure to America to sign up to the deal.
There were questions on climate change. Our view is that the terms of the climate change agreement that we are seeking to achieve in Paris will be legally binding and we will continue to press for that. We very much believe that there are real benefits to the economy from making sure that we take a leading role in this area and that there are real threats from climate change that need to be properly dealt with.
The noble Baroness, Lady Smith, asked me specifically about an Oral Question and Answer between the noble Lord, Lord Bach, and my noble friend Lord Faulks. I do not have the specific detail to hand, so, if I may, I will have to come back to her on that. However, the point I was making by referring to FIFA in repeating the Prime Minister’s Statement is that FIFA is an illustration of how corruption needs to be tackled. It was the Prime Minister who put this on the agenda in Germany and the House might like to know that in the light of the discussions at the G7 at the start of the week, the Japanese Prime Minister has agreed to take that forward into his presidency next year.
As I say, this is something on which we are setting the agenda and leading the way. We are making good progress in all these important areas.
Lord Ashton of Hyde (Con)
My Lords, as this is the first ministerial Statement in this Parliament, I thought it might be useful if I remind the House of what the rules for the 20 minutes of Back-Bench questions are and what the Companion says. It says:
“Ministerial statements are made for the information of the House, and although brief questions from all quarters of the House are allowed, statements should not be made the occasion for an immediate debate”.
Lastly, it says:
“As a matter of courtesy, members who wish to ask questions on an oral statement should be present to hear the whole of the statement read out”.
Lord Howell of Guildford (Con)
My Lords, there were reports from the margins of the talks at Garmisch-Partenkirchen that Moscow and Tehran might now be more willing to assist with the removal and replacement of President Assad. If that is so, that is extremely significant. I wonder whether the Minister has any more information on those reports and the related issues.
Baroness Stowell of Beeston
On that matter, as I said, as far as Russia is concerned we are completely firm in our position on Ukraine. But it is right that the Prime Minister has had a conversation recently with President Putin, and in the course of that conversation President Putin and the Prime Minister agreed that our national security advisers should restart talks on the Syrian conflict. But the Prime Minister was clear with Putin, as ever, that Assad could not be part of the solution in Syria because, as I said in the Statement, he is a recruiting sergeant for ISIL and not part of the answer to it.
Lord Anderson of Swansea (Lab)
I have two questions about Russia and Ukraine. We are told in the Statement that the G7 was clear and unambiguous about the position. It states:
“Diplomatic efforts must succeed in restoring Ukraine’s sovereignty and territorial integrity”.
Does that extend to Crimea, or have we written off Crimea effectively as a fait accompli?
Secondly, the Statement states that we stand ready to impose further sanctions if necessary. Clearly, that is important, and it is particularly important that Japan is now part of that consensus. But are the Government really confident that the EU sanctions will even be maintained, given the very strong pressures of President Putin and his inducements for a number of EU countries?
Baroness Stowell of Beeston
The Prime Minister and the other European leaders were absolutely united in their view on sanctions on Russia, certainly in the course of discussions at the G7 over the last few days. From the preliminary discussions leading into the next European Council meeting, I gather that there is no question of any doubt on that, but it is something that we have to keep pressing. We have talked about this before. We all have to hold together on this, because it is so vital. Russia must not see any weakness in our agreement in the West and in Europe on sanctions remaining in place.
On the noble Lord’s question about Crimea and whether it has been written off, I would answer, “Absolutely nothing of the kind”. We remain very clear that what Russia did in that area was illegal and there is no question that this would in any way be ignored or forgotten.
Lord King of Bridgwater (Con)
Looking at this Statement and the seriousness of some of the global issues that it mentions such as global health and climate change, is there any movement at all to suggest in discussions involving the major countries of the world that China might have a contribution to make? There are international global interests in so many of these very serious issues.
Baroness Stowell of Beeston
I do not think that my noble friend is suggesting that we are at the point where we might extend the G7 to include China. But he is right about China being so important to the future prosperity and security of the world at large. Again, this is an area where we have been very much in the forefront in recognising the growing importance of China. Before the general election, the UK was the first G7 country to join the AIIB, which is the new Chinese version of the World Bank. Because of our leadership there, other G7 countries have joined that bank.
Lord Wallace of Saltaire (LD)
My Lords, I am sure the noble Baroness will be pleased to be reminded that the current EU Trade Commissioner is a woman, Cecilia Malmström, so she should therefore have said “her predecessor” when referring to the EU Trade Commissioner.
On TTIP, the transatlantic trade association, I hope the Government are well aware that there is an active campaign on social media and in the NGO community against this whole transatlantic free trade agreement as a capitalist ramp that will give multinational companies access to our markets at all sorts of cost. That is as irrational as much of the campaign for Britain to leave the European Union. Are the Government planning any major information campaign to combat that underlying distrust of the entire transatlantic trade agreement?
On the EU, are the Government also proposing to use the balance of competences exercise of the last coalition Government to inform the public, given that I read in the newspapers every day of major claims being made by members of the Conservative Party for the repatriation of substantial powers from the European Community, for which the balance of competences exercise produced no evidence?
Lastly, we all welcome the Government’s views on corruption, and we all see again from the FIFA example that the overseas territories and Crown dependencies under British sovereignty form part of a network of transnational corruption. Are the Government planning to take powers to tighten controls over overseas financial centres under British sovereignty?
Baroness Stowell of Beeston
My Lords, there is quite a lot there, but first I must thank the noble Lord for correcting me on the current EU Trade Commissioner. He follows these issues far more closely than I do myself and, unfortunately, I had not spotted from the name in my brief that I had got the gender incorrect, so I am pleased to be told that the Trade Commissioner is a woman.
On TTIP, the noble Lord is absolutely right to say that there are a huge number of benefits in the agreement for small businesses because it will help them to export, as well as for consumers generally in terms of cheaper goods and increased trade. I will reflect on his comment about the promotion of the benefits of TTIP, but that leads me back to the point I made earlier, which is that because there is so much to be gained from this trade deal, I think there are some misplaced concerns about issues which are not relevant. They are not ones that we need to be concerned about because we have got the necessary assurances. I know that the noble Lord was very much involved in the balance of competences exercise. I will look at it again.
On corruption and the overseas territories, although I may not be able to find the specifics, I can make the general point that one of the things that we as a Government have done in terms of increasing transparency is to ensure that the Crown dependencies are part of the first wave of the new arrangements for ensuring that transactions are properly recorded as part of one of our new measures to increase transparency, so they are very much part of the effort to make progress in this area.
Lord Craig of Radley (CB)
My Lords, in the discussions which the Prime Minister had with President Obama, did the President raise concerns about the reductions which have taken place in the Armed Forces in recent years, and about the lack of clarity on the future defence budget? If so, how did the Prime Minister reply?
Baroness Stowell of Beeston
Unfortunately, I do not get to be a fly on the wall in these meetings, but the point that I am sure the Prime Minister would have made on defence is the one that he makes continually: this year we are spending 2% of our GDP on defence, and future defence spending will be decided in the review. We must not forget that it is clear in the Government’s manifesto, and we are clear, that there will be no reduction in the regular forces, we will replace Trident, and we are committed and able to spend some £160 billion on defence equipment over the next 10 years.
Lord Soley (Lab)
The Prime Minister has been claiming that Britain is going forwards, but in fact a number of US commentators have been saying that we are going backwards. What we want to know, and I think what has just been asked, is whether a clear commitment was given to President Obama that Britain would retain or increase its defence expenditure to 2% of GDP, and maintain that forthwith. That is what we need to know.
Baroness Stowell of Beeston
I have nothing to add to what I have just said except to say two things to the noble Lord. The first is that we have the biggest defence budget in the EU and the second largest in NATO, and we are the US’s largest partner in terms of coalition air strikes against ISIL. I would also make the point that we are very much in play in ensuring that the defence of this country is secured, and we are playing our part in security and defence issues around the world.
Lord Hylton (CB)
My Lords, the Statement says that there is a central register here of beneficial owners and companies. Will the Government do the same for valuable properties, and would that not be a very good way of reducing money laundering? Secondly, if it is right to fight ISIS in Iraq, surely the same must be true for Syria. Is there not something that needs reconsidering on that point?
Baroness Stowell of Beeston
On the noble Lord’s first point, I am not in a position to extend what we have already done in this area, but we are very much at the forefront of this agenda, which the Prime Minister started back in Lough Erne. However, I note the noble Lord’s proposal.
The situation in Syria is very concerning and continues to worsen. We are doing a great deal in terms of supporting the action by ensuring that we are providing reconnoitre-type services and supporting the humanitarian situation on the ground. However, we are not involved in military action.
Lord Lea of Crondall (Lab)
My Lords, many of the issues covered by the Statement seem soluble, at least in principle. What worries some of us is that the refugee crisis in the Mediterranean is not in the same category—it looks insoluble. Is the difficulty about finding a more credible process involving north Africa and the Middle East with Europe to reduce the number of refugees that no one has thought intellectually, as it were, of what is needed, or is it that some of the countries where people are coming from do not want to co-operate? I find what is going on very shocking, as do people all around the country. It is absolutely dreadful. Is it for Europe or is it for our own Foreign Office to give a really big push to think of ways in which we can find a credible process?
Baroness Stowell of Beeston
The noble Lord gives a stark illustration of the seriousness of the desperate state of some countries, whether they are in north Africa or the Middle East. I will try to be brief while at the same time doing justice to this serious issue. We are doing everything we can to save lives, as one would expect from a moral and upstanding nation. I refer to what HMS “Bulwark” has been doing as part of the rescue operation. The misery of the people who are being rescued from the Mediterranean does not start there; they need security and stability in the countries they are fleeing from. We have to tackle the cause of this problem, and whether it is through our aid programmes or the political agenda, we must make sure that there is no reason for people to flee in this way in the first place.
Lord Moynihan (Con)
I strongly agree that corruption is endemic in FIFA. Can my noble friend the Leader of the House suggest to her ministerial colleagues that we should closely scrutinise the proposed legislation being introduced into the Swiss Parliament to address corruption in sport and increase accountability and transparency to see whether there are lessons to be learned from co-operating with the Swiss authorities, while stepping up our work with sponsors and reporting in due course to this House on the important work of the Serious Fraud Office—the issue rightly raised by the noble Baroness, Lady Smith—as well as co-operating with US judicial authorities to address corruption in international sports administration?
Baroness Stowell of Beeston
My noble friend covers a range of different recommendations for us to consider. I will certainly make sure that I report them back to the relevant departments which are responsible for this matter.
Lord Stoddart of Swindon (Ind Lab)
My Lords, I will ask two questions. First, on overseas aid, I think it was the Defence Secretary who suggested that part of the overseas aid budget should be used to arm third-world countries and to provide other military assistance. Does the Minister agree that, if that were so, overseas aid, which is supported by most people, would lose some support?
Secondly, on Russia, I am part of the generation who lived through World War II and saw the contribution that the Russians made—26 million people dead—to the fighting and winning of that war. As far as Ukraine is concerned, there are two sides to the question. The EU, the United States and Russia have made mistakes relating to Ukraine. Instead of having discussions through foghorn diplomacy through the press and other media, would it really not be better, in the interests of peace and co-operation, for the Russians to be invited back into the G8 forthwith?
Baroness Stowell of Beeston
On the noble Lord’s last point, the G7 leaders are clear that that will not happen until Putin wants to adopt the values that he has decided no longer apply to him, which is the point that I tried to make when responding to the questions about sanctions. This is not just a group of people trying to ensure prosperity in the world; it is also an organisation that represents values that are important and that underpin how we achieve that prosperity. If somebody such as President Putin does not subscribe to those values, as he clearly does not, there is not a place for him at the G7, or for it to be extended.
On the noble Lord’s point about overseas aid and defence spending, my right honourable friend the Defence Secretary was making an important point: clearly, a lot of overseas aid contributes to our security and to stability in other countries, whether that is by tackling something such as Ebola or by supporting people with humanitarian needs. In doing that, we hope to return a country to some sort of stability so that it can prosper. That is another way of protecting ourselves and our defences.
Charities (Protection and Social Investment) Bill [HL]
(8 years, 11 months ago)
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Lord Hodgson of Astley Abbotts (Con)
My Lords, we descend from the rarefied atmosphere of world diplomacy to the rather more pragmatic matter of the Charities (Protection and Social Investment) Bill. I admit that my fingerprints are on a good many parts of this Bill and I therefore begin by pleading guilty as charged. It will come as no surprise to my noble friend on the Front Bench, or indeed the House as a whole, that I am very supportive of the principles behind this legislation.
My noble friend was kind enough to say some nice things about my review in his opening remarks. I reciprocate by congratulating him on his maiden speech. Maiden speeches are, for all of us, a moment of terror. If it is a maiden speech from the Front Bench the hurdle is commensurately higher. I have to say that he cleared the hurdle with aplomb and I congratulate him on that. Of course, he need not think that I will not probe him in Committee. I am a Back-Bencher and I will do my scrutinising work. However, as to the direction of travel, I have no doubt that the Government are on the right track.
My nearly year-long review of the Charities Act, from which a good many of these proposals flow, was fascinating but also humbling because one saw around the country groups of men and women, often with not much money or resources but with commitment, drive and enthusiasm, setting out to tackle some of the most difficult and deep-seated problems of our society, and doing so without expecting any reward or publicity, or to be noticed or praised. They are in many cases totally unsung heroes.
When I began the review, I asked the charitable and voluntary sector to bring forward its ideas for change. It did so with a will—so much so that I ended up with 115 recommendations, only a minority of which required statutory effect, some of which we are considering today, while others required action by the Charity Commission and the sector or, indeed, by the professions or other parts of our society. However, the House can imagine that the volume of paper and submissions behind those ideas was very substantial. It all had to be read through, absorbed and integrated into the report.
This debate gives me the chance once again to put on record my thanks to the Cabinet Office team who supported and looked after me and prevented me going too far off-piste, at least one of whom is in the officials’ Box to the left of my shoulder. It also gives me the chance to inquire about the fate of some of the other more technical proposals. These have been taken up by the Law Commission, which currently has a consultation out—a paper rather forbiddingly entitled Technical Issues in Charity Law. It is 279 pages long and will, I fear, never hit the bestseller list, nor can it be described as a ripping yarn. However, the Law Commission, with its normal forensic attention to legal detail, has laid out the pros and cons in the consultation paper. The consultation closes on 3 July. Today all I really seek from my noble friend is an assurance that, when the results of the consultation are absorbed, the Government will find time quickly to bring forward another Bill on charities—this time using the Law Commission procedure for non-controversial measures. I comfortably predict that the contents of that Bill will not have people dancing in the saloon bar of the Dog and Duck. However, there is an opportunity to greatly facilitate and bring up to date charity administration and procedures in a number of areas such as land transactions, permanent endowment, charity mergers and the operation of the Charity Tribunal. Therefore, I hope that at some point during the proceedings on the Bill, my noble friend will reassure me that the Government will give any such Bill proper priority.
I said in my earlier remarks that the report contained 115 recommendations and I was rather gratified that it was well received by the sector. However, in life, particularly in political life, if you have a moment of self-satisfaction, you can be quite certain that someone is going to smack you on the nose straightaway. My smack on the nose was given to me by a lady who, on being introduced to me, having just got involved in charities, said rather peremptorily, “Do you know anything about charities?”. I replied, “A little”, I hope in a duly modest tone. She said, “I have just joined the board of my hospice”. I said, “Splendid. How is it all going?”. She replied, “It’s going wonderfully except for one thing”. I said, “What is that?”, to which she replied, “Some idiot has produced a report with 115 recommendations that we are going to have to absorb”, so I went on my way duly chastened.
I turn to the Bill itself. My work on the review revealed the stupendous breadth of the Charity Commission’s work. The briefings state that there are more than 160,000 registered charities. However, as the noble Baroness, Lady Barker, pointed out, there are probably as many again which are unregistered, exempt or excepted. So, there are probably a third of a million charities, with more than 1 million trustees, the regulation of all of which ultimately ends up with the Charity Commission. To put it in context, if you take just the 160,000 registered charities and assume that they send their accounts in to the Charity Commission on a 250-day working year, that is 650 sets of accounts the Charity Commission would have to get every day. As everyone has pointed out, malfeasance is gratifyingly rare but, with the numbers of charities and trustees, there are bound to be occasions when people behave less well than we might like. If public trust and confidence in the sector are to be maintained, it is vital that the commission has the necessary powers.
My non-political life has been spent in industry, commerce and the City. The regulators of those sectors have draconian powers. By comparison, I found that the Charity Commission was rather underpowered. Two simple examples have come up today. The fact that when you hear the heavy tread of the Charity Commission coming towards you, you can resign and get away without any censure at all seems extraordinary. The fact that, if I have behaved badly, the Charity Commission will remove me as the trustee of a charity but cannot prevent me from reappearing five minutes later as the trustee of another charity also seems unacceptable. Of course, the powers need to be used proportionately and we will no doubt discuss those checks and balances in Committee but public trust and confidence will be eroded if bad apples repeatedly turn up as trustees, directors or senior managers in the charity sector.
I will add a word on the inclusion of the terrorist funding offence, which, if the Bill is implemented, will lead to automatic banning as a trustee. I began my review thinking that this was an open-and-shut case which one could have no problem with. But I found—as those of us who served under the able chairmanship of the noble and learned Lord, Lord Hope of Craighead, on the pre-legislative scrutiny committee subsequently found—that it was more complex than it at first appeared. Charities that provide aid to dysfunctional and broken areas of the world—and I believe they should, for moral reasons and because it is part of our soft power and reputation building around the world—may have to make compromises.
What do I mean by compromises? I will give the House a brief example. I am sent these things quite a lot. The example concerns Iraq and Syria—both areas much in our minds when it comes to the funding of terrorism—and a very unfortunate people called the Yazidis. The Yazidis live—actually, lived—mostly in the Nineveh province of Iraq and they belong to a very ancient religion that I think is linked to Zoroastrianism. ISIL considers them to be devil worshippers and believes the state should be purified and purged of them. The House will appreciate what “purified and purged” means if you are an ISIL freedom fighter. For Yazidi men it often means brutality followed by death, and for Yazidi women it means sexual slavery and repeated rape by ISIL freedom fighters. Yet hope exists. There is a market for these luckless women. For about $10,000 the freedom of one Yazidi woman can be purchased. The legal and moral dilemma for a British charity seeking to buy the freedom of one of these unfortunate women—and who can blame it or criticise it for wishing to do that?—is that the $10,000 is almost certainly going to go straight to ISIL.
