Charity Commission

Lord Borwick Excerpts

Thursday 27th February 2014 Grand Committee

[Lord Borwick (Con)]

My Lords, first, I declare an interest as a trustee of four different charities, ranging from Deaf Education to the British Lung Foundation, all of which are to be found in the register, and I have been a charity trustee for 30 years.

The Public Accounts Committee concluded that:

“The Charity Commission has not regulated the charity sector effectively”,

but I think the committee’s outlook is too bleak. There is a new team leading the Charity Commission now, with William Shawcross taking over from the “Quango Queen”.

[Noble Lords]

Outrageous!

[Lord Borwick]

The search is under way for a new chief executive as well. It takes a long time to change the ethos of an organisation, to make a bureaucratic elephant tap-dance, or even to make the elephant head in the right direction at any speed. I have made a change in the private sector, changing an inefficient, lazy monopoly supplier into a tiger, but it took a long time and I got support, not criticism, from stakeholders. I am not sure that everything done so far has been perfect. Shawcross’s comments on the pay of CEOs of charities could have been better.

The charity sector has changed, moving from the saintly amateur to the professional. The commission has to change from working on the chief assumption that all players in the sector are honest gentlemen to the reality that, hidden among those saints, are occasional sharks. All regulators rely in part on the integrity of their subjects, and integrity is harder to find now than 20 years ago. We should compare the Charity Commission’s failures in spotting the Cup Trust as a cracked vessel with a similar failure—that of the Bank of England and the FSA to spot the “crystal Methodist” as a bad banker. After all, some politicians could not even tell there was a problem with the affiliates of a charity, even when they were employed as full-time legal officers. Is not the percentage of imprisoned politicians from another place greater than the percentage of bent charities?

I think there is another, hugely important issue that the commission must combat with time and resources. That is taxpayer-funded political campaigning. The problem starts with the Government. Over the past few decades, they have given state support to an increasing number of charities. The intention might be good, but the result is not.

Christopher Snowdon of the Institute of Economic Affairs has carried out extensive work on this issue. His research has shown that some groups are being set up to champion certain pieces of legislation under the guise of a charity pursuing its objectives. He rightly calls such groups “sock puppets”. They prey on the good nature and trust of the British public because government departments and councils are camouflaging themselves as benefactors. Snowdon found that a shocking 27,000 charities are dependent on the Government—or, more accurately, on taxpayers—for more than 75% of their income. That has to have a big impact on the independence of charities and their ability to criticise the Government of the day.

What shall we do to tackle this evil? A lot of the responsibility for fixing the problem lies with the Government, not with the Charity Commission. Any statutory funding should be restricted and should not be used to lobby politicians or engage in other political activity. These charities should also be subject to freedom of information legislation. Much effort was needed to put together the Transparency of lobbying, non-party campaigning and trade union administration Act. Perhaps now we need a new “lobbying by sock puppets” Act to deal with this issue.