Charities (Protection and Social Investment) Bill [HL]

Lord Bridges of Headley Excerpts

Tuesday 23rd June 2015 Grand Committee

[Lord Scott of Foscote (CB)]

My Lords, noble Lords need to bear in mind that each of the three words “how”, “when” and “where” is a preposition, and each word has a slightly different meaning. Since the intention of this part of Clause 1 is plainly to give as wide a discretion to the commission as is practicable, I respectfully suggest that all three words should be included, each meaning something slightly different. If the words were “how, when and where”, all would be covered.

[The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)]

My Lords, before I address the amendment moved by the noble Baroness, I should repeat my declaration of interest as a trustee of the Foundation Years Trust.

The noble Baroness began by suggesting that she might be seen as pedantic, and I think the other word she used was “fussy”. I would not dream of accusing the noble Baroness of being either. Indeed, the whole purpose of this Committee is to kick the tyres of this policy and to do precisely what we are doing, which is to examine every word, even thin little words such as “how”.

The noble Baroness began by making an excellent overarching point which I endorse wholeheartedly. We need to ensure that this Bill and all the measures within it are balanced. We are mindful of proportionality. We must also ensure that proper safeguards govern the measures and all the new powers in the Bill. I very much welcome the debate that we are going to have. I would also like once again to put on record my thanks to all noble Lords who spent so much time in the pre-legislative scrutiny committee shaping the Bill before us today.

Taking a step back, the Charity Commission asked for these powers following criticism from the NAO and PAC about its regulatory approach. These powers were a specific recommendation of the NAO in its December 2013 report. Further calls for tougher powers for the commission came from the extremism task force in December 2013 and from the Home Affairs Select Committee.

We consider the Bill is a “must have” because it forms just one part of a multistrand approach to addressing criticisms of the Charity Commission by ensuring that it has the tools it needs to do the job that we and the public expect of it. One of these powers is the power to issue an official warning. As my honourable friend the Minister for Civil Society said to the Joint Committee in pre-legislative scrutiny, this is one of the most important new powers in the Bill. An official warning could be issued to a charity trustee or to the charity itself where the Charity Commission considers there has been a breach of trust or duty or other misconduct or mismanagement. The power would enable the Charity Commission to publish a warning, as we have been discussing. The Charity Commission has said that it would not publish all warnings, which is an important point to note. The decision to publish would be in line with its current policy on publishing the announcement of statutory inquiries, which are considered on a case-by-case basis. The Charity Commission would not publish an official warning if it considered that it would not be in the public interest to do so.

Let me give the Committee two brief examples of when the Charity Commission might consider issuing an official warning. Fist, a charity is consistently a little late in submitting its accounts. An official warning would remind the trustees of the seriousness of their non-compliance. Secondly, a charity makes unauthorised payments to a connected company or one that benefits a trustee. The size of the sums involved means that it would be disproportionate for the commission to take firmer action, but it could issue an official warning on future conduct.

As the Committee would expect, and as I mentioned, the power is accompanied by a number of safeguards; I know these were discussed in the committee, and others have been added since then. The first is as follows: the Charity Commission must give notice of its intention to issue a warning to the charity and its trustees. The notice must specify a number of matters, including the grounds for issuing the warning and any action that the commission considers should be taken by the charity to rectify the breach that has given rise to the warning. The notice must specify a period for representations to be made about the proposed warning, and the commission must take account of any representations before it issues any warning. An official warning could also highlight the likely consequences of any further non-compliance, which would be likely to require a more significant intervention by the regulator.

This is the one new regulatory power in the Bill that we and the Charity Commission expect may impact on more charities than the other proposed powers. Most of the powers in the Bill are targeted at serious, deliberate abuse of charity. The official warning power would be used more frequently by the commission as a more reasonable and proportionate way of dealing with breaches where the risks and impact on charitable assets and services are lower.

The Charity Commission’s current policy is to consider publishing reports of its non-inquiry work where, first, there is significant public interest in the issues involved and the outcome and, secondly, there are lessons that other charities can learn from them. The commission has explained its proposals for publishing official warnings in evidence to the Joint Committee on the draft protection of charities Bill. In its written evidence, it said:

“We do not intend to publish all warnings. Whether or not we do so will, in line with our current policy on publishing the announcement of statutory inquiries, depend on whether it is in the public interest. We would not publish an official warning if we consider that it would not be in the public interest to do so”.

It went on to say that it would follow its existing practice of inviting comments on factual inaccuracies, which it would take into account, and would publish guidance on the criteria that it would use in deciding whether or not to publish an official warning.

The requirement for certain information to be specified in the notice of an official warning was added in response, as I said, to a recommendation from the Joint Committee on the draft protection of charities Bill. In terms of where the official warning would be published, the Charity Commission already publishes around 25 non-inquiry regulatory case reports on its pages on www.gov.uk. Details can also be published alongside the charity’s register entry. It also summarises its regulatory casework and, in particular, identifies each year wider lessons that charities can draw from it in an annual report. To pick up the noble Baroness’s point about publication, only in certain cases might the commission consider issuing a press release, and this is always shown to the charity in advance. The commission will also share with the charities where it is to be published.

As to when the commission would publish the official warning, this would always be after the period of representations, and a period for the commission to consider any representations made by the charity. There may be some cases where the commission needs to have further engagement with the charity before it can publish an official warning, based on the representations that it receives from the charity. So it is not possible for the commission to specify exactly when it would publish an official warning at the point at which it issues a notice of intention. However, it would tell the charity before publication. If the charity needed to have such discussions and needed to have an extra time period, I am sure that the commission would listen carefully and respond accordingly. The commission already has in place a procedure and published policy that works which announces the opening of inquiries, and it has had no complaints from charities about the process. The commission would engage with the charity and would not publish without letting them know but, as I have said, it would not be possible to do this in the original notice of intention.