As the noble and learned Lord, Lord Hope of Craighead, pointed out, too inflexible an application of the terrorist provision will have a chilling effect on the provision of charitable aid of the sort that I have just described. We need at some point, either here or in other bits of Bills—and I take the stricture of the noble and learned Lord about this—some form of “safe harbour” provision so that charities that are doing responsible work in these ghastly areas of the world can do so without feeling that they are opening themselves up to criticism and legal threat.
I turn to the Bill’s provisions on social investment, which was another chapter in my review. This is a new development and one in which the United Kingdom is a world leader. I hope that it can remain so, as it has fantastic possibilities to be achieved by combining charitable purposes with the opportunity to earn a modest financial return. Not only could it greatly increase the volume of charitable investment and spread the number of investors; it also opens the way for new approaches and ideas in the operation of individual charities. But—and I am afraid that it is a significant but—it is a very new movement and we need to be careful not to place on it a weight of expectation which it cannot sustain, so there is a need for incremental reform to the statutory framework as the social investment movement develops.
Research that I carried out for the review revealed that the provisions of the Trustee Act 2000 are a significant impediment to established charities becoming involved in social investment. This is because, first, it emphasises that the primary duty of a trustee is to preserve capital and, secondly, it makes no distinction between a charitable trust and a private trust. They have very different objectives. For a private trust such as a person’s pension fund, the preservation of capital is of course critical, otherwise the pension cannot be paid. However, for a charity it is a different matter because it has a public benefit requirement, so it could be perfectly proper for a charity concerned with, say, prisoner rehabilitation to spend some of its capital on those objectives—not to do so capriciously or without due care and attention, because in those circumstances the trustees would certainly be liable, but soberly, carefully and after due inquiry. I am sure that the noble and learned Lord will know better than I do that some lawyers argue that a distinction already exists in law, but the evidence I got suggested that there was a chilling effect. So I am glad that the Government are now proposing to put beyond doubt that the position of a charity trustee is different from that of a private trustee.
I referred a moment ago to the need for a gradualist approach in assisting the development of social investment. It is of course not just the Government who have to play a part; so do the regulators, the FCA and the Charity Commission, as well as myriad professional bodies including accountants, advisers, investment managers and financial advisers. At some point in proceedings on the Bill, it would be helpful if my noble friend could tell the House or the Committee what actions the Government are taking to chivvy up this group in their support of social investment, and what the present position is on those developments.
Finally, I turn to something which is not in the Bill as drafted. One of the issues which I expect we will explore in Committee is whether the commission’s new powers are proportionate or represent an inequality of arms, especially as regards smaller charities. When the Labour Government brought in what became the Charities Act 2006, they introduced the concept of the Charity Tribunal. This was to be a user-friendly, non-adversarial, quick and cheap means for charities—again, especially smaller charities—to get access to redress when they believed that they had been unfairly treated by the commission. Prior to this, the only method of redress was an appeal by the charity to the High Court. As we all know, Silks, like supermodels, do not get out of bed for less than a few thousand pounds a day. The result was that charities mostly had no option but to submit automatically to the commission’s direction.
It is fair to say that the tribunal got off to a bit of a slow start and that early hopes were not entirely fulfilled, but progress towards the original idea is now being made. One inhibition is contained in Schedule 6 to the consolidated Charities Act 2011. This is a complex, 10-page schedule as to who may do what, how they may do it, what the timescales are and what the outcomes or redress may be. To the trustee of the smaller charity, it is a formidable bureaucratic list. If your Lordships look at line 22 on page 6 of the Bill, you will get a flavour as there is an amendment to that schedule. I argued in my review that this represented an inequality of arms and an unnecessary impediment to access to justice for charities. I recommended that the whole schedule should be replaced by two simple provisions: first, that any charity should have a right of appeal to the tribunal against any legal decision of the Charity Commission; and, secondly, that it should have the right of review against any other decision by the commission. In so far as the House may wish to explore proportionality in the commission’s new punitive powers, a reform to remove the existing Schedule 6 and have that simple replacement would represent a rebalancing. I hope that the Government will reflect on the advantages of such an approach between now and Committee.
Today, I conclude by saying that the principles of the Bill are doing the right things in the right way. The Bill has my support.
Viscount Chandos (Lab)
My Lords, I welcome the Bill. I thank the noble Lord, Lord Bridges of Headley, for introducing it with such an excellent maiden speech and congratulate him on his appointment as Minister. I also pay tribute to the work of the noble Lord, Lord Hodgson, and his review and to the noble and learned Lord, Lord Hope of Craighead, and the members of the Joint Committee on the predecessor, draft Bill. I start by declaring an interest as a trustee of a number of charities, as disclosed in the register, in particular as a trustee and past chair of the Esmée Fairbairn Foundation, one of the largest grant-making foundations in the country and also one of the most active social investors. For that reason, in speaking briefly, I will concentrate on the issues relating to social investment.
I thoroughly welcome the clarification of the powers of charities in that respect, reflecting the recommendations, among others, made by the Law Commission. As well as expressing my strong support for the excellent points made by my noble friend Lady Hayter, I will first make a brief comment about the role of charities and the implications of that for the main measures included in the Bill, which is another way of saying what both the noble Lord, Lord Hodgson, and the noble and learned Lord, Lord Hope, have already said.
A few years ago, Bill Gates, on one of his visits to London, was asked how the Bill and Melinda Gates Foundation saw its role and its relationship to Governments—not just its own Government but Governments around the world. Innovation, he said, should lie at the heart of philanthropic activity. Philanthropy could never replace government funding for those in need, so its role had to be to lead the way. If that is true for a foundation with an endowment of over $40 billion, how much truer must it be for all other charities? With innovation, comes risk; and as in the corporate sector, charities must therefore be free to fail. Although I wholeheartedly support measures to ensure that the Charity Commission can act decisively to prevent abuse, this must not be at the cost of discouraging proper risk-taking or of the creation of a risk-averse environment that stifles the vital innovation about which Bill Gates has spoken. The noble and learned Lord, Lord Hope, spoke about the risk of the Bill’s provisions being too specifically restrictive. That is obviously something we should look at, but we should also be looking at and fostering the culture and environment around the third sector.
As the House has heard, the social investment provisions are essentially a clarification. The noble Lord, Lord Hodgson, has already described the UK as a world leader in this area. The Esmée Fairbairn Foundation and others have been able to pursue social investment prior to this clarification, but it is clearly welcome, across the board, that a wider range of trusts and foundations should be able to consider social investment. However, in clarifying this there is obviously the challenge of definition. In general parlance, “social investment” can cover—if I am allowed to use the phrase—a multitude of sins, ranging from quite lightly or negatively screened investment to take out tobacco or, fashionably, fossil fuels, all the way to mission-related investment. The Law Commission report has an excellent diagram showing the range of investments covered by the definition.
The Bill sets out a definition that there are two purposes of a social investment: both,
“furthering the charity’s purposes; and”,
at the same time,
“achieving a financial return for the charity”.
The very helpful notes provided by the Cabinet Office make the point that that return can be negative but cannot be wholly negative, otherwise a social investment is in reality a grind. It may be that in the later stages of the Bill we should look at whether the simple definition—that is the great benefit of its simplicity—needs to be clarified to make sure that it is not interpreted as requiring a financial return that is greater than zero.
It has always been easier to assess social investment where the financial return is low and the social impact high. Of course, it is difficult to measure social impact or impact in grant making. That is the holy grail of the charitable sector, and all the major foundations and trusts work hard to otherwise measure it. None the less, it is clear that if the financial return is 1% or 2%, there must be social impact to justify that sacrifice of financial return. There are those—including Sir Ronald Cohen, who has been one of the most important people in this area—who argue that you can make social investments without sacrificing financial return. While that may be true exceptionally, generally, if it is to be a meaningful definition there must be some sacrifice of financial return in exchange for the social impact. After all, almost everybody in this House would agree that all forms of investment through the financial market can and should be productive in terms of the economy and society—contrary to scurrilous rumours, that is certainly a belief on these Benches. The risk that social investors face when presented with investments where there is a high financial return and relatively low impact is that it may be easy to make poor commercial investments on the grounds of a somewhat illusory impact.
It may be the cynicism of old age but I wonder why the Government have introduced this clarification with this enthusiasm. The smoke signals that seemed to come out of the Cabinet Office during the last Parliament suggested that there was an element of seeing the investments of trusts and foundations as a cow to be milked to try to cover the challenges resulting from the public expenditure cuts being made.
It is hugely important, as the noble Lord, Lord Hodgson, said, that we do not force the pace of social investment. There are two risks if the pace is forced. One is that charities will lose money and see little or no benefit in terms of their objectives or mission. At the other end of the extreme, with regard to instruments such as social investment bonds, based on payments by results, if you chase volume rather than cost efficiencies, it is too easy for it to become another expensive way to finance social welfare—something similar to what we saw with the worst of the PFI.
This is a complex area. The nearly 90 investments that the Esmée Fairbairn Foundation has made over eight years cover every sort of instrument that you can imagine. We are fortunate to have the scale—even though the social investment portfolio is only 3% of the total investments of the foundation, two full-time executives run that programme. That is clearly not a resource that most trusts and foundations can justify. Therefore, in promoting the growth of this market, we have to be realistic about what prudently smaller trusts and foundations can do. There are already a number of social investment funds, and there will be an increasing number. If you have heard the vigorous debate in the investment management world about the trade-off between returns and fees, you can imagine that there is an even more complex debate when trying to assess fees against some mixture of financial and social return.
Subject to those quibbles, I very much welcome the Bill and the facilitation and encouragement of social investment that it brings. I look forward to the further stages of the Bill and its ultimate enactment.
Lord Borwick (Con)
My Lords, I declare an interest in that I am active in five charities—the British Lung Foundation, the Royal Brompton and Harefield Hospitals Charity, the Ewing Foundation, the Federated Foundation and the Science Museum Foundation. I am also on the campaign board of Historic Royal Palaces. All of them are well-run charities, but this Bill is about badly run charities and bad trustees, and I very much support it.
We saw this weekend what happens when charities focus on aggressive fundraising rather than on their objectives. Many have outsourced these functions, and they now give the impression that they are badly run charities. The Mail on Sunday videos showed cynical attempts to get every last penny from donors. Oxfam is one of the charities that outsourced fundraising in such a way. It aims to tackle poverty, but the company that it authorised to raise money clearly was not concerned about the financial situation of the 98 year- old pensioner whom they talked about getting money from in the video. If there was an equally aggressive focus on achieving the charity’s objectives, more might be done to actually alleviate poverty.
Charities such as Oxfam do not help themselves when they talk about things that do not seem to be in their remit. Oxfam, among others, produced lots of content during the last Parliament about austerity, including a mocked-up film poster of “The Perfect Storm”, featuring a list of coalition policies. The Charity Commission found that this,
“could be misconstrued as party political campaigning”.
We must also emphasise the number of great charities and good trustees. There are great things being done in smaller charities, and they are coming up with innovative ways to achieve their objectives and finance their activity. These things are usually being done voluntarily. Volunteers do what they do because they back the cause. They are paid only in pride, in thanks and in the satisfaction of a job well done. Every one of them is let down by bad apples, so such a scandal might tempt a volunteer to despair.
Bad faith in the charity sector is even more heinous for its effect on others, but can we do more than this? If it is pride that motivates the great volunteers, how can we increase the level of pride and the level of dedication that drives people to stand in the cold on street corners to sell poppies for remembrance? Recognition may be a good way. Two hundred and ninety-two people were given a British Empire Medal in the new year honours list, and they were largely people who undertake charity or community work. The great work done by honours committees to identify and locate these people should be applauded. The attention of the press may be on knighthoods for footballers, but a lot of valuable work is done much more quietly. As well as the main national awards, there are local ones, with mayors giving awards to people in their communities pulling our fractured society together with encouragement and faith that even more can be accomplished. I know that most volunteers are not doing their work for recognition, but all are encouraged by it.
At present there is no equivalent of a label such as “plc” for charities: no simple badge that they are registered and doing their job properly. I suggest that charities could put the letters “RC” after their name, standing for “registered charity”. There should, of course, be penalties for misuse of such a badge, and I do not know if “RC” is the right acronym. It certainly could be wrong for an Anglican Church charity. Others may have better ideas. Such a label would show the country that they are in the good category.
I do not want to stop government giving money to charities, as I feel that that kind of expenditure can often be better than other government expenditure. Indeed, there are very sensible arguments for the Government to ask a charity to deliver certain public services. It will often do it more efficiently and with more knowledge and compassion than state employees.
There is one group of particularly problematic charities: the “sock puppets”. These are organisations that receive a large proportion of their budget from government and use that money to lobby for even more money. A report from the Institute of Economic Affairs found that 27,000 charities are now dependent on government for more than 75% of their income. The report also found that the voluntary sector receives more money from the state than it receives in voluntary donations. That is astonishing. It creates huge problems because many of these charities lobby for more state intervention, higher taxes and more regulation. Perhaps most perniciously of all, many of these charities use taxpayers’ money to call for even more of it for themselves, so it was right that the previous Government took some action on this.
Back in February, Sir Eric Pickles MP announced that the Department for Communities and Local Government was to become the first government department to insert an anti-sock puppet clause in grant agreements. It is important that further steps are taken to tackle the sock puppets. There is a suspicion that Governments of all parties have form in encouraging some charities to lobby for particular policies. We all know the argument: politicians want to implement a policy, but there appears to be no demand for it from the public—but the politicians know that it is the right thing to do and believe that there must be a hidden demand for it, so they make that demand apparent by encouraging charities to lobby for the policy.
There is a host of differences between a well-funded charity, funded by the Government, and an individual helping people themselves. Should this difference be made clear by refusing the right of government-funded charities to be called an RC or registered charity, as I suggested earlier? I propose that government-funded charities should use, if they want, an acronym such as “GFC”, but be refused the right to be called registered charities. How could we define GFCs? Perhaps as charities that have 50% or more of their income coming from government. After all, fundraising from government is different from fundraising from individuals, and it has significant implications for integrity and accountability. Just as companies must understand and react to the needs of their customers, GFCs surely become creatures of government—perhaps even unconsciously. This should be apparent to all but sometimes is not so. Therefore, a GFC acronym would be an idea with merit. Does the Minister agree?
I am concerned that Clause 13, which adds a new Clause 292A, is too focused on defining the financial return element of social investments. It does not clearly enough explain or define the social impact element of social investments. That section of the Bill is devoted to explaining what is meant by “financial return”, which is only one side of the coin. It is perhaps even more important to define what kind of social impact the section has in mind when it comes to social investments. The only text on this issue at the moment is set out in new Clause 292A(2)(a), which talks about,
“directly furthering the charity’s purposes”.
That seems to cover programme-related investment, where an investment is exclusively an advancement of a charity’s purposes. I thought that this area of the law was reasonably settled.
I argue that what is needed is a statutory power that enables charities to engage in what the Charity Commission described as mixed-motive investments. There are investments that are justified on the basis of expected financial return and the extent to which an investment is expected to advance one or more charitable purposes of a charity in whole or in part. It is this form of investment that needs a clear statutory basis. That was clear from the Law Commission’s report on the issues. Would the Minister consider again whether the wording would permit the flexibility to make mixed-motive investments?
Lastly, I ask the Minister whether there is room in the Bill to deal with the problem of charities and community interest companies being treated differently from co-operatives and community benefit societies in the financial promotion regulations when raising social finance. A change to the legislation would enable charities to raise social investment capital from local communities.
Lord Low of Dalston (CB)
My Lords, I join everybody else in welcoming the Minister to his new position and in congratulating him on a most accomplished and confident maiden speech. I do not think he has any need to feel trepidation. He has made an extremely auspicious start in the way he has lost no time in reaching out to stakeholders with an interest in the Bill, and that, too, I very much welcome.
As for my own interest, I have a long-standing interest in the charitable sector due to my 40-year involvement with the RNIB, of which I am now vice-president. Most recently, I have been asked to chair a commission on third-sector regulation by ACEVO, the Association of Chief Executives of Voluntary Organisations. These interests I now declare.
I think that I can speak quite briefly, especially given the authoritative contributions that we have heard already from the noble and learned Lord, Lord Hope of Craighead, and other members of the joint scrutiny committee, notably the noble Baroness, Lady Barker, and the noble Lord, Lord Hodgson of Astley Abbotts, who have laboured tirelessly in this particular vineyard for a considerable period.
The Bill has come forward with a remarkable degree of consensus. It confers powers to strengthen the hand of the Charity Commission in regulating charities, which the commission has itself been seeking, and as a result it has the commission’s strong support. It has been subject to pre-legislative scrutiny, which has led to the Bill being strengthened to include two further powers which the Charity Commission was asking for that were not in the original Bill but are now included as a result of the Joint Committee’s recommendations. It also enjoys a broad welcome from the two leading umbrella bodies in the sector, the NCVO—the National Council for Voluntary Organisations—and ACEVO, which acronym I have already deconstructed, so I do not think there is much that is contentious in the Bill.
Following consultation by the Law Commission, Clause 13 removes any doubt that charities may engage in social investment: that is to say, in investments that both further the charity’s purposes and achieve a financial return for the charity. Measuring social impact might be a little more subjective and problematic. From a charity’s point of view, that will make it easier to undertake such investment, so it is very welcome.
The Charity Commission has made it clear that the Bill is aimed principally at strengthening the commission’s hand in dealing with the most serious cases, and that for the vast majority of cases it will have no direct impact. ACEVO has accordingly expressed some concern that this will tilt the balance more towards the commission’s enforcement as opposed to its advisory role, which is arguably of even greater importance in raising and maintaining standards of good practice, a tendency that can only be reinforced by recent reductions in the commission’s budget, which is down almost 50% in real terms since 2007. So care needs to be taken to maintain the right balance here. I was encouraged that the noble and learned Lord, Lord Hope of Craighead, underlined that point.
I will mention one or two provisions where there is room for some concern about the breadth or vagueness with which they have been drafted. I will do this quite briefly, because I am conscious that I am picking up on pretty much the same provisions which the noble Baroness, Lady Barker, drew attention to. Concerns have been expressed that Clause 3(3)(b) and condition F in Clause 10(7) go too far in specifying the range of conduct the commission can take into account in exercising its powers of disqualification. Clause 3(3)(b) identifies,
“any other conduct of that person that appears to the Commission to be damaging or likely to be damaging to public trust and confidence in charities generally or particular charities or classes of charity”,
and condition F is,
“any other past or continuing conduct by the person, whether or not in relation to a charity”.
Those are indeed quite wide. The NCVO has concerns that past conduct could be brought into decision-making where it is not relevant to the case in question, since what is damaging to public trust and confidence in charities involves what they describe as an open and potentially subjective test. We will want to look at those provisions carefully in Committee to make sure that the right safeguards are in place.
As regards Clause 7, which gives the commission broad powers to direct the winding-up of a charity, ACEVO believes that the commission should be required to consult the charities sector on the criteria to be used in deciding whether to direct that a charity should be wound up.
Care also needs to be taken that we do not cast the net too wide when specifying the offences that can lead to automatic disqualification, which are covered in Clause 9. The Bill expands the list of criminal offences that automatically disqualify a person from being a charity trustee beyond those that involve only deception and dishonesty. In particular, anti-terrorism legislation includes offences that have an element not only of clear and deliberate wrongdoing but of inadvertent involvement. The criticism of the current criteria is that they are too narrow and fail to capture other behaviours that should automatically disqualify an unsuitable person from acting as a charity trustee.
The NCVO does not object to the addition of new offences to the list. However, the inclusion of a number of offences under terrorism legislation has raised concerns due to the extraordinary breadth of the definition of terrorism and the unforeseen impact that that could have on the work of international NGOs. The Independent Reviewer of Terrorism Legislation has expressed concern about the fact that criminal offences under UK anti-terrorism legislation are also capable of impeding the legitimate activities of international NGOs in conflict areas. It has therefore been suggested that the Home Office, the Treasury and international NGOs should meet to discuss how the objectives of antiterrorism legislation can be met without prejudicing the ability of NGOs to deliver humanitarian aid. It should also be remembered not only that participation in voluntary action can play an important part in the rehabilitation of offenders but that ex-offenders can also benefit others on the basis of their experience. For example, the Prince’s Trust specifically employs ex-offenders for many of its jobs.
So there is a general welcome for the Bill, to which I subscribe. Where questions have been raised, there is a good deal of agreement on what those are. I hope and believe, therefore, that after due scrutiny in Committee your Lordships will be willing to give the Bill a fair wind so that it can reach the statute book without undue delay.
Viscount Bridgeman (Con)
My Lords, it is a great privilege to follow the noble Lord, Lord Low, with his outstanding experience particularly in the field of charities for the disabled.
After a maiden speech there is sometimes a perfunctory statement from the following speaker that we hope to hear future interventions from the maiden speaker. However, glancing at the forthcoming business, and indeed at this Bill, I see that we are fortunate in not having to wait long to hear again from the noble Lord—who in this case is my noble friend the Minister.
It is a paradox that charity is one of the noblest of human sentiments—a point which my noble friend Lord Borwick expanded on—but, in the context of the administration of charities, it is also, as my father would have said, open to abuse by individuals who are less than totally satisfactory. I note that the Joint Committee, so ably chaired by the noble and learned Lord, Lord Hope of Craighead, outlined three issues on which regulation is required: honest mistakes that trustees make, persistent mismanagement of charities, and deliberate abuse where people go out of their way to abuse their position in a charity for personal gain or some other non-charitable purpose. The committee added that the third was, fortunately, the rarest, but also hard to assess accurately. It is therefore appropriate that a major part of the Bill—Clauses 2 to 12—deals with the question of disqualification.
In England and Wales it is the duty of the Government, through the Charity Commission, to tread the fine line between policing the administration of charities with a firm hand but, at the same time, with an appropriate—if not light, then certainly imaginative and helpful—touch. I suggest that the Bill is a further small but significant step towards giving effect to those intentions. I pay tribute to the work of the Joint Committee, chaired by the noble and learned Lord, Lord Hope, and the statutory review by my noble friend Lord Hodgson of Astley Abbotts, together with the Law Commission’s work on social investment. Their work has contributed to the creation of a Bill that is not only reasonable and constructive but, if I may say so, realistically constructive.
The tightening of the provisions on disqualification is timely. Of the many loopholes that have been closed I particularly welcome the action to address the glaring anomaly that permitted disqualified trustees to hold other trusteeships or, indeed, senior management positions in charities. That is addressed in Clause 10(2) with the introduction of new Section 181A, to which my noble friend Lord Hodgson referred.
Clause 1 inserts new Section 75A, which provides the commission with the power to issue a warning to a charity or a charity trustee. This is particularly welcome as it reinforces the concept of proportionality without the need for a statutory inquiry. The Explanatory Notes—I echo the words of my noble kinsman Lord Chandos—have been particularly helpful on the Bill. They give three useful examples of when the warning power could be used, relating respectively to unauthorised payments, governance problems—for instance, a repeated failure to call AGMs—and where a statutory inquiry would be disproportionate. The introduction of this procedure has many advantages, not least in freeing up time for the commission to concentrate on more serious matters.
Another significant feature of the Bill is Clause 13, concerning social investments. This has been well covered, particularly, again, by the noble Viscount, Lord Chandos. I am grateful to the Minister for his helpful guidance on this part of the Bill. I particularly welcome new Section 292A(5) introduced under this clause. It addresses the distinction between a loss of investment and a total loss of funds—again, referred to by the noble Viscount. However, I had some difficulty with this new section, as did my noble friend Lord Borwick, but the Minister has been very helpful in clarifying that a social investment has to satisfy the two conditions set out in proposed new Section 292A(2): first,
“directly furthering the charity’s purposes; and”,
secondly,
“achieving a financial return for the charity”.
The implications of social investment are quite considerable because of the additional obligations on trustees imposed under new Section 292C, and I have no doubt that this will come back in Committee.
This is a valuable complement to the previous charity Acts and the commission is to be congratulated on giving effect to the many valuable recommendations submitted to it. I have no doubt that they will be further refined as the Bill makes its way through this House and another place.
Baroness Kramer (LD)
My Lords, I declare an interest as a trustee of two small local charities.
I want to address just two issues, neither of which has been raised so far in this very excellent debate. The first is the power introduced by the Bill for charities to make social investments. The noble Lord, Lord Hodgson of Astley Abbotts, has led the charge on this issue incredibly effectively, and I completely support the proposals that the Bill encompasses.
However, I want to talk about the other side of the coin: the power or capacity, particularly of small charities, to issue those social investments—specifically, for example, social impact bonds. The noble Lord, Lord Hodgson, talked about this, as did I, in the debates on the then Financial Services Bill. We thought that we were getting a response from the Government but in the end it went nowhere, and I hope that this Bill provides an opportunity to retrieve that situation.
A charity may wish to issue social investment bonds because, for example, it has been successful in achieving a contract with a local authority for a payments-by-results project, perhaps working with disadvantaged youngsters to keep them on the straight and narrow, rehabilitating prisoners or all kinds of other important areas. I say to the noble Lord, Lord Borwick, that a charity will have typically won the contract because it will have come forward with innovative ideas on how to tackle the problem in a way that government institutions have historically failed to do. So let us not denigrate the work that is done under contract; it is very important.
If a small charity succeeds in winning a contract, it now has to fund the project, and the obvious direction is a social impact bond. However, under Section 21 of FiSMA 2000 and the financial promotions order that sits underneath it, in order to go to ordinary people and ask them to purchase one of those bonds—perhaps for £100, £200 or whatever—it has to meet the demands on any publicly marketed investment, including a full prospectus under the Companies Act. The estimate is that, on the cheap side, an organisation might be able to achieve that for, say, £150,000. I believe that the noble Lord, Lord Hodgson, thinks that to achieve that benchmark the figure is closer to £500,000. However, it is obviously a ridiculous and completely impossible amount for any small charity that engages in a relatively small project.
We are left with the ridiculous situation that members of the charity—one of whom might be one of your Lordships—could go to members of the community who are excited by the project, who know a lot about it and who think that it is really worth while and say, “Would you make a donation?”. That would be entirely legitimate. If they were to say, “Would you give me some money? In fact I might return it to you. It’s not guaranteed but I might be able to give it back to you when I get my payment through payment by results, and indeed give you a little financial interest on top of it”, that, I am afraid, would be an imprisonable offence. It is an absolutely insane situation which needs to be tackled.
When we went through the Financial Services Bill, the Treasury Minister, the noble Lord, Lord Sassoon, made it quite clear that he understood the problem but, for lack of time and focus in a very complex Bill and at a time when, frankly, financial services were under very broad scrutiny because of so many abuses, the Government were not able to give the time and attention to come forward with a solution. The noble Lord, Lord Hodgson, suggested that there would be a way of introducing a new section under FiSMA that, for example, allowed people to self-certify as a sophisticated social investor without the need for this complicated and expensive process. That could be added to, for example, a materiality benchmark so that an individual could not invest more than £200. Various kinds of packages could be put together to make that possible.
This truly is important for small charities. The majority of donations in this country are, frankly, hoovered up by the big boys and the little charities struggle in every way to access finance, no matter how worthy their causes. It is often their very local communities that understand the good work and the specific projects that they do. Therefore, there is an enormous argument for using this Bill to deal with what I think everyone recognises as an unfortunate and unintended problem.
Perhaps I may raise one more issue, which goes into the area of abuse. My 95 year-old godmother, like many people of her generation, has always been very generous to charities. One can imagine that her daily post includes numerous letters from every charity under the sun requesting money. She can deal with that but there is one form of request that is exceptionally stressful, and that is the request that comes with unsolicited goods in it. I name the British Red Cross as being particularly culpable in this area, sending coasters, bookmarks and cards of every kind. My godmother feels too guilty to put those items in the bin but she also feels that if she uses them she must make a payment, and surely she is not alone in that.
Personally, I make many fewer donations to the British Red Cross because I despise this form of solicitation, and I am also very concerned that a significant proportion of anything that I give is used to send these kinds of items out to thousands of other people on an unsolicited basis. However, it is also a form of pressure. I hope very much that the measures considered in this Bill will at least allow people to disengage from receiving these solicitations or from having their money spent on providing such items for other people. It is a subtle form of pressure that I think, frankly, ought to be beneath any good charity.
Viscount Eccles (Con)
My Lords, following the noble Baroness, Lady Kramer, there is undoubtedly a problem—and an understandable one—in relation to pressure. I have always said that if you are a fundraiser, you need a wicked smile and not to leave until you have the money. It is not easy to raise funds. That leads me to the reflection that, if life is complicated and quite often ends in a muddle, we cannot expect the charitable endeavour in this country ever to be anything else but pretty complicated and quite often in a muddle.
I have one other reflection before I start, as it were. My noble friend Lord Borwick suggested that he who pays the piper calls the tune. We should always remember that if you accept money, you have to pay some attention to the donor.
For quite a long time, I have been a trustee, fundraiser, adviser and donor—I think that I am probably all of those things still. The ones that need to be on the register are, I hope, correctly on the register. To illustrate the length of time that I am talking about, I am a life member of a charity, for which I paid £20.
This Bill is a welcome measure and one that has been very well prepared. In being prepared, it has been discussed in detail and very well argued. It has the full support of the Charity Commission, and I must say that I have been very impressed in recent times by the way in which the Charity Commission puts its points across to those of us who are engaged. No doubt the detail will come out in Committee and later, and other noble Lords have talked about that with much more understanding than I would have done.
Let me go to the wider scene. We all agree about the merits of charitable endeavour: its very long history and the need for it, which grows as life gets more complicated. I think that we all agree that there needs to be a balance in our country between the way that the economy is run and what it is expected to do, how taxation should play its part, the democratic aspirations of the people who pay the taxes and how we control public expenditure. That balance has never been more in question than it is now.
Although I quite understand the point made by the noble Viscount, Lord Chandos, that the Government may expect, in some way, the gaps to be filled by others as they try to reduce public expenditure, my view is that the gaps are inevitable. The noble Viscount gave us a very good explanation of why the gaps are there and need to be dealt with. He cited innovation, and that must be right. Lots of things go on in our society which do not fit the postcode lottery school of thought that everything should be the same for everybody. Lots of things go on where ticking boxes about the highest common factor, or even the lowest common denominator, simply does not work and where independent solutions are needed. If charities are full of innovation, some of the solutions will work and some of them will not work so well. However, the flexibility, imagination and judgment that charities can exercise are a very important component of the total picture in our society.
Indeed, on occasion, charities will come up with ideas that we will think are slightly zany. However, if people are exercising flexibility, imagination and judgment, the chances are that there will be problems, that things will go wrong and that some people will deliberately make things go wrong. Therefore, we clearly need a monitor and regulator. We have one with what is, in my view, a growing and excellent database of information, which has made very welcome progress in recent years—on that I entirely agree with the noble and learned Lord, Lord Hope of Craighead. The greater powers for it to exercise its role are welcome as well.
In thinking about the impressive performance of the Charity Commission, we have had reference to the 160,000 regulated charities, the staff of 300 people and the budget of £20 million a year. If noble Lords were to look across the regulator scene and try to find another regulator that is making as good a shot at doing what it is required to do as the Charity Commission is, they might look a long way before finding one. Much progress is being made, but the really interesting question is, where next? To my mind, the Charity Commission has a clear sense of direction.
The Bill provides for a review, and I want to spend my last couple of minutes on that. The review should be on,
“how the Act affects … public confidence in charities … the level of charitable donations, and … people’s willingness to volunteer”.
There are two negatives to that. First, the motivation for volunteering and the results of volunteering are, in my experience, very complicated subjects. That is for another day, but, in the mean time, I would like to remember, as I always do, that volunteers have a divine right to be unreasonable.
The second negative that I want to get out of the way is about public confidence. It has already been said that there is a danger that Her Majesty’s Government and the Cabinet Office—Parliament, even—can do things that do not improve the public’s confidence in charities. I am sure that that is true. Here we get into the extremely complicated subject of independence, which is best summed up by saying that when somebody tells you that they have independence and are treated at arm’s length, you need to suggest to them that probably their arm is regularly being twisted.
There is an issue around what was billed very prominently—not in the previous Administration but in the one before that—as the third sector. There has been reference today to the degree to which some registered charities are in fact being funded by the taxpayer. There is something there that we have to think about very carefully, because every time you take money, you must remember that he who pays the piper calls the tune.
Another issue is the connection between public confidence in charities and the level of charitable donations. I am not clear as to whether “level of charitable donations” means donations to charities, donations from charities or both. When considering charitable endeavour, one has to be very conscious of the fact that it is both that we are thinking about. For example, Henry Smith was lucky enough to own land that subsequently became part of London. His charity, and others such as the Wellcome Trust, does not spend any time raising money but runs what is, in effect, a massive endowment fund that distributes the income from that fund, and sometimes part of the capital, to other charities. We know a great deal about those very big, top-tier charities. Indeed, the whole charitable endeavour in our country would be completely different if they did not exist. It would be very interesting to have a better grip on exactly how important they are.
Small donors have also been referred to. Charities such as those for birds or lifeboats are massively successful. All through its history the lifeboat charity has been, to a degree, a substitute for money coming from the taxpayer—it is extremely well known and has extremely successful services. However, to introduce a slightly discordant note, sometimes the business of animals gets rather complicated in our minds. We wonder whether we understand what we might call the mass appeal charities as well as we thought.
To me, there is a gap in the middle. There is a great need to understand in much more depth and detail the middle rank of charities. Where do they come from, why are they created, what do they do, how do they do it and can we think more positively about how that part of the system can work better than it does now? Indeed, we would probably find that nearly all the investigations undertaken by the Charity Commission to date—it is a formidable number and there has been a formidable rate of increase over the last three years—have been in that middle sector.
I believe that there is the same need about donors. We understand about big donors. They get their names on boards. I was in the British Library this morning and I read the board with some interest. We understand about how small donors behave; there are millions of them and they behave with great consistency. We have heard today about the difficulties that can be faced in that sector. But I do not believe that we understand at all well what the people in the middle do or do not do about forming charities or giving money to charities—their total charitable endeavour. There is huge potential there which we are not at the moment making a good job of tapping. I look forward to the further stages of the Bill.
Baroness Pitkeathley (Lab)
My Lords, I declare my interests as president, vice-president, patron and former chief executive of various charities, as co-chair of the All-Party Group on Civil Society and Volunteering, and as someone who has spent the large part of a very long working life working in or with the charitable sector.
In those roles, I have been familiar with, connected with and at times frustrated by the work of the Charity Commission. I commend the improvements that it has made to its performance over recent years and I support the new powers given to it in this Bill. I would also like to praise the work of the pre-legislative scrutiny committee under the chairmanship of the noble and learned Lord, Lord Hope of Craighead, which suggested improvements to the Bill. The House should also be mindful, as it has been throughout this debate, of the excellent work done by the noble Lord, Lord Hodgson of Astley Abbotts, in his review of the Charities Act 2006, which was an important background to the provisions we now see in the Bill. Of course, like others, I pay tribute to the excellent maiden speech of the Minister, and look forward to working with him as we proceed.
This is a good, useful and welcome Bill. We shall in Committee be able as ever to suggest improvements, strengthening and so on and, as we shall be in the Moses Room, there will be opportunities for useful discussions about the role and future of the Charity Commission, so here I will raise only one or two cautionary thoughts. While I am fully supportive of extending the powers of the Charity Commission to regulate in the interests of public trust, there are dangers about focusing too strongly and solely on the commission’s enforcement role. The commission has an important role too as an adviser, particularly on charity governance.
The quality of charity governance is equally as important in promoting trust in charities as is tackling abuse. It is welcome that trustees will be able to be removed or disqualified, and no doubt we shall have much debate about how judgments are to be made as to the fitness or otherwise of trustees. What is seen as damaging or unfit in one charity might be seen as appropriate by another, especially bearing in mind the huge range in size and type of charity. Many are tiny and run from someone’s kitchen table, as we know. Some are large multimillion pound enterprises barely distinguishable from businesses. We must ensure that in our enthusiasm for propriety we do not damage or interfere with the spirit of voluntarism, which is the lifeblood of the charitable sector. I am sure that your Lordships’ House, in its inimitable way, will be able to achieve this important balance. With regard to the advisory role of the Charity Commission, we should also remember that advice early in the process of registration can head off many a problem at the pass, preventing larger difficulties that need a stronger reaction down the line. In this regard, the new warning power will be very welcome. In my experience, the charitable sector should look to the commission for advice, support and guidance as well as policing.
I am aware that lobbying and campaigning by charities is not the subject of this Bill, but we cannot fail to have noticed that in the recent general election campaigning charities were not as prominent as they have been in the past. That may be because the agenda for the election was less focused on topics of concern to charities, but it may also be due to a certain nervousness about speaking out given the clear disfavour that has been expressed in some quarters about this type of activity, not least in your Lordships’ House this evening. This is of particular concern to me as former CEO of Carers UK, whose campaigning—absolutely non-party-political campaigning—has been fundamental in raising the carers issue to the importance that it now enjoys. As this is Carers Week, I feel justified in reminding your Lordships that we should bear in mind the importance of charities representing the views of underprivileged sections of our society as we examine this Bill
In drawing attention to the role of the Charity Commission as adviser as well as regulator, I am only too well aware of the resources problem that the commission can face. The Bill gives the Charity Commission increased powers but no lasting increase in its budget. Whether in the long term this is feasible is something that we must all—the Government, the charitable sector and the commission itself—be extremely concerned about.
I turn now to the social investment section of the Bill and declare a further interest as chair of the Big Society Trust, which oversees the work of Big Society Capital—a leading wholesaler in the field of social investment. The Bill introduces a power for charities to make social investments and sets out trustees’ duties in relation to social investments. The social investment market has grown significantly, as we have heard, and helped many charities and social enterprises, but too many are not able to access the capital they need. It may be that they are not investment-ready, that loans are considered too risky for a charity to take on, or that the transaction costs are considered too high. Charity trustees have been particularly reluctant to venture into this area. In this regard, the encouragement and support given to trustees in the Bill will be especially welcome.
I also want to draw the House’s attention to the setting up, in a collaboration between the Cabinet Office, the Big Lottery Fund and Big Society Capital, of Access, the Foundation for Social Investment. Through two programmes—the growth fund and the capacity-building programme—Access aims to fill the gap which many charities at present find exists when they try to access social investment for innovative projects that they want to put in train for their beneficiaries. The noble Baroness, Lady Kramer, may be interested in the Access foundation. Finance will be provided that blends grants with loans, which will help to provide reassurance about the risks of this type of finance. The foundation will also be able to make smaller loans, perhaps up to £150,000, and to reduce the costs of those smaller investments. Many charities are nervous when taking on this type of finance for the first time, so the support and capacity building provided by Access will be especially welcome to many charities and perhaps particularly to their trustees.
Social investment never has been and never will be the solution to all the resource problems of the charity sector, especially at this time of growing need for so many of the recipients of charitable services. But it can make a useful and important contribution, enabling charities to be more sustainable and deliver greater impact, so the provisions in Section 13 are very welcome. I look forward to detailed consideration of the Bill in its further stages.
The Earl of Lindsay (Con)
My Lords, I welcome the maiden speech of my noble friend Lord Bridges of Headley and I congratulate him on his appointment as a Minister. I share with him the experience while on the Front Bench of carefully prepared briefs being shredded by the noble Lord, Lord Williams of Elvel. That is a memory that will not fade.
First and foremost, I welcome the Bill, and in doing so I should declare an interest in having various roles in or links to charitable bodies as listed in the register. In principle, I support any measures that can be sensibly developed to give the public greater confidence in the probity and good governance of the charities they choose to support, and to provide charities themselves with greater protection from individuals who are either unfit to be trustees or who might seek to exploit them. I therefore support the Charity Commission being given new powers to take action when necessary against individual trustees or, where appropriate, against the charities with which they are involved.
Public and donor confidence in the probity and governance of charitable bodies strikes me as essential. In supporting the increased powers that are being proposed for the Charity Commission, I acknowledge at the same time that even with these increased powers, the scale, magnitude and extraordinary diversity of the 160,000-plus charities for which it is responsible will continue to pose a considerable challenge for it, given the resources that it has available—and that is before one considers the large number of unregistered charities, as mentioned by my noble friend Lord Hodgson of Astley Abbotts. The figures are startling. There are probably a third of a million charitable bodies throughout the UK with more than 1 million trustees.
Recognising this continuing challenge for the commission along with the Government’s commitment to a more intelligent approach to regulation and its enforcement, I want briefly to explore an additional, parallel opportunity for improving confidence in the governance of charities and the fitness of trustees to perform their duties. It is an opportunity that I believe could be developed alongside the enactment of the new statutory powers being proposed for the commission. As well as delivering greater confidence, it could assist the commission in enabling it to focus its efforts and resources in a more risk-based manner, and to resort less frequently but more effectively to the exercise of its proposed new powers.
In raising this opportunity, I should declare an interest as the chairman of the United Kingdom Accreditation Service—UKAS—which is the country’s national accreditation body, as it is in this role that I have been involved in exploring a number of different initiatives to promote demonstrable good governance and management in the charity sector. I should add that UKAS, as the national accreditation body, already supports voluntary and regulatory standards across a broad range of policy areas in a way that benefits both the regulator and the regulated. There are therefore some useful precedents in other policy and regulatory areas on which to draw.
Current discussions with a number of relevant parties in the sector are exploring whether agreed standards, underpinned by accredited certification or inspection, might be a useful and robust means by which the quality of a charity’s governance or the calibre of a trustee can be demonstrated to a donor, a regulator, or indeed the public interest. In recent years, bodies such as the NCVO have developed a number of different voluntary standards and codes of practice for the sector, and many charitable bodies have adopted one or more of them. However, given the general need for greater confidence in governance and the calibre of trustees, the current discussions are exploring whether there might be multiple benefits from aligning these voluntary standards more closely with the regulatory requirements and underpinning those certifying the charities for their compliance against them with UKAS accreditation.
It has also been recognised that such an approach might at the same time be an opportunity to address the challenges that many charitable bodies face, such as how the multiplicity of standards, codes of practice and awards makes it difficult for organisations to decide which ones to use. There is a need to identify which standards or marks are valid and meaningful, along with the need for a more coherent and rationalised approach. Such an approach, intelligently designed and configured so that it complements the objectives sought by this Bill and intelligently endorsed so that compliance is recognised and, where appropriate, rewarded by external parties such as the regulator, could have a significant effect on improving the standard of both charities’ governance and trustees’ abilities. It could be value-adding for charitable bodies that choose to be certified as having adopted the relevant standards. It could increase public, regulatory and donor confidence in certified charities, and assist the Charity Commission by enabling it to better direct its efforts and resources to where there is the greatest need for oversight or intervention, thereby making it a more robust regulator. It could also reduce the need for costly legal action.
While potentially having a significant impact where it matters most, such an initiative could none the less remain entirely voluntary. It would be largely owned and driven by the sector, and it could be managed so that the bodies for which it is not relevant do not feel compelled to participate. At the same time, a more robust and better-recognised standards-based option, underpinned by accredited certification, might be helpful in respect of the large number of charities that are not registered with the Charity Commission, and obviously to the large federated charities.
As I said at the start, I fully support the Bill and the proposals that it will bring forward, but I believe at the same time that there may be an opportunity to develop a credible regime of voluntary, well-designed, sector-owned standards, underpinned by accredited certification that will, in conjunction with the provisions of the Bill, help to address the concerns surrounding governance in the charities sector.
Lord Green of Deddington (CB)
My Lords, I first congratulate the noble Lord, Lord Bridges of Headley, on a most impressive maiden speech. I thought that it demonstrated the elegance, economy and judgment that bode well for his future in this House and in the Government.
I shall be very brief. I would like to focus just on Clause 10 covering the revised powers to disqualify a trustee. The noble Baroness, Lady Barker, spoke of a possible chilling effect on Islamic charities, and I think that similar concerns were voiced by the noble and learned Lord, Lord Hope, and the noble Lord, Lord Hodgson. I come to this from a rather different angle. We need to be fully aware of the risk that our charity system can be exploited by Islamic extremists, who pose a very serious threat to our society. I speak with some background in both counterterrorism and the Middle East.
Noble Lords will be well aware that charitable giving is a fundamental and of course very welcome tenet of the Muslim faith. They may also be aware of the difficulty that Muslims often feel when challenging actions that are dressed up in religious clothing. It follows, therefore, that a charitable cloak is ideal for Islamic extremists in pursuing their intentions to infiltrate Muslim communities in Britain. Of course we have to tread gently in these matters, but we also have to be firm. I suggest that there is a clear case for strengthening the powers of the Charity Commission when such activities are identified.
At the same time, of course, it is no less important to be quite sure that we do not interfere with proper charitable activity in the region. I speak as a former chairman of Medical Aid for Palestinians. I am well aware of the need to ameliorate the appalling situation in which Palestinians find themselves in the Occupied Territories, and of course one need hardly mention the problems of Syria, Iraq, Libya and Sudan. Those charities must be allowed to operate. However, what we are talking about here is, frankly, dodgy trustees, and when they are detected by whatever agency, there must be powers which the Charity Commission can use to deal with it.
I think that covers it, and I commend the Bill.
Lord Moynihan (Con)
My Lords, first, I echo the congratulations which have been offered to my noble friend Lord Bridges, with whom I had the pleasure of working some 10 years ago when on my noble friend Lord Howard’s team. He had clear insight, humour and intelligence which shone through in all our dealings, and there is little doubt that he has replicated that again today and will enjoy life in your Lordships’ House.
I am very supportive of the principles of the Bill, and I declare my interests, which are in the register: I have worked closely with the Haberdashers’ Livery Company on its educational initiatives, and I have interests in a range of sports charities. I am conscious that there is one area which has been much debated in the context of the work of the Charity Commission—the often challenging subject of the public benefit requirement. That is a difficult issue because there are advantages to having clarity in the Bill but that would be complex and challenging, as is the guidance that is available. That debate needs to continue and I intend to raise it in a specific context—the advancement of amateur sport—in Committee.
The Charity Commission has recognised that there is room for improvement, and we need to help charities understand that, far from being an irrelevant distraction, the public benefit is one of the core questions of mission. It is about charities being clear what their aims are, who they serve and how they serve. No simple statutory definition of public benefit exists; it has therefore been contested and is subject to case law. Fee-charging schools have been recognised in the voluntary action research in the Sheffield Hallam University report as very well informed on the subject, yet they have been involved in costly Upper Tribunal cases. So there is uncertainty, misunderstanding on occasion and a lack of impact. This subject has led to opaque debate which I hope will be clarified.
The report concludes that if independent schools are to benefit from the privileges of the charity sector they have to be clear that charities are working for the public benefit in an understandable way. I believe that Parliament needs to define public benefit more precisely, as opposed to the alternative route at present, namely the Charity Commission developing practical guidelines. That is especially important since public benefit needs to be built in to the purposes of the charity.
I am not alone: the Select Committee on Public Administration report stated that the current position on the public benefit test has been,
“an administrative and financial disaster for the Charity Commission and for the charities involved”.
The Charities Act 2006 was considered to be “critically flawed” on the question of public benefit. The report said that the Act removed the presumption of public benefit from religious, educational and anti-poverty charities and required the Charity Commission to create guidance on public benefit, but it did not give a definition. The report stated that changes in the Act left the Charity Commission in an “impossible position” and led to costly Charity Tribunal cases involving independent schools, which I have mentioned. The committee said that the 2006 Act had absorbed vast amounts of energy and commitment, as well as money. Bernard Jenkin, from another place, said:
“We should never have opened up the whole can of worms called public benefit. Parliament needs to legislate, because the time and money being wasted suggests the act as it stands is not well-drafted and needs to be amended”.
I introduced the governance of sport Bill shortly before the election, in which I proposed that the Secretary of State for Education should table an annual report to Parliament for debate in both Houses entitled The Transformation of School Sport, documenting the state of sport in schools in England and Wales. Specifically relevant to today’s debate, I proposed that all schools should publish annually a report setting out policy in relation to sharing schools’ sports facilities and coaching expertise with state primary and secondary schools in order to benefit the local community. Effort made in the previous year to implement such a policy should also be covered. I took the view that all schools holding charitable status should submit reports as set out in Clause 4 and that the Charity Commission should take into account such reports in assessing whether the school continued to meet the public benefit requirement in Section 2(1)(b) of the Charities Act 2011.
In pursuing this objective, I believe that we should place public benefit on the face of the Bill. To avoid the complexity of a wide debate, I suggest that we legislate in a specific area of public benefit as it applies to the promotion of amateur sport, directed at independent schools holding charitable status. Those colleagues on all sides of your Lordships’ House who take a keen interest in sport will, I hope, take the opportunity in Committee to focus on the specific requirement for independent schools to deliver public benefit under the Charities Act. We will explore whether it is possible to define public benefit specifically to ensure that independent schools should be required to share their sports facilities and co-operate with primary schools in their catchment area. Many independent schools achieve this objective and achieve it admirably, through dual use of their facilities, engagement with local clubs in after-school hours, as well as coaching and pupil engagement. But there is a lack of clarity as to what specifically is required from schools to deliver public benefit under the Charities Act. The purpose of my intervention is to continue that dialogue between sports organisations, independent schools and those who will be in Committee as to whether primary legislation in this context is desirable.
Why do I raise the subject of sport? I have in the past highlighted the fact that more than 50% of our medallists at the Beijing Games came from independent schools. That means that half of all our medals for Team GB came from just 7% of the children in this country. In the excellent Ofsted report a year ago entitled Going the Extra Mile, Michael Wilshaw said:
“Only 7% of school-aged pupils attend an independent school in England at any point in time and only up to 14% of students aged 16 or above are reported to have attended an independent school at any point in their schooling. If maintained schools and independent schools were equally successful in nurturing sporting talent, we would expect approximately 86–93% of elite sportspeople to have been educated in a state school. However, 41% of the medallists from the UK team from the London 2012 Olympic Games were reported to have attended an independent school”.
I strongly believe that we need to address this imbalance. Independent schools are very well placed to play an important role in assisting state schools in their catchment area. That statistic of 41% of our medallists from Team GB in the London Games coming from 7% of our children means that thousands of talented young athletes are not being identified in the state sector. We have a duty to identify and develop that talent and to create a pathway for it from primary school to podium.
There are schools that are doing this outstandingly well. Their interpretation of the charitable requirement for public benefit is very clear. I cite Tonbridge School as an example. It works with 27 primary schools; it engages with those schools and provides the opportunity for boys to help with coaching, for state schools in the area to have access to its facilities and for a community action co-ordinator to work with those schools. Every year the school brings nearly 1,000 children from the primary schools in its catchment area to an Olympic day. It also sets up a freshers’ fair at the end of the day, when it invites local clubs, local community clubs and local sports clubs and the governing bodies to come to the school so that they can engage with the primary schoolchildren, their teachers and their parents to encourage them to become engaged in sport.
The best of our independent schools are doing exactly what I seek. The problem is that that is not a universal position for independent schools. I believe that focusing on the legislation before us, as we should, provides an opportunity to unlock the challenge and the real opportunity there will be for enabling public benefit to be interpreted in a very clear way to engage independent schools with local communities. If each of our independent schools built a relationship with the local primary schools and their local communities similar to that of Tonbridge School we would transform this country when it comes to the provision of sporting opportunity and engagement with the state schools and independent schools. That is much needed as part of our legacy from London 2012.
In closing, I cite John Claughton, chief master of King Edward’s School, Birmingham, who shares this vision. He identifies two kinds of resources: facilities and people, and says:
“Much good work has been done over the past decade or so in making the high quality facilities found in many independent schools available to local communities”—
a commitment, incidentally, that pre-dates discussions about charitable status and public benefit. There are numerous examples of partnerships with local schools and communities to be cited. He says:
“Not all former professional sportsmen and women have the skills or the desire to be both teachers and coaches. Many are excellent coaches but do not have the qualifications, desire or skills to be full-time teachers. These colleagues would enjoy working as full-time coaches across a variety of schools … Professional coaches employed (and frequently housed) by independent schools mainly work during the afternoons (when team sports are usually scheduled), early evenings, and at weekends. These members of staff could be employed on contracts where they spend some of their mornings (and non-sports afternoons) working in local state schools. The cost to the state schools would be low (calculated on an hourly basis without the additional costs of employment which are carried by the independent school) but would offset some of the costs incurred by the independent school”.
I believe that we have a far-reaching opportunity through this legislation to address a key, albeit complex, area of charity law. In so doing we can provide much-needed clarity over the concept of public benefit, reduce the Charity Commission’s focus on costly Charity Tribunal cases, and, above all, link our independent schools to state schools through the dual use of facilities and coaching to provide a genuine sports legacy to London 2012.
Baroness Brinton (LD)
I start by also congratulating the noble Lord, Lord Bridges of Headley, on his maiden speech. It is interesting that others have commented on his mix of charitable and business interests, but much of the charitable world has benefited from the involvement of those in business and industry. Having served as a trustee of a range of charities, and on the executive of charities, over the last 20 to 25 years, I know that the expertise brought in from outside is one of the things that has most transformed the charitable sector. I do not recall any charity talking about risk assessment any particular detail 20 years ago in. The whole planning of activity and finance has been transformed in smaller charities across the country, and there is much to commend the charitable sector in that regard. I am delighted to welcome the Minister because of his expertise, but also because he embodies the expertise that we see in our charities throughout the country.
I declare my interests as recorded in the register. As I have already outlined, I have current and past trusteeships. I am a trustee of UNICEF UK, of the Joseph Rowntree Reform Trust and of UFI Charitable Trust, which provides grants for technology in further education and which used to run learndirect. That is a very diverse range of charities, which sums up the whole sector: we all come with expertise from different areas, but public benefit is key. I am very glad to follow the noble Lord, Lord Moynihan, because later in my speech I will refer to disbenefit, detriment and harm—issues that have not been raised so far today.
I am a trustee of UNICEF UK and in the past have been a trustee of Christian Blind Mission, both of which work in international development. They have an understanding of assessing risk in the field around the world for staff and volunteers, and for the beneficiaries in those communities, who often are at risk from terrorists, opposing armies or natural disasters. It is always difficult for those charities to assess such risk and to make a decision when things are happening thousands of miles away. I echo the concerns expressed by others about the breadth of restrictions relating to any activity that might come up against terrorism. However, most other speakers have thought of that only in the context of charities run for the benefit of Muslims and those in Muslim countries. That is not the case. Any charity working in international development has to be fully aware of it. We need to look at the practicalities of what is happening in different parts of the world, rather than make assumptions. It becomes very easy to use a blanket statement—“We can resolve this, we can stop people being trustees in the future, we can wind charities up”—when it is actually extraordinarily difficult for the charity to control some of the things happening on the periphery.
I also wanted to ponder the point made by the noble Lord, Lord Borwick, on the different nature of charities and his interesting notion that we could have a registered charity versus one that was publicly funded. I have to say that, for me, that jars rather. In recent years, many charities have started to receive funding from the public purse—not just from government, but from local government and from the National Health Service—to deliver services to a particular community that that charity may understand well. Indeed, many people who have said that it should be not just the state that delivers those services have welcomed the expertise of a large charity or a small charity that can provide something relevant. In my book, those charities deserve just as much the high accolade of being a registered charity, as outlined by the noble Lord, Lord Borwick, simply because of their expertise and public benefit, despite the fact that the resources may come from the public purse. I therefore worry that we will get into a semantic debate about “which charity” and where its funds come from. I understand that the nature of charities has changed as money has come from the public purse, as well as from private donors.
In international development, we have chosen to move away from handing funding over to foreign Governments. In the previous coalition Government, we made a particular point where there were concerns about human rights. We handed money to charities to deliver partly because they were accountable to us. I am concerned that they would be denigrated as not quite a top charity if they received government funding.
The focus of what I want to say comes back to this issue of “disbenefit”. I welcome the clauses in the Bill that give the Charity Commission further strength and resource, particularly official warning by the commission and other actions that it can take. However, I have spoken in your Lordships’ House before about the Exclusive Brethren, also known as the Plymouth Brethren Christian Church. It had been asking since February 2009 for recognition for the Preston Down Trust, one of its meeting halls. There was an investigation —one of the few that the Charity Commission has carried out over the years, given the hundreds of thousands of charities registered—partly because there was concern about public benefit. It became apparent in its investigation that there was public disbenefit, detriment and harm. The Bill does not seem to address those issues. I will come back to those in more detail in Committee.
Something that concerned me from the investigation and the subsequent Charity Commission report is that—despite much detail in the report that accepted that there was detriment, harm and disbenefit— the Preston Down Trust was given charitable status. That seems quite extraordinary. I understand that it was given with the proviso that changes had to be made and that the commission would assess it, but if we are to be strict in other areas of the charitable sector, I wonder whether we should also be strict if we or the commission see evidence of detriment or harm, and whether there should not be provision of charitable status. The organisation submitting the application should have to prove that things had changed and that it was now able to offer public benefit as well. Therefore, I will seek an amendment from the Minister on that issue and look forward to discussing it at a later stage.
Overall, the Bill makes the real strides in policing and regulation that the Charity Commission itself says need to be made if it is to be able to do its job. I echo the comments of those noble Lords throughout the House who said that we must also make sure that the Charity Commission has the funds to deliver these provisions. I hope that the funds will follow to meet the extra requirements and responsibilities that the Bill will place on the commission.
Lord Watson of Invergowrie (Lab)
My Lords, I am pleased to add my name to those of other noble Lords who have welcomed the Minister to your Lordships’ House, and to congratulate him on a distinguished maiden speech. There cannot surely be many legislatures where a maiden speech can be delivered from the Front Bench—although I was privileged to be an elected Member of the resumed Scottish Parliament in 1999, when, of course, all ministerial speeches were maiden speeches.
The noble Lord is perhaps fortunate in being allowed to cut his ministerial teeth on one of the least controversial Bills likely to come to your Lordships’ House in this parliamentary Session, but that does not mean, I suspect, that our days in Committee will be tame. We on these Benches will seek to improve the Bill where we believe that that is necessary—although, given the Minister’s experience to date, I have no doubt that he will take that in his stride, his tender years notwithstanding. I say that from the slightly unnerving position of facing a Minister more than 20 years my junior.
We have heard an interesting debate reflecting the considerable experience of noble Lords in various forms in relation to the charity and voluntary sector. I like to call it the third sector—a term which I think my noble friend Lord Chandos used—but perhaps that seems to be a bit out of favour at the moment. However, we understand clearly what we are talking about. As those contributions demonstrated, the Bill is not one likely to cause much controversy or disagreement, providing, as it does, for greater freedom for the Charity Commission to act where there has been abuse within a charity, either by the charity itself or by a trustee. The new powers for charities to make social investments were a welcome, if surprise, addition to the Bill, not having been part of the draft Bill that was the subject of pre-legislative scrutiny between November last year and February this year.
I was fortunate in being a member of the Joint Committee of both Houses which undertook that scrutiny, and I pay tribute to the noble and learned Lord, Lord Hope of Craighead, who chaired the committee with distinction and who has brought his wealth of experience to bear on the debate today. Like him, I welcome the Government bringing forward this Bill without delay.
The Government have accepted many of the Joint Committee’s recommendations, although it is disappointing that a comparison of the Bill with the undertakings given by the previous Government in response to the committee’s report reveals that eight commitments given then have not been met. Clearly, I do not expect the Minister to respond to those points this evening, but I and colleagues will raise them in Committee, seeking to ascertain what changed between March and May—apart, that is, from the disappearance of the Liberal Democrats from government.
The Charity Commission has a statutory role in maintaining public trust and confidence in charities—a duty which is more necessary than ever at a time when criticism of charities, not least in terms of fundraising, is increasing. However, the commission also acts as the regulator for the sector. It could be argued that there is an inherent contradiction in those two roles rather in the manner that applies to the BBC Trust, but the commission has those dual responsibilities and it is important that it has the necessary powers to ensure that charities are compliant with their legal obligations. Many noble Lords, most notably perhaps the noble Baroness, Lady Pitkeathley, and the noble Lord, Lord Low, made the point that one must not be pursued at the expense of the other. However, I think that the noble and learned Lord, Lord Hope, captured it best when he said that the two were inextricably linked—as I believe they are.
The Association of Chief Executives of Voluntary Organisations stated, in a briefing which I believe all noble Lords will have received, that,
“timely, expert advice from the Commission can prevent problems before they arise”—
a sound point which I believe should never be lost sight of. That said, regulation of charities is, of course, essential, although it should be proportionate. The Charity Commission must ensure that charities are given sufficient room to operate without excessive intervention and regulation.
Although, as I said, the Bill is to be welcomed, there are nevertheless some concerns relating to certain measures, either because they are too vague or too wide—both issues have been referred to by noble Lords today—as well as some provisions that might be added to those already in the Bill. The first of those relates to the additional offences that automatically disqualify someone from acting as a trustee of a charity. The addition of offences under terrorist legislation has, of course, some merit. However, given the breadth of the definition in the Bill, it is quite likely to have a negative impact on some NGOs working overseas, particularly in conflict zones. This was referred to by several noble Lords, who in a sense reflected the experience that they have had with various charities.
These measures could also impact disproportionately on some Muslim charities, as was mentioned by the noble and learned Lord, Lord Hope, and, in a slightly different manner, by the noble Lord, Lord Green. However, the comments which struck me most were those made by the noble Lord, Lord Hodgson, who, in highlighting the awful plight of the Yazidis in the face of so-called Islamic State, gave a very good example of how a charity could get into real difficulty. However, I take issue with the noble Lord’s description of these people as freedom fighters. I believe that they are absolutely nothing of the sort. They are psychopaths with a medieval mindset who must be rooted out and put out of business as soon as possible, however that may be done. However, that is an important example of some of the difficulties that charities can get into.
An example was given to members of the Joint Committee scrutinising the draft Bill of an NGO seeking to provide humanitarian aid in a conflict zone, where perhaps the only means of getting aid to people desperately needing it is to make a payment to so-called “gatekeepers” controlling access to those zones. These “gatekeepers” might be representatives of organisations deemed to be terrorists, and any money paid to them could be treated under this Bill as assisting terrorism—but how else could the humanitarian aid be delivered, and would it be in any way appropriate to pursue a charity, or individuals involved with a charity, for simply delivering humanitarian aid?
I certainly would like to see the suggestion made by the noble Lord, Lord Low, taken up—namely, for the Charity Commission to bring together the various organisations involved in providing such aid to discuss the matter, and, I hope, find a way forward. Both Australia and New Zealand already have legislation that exempts NGOs in such situations. However, in response to the Joint Committee seeking the Government’s views on the prospect of similar legislation being introduced in this country, the noble and learned Lord, Lord Hope of Craighead, was told by the then Home Office Minister that the previous Government were quite unsympathetic to the prospect. When the Bill goes into Committee, there will be an opportunity for an amendment on the matter to be considered. Will the Minister give an undertaking that, in advance of Committee, he will hold discussions with his opposite number in the Home Office to seek to bring about a more flexible and practical response to this important matter?
Further, in relation to additional offences that automatically disqualify a person from being a charity trustee, there is a lack of any mention of a person placed on the sex offender register. The Charity Commission has published a strategy for dealing with safeguarding issues associated with vulnerable groups, but it seems strange, to put it mildly, that those found guilty of behaviour serious enough to have them placed on the sex offender register do not constitute a category to which automatic disqualification applies. My noble friend Lady Hayter raised this issue. We believe that this should appear on the face of the Bill, and I hope that it will be possible for this to be achieved in later stages as we progress.
Charities depend, of course, on the trust and confidence of the public, and high standards of fundraising practice are essential to uphold levels of public trust. Recent events and media reporting that many noble Lords will have seen have highlighted that all is not well in this area of the charity sector, although the ability of the Bill to introduce meaningful changes may be limited. However, we shall see. The Fundraising Standards Board needs to raise its public profile and convince the remaining 35% of charities that voluntarily raise more than £1 million a year to affiliate to it.
On the latter point, perhaps it is now time to adopt the suggestion of the noble Lord, Lord Hodgson, to require all such organisations to be part of the Fundraising Standards Board. That was in his report of 2012, but he suggested that it should be revisited if the situation regarding fundraising was not resolved satisfactorily. Recent events demonstrate that that is where we are just now, and I can tell the Minister that it is a view supported by the CEO of the board itself that the time has now come to require charities within that sector—that is, those that voluntarily raise more than £1 million a year—to be part of the board. This could be achieved by the Minister for the Cabinet Office utilising the reserve powers given to that office by the Charities Act 2006 to introduce regulations,
“in connection with regulating charity fund-raising”.
Of course, the Minister is in an ideal position to progress that, should he choose to do so.
Other important issues have emerged from today’s debate, one of which is the ability of the Government to force housing associations that are charities to sell off properties against their will. I am rather surprised that only my noble friend Lady Hayter has raised this issue, because it certainly is exercising a lot of minds within housing associations, the vast majority of which are indeed charities. Perhaps the Minister can tell us whether he anticipates that in order to progress the policy that the Conservative Party announced during the election campaign and now intends to implement, primary legislation will be necessary so that properties that are owned by housing associations—in other words, not public property—can indeed be sold off, as the Government intend.
Many noble Lords referred to the vexed question of the demands for the additional responsibilities being placed on the Charity Commission to be matched by the resources to enable those additional responsibilities to be carried out. Although the Prime Minister announced last year that additional funding would be provided to coincide with the introduction of new powers, concerns remain about the resourcing of the commission, which saw a significant reduction in funding during the previous Parliament, as many noble Lords said. The additional powers will be effective only if the commission has the resources to use them properly.
Clause 14 states:
“The Minister for the Cabinet Office must carry out reviews of the operation of this Act”,
with the initial one being required within five years of the Bill becoming an Act. We believe that to be too long a delay and that three years would be more appropriate. To some extent, this relates to my previous point about adequate resources being made available, but in any case a shorter period than that envisaged in Clause 14 would enable any changes required to be identified and acted upon as soon as possible; thereafter, five-yearly reviews would be reasonable. This does not cut across the recommendation by the Joint Committee that there should be a broader review of the operation of the Charity Commission: rather, Clause 14 refers to this Bill specifically, so if that is what is carried forward, it should be three years rather than five years in the first instance.
Although it is not explicitly part of the Bill, an important issue was raised by my noble friends Lady Hayter and Lady Pitkeathley: a charity’s ability to speak out on behalf of others in pursuit of its objectives. My noble friend Lady Pitkeathley commented on the reduction in the number of charities involved in the recent general election. I believe that that is a natural consequence of the lobbying Bill which went through your Lordships’ House last year, and it represents a democratic deficit because it ought to be perfectly possible for charities to enter the debate without adopting a party-political stance—indeed, it is perfectly possible—and it is much to be regretted that many felt constrained from doing so during the election campaign.
There were also some excellent contributions on the question of social investment, not least from the noble Lord, Lord Hodgson, to whom we are indebted for highlighting this issue some years ago. But I particularly enjoyed the contribution of my noble friend Lord Chandos, whose thoughtful and thought-provoking comments I found very interesting. I look forward to hearing those developed further in Committee.
In conclusion, perhaps there has not been too much disagreement on these Benches or indeed the Benches opposite, but there is no shortage of issues for noble Lords to get involved in when the Bill enters Committee. I am sure that that will prove enjoyable for all noble Lords who have participated today, not least the Minister.
The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)
My Lords, I thank all those who have spoken for their excellent contributions and for the kind words spoken about me. Clearly, the pressure is now on for me to live up to your Lordships’ expectations. I particularly thank the noble Lord, Lord Watson of Invergowrie, for his speech and for his contribution to the pre-legislative scrutiny of the Bill. The last few hours confirmed what I said at the start of the debate: your Lordships’ House is indeed a place for quiet but incisive scrutiny. Much more than that, it is a forum in which the voice of our nation’s “little platoons” can be heard. I counted more than 30 charitable organisations being represented by the speakers in this debate.
Taking a step back, it is clear to me that, thanks in very large part to those who spent so long scrutinising these proposals over many months, there is considerable support in this House for the principles that underpin the Bill and most of its measures. Let us not forget why these powers are needed. It was the independent National Audit Office that pointed to,
“gaps in the Commission’s statutory powers which were hampering its ability to regulate effectively”.
In the years since that report was written, many in the charity sector have supported the need for change, as my noble friend Lord Hodgson did again today. These powers need to be carefully balanced, as does the role of the Charity Commission, between being a regulator and an adviser, as the noble and learned Lord, Lord Hope of Craighead, said. Here again I pay tribute to and thank the noble and learned Lord—the Usain Bolt of charity law, as we are told to call him—for all he did in making that process so productive and worth while.
Lord Hope of Craighead
My Lords, it occurs to me that Usain Bolt suggests that we rather rushed our job. I think Mo Farah might be a better analogy.
Lord Bridges of Headley
I am brought up short. The noble and learned Lord is quite right: Mo Farah would be much better. Thanks to the noble and learned Lord’s hard work, and the work of so many others in this Chamber, I am pleased but not entirely surprised that rather than wheeling out the wrecking ball for this Bill, your Lordships have simply started to stick little pins into it before the House, to test, to probe and to clarify a little bit more. I very much welcome this, my first experience of legislative acupuncture, an experience I am told will leave me feeling invigorated, refreshed and revitalised.
Turning to address the points made, I hope to cover as many as I can, starting with some of the more detailed comments. The noble and learned Lord, Lord Hope, asked whether we could amend Clause 8 to make it clear that there are other circumstances in which a third party may be unable to comply with the Charity Commission direction. I am sympathetic to this point as we want the provisions to work effectively. We will need to look at this in some more detail before Committee, as we will other words such as “privy”, which I think the noble and learned Lord also mentioned.
My noble friend Lord Lindsay referred to the complementary role that standards and accreditation could play alongside the new powers proposed in the Bill in addressing governance and trustee issues. I agree and I welcome the work being done by the United Kingdom Accreditation Service and the NCVO to explore the potential that standards and accreditation have to offer in the charity sector.
My noble friend Lord Hodgson made a number of incisive points, as one would expect. He asked for the tribunal appeal rights to be consolidated and simplified. While recognising his point, it is important to note that not all Charity Commission decisions are subject to appeal and the existing table of appeal rights provides a useful checklist of what decisions can be appealed and who can appeal them. The Charity Tribunal itself has, I am told, not expressed concerns about it in practice. My noble friend Lord Hodgson also asked for time to implement the Law Commission’s recommendations. I am sorry to say that I cannot give any guarantees, but my noble friend knows that the Government will look favourably on deregulatory and simplification measures.
A number of comments were made about the social investment aspects of the Bill, and I am very encouraged and heartened by the interest that your Lordships paid to this. The noble Viscount, Lord Chandos, for example, made a number of perceptive points about social investment, as did the noble Baroness, Lady Kramer. I would very much like to meet with both of them to pick their brains, as they clearly have a lot of experience in this sector. I know that the noble Viscount sits on a number of foundations, and it is quite clear from the noble Baroness’s very eloquent speech that she, too, has a lot to offer.
My noble friend Lord Borwick made some very interesting points on the definition of social investment, including a slightly detailed point on mixed-motive investment. I will not detain the House on that point now but I would be delighted to discuss it with him, as I would with my noble friend Lord Bridgeman. As regards the naming of charities, a point which my noble friend Lord Borwick brought up, I simply point out that it is an offence to call yourself a charity if you are not; and as regards charitable income, charities must now declare income from central and local government in their accounts.
I turn to my noble friend Lord Moynihan’s remarks about independent schools, and pay tribute to the extensive and fantastic work that he has done in this area and on sports in general. He made some interesting points about the public benefit test. I would like to make it clear that charities already have to report on their public benefit in their trustees’ annual report. However, I would be happy to meet my noble friend before Committee to discuss the points that he has raised. Likewise, I would like to discuss the public benefit issue with the noble Baroness, Lady Brinton, who also brought this up in a number of ways.
Perhaps I may turn to some of the substantive points in the Bill itself. Clause 3, as noble Lords will remember, will enable the Charity Commission to take account of other relevant evidence of a person’s conduct in the context of a statutory inquiry into a charity. I think that the noble Baroness, Lady Barker, and the noble Lord, Lord Low, raised concerns about this. I would simply point to several safeguards on this point, and I shall do so quickly. First, there must be a statutory inquiry open and the Charity Commission must be satisfied that there is misconduct or mismanagement linked to the individual in that charity before it can rely on conduct from outside the charity in its decision-making. Secondly, when exercising its powers the commission must provide a statement of reasons which sets out the evidence it relied on in making the decision. This would include any evidence it relied on from outside the charity. Finally, there is a right of appeal to the Charity Tribunal in relation to the exercise of the commission’s compliance and remedial powers, ensuring judicial oversight of the exercise of the power.
The noble Baroness, Lady Barker, and the noble Lord, Lord Low, also referred to Clause 7, which contains a power to direct a charity to be wound up. As your Lordships will know, the commission’s usual practice is to restore a charity to health following an inquiry. However, in some very rare cases—and I stress they are rare—it would be more appropriate for any remaining assets to be transferred to another charity. The commission can already do that under existing powers, but now the commission will have the power needed for the shell to be wound up. This power is available only in the context of a statutory inquiry where there is misconduct or mismanagement, or risk to charity property. In addition, the commission must be satisfied that the charity does not operate, or that its purpose could be more effectively promoted if it were to cease to operate, and that the exercise of this power is expedient in the public interest. There is also a requirement for the commission to publish details of a proposed winding-up order and invite representations. A winding-up order can be appealed to the tribunal. So, there are a number of safeguards around that clause too.
Two points were made on Clause 9, which concerns the automatic disqualification powers that the Charity Commission is to be given. The noble Baronesses, Lady Hayter and Lady Barker, and the noble Lord, Lord Low, among others, raised this point. I am sure that we will discuss this further in Committee. As regards their wish for sex offences to be added to the list, I would simply say that there is an existing regime to ensure the suitability of anyone in a charity with unsupervised access to children and vulnerable adults. Whether they are a trustee, an employee or anyone else, they must all have had a Disclosure and Barring Service check. It would be impractical for the Bill to break down the charities type by type and prescriptively list criteria for automatic disqualification in each case. Charities should be trusted to make their own decisions on how suitable a potential trustee is when recruiting. Where charities fail to take their safeguarding responsibilities seriously, the Charity Commission can and does intervene to take regulatory action.
Baroness Hayter of Kentish Town (Lab)
Does the Minister accept that that occurs only after someone has been abused?
Lord Bridges of Headley
I would point out, if I may finish my point, that under the Bill the commission would also be able to rely on the disqualification power if a person’s conduct clearly made them unfit to serve as a trustee or senior manager of a particular charity or class of charities. The commission’s draft guidance on how it would exercise the disqualification power makes clear that it could be used in the circumstances. This is made clear on page 4, under paragraph (b)(i) concerning condition F. I know that we will probably return to this point in Committee, so I hope the noble Baroness will forgive me for going on right now.
Also as regards Clause 9, the noble Baronesses, Lady Barker and Lady Brinton, and the noble and learned Lord, Lord Hope, were among a number of your Lordships who raised the issues that counterterrorism legislation might have in this context. I have been fortunate enough to talk to a number of your Lordships about this point and I recognise that there is a concern for some charities operating in some of the most difficult parts of the world—not just the Middle East, as the noble Baroness, Lady Brinton, pointed out. However, I would point out that several government departments, including the Home Office, the Treasury and DfID as well as the Charity Commission and the Cabinet Office, are engaging with NGOs to understand their concerns and ensure that, wherever possible, they are given proper guidance.
In many cases there is already detailed guidance dealing with the points that were raised, and it may be a case where better signposting is needed. We are also not aware of any legitimate NGO worker who has been convicted in the UK under the counterterrorism legislation. Providing some sort of exemption for charities from aspects of counterterrorism legislation may sound attractive, but I would argue that it could create a loophole in the law that could be exploited by the unscrupulous—something which I am sure we would all want to avoid. I was particularly struck by the remarks made on this point by the noble Lord, Lord Green of Deddington, given his extensive experience in this area, and I thank him for his contribution.
The noble Lord, Lord Low, raised Clause 10, particularly as regards whether condition F in the proposed new section is too broad. This condition needs to be considered in the context of other criteria for the exercise of the disqualification power, namely the test of fitness that disqualification,
“is desirable in the public interest … to protect public trust and confidence in charities”,
and the safeguards relating to the operation of the power, including the right of appeal to the Charity Tribunal. The Charity Commission’s draft guidance on how it would exercise the power should provide reassurance that it will use the power only when there is a clear case for doing so; that the commission would clearly explain what it would take into account before using the power; and that in exercising the power, the commission would provide an explanation identifying the conduct in question and why it thought that the conduct met condition F.
I turn to some of the wider issues that have been raised. The noble Baroness, Lady Hayter, and a number of other noble Lords raised the tragic case of Olive Cooke. This was a very sad case and I start by paying my condolences to the family of Olive Cooke and pay tribute to her outstanding work in the field of charity, which the noble Baroness, Lady Corston, referred to. I would like to say here that the charity sector needs to move quickly and firmly to show that self-regulation works in the best interests of the public and that fundraising can set itself sufficiently high standards to meet public expectations.
Last week, my honourable friend the Minister for Civil Society met with three chief executives of the self-regulatory bodies. He made it clear that action must be taken quickly to protect the long-term reputation of charities. The self-regulation bodies agreed to pull together a plan of action that could be taken in the short term, together with plans to work on in the longer term. The FRSB published its interim report yesterday, and its findings and recommendations are being discussed at the Institute of Fundraising’s standards committee today—a point, I think, that the noble Lord, Lord Watson of Invergowrie, was referring to. Charities need to ask for funds, but that is not an inalienable right and it needs to be exercised responsibly, particularly if we are to protect public trust and confidence in charities for the long term.
A number of your Lordships raised the issue of charity campaigning, including the noble Baronesses, Lady Hayter and Lady Pitkeathley, and the noble Lord, Lord Watson. The Government have been consistently clear that charities have the right to campaign within the law and that this can be a valuable way in which charities can further their charitable purposes. The Charity Commission’s guidance, CC9, makes it clear that charity law recognises that campaigning can be a legitimate activity for charities and sets out the general principles. The Charity Commission keeps all its guidance under review to ensure that it remains relevant and up to date. The commission has monitored charities’ observance of the guidance during the election campaign and is considering the findings from that monitoring along with the impact of the lobbying Act and other issues relating to the current guidance. The Charity Commission will need to take account of any findings of the statutory review of Part 2 of the transparency of lobbying Act by my noble friend Lord Hodgson of Astley Abbots. If the commission considers revisions should be made to CC9, it has committed to say so publicly and to consult widely.
I turn to housing associations, right to buy and their charitable assets. The noble Baroness, Lady Hayter, raised the Government’s policy to extend right to buy. This, of course, is being taken forward in another Bill. The Government are determined that anyone who works hard and wants to get on the property ladder should have the chance to do so. There is indeed, as the noble Baroness knows, a precedent for housing association tenants accessing discounts to enable them to buy their own home. I believe many people exercised the right to buy their housing association home between 1997 and 2010.
Finally, a number of your Lordships raised the resources and role of the Charity Commission, including the noble Lords, Lord Low and Lord Watson of Invergowrie. I would make two points. First, on its resources, if we are to bring down the deficit, we need to make savings and efficiencies right across government, and that includes the Charity Commission. The Treasury has agreed a sensible settlement for 2015-16 with the Charity Commission, based on its forecast needs and focused on protecting its investigation and enforcement functions. The 2015-16 settlement also increased the Charity Commission’s capital budget by £500,000 to invest in a new digital online system for charities to file their annual accounts. This will improve the Charity Commission’s efficiency and help it to identify and tackle fraud and mismanagement. I also welcome the £8 million investment in the Charity Commission announced last October by my right honourable friend the Prime Minister. All this will help the Charity Commission refocus its regulatory activity on proactive monitoring and enforcement in the highest risk areas, such as the abuse of charities for terrorist and other criminal purposes, such as tax avoidance and fraud. Secondly, as regards supporting charities, I am confident that the Charity Commission will get the balance right between regulator and adviser, and I was heartened to read what the National Audit Office said in its interim report.
I look forward to debating and discussing these measures, and more, in more detail with your Lordships in the weeks ahead. As I said, my door is always open. That said, I would be grateful if your Lordships do not follow the example set by my formidable great-aunt, who was general secretary of the Women’s Institute during the Second World War. I am told that when she ran into some bureaucratic obstacle, she found that the best way of overcoming it was to harry Ministers by ringing them at home well before breakfast. That is something that I recommend your Lordships do not follow, as you may get my four year-old daughter, who is twice as formidable as her great-great-aunt.
This Bill is just one part of the Government’s programme to strengthen the fabric of our nation—one nation. In myriad ways, in every community across the land, charities are performing that vital role. Some are tiny, others enormous—together they are a golden thread, weaving together those who want to do their bit. The Bill will give the Charity Commission strengthened powers to tackle abuse so as to maintain the public’s trust in charities, and it will enable those who have to do still more to help those who have not. I thank your Lordships for all your contributions today and for the many months spent scrutinising the Bill’s proposals. I ask the House to give the Bill a Second Reading.
Gurkhas: Anniversary
(8 years, 11 months ago)
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Lord Bilimoria
To ask Her Majesty’s Government what activities have taken place relating to the 200th anniversary of the Gurkhas’ service to the Crown and the Government’s support of the Gurkha Welfare Trust, particularly in the light of the recent earthquakes in Nepal.
Lord Bilimoria (CB)
My Lords, yesterday I was privileged to attend the Gurkha pageant held at the Royal Hospital Chelsea, where I was proud to be a commissioner for six years.
Throughout the pageant, my eyes welled up with childhood memories of being brought up among the Gurkhas—it all came flooding back. My late father, Lieutenant-General Faridoon Bilimoria, was commissioned into the 2/5th Royal Gurkha Rifles, Frontier Force, and commanded his battalion in the 1971 war for the liberation of Bangladesh. His battalion suffered heavy losses and casualties, including officers I had known and grown up with as a child. How ironic that a couple of decades later I would found a brand, Cobra beer, which we supply to thousands of Indian restaurants in the UK, the vast majority of them run and owned by Bangladeshis.
I am on the commemoration committee of the Memorial Gates on Constitution Hill and was chairman of the committee for six years. These gates exist because of the amazing tenacity of one individual, my noble friend Lady Flather. The Memorial Gates commemorate the contribution of the 5 million volunteers from the Indian subcontinent, Africa and the Caribbean. Inscribed on the ceiling of the pavilion next to the gates are the names of the Victoria Cross and George Cross holders, three of whom were from my father’s battalion, the 2/5th Gurkhas—one posthumous.
Gaje Ghale VC and Agansing Rai VC were living legends, who I was fortunate to have grown up with and have been inspired by for the rest of my life. Agansing Rai VC was subedar-major when my father was commanding his battalion. Legend has it that when my father, as a young captain in a remote area in north-east India, received the telegram of my birth, Gaje Ghale was next to him and jumped for joy. The ground shook, because he was such a large man.
What I learned about the Gurkhas really quickly is that they are the kindest, most caring and most gentle people. For example, when I took my South African possible future wife on her first visit to India, my father’s retired driver, Bombahadur, who continued to serve with my father at retirement, took me aside and said, “Baba, you should marry her!”. My father’s beloved Gurkha had given his approval, and of course then there was no question but that I was marrying Heather.
However, these kind gentle people in peacetime are the fiercest warriors mankind has known. Just reading the citations of the Gurkha VCs makes your jaw drop with feats that are, quite frankly, superhuman. Sir Ralph Turner, a former officer of the 3rd Gurkhas, had written:
“Bravest of the brave, most generous of the generous, never had country more faithful friends than you”.
We are celebrating the Battle of Waterloo and the 200th anniversary of the Gurkhas’ service in the same year. I visited the site of the Battle of Waterloo earlier this year. If the Duke of Wellington had had Gurkhas among his troops, the Battle of Waterloo would not have been won on the playing fields of Eton or because Blücher came to the rescue; it would have been won because Napoleon’s troops, including his beloved Imperial Guard, would have been running in fear back towards Paris, fleeing from the fierce Gurkhas, just as the Argentinians did in the Falklands.
It was disheartening when I first spoke about the Gurkhas in this House in 2008 to start the fight for the Gurkhas who had served in Britain for four years to have the right to stay on in the UK if they wished to do so. It seems so unfair that a person could work for a company for four years and have the right to stay indefinitely, and yet someone who was willing to commit the ultimate sacrifice was not, at that time, allowed to. After that debate—I thank the noble Lord, Lord Lee, who initiated the Bill—Joanna Lumley, whose father had served in the 6th Gurkhas, came to the fore and spearheaded a public battle that generated an outcry among the British public, who were overwhelmingly appalled at this injustice and unfairness. I will never forget in one television interview how Joanna Lumley humiliated the then Home Office Minister, Phil Woolas. Of course, we won the day and justice was delivered.
We should never take for granted what these amazing men have done in the past 200 years for Britain and India. I have been very outspoken in my criticism of the SDSR in 2010, when cuts were made to the Army that I believe were negligent, cutting the number of Army troops to 80,000—not even enough to fill Wembley Stadium. Today, there are barely 3,000 Gurkhas in the British Army, with the Gurkha regiments amalgamated into one, the Royal Gurkha Rifles, with just two battalions, and some in the Queen’s Gurkha Signals, the Queen’s Gurkha Engineers and the Queen’s Own Gurkha Logistic Regiment.
However, in India, the Gurkha regiments left with the Indian army after India’s independence have flourished, with six battalions per regiment, an additional regiment formed—the 11th Gurkhas—and Gurkhas serving in all other arms of the army as well. There are approaching 100,000 Gurkhas serving in the Indian army, recruited from Nepal and India, who, after they retire, settle in both India and Nepal. They are a vital backbone of the Indian army. Will the Minister agree that the 200th anniversary celebrations of the Gurkhas are for the British and for India? It was a privilege today to show General Dalbir Singh Suhag, Chief of the Army Staff of the Indian army, around Parliament—all the more for me because he is also from the 5th Gurkhas. When my father was commander-in-chief of the central Indian army, an army of 350,000 strong, I always felt it meant more to him to be president of the Brigade of Gurkhas and colonel of his regiment.
Could the Minister commit, where the Prime Minister is unwilling to in this dangerous world that we live in, to the NATO commitment of 2% of GDP spent on defence? Could the Minister also reassure us and confirm that there will be no further cuts to the Gurkhas? I look forward to the forthcoming SDSR report and hope that this time it is not about means before ends but about looking carefully at the needs first. It is our duty to look after the veterans, and I commend the work of the Gurkha Welfare Trust and all that it does for Gurkhas to live out their lives with dignity. Can the Minister confirm the commitment for future support of the Gurkha Welfare Trust to continue the wonderful work that it does? Will the Government reassure us?
His Royal Highness the Prince of Wales, who was present at the pageant, said:
“The Brigade of Gurkhas is more than just a fighting force, it is also—in every sense of the word—a family”.
Particularly at this time, with the devastating earthquakes by which so many Gurkhas have been affected so tragically, does the noble Earl feel that we are doing enough to support the Gurkhas in Nepal? Will the Minister confirm that? Our thoughts and prayers go out to all those affected in the two disastrous, tragic earthquakes. Major-General Ashok Mehta, my father’s second-in-command, said:
“Two hundred years of distinguished soldiering have put a halo around the Gorkha in the hall of fame. In this hour of national calamity it is the Gorkha-ness of the Nepalis that will be the greatest enabler to confront the monumental tragedy”.
In my own company, Cobra Beer, I sent out 200 letters to our Nepalese restaurant customers straight after the first earthquake to offer our support to raise funds, and I am delighted to say the restaurants have raised almost £200,000. That is the wonderful spirit of giving in our country.
A fellow Zoroastrian Parsee, Field Marshal Sam Manekshaw—popularly nicknamed by the Gurkhas as “Sam Bahadur”—said:
“If a man says he is not afraid of dying he is either lying or is a Gurkha”.
Prince Harry, who was also present at the pageant yesterday, said that,
“there was no safer place than by the side of a Gurkha”.
This is the Ayo Gorkhali, or “Here come the Gurkhas”, the cry of the Gurkhas—the finest fighting force the world has ever known. The Gurkha motto is:
“It is better to die than be a coward”.
On the 150th anniversary of the regiment of the 5th Gurkhas in 2008, which took place at Sandhurst—I am proud to be a member of the regimental association— I heard a prayer written by the Reverend Guy Cornwall-Jones, whose father served in the 5th Gurkhas. That prayer said:
“Oh God, who in the Gurkhas has given us a people exceptional in courage and devotion, resplendent in their cheerfulness, we who owe them so much ask your special blessing on them, their families and their land. Grant us thy grace to be faithful to them as they have been faithful to others”.
As a nation, we can never thank the Gurkhas enough. We will be eternally grateful to them.
Lord Sheikh (Con)
My Lords, I am pleased to participate in this important debate and thank the noble Lord, Lord Bilimoria, for bringing it before your Lordships’ House.
I have always been a strong supporter of the Gurkhas. I have an extremely high regard for their loyalty and dedication to the British Army. I also hold a great fondness for the Gurkhas’ original home, Nepal. I am a member of the All-Party Parliamentary Britain-Nepal Group and in fact met the acting high commissioner for Nepal last Friday. I have visited Nepal twice, first as part of a parliamentary delegation and secondly to set up a school of excellence for business students in Kathmandu. The parliamentary delegation visited Pokhara, the centre of recruitment for Gurkhas. We also visited the historic Gurkha Memorial Museum there. I was privileged to meet members of the Nepalese royal family with the noble Earl, Lord Sandwich. We were treated to a most enjoyable evening. I was also presented with a real Gurkha kukri. I have previously worked with Nepal’s ambassador to the UK to support a trade delegation to the country.
Each time I visited Nepal, I found the people to be extremely friendly and hospitable. For me, the integrity of Nepalese culture and that of its Gurkha soldiers go hand in hand. The Gurkhas have been part of the British Army for 200 years. They fought loyally for our country all over the world and still continue to do so. They served alongside us in places such as Burma, Malaysia, Cyprus, the Falklands and China. More recently they played key roles in the Balkans, Sierra Leone, Iraq and Afghanistan. They made significant contributions during both the First and Second World Wars. Some 43,000 Gurkhas lost their lives during these two wars. They are noted and respected for their courage and valour in battle, having won 13 Victoria Crosses. The spirit of their service is demonstrated in the motto,
“better to die than live a coward”—
a point made by the noble Lord, Lord Bilimoria. When Prince Harry returned from his tour of Afghanistan, he said that there was,
“no safer place than by the side of a Gurkha”.
Today, they are still an integral and invaluable part of the British Army. Gurkhas within the British Army are proof that different religious and ethnic groups can work together. I find this very pleasing as I am actively involved in encouraging the BME communities, particularly Muslims, to join the Armed Forces. Admission to the Brigade of Gurkhas is highly competitive. There are often more than 20,000 applications for the 230 places available each year. The brigade is 3,640 strong.
Of course, the Gurkhas’ loyalty and integrity of service is not constrained to warfare. They also command respect away from the battlefield, undertaking wider military duties with the same discipline and vigour. We need look only at the recent invaluable contributions made by the Gurkhas following the Nepalese earthquake. The devastation caused by this disaster required enormous support from the international community. The United Kingdom’s humanitarian response has been most impressive. I commend both the Ministry of Defence and the Department for International Development for their financial commitments and for spearheading much of the wider relief effort. A large number of British Army Gurkha engineers were deployed to provide direct welfare support to serving Gurkhas, their families and veterans who were affected. They are constructing shelters and assisting in the repair of infrastructure.
In the long term, it is of course not only emergency help that will be required; also there will be the necessity to build communities and businesses. It is estimated that the Nepalese economy has suffered dramatically. Initial estimates put the cost of damage to property and infrastructure at $6 billion to $8 billion. Combined with an inevitable wider economic downturn, the total cost of the earthquake could be up to $10 billion. This is more than half of the country’s GDP last year.
Last week, I said in your Lordships’ House that Muslim charities are undertaking sterling humanitarian work in different parts of the world. I would like to mention that I am connected with the Al-Khair Foundation, which was founded by Imam Qasim. It has worked tirelessly in Nepal to help the earthquake victims, raising nearly £1 million from donors in the UK and securing over £5 million of medicines from its supporters in the United States. The Muslim community has responded positively to render help to all the people of Nepal. DfID has now pledged an additional £10 million to rebuild health services. Our total commitment of £33 million makes us the largest donor to the relief operation. I hope that we can continue to commit this level of support.
It is clear that Gurkhas hold a special place in the hearts of the British people. It is therefore important that we appropriately honour and celebrate their contributions on this anniversary. I am pleased to see that such an extensive series of events have taken place and are going to take place, not least the magnificent Gurkha 200 pageant that took place yesterday at the Royal Hospital Chelsea. It is so good to see a string of concerts, exhibitions, sporting events and even physical challenges organised as part of the commemorations.
Commemorating the past sacrifices of Gurkhas is one thing. It is also of paramount importance that we treat the Gurkha soldiers and veterans of today with the respect they deserve. At the very least, we must afford them parity with other British soldiers. Many Gurkhas are now based here in the United Kingdom and settled here following completion of service. I believe this must be taken into account when considering matters such as pension entitlements. I am glad that the right to settle in Britain has now been extended to all Gurkhas, irrespective of when they retired. I spoke on that matter when it was discussed in your Lordships’ House several years ago. I commend the All-Party Parliamentary Group on Gurkha Welfare for its tireless work on behalf of Gurkha veterans. Its inquiry last year ensured that veterans’ grievances were given appropriate attention.
I finish my remarks by expressing my own gratitude to the Gurkhas, and I am sure that that feeling is shared across the House and the country.
Lord Davies of Stamford (Lab)
My Lords, I congratulate the noble Lord, Lord Bilimoria, on securing this debate, which is an exceptionally well-timed initiative, if I may say so, given that this is the 200th anniversary of the first Gurkha units being recruited by the East India Company and there is the appalling coincidence of the dreadful earthquake from which people in Nepal are suffering so much at present.
I speak both as a former Defence Minister and as someone who knows and loves Nepal, as evidently the noble Lord, Lord Sheikh, does. Of course, I was not a Minister for the Armed Forces—I was Minister for Defence Procurement—but no one can be associated with the British Armed Forces without being enormously conscious of the tremendous contribution that the Gurkhas have made to the defence of this country and our people, and to the defence of world peace over the time when Gurkha units have been with the British Army.
I add to the very fine tribute, which the noble Lord, Lord Bilimoria, has just paid to the Gurkhas’ extraordinary bravery and gallantry and which was not exaggerated in any way, the fact that, to my knowledge, they have never actually participated in an operation which they have not concluded not merely honourably but with the greatest distinction. They are an enormous asset. I do not think that I need to expand on that too much, because I note that two noble Lords are going to contribute to this debate—the noble Viscount, Lord Slim, and the noble Lord, Lord Ramsbotham —who probably have direct experience of fighting alongside Gurkhas or perhaps commanding formations, including Gurkha units, which I of course do not have. I think there is a very wide recognition in this country of the great debt that we owe the Gurkhas, which was demonstrated very visibly, and I think quite movingly, by the success of Joanna Lumley’s campaign. I hope that it moved people in Nepal, too. I think that it did.
Nepal is a country that I know personally. I spent several weeks of my life on different occasions walking in Nepal, both in the east of Nepal, going up to the Everest base camp, the Cho La glacier and elsewhere, and in the west of Nepal, going up to Annapurna base camp and so forth. Anybody who does that is entirely dependent for his security and safety on the good judgment and conscientiousness of his guide. On several occasions, I could understand some of the great confidence that British soldiers have always had in having Gurkhas alongside them—confidence in their courage and confidence in their reliability, judgment and great personal loyalty.
What is happening at the present time is a terrible tragedy. The whole world has responded. The Indians and Chinese have particular political as well as geopolitical reasons, but I am sure that they also have very strong humanitarian reasons, for getting involved in helping Nepal. We have a deep and personal historic obligation to do that, as well as a moral one. The Government have responded to that, and I commend DfID for what it has done so far, but I want to ask the Minister a few questions which I think it would be useful to the public interest to have answered in public this afternoon.
First, one hears in the media that the problem is not so much lack of money, because quite a lot of money has been raised from different sources; the problem is one of logistics and co-ordination of the different government departments in Nepal. Could the noble Earl, Lord Howe, say whether that is a correct perception of the present situation? It would also be very valuable if he could give us an update on what the contribution has been from this country. I also wonder to what extent British military personnel have been involved. When I was in the MoD, one thing that I did was to order 22 Chinooks, 10 of which were cancelled by the incoming Government in 2010. We still have 60 in inventory, and just half a dozen of those would be a wonderful asset, particularly in supplying those very narrow valleys, which are otherwise inaccessible. Everything has to be carried in on the back of a man or a yak, often after a trek of days. Chinooks would be wonderful in getting heavier building materials up into those valleys in time to repair or rebuild houses before the winter comes.
On the heritage sites in Nepal that have been so badly damaged, we have all been appalled to see pictures of Durbar Square, which has been almost completely obliterated. As anybody knows who has been to Kathmandu, it is the most extraordinary collection of the most exotic and astonishing Nepalese architecture, going back over 400 years. There are other great sites of the same kind—at Bagan, for example. What is the situation with regard to repairing those, and to what extent are the Government involved in initiatives with UNESCO or otherwise to make sure that something is done to repair them? Somebody has already mentioned the very fine museum in Pokhara, which is both a brigade and a regimental museum. I would be very interested to know whether that has survived unscathed, and if not what is being done to repair it.
Finally, perhaps I could ask a question that is also a suggestion. Has there been a ministerial visit to Nepal since this disaster took place? If not, is one contemplated? If one is not, could one please be contemplated as urgently as possible? For the reasons I have already mentioned, I think it would be particularly effective if it could be a Defence Minister who goes to Nepal, who could show directly by his or her presence there our solidarity with the Nepalese people and would be able to form a personal judgment on the progress of the great international relief effort and come back and be able in a well-informed fashion to take any measures that might be needed in the present circumstances to improve things and make sure that we do not have any further tragedies of people dying because, for example, they cannot repair their houses before the weather deteriorates in the autumn.
Lord Burnett (LD)
My Lords, I, too, congratulate the noble Lord, Lord Bilimoria, on securing this debate. It is a privilege to speak in it and pay tribute to the Gurkhas and their families who have served this country with such dignity, loyalty, courage and steadfastness for 200 years. I first came across the Gurkhas professionally in 1965. My first draft after completing commando training was to 42 Commando Royal Marines, which was stationed in the Far East. On arrival, and before deployment on operations, my commanding officer sent me to do the jungle warfare course at Kota Tinggi in Malaya. The jungle warfare school was effectively run by the Gurkhas. The commanding officer and many of the directing staff were Gurkhas. The demonstration company was drawn from a Gurkha battalion. The course was excellent and I had many opportunities to see at first hand the expertise of the Gurkhas in warfare and, in particular, in jungle warfare. I also served with the 2nd Battalion of the 2nd Goorkhas for a few weeks in the advanced party of my unit when we took over the Lundu area of Borneo from them. That also gave me a first-hand opportunity to see Gurkha fighting men in action. Their expertise has been acquired over centuries during which Gurkhas have fought with the greatest bravery, skill and stamina.
I understand that there is now a Gurkha battalion stationed in Brunei. Will the Minister confirm that that Gurkha battalion will be staying there and explain to the House the vital role the Gurkhas still play in training other branches of the Armed Forces in jungle warfare? Jungle warfare is a difficult skill, and it is crucial that the United Kingdom Armed Forces retain it.
During the jungle warfare course, we were given a lecture on the glorious history of the Gurkhas: 25 Victoria Crosses have been awarded to Gurkhas. Lance Corporal Rambahadur Limbu had not yet won his Victoria Cross. I believe he won it in action in Borneo on 21 November 1965 for utmost bravery.
From an excellent article by Hew Strachan in yesterday’s Daily Telegraph, I learnt that 90,000 Gurkhas served this country in the First World War and that 138,000 Gurkhas served this country in the Second World War. I understand that service in the British Army is popular with Gurkhas. There is a considerable shortage of recruits coming forward within the United Kingdom to join the Army at present. Now is not the time to go into the considerable shortcomings in army recruiting, but will the Minister explain to the House whether the Government are considering recruiting more Gurkha battalions?
The recent earthquakes in Nepal have had tragic consequences for that country. It is fortunate that we were able to deploy Gurkhas to assist and support their own people. The Armed Forces in this country, which include the Gurkhas, have to be flexible. They have to be ready and able to conduct all varieties of operations: from all-out warfare to humanitarian operations. Our Armed Forces are, and always have been, our greatest ambassadors. They are the most effective providers of humanitarian aid. Nevertheless, the commitment to spend 2% of our gross domestic product on defence should stand alone and not be diluted with the budget of any other department of state.
The fighting ability and bravery of the Gurkhas are legendary. They will always hasten to the battle and prevail. They are fearsome in close-quarter combat, they are loyal and they are true. We owe the Gurkhas loyalty in return. I hope that the Minister will be able to convince this House tonight that the Government understand this and will always support and stand by our Gurkha brothers-in-arms, their families and the people of Nepal.
Viscount Slim (CB)
My Lords, I thank the noble Lord, Lord Bilimoria, for the chance of a debate about Nepal and the Gurkhas. He mentioned that he particularly wished to raise the issue of the Gurkha Welfare Trust. Noble Lords have done that. One thing should be known at the start, which is that the Chancellor of the Exchequer has been extremely good to a number of military charities, and the Gurkha Brigade has done well by them.
The amount of money required to put Nepal straight is very great. One or two noble Lords have said that the Government must tell us exactly what is happening. I am rather sad that there has not been a general call within the country to get volunteers from the many Gurkhas who live here. Apparently there are a lot of unemployed Gurkhas around Aldershot and other places, and I would have thought they could be got together to volunteer for some form of pioneer company to go out to Nepal and do some work to help put the place straight.
Politically, we want to be very careful. China is not being pleasant to the Tibetans, and I have a feeling that Nepal is in their sights, long term, as well. As the noble Lord, Lord Davies of Stamford, said, it is about time some of the British Government got out to Nepal to assess the situation and make some firm judgments about how we can stand by Nepal and help it.
Noble Lords have heard about the Gurkhas’ courage. I speak as one who was a Gurkha. I had to work very hard to have the same courage. The Gurkha is also very generous about other people who are brave. In the great old Indian Army, it was not just Gurkhas. The great martial tribes of India, which still join its Army, be they Rajputs, Punjabi Musulmans or Maratha —you can go on—all have great histories of courage. The Gurkha is generous. He is even generous to a brave enemy. We all hated the Japanese, who were not a pleasant enemy, but no one is rude about the courage—the vicious courage—of a Japanese solider. The Gurkha would pay due tribute to his enemy.
I feel that the Government are not doing sufficient at the moment to really get to grips with the situation. Like the noble Lord, Lord Davies of Stamford, I was very suspicious over that Chinook incident. There was something funny about it—maybe the Maoist Government and the Russians. A number of people I have spoken to who have been bravely rescued said that it was by Russian helicopters and Russian pilots.
I think something is going on in Nepal. It is not well administered. After this awful earthquake, people have been putting their hands in their pockets and giving money that should go towards relief and that sort of thing. The trust also has its problems: veterans’ houses destroyed while medical centres, hospitals and old people’s homes put up by the trust have all disappeared. The British Government should take some interest in this.
Not only is the Gurkha brave but he is very flexible, inquisitive and not stupid. If I may just tell noble Lords a lovely little story from before World War II, some recruits had come down from the hills and, as their training and induction took place, they started to be educated. For the first time in their lives, they were suddenly shown a thing called a book and told, “If you read one of these, you will learn many things”. A recruit picked one up, looked at it and twisted it around. He said to the instructor, “I don’t quite understand about this book but you tell me one day I’m going to do this thing—‘read’ it. I’ve opened it and I want to know, do I read the white or the black?”. I call that rather intelligent questioning, when you look at the situation.
There is none better to be with than a Gurkha. Training and fighting is a pretty serious business but, take it from me, it is fun being with the Gurkhas. Please also take it from my father who, at a place called Sari Bair in Gallipoli, first met the Indian Army—a brigade of three or four Gurkha regiments and King George’s Own Sikhs, with Punjabi, Musulman and Sikh gunners all fighting as one. They got higher up the ridge—they could see over it at one point—than any other British, Australian, New Zealand or French unit. They were decimated. In my father’s own platoon of the Warwickshire Regiment, of about 40 men, 27 were killed and everyone else wounded except for two. He himself was severely wounded but he always said, “If I can get through this, I want to transfer to the Indian Army and be a Gurkha”. I can tell noble Lords that his son felt much the same in World War II.
Lord Ramsbotham (CB)
My Lords, as the noble Lord, Lord Burnett, has said, it is a great privilege to take part in this debate. I thank the noble Lord, Lord Bilimoria, for obtaining it on this important anniversary.
Like the noble Lord, Lord Burnett, I completed a jungle warfare course in Kota Tinggi in 1965. I was fortunate to have the 6th Gurkhas beside me in Borneo. We used to keep Gurkha rations there so that platoons could come along the border ridge and into our base, and we could go to theirs. I shall always remember seeing a platoon going out of my base. The Gurkha sergeant in charge tapped his pack and said, “Gurkha rations”. Then he patted the magazine of his rifle and said, “Indonesian rations”, and with a grin he went out of the gate.
My own regiment, The Rifles, has been very close to the Gurkhas throughout its history. Indeed, it is a great pleasure to us that the Gurkhas wear the green and black buttons of The Rifles. For years, until the Royal Gurkha Rifles itself was formed, the two Queen’s Gurkha orderly officers who become her ADCs for a year used to be based with us at Winchester. That was a great link. It is very important to remember that this relationship with the Gurkhas carries many links with many regiments over many years.
I am very glad that the noble Lord, Lord Bilimoria, also mentioned the Indian connection. When I was adjutant-general I was privileged to go out to Nepal to do, among other things, something that has remained in my memory for ever: I took the attestation parade early in the morning in Pokhara. With the Himalayas behind them, these young Gurkhas came forward, put their hands on a Union Jack on a table and looked me in the eye as they took the oath. That was something tremendous; it has stayed with them and with me.
At that time we were concerned because we had closed our British military hospital in Dharan. I was therefore trying to negotiate with the Indians that our Gurkhas, on retirement to Nepal, could qualify to get medical support from the Indian Army, which had arrangements in Nepal; it meant buying into an insurance policy. The whole question of the employment of the Nepalese soldier, the Gurkha, was a tripartite agreement between Nepal, India and this country, and woe betide us if we ever forget that there are three employers of these wonderful people. All three benefit from them and have done so for a long time.
I am very glad that there was the event yesterday, which I did not attend. At least it gave the public an opportunity to recognise the support and help that the Gurkhas have given us. It reminded me of an experience during the Falklands War, when the Gurkhas came back from there, having had a miserable journey in the “Queen Elizabeth”—they did not like being on the sea. They were picked up and taken by train to Aldershot, and then they got out and marched to their barracks at Crookham. The streets were lined with people cheering them. Suddenly these people, who had been looking rather sad and down in the mouth, started beaming. Immediately there was good will and good spirit, and it lifted them. The British public ought to be given opportunities to show something back to the Gurkhas.
I am very glad that the contribution to aid in Nepal has been given but I for one have questioned why, immediately after the earthquake happened, the whole of the Brigade of Gurkhas was not flown out at once to Nepal, with all its troops, signallers, engineers and logistics people. That should have been the instant reaction in return for all the wonderful help that the Gurkhas have given to this country over so long. Anything less than full commitment to them is less than generous in return for what we have had.
Yes, I am pleased that the Gurkha Welfare Trust is remembered at the same time, and I am pleased that we should go on thinking about the future of the Gurkhas who retire here, but let us never forget that for 200 years we have had marvellous, brave, loyal and selfless service from some wonderful people, and we should be eternally grateful for what we have had.
Baroness Flather (CB)
My Lords, I join other noble Lords in thanking the noble Lord, Lord Bilimoria, for getting this debate. I appreciate this opportunity to say something from my own point of view.
First of all, we have spoken about the earthquake, but it is a real tragedy for Nepal and for Gurkhas, and we have not taken it as seriously as we should have because of our connection with the Gurkhas. I hope noble Lords know that Gurkhas are only a part of Nepal; not all Nepalis are Gurkhas—they are from a section of that country. I cannot say that I have ever served with any Gurkhas or been in the Army, as noble Lords can imagine. However, I will start by telling noble Lords something about the history of the Gurkhas before they came to serve with the British and with the Indians—that was the same thing at that time.
Groups of Gurkhas used to come to a place called Lahore. Anyone who has read Kim will know that Lahore was the crossroads for many parts of that world at the time, and people used to congregate there for all sorts of reasons—and not always very good ones. They used to come in groups of 10, 20, 40 or 50 to be hired by any warlords who needed somebody to fight for them. Therefore, in a funny sort of way they were doing that long before the British started having Gurkhas in their Armed Forces. A very clever British person must have seen the opportunity at that time to get all the Gurkhas together and to get them into the East India Company’s sepoys. Therefore, there is an interesting history. Originally they were known as “Lahures”—from Lahore. As I come from Lahore, I feel very proud of that.
That is how they started, but how have they gone on? They have gone on to serve Britain, and now Britain and India. I was very upset at the time when there were reductions in general in the British Army. More Gurkhas were laid off in proportion than the indigenous soldiers—British soldiers—which was upsetting in itself. Nepal is a very poor country. Nepalis need their soldiers to earn money and send it back, and as a country it is very dependent on the people who serve in the Indian army, in the British Army, and we should never forget that. They do not serve just out of niceness—“Oh, we like the British”. They need the money—they need to be fighting for the British—and they need us as much as we need them. However, we are not standing by them. They are being reduced in numbers, and there are some wicked rumours going round that the intention is to reduce their numbers further. We should take a step back and think about what they have done for the British Empire and decide whether that is fair—not just what they did for the empire but after; even after India and Pakistan.
But Nepal was never a colony, and that was a problem for us with regard to the memorial gates. Originally I had not intended to include Nepal, because it seemed wrong to have a non-colony along with the colonies. However, then somebody suggested, “Why don’t you put ‘Kingdom of Nepal’?”, so we did that. When the kingdom fell some clever ambassador said, “You have to take that off now!”, as if you can rub off something that has been engraved into stone. Therefore it reads “Kingdom of Nepal”, and it will always be like that on the memorial gates. The other thing is that when you look at the names of the Victoria Cross and George Cross recipients in the pavilion next to the memorial, you see how many names of Gurkhas are there. People who have shown such bravery and commitment should be treated with much more respect—although it is about not only respect but consideration, with regard to keeping them on and how their lives are.
We have heard that they can settle in this country—one or two noble Lords said that. Do those noble Lords know what the criteria are? They are so strict and difficult that the campaigners have decided that probably only 100 Gurkhas will meet them and be able to settle in this country. That is quite upsetting after all the lives they gave and all the fighting they did. I will quote the criteria, because noble Lords will probably not know them. The first one is:
“Close family in the UK”.
That seems very unlikely, does it not? The second is:
“A bravery award of level one to three”.
That may be possible. The third is “Service of 20 years”—yes; or, finally, “Chronic or long-term” illness. Are they really likely to have close family ties here? I would have thought that very unlikely. Therefore, there are issues that still need to be looked at.
Some years ago, I think at the end of the 1990s, there was a big discussion about pensions, and we were told then that it was a tripartite agreement—the noble Lord, Lord Ramsbotham, mentioned that—and nothing could be changed. However, I say, “Then negotiate with the third party as well”. You cannot just say, “We can’t do it”. I do not believe in “we can’t do it”. When I started on the rather foolish journey towards the memorial, almost everybody said to me, “You can’t do it”. Well, it is there and I have had a lot of help. The noble Viscount, Lord Slim, was a trustee; my noble friend Lord Bilimoria was chairman of the council for several years; and my noble friend Lord Ramsbotham represents somebody—I hope I will be forgiven for forgetting who it is—at the ceremony. So it is there and I hope that it will stay as a reminder of all the people who have been instrumental in helping this country. Indeed, in the Second World War, it was crucial that the colonies were able to support Britain in its hour of need, as one might call it.
The key things now are, first, to decide whether the Gurkhas mean enough to keep them on and not reduce their numbers any further and, secondly, to do whatever we can to help them following the earthquake. It is unbelievable that there have been not one but several earthquakes, and the terrain is difficult. I hope that the noble Earl will tell us that the Government are going to do more and that somebody senior will visit Nepal. That would mean a lot for morale. I have been to the two camps—the British and the Indian—in Nepal. We were able to spend time at both camps and it was very interesting.
That is about all that I can tell your Lordships about my connection with the Gurkhas, but I finish with a short iconic story, although I am sure it is untrue. Somebody said that the Gurkhas were asked to jump into a pool of water. They could not swim but when they jumped into the water they swam. I do not believe it but it is a nice story.
Lord Rosser (Lab)
I, like other noble Lords who have spoken, extend my congratulations to the noble Lord, Lord Bilimoria, on securing this very timely debate. He spoke with the passion and fervour that we have come to associate with him. I regret that my contribution cannot contain personal experiences and recollections but this debate gives an opportunity to draw attention to the major contribution made by the Gurkhas to the British Army and to talk about some current-day issues relating to the Gurkhas, including Gurkha veterans.
As we all know, this year marks 200 years since Gurkhas were first enlisted into the armies of the British Crown in the wake of the Anglo-Nepalese war at that time. Ever since then, the Gurkhas have made a major and widely admired and respected contribution to the British Army, and many have made the ultimate sacrifice and given their lives. Thirteen Gurkha soldiers have won the Victoria Cross.
As the noble Lord, Lord Burnett, said, during the First World War more than 90,000 Gurkhas served the British Crown, of whom more than 20,000 were killed, wounded or missing in action. Gurkha regiments earned hundreds of gallantry awards throughout that war. In the Second World War more than 137,000 Gurkhas served the British Crown, with more than 23,000 being killed, wounded or missing in action and more than 2,500 awards for bravery being made.
More recently, the Gurkhas have served in the Falklands, Kosovo, Bosnia, East Timor, Sierra Leone, Afghanistan and Iraq. Today the Brigade of Gurkhas has spread between the British garrison in Brunei and the UK, and they continue to play a full part in the Army’s operational and peacetime commitments.
The Gurkha soldier, it has been said, defines the close relationship between the Republic of Nepal and the United Kingdom—a relationship that has developed in many different and perhaps surprising ways. Aldershot Town Football Club, whose ground is close to Aldershot Garrison, sent a team to play in Nepal earlier this year and has established a fund to aid the Nepal earthquake relief programme. Last year it was adopted as the official football club of Rushmoor’s Nepalese community, and last month the Nepalese organisation, Sahara UK, purchased £10,000-worth of the football club’s shares. Yesterday evening there was an anniversary pageant for the Gurkhas at the Royal Hospital Chelsea, attended by the Queen, the Duke of Edinburgh and other members of the Royal Family, and, as I understand it, the noble Lord, Lord Bilimoria.
The wording of our debate makes reference to the recent earthquakes in Nepal, the first of which was on 25 April, when a magnitude 7.8 earthquake struck an area between Kathmandu and Pokhara in Nepal, and right in the centre of one of the Gurkhas’ recruiting areas, in which a not inconsiderable number of retired soldiers would have been living. Some of the villages occupied by the Gurungs, the clan which provides the backbone of the Gurkha regiments, were largely destroyed. Clearly the magnitude of the disaster in Nepal has thrown something of a shadow over the events and activities celebrating the 200th anniversary.
Needless to say, though, the Gurkhas have been playing a significant part in the relief effort, and not least through the work of Army Gurkha engineers. Points have already been made and questions asked in this debate about the Government’s approach and contribution to the relief effort in Nepal, to which no doubt the Minister will be responding. It is of course not only in Nepal that the Gurkhas provide humanitarian relief; they were also sent to Sierra Leone to help contain Ebola.
Competition to become a British Gurkha recruit is strong and the tests involved are very challenging. Typically some 6,000 men, now from across Nepal, will apply to be one of the 200 to 300 recruits chosen each year. Those selected become, after a year’s induction training, soldiers in the Brigade of Gurkhas, which comprises about 3% of the British Army.
An agreement signed between the UK and Nepal in 1947 provided the basis for the service of the Gurkhas in the British Army, who previously had been part of the British Indian Army before Indian independence in 1947. The Gurkha pension scheme had its origins in this 1947 agreement. The agreement committed the British Government to treat Gurkhas fairly but did mean that, before April 2007, Gurkhas served on different terms and conditions of service from those in other parts of the Army. These differences have been the cause of grievances held by members of the Gurkha veterans’ community, mainly but not exclusively in respect of perceived pension inequalities, and were the subject of a recent inquiry by the All-Party Group on Gurkha Welfare.
Many former Gurkhas now work with charities, including the Gurkha Welfare Trust. The Gurkha Welfare Trust was founded in 1969 with the aim of relieving poverty and distress among ex-Gurkha soldiers and their dependants, though today, from a network of centres across the country, it also delivers community aid such as water supply systems, schools, medical camps and welfare, not least to some of the poorest, most inaccessible parts of Nepal. The trust pays pensions from a charitable fund to which the British public contribute generously. Over 6,500 veterans or their widows depend on the welfare pension to enable them to live with dignity.
Modern terms of service for Gurkhas are now identical to British ones. Since April 2007, any Gurkha joining the British Army receives the same pay and pension benefits as their counterparts in the wider British Army. They serve on the same basis as the remainder of the Army, with some limited exceptions designed to meet the wishes of the Government of Nepal. In 2009, retired Gurkhas were given the right to settle in Britain with British citizenship, although I note the points made by the noble Baroness, Lady Flather, on that issue. The Government provide financial support to the Gurkha Welfare Trust through an annual grant in aid. However, welfare payments to needy veterans are funded by public donations.
Following the recent report by the all-party group into grievances held by members of the Gurkha veterans’ community, the Government agreed to set up a fund to compensate those who had had to leave the Gurkhas as a direct result of marrying a non-Nepalese. Over the next five years, £5 million will also be made available from LIBOR fines to support Gurkha Welfare Trust projects in Nepal or the UK, and just under £1 million has been found from the LIBOR-funded veterans’ accommodation fund to provide 32 homes in the UK for up to 64 Gurkha veterans and their spouses or partners. These moves by the Government will not fully address the grievances of members of the Gurkha veterans’ community, which successive Governments have faced, but they do represent further steps following the significant decisions by the then Government in 2007 and 2009 in respect of pay and pension benefits and settling in Britain with British citizenship.
In February this year, I asked the then Government if they agreed that the best way to mark the 200th anniversary would be to ensure a clear and continuing role for the Gurkhas in Army 2020 and inquired whether that was the Government’s objective and what that role might be. Now that we have a new Government, I, like the noble Lord, Lord Bilimoria, ask the question again. I hope that the Minister will provide a clear and positive answer when he responds. In particular, will he confirm that the Prime Minister’s pledge to maintain the current size of the Regular Army applies also to the Gurkhas? It would, after all, seem rather odd for us to be rightly praising the tremendous and courageous contribution of the Gurkhas tonight—I am assuming that the Minister will also be doing just that very shortly—if earlier in the day, metaphorically speaking, Ministers in the Ministry of Defence had been considering making defence cuts at the expense of the Gurkhas, as part of the somewhat secretive current strategic defence and security review.
The Minister of State, Ministry of Defence (Earl Howe) (Con)
My Lords, like so many people across the country and on all sides of this House, I have a huge admiration and respect for the Gurkhas. As has been said by all speakers, for 200 years Gurkhas have fought loyally for this country and they rightly deserve their reputation as being among the bravest and most fearless of soldiers. Gurkhas hold a special place in the heart of the British people, and evidence of this can be seen in the generous support given by the British public following the recent devastating earthquake in Nepal.
Before I speak about that disaster, I would like to emphasise the Gurkhas’ primary role, that of soldiers. The Brigade of Gurkhas remains a vital part of the British Army’s military capability. The noble Lord, Lord Rosser, summarised very well their role in our history. Both battalions of the Royal Gurkha Rifles and subunits of the three main corps units all deployed on operations in Afghanistan under Operation Herrick, where they have demonstrated their outstanding war-fighting skills and cultural adaptability. I am proud to have two Queen’s Gurkha orderly officers with me here this evening.
Moving on to recent events in Nepal, the major earthquake tragically led to significant loss of life and destruction to property, and our thoughts are with the people and Government of Nepal at this difficult time. The United Kingdom’s disaster relief response has been led by the Department for International Development, which has provided over £33 million in direct and indirect aid, as was rightly pointed out by my noble friend Lord Sheikh. This aid included the provision of search and rescue teams, trauma medics and logistic supplies. I can say to the noble Lord, Lord Davies of Stamford, that the Ministry of Defence supported these efforts with an airlift and by deploying over 100 additional Gurkha personnel. We offered the services of our Chinooks, but the Government of Nepal did not consider that they were necessary. My right honourable friend the Secretary of State for International Development has visited to inspect and assess the damage and speak to those delivering aid.
The additional Gurkha personnel went into Nepal under the auspices of British Gurkhas Nepal, which is the unit based in Nepal looking after recruitment and welfare matters for the brigade. British Gurkhas Nepal and the Gurkha welfare scheme, which is the field arm of the Gurkha Welfare Trust, are working together to ensure that our pensioners and families are looked after alongside all needy persons in villages affected by the earthquake. It is important to state that we are not discriminating as to who gets the help. Instead, we are providing to the neediest first with the aim of everyone being under cover with access to water before the monsoon rains arrive.
Reconstruction efforts are to focus in the short term on protecting isolated Gurkha communities through the approaching monsoon season. This will include the construction of temporary shelters, the provision of clean water supplies and basic sanitation, and the delivery of aid and basic medical supplies. A squadron from the Queen’s Gurkha Engineers is currently deployed on this task. Subject to Government of Nepal approval, work priorities will primarily be driven by humanitarian need within the Gurkha communities, rather than uniquely supporting the families of serving Gurkhas and Gurkha veterans. To answer the noble Lord, Lord Burnett, we believe that the museum at Pokhara was not badly damaged.
The Gurkha Welfare Trust is the principal Gurkha charity and it maintains through its field arm, the Gurkha Welfare Scheme, a network of welfare centres in Nepal to look after Gurkha veterans in need. The Government provide financial support to the Gurkha Welfare Trust by means of an annual grant in aid of over £1.5 million which pays for the majority of the costs of the Gurkha Welfare Scheme in Nepal. In addition, the Government announced in January that they were giving the trust £5 million from the LIBOR fines to assist its work in Nepal, so I would say to the noble Lord, Lord Bilimoria, and the noble Baroness, Lady Flather, that this is a clear statement of the commitment to and recognition of the work done by the trust in support of Gurkha veterans.
This year we celebrate 200 years of Gurkha service to the Crown. This milestone is a further opportunity to thank the Gurkhas for all that they have done to preserve our freedom and security in many conflicts around the world, most recently in Afghanistan. To celebrate the Gurkhas’ unique service, there are over 100 events of varying size taking place, both in the United Kingdom and around the world, reflecting the brigade’s previous service. These events are being conducted by the serving brigade, the Gurkha Brigade Association and the Gurkha Welfare Trust.
Major events have already taken place. In late March, a gathering of over 3,000 people attended a celebration in Kathmandu, before the earthquake struck. On 30 April, contingents from the four major Gurkha units, with the Band of the Brigade of Gurkhas and the Queen’s Truncheon, marched from Wellington Barracks down the Mall to the Gurkha statue outside the Ministry of Defence. This was followed by a short service to commemorate those from the brigade who have given their lives in the service of the Crown.
Most recently, throughout May, each of the four major Gurkha units has conducted public duties, providing the guards at Buckingham Palace, St James’ Palace and the Tower of London. And as we have heard, a major event, the Gurkha 200 pageant, took place last night at the Royal Hospital Chelsea in aid of the Gurkha Welfare Trust. Her Majesty the Queen attended, along with other members of the Royal Family. I am delighted to note that at least two noble Lords here this evening were able to attend.
I shall answer a few of the questions that were put to me. I turn first to the noble Lord, Lord Burnett, who asked whether the Gurkha battalion would remain in Brunei. The answer to that is yes, because a new agreement was recently signed with the Sultan. He also talked about jungle warfare training. As he knows, this is carried out in Brunei by the Gurkha battalion and other British Army units. In addition, the British Army Jungle Warfare Training School is based in Brunei and is supported by the Gurkhas.
Questions were asked by the noble Lord, Lord Burnett, and others about recruitment. No decisions have been taken about increasing the number of Gurkhas at present, but equally no decisions at all have been taken about reducing their numbers. I can say to the noble Viscount, Lord Slim, that the Brigade of Gurkhas has been wholehearted in its support for its kith and kin in Nepal. Its members are all very keen to deploy in order to support and assist if they can. The brigade has been incredibly active in fundraising and has generated in excess of £300,000 to help the relief effort, which is a commendable achievement.
I would like to thank the noble Lord, Lord Bilimoria, for raising this important subject for debate. I will write to noble Lords on questions that I have not been able to cover this evening, but I am pleased to have had the opportunity to explain the Government’s position on both the support we are providing for the Gurkha Welfare Trust in Nepal following the tragic events of the earthquake and the celebrations behind 200 years of Gurkha service to the Crown.
Lord Bilimoria
I thank the noble Earl for his response, but there was one very specific question: can the Government assure us that there will be no further cuts to the Gurkhas, regardless of the SDSR?
Earl Howe
My Lords, I am sure the noble Lord knows that I cannot separate the Gurkhas out from the SDSR. It would be as impossible to do that for the Gurkhas as for any other part of the British Army. However, I note the strength of feeling that the noble Lord has expressed, and I am sure that that will be conveyed back to those who are in the throes of preparing the initial stages of the SDSR.
Lord Rosser
My Lords, I understand that a commitment has been given by the Prime Minister that there will be no further cuts in our Regular Army. Why is there any doubt that there will be any cuts so far as the Gurkhas are concerned? Are they not covered by the pledge that was given by the Prime Minister?
Lord Martin of Springburn (CB)
My Lords, I will not take a moment. I have been very impressed by all the contributions to the debate. If Gurkha veterans living in the United Kingdom in their advancing years need to do so, will they get access to the hospital charities such as Erskine in Scotland, along with the other military hospitals?
Lord Ashton of Hyde (Con)
I should say to the noble Lord that this is a Question for Short Debate with a speakers’ list. I am sure that my noble friend the Minister will be able to write to the noble Lord.