Any published details of warnings would have to be removed by the commission after a period of time. Its current practice in relation to inquiry and case reports is to archive them after a period of two years. The commission will set this out in its guidance on official warnings, which will be published before the power is commenced. As the noble and learned Lord, Lord Hope, suggests, the amendment might well narrow the requirement if it were brought into effect.

I am sympathetic to the intention behind, and I agree with the spirit of, the noble Baroness’s amendment to provide further clarity around the publication of an official warning. I think that we agree in principle and I hope that I have been able to offer some reassurances about the way that the process would work. As I have stated, the criteria would be published and the commission would engage with the charity throughout. However, logistics and the nature of the response from the charity to the notice would mean that it would not be able to say when it would be published at such an early stage. On that basis, I hope that the noble Baroness will be able to withdraw the amendment.

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[Lord Hope of Craighead]

My Lords, I will resume what I was attempting to say. Before we broke for the vote, I drew attention to the width of the expression “a sexual offence”, which is a cause of some concern. There are a number of points to be made as far as the sex offendering register is concerned. First, it applies to people who have been sentenced to 30 months or more of imprisonment or detention. Secondly, subject to an order that came into force in 2012 and gives a certain power to the chief officer of police, the entry on the register is indefinite, without limit of time.

The case that I was about to mention came before the Supreme Court in 2010 and led eventually to the making of the Sexual Offences Act 2003 (Remedial) Order 2012. It was a case where a child aged 11 was convicted of an offence. It caused real grounds for concern in that the crime he committed meant that he would have had a permanent position on the register. One has to wonder whether somebody who committed an offence of that kind when a teenager and who reached the age of 60, let us say, should really be subject to the automatic disqualification which would flow from this amendment if it were to stand as it is.

I appreciate that the chief officer of police has the power to remove people from the register but I do not know how often that power has actually been exercised. It may be that the Minister can find out from other sources as to the efficacy of the order, but it is a ground for concern that placing on the register has such a powerful effect on the individual. We heard evidence from a body called Unlock. It made the point that there are some people for whom rehabilitation is so important. Contributing to public life by participating in charities, years after an event which happened at a much earlier stage in their life, is something that they would greatly value. There are real grounds for concern about the width of the amendment and its suitability, and whether it really falls into the nature of offences that would justify automatic disqualification.

I raise these issues as a note of caution. I would not go to the point of voting against the amendment if it were pressed to a vote—which, of course, it cannot be in Grand Committee—but these points suggest that the question requires careful consideration before the noble Lord would accept the amendment.

[Lord Bridges of Headley]

My Lords, let me start by echoing what my noble friend Lord Hodgson of Astley Abbotts said. We all agree that we must do all we can to ensure that the vulnerable—be they young or old or, as the noble Baroness, Lady Barker, said, those with dementia—are protected within charities. The question we are grappling with is how best to do so.

The Charity Commission takes safeguarding issues very seriously. Its statement of regulatory approach makes it clear that the abuse of vulnerable beneficiaries is a matter to which the commission will pay particular attention, alongside terrorist abuse of charities and fraud. The Charity Commission’s director of investigations, monitoring and enforcement has said:

“The public relies on trustees to have robust procedures in place so that people working in a charity with access to beneficiaries are suitable to hold those roles”.

Trustees must,

“ensure their charity has appropriate and robust policies and procedures in place to safeguard the charity’s beneficiaries, including a process for recording incidents, concerns and referrals”.

The Charity Commission publishes detailed guidance for charities on their safeguarding responsibilities. It explains the legal requirements for charities working with children and vulnerable groups and how they must safeguard them from harm. It covers what safeguarding involves, what child protection policies and processes should include, and explains the Charity Commission’s role in ensuring that charities follow the law.

The Protection of Freedoms Act 2012 established, as your Lordships know, the Disclosure and Barring Service or DBS, which processes criminal records checks and manages the lists of unsuitable people who should not work in regulated activities with children or adults. The DBS decides who is unsuitable to work or volunteer with vulnerable groups. There are two points to stress: it is an offence first, for a barred person to apply for such work, paid or voluntary; and secondly, it is an offence for a charity to employ a barred person in such work. Furthermore, Sections 35 and 36 of the Safeguarding Vulnerable Groups Act 2006 imposed a duty on regulated activity providers and personnel suppliers to provide the DPS with information where there is a risk of harm to a child or vulnerable adult. There is an established policy of reporting abuse directly to the DBS.

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[Lord Scott of Foscote (CB)]

My Lords, I think I had an invitation to speak on this from my noble and learned friend Lord Hope. I have puzzled a little bit over the object of Amendment 11. There is a reference in it to where there is,

“sufficient reason to believe there is a collective failure of all trustees to ensure the safety and protection of children who are direct beneficiaries of the charity”.

The children may be the objects of the charity in the sense that the charitable money is meant to go to them. However, if all that is intended in the charitable trust in question is that charitable money be applied for the benefit of the children, it is a little difficult to see how the safety and protection of the children comes into it. Any misuse of the funds of the charity would be a breach of trust. You do not need a provision in the Act to say so. That could be remedied at any time by any of the trustees.

I find it difficult to quite understand what is meant by a,

“failure of all trustees to ensure the safety and protection of children”.

If the children are the objects of the charity in the sense that the funds must be used for their benefit, it is not the duty of the trustees to ensure their safety and protection. Their safety and protection may be put at risk by any number of different means that have nothing whatever to do with the objects of the charity. I am little puzzled by the intention behind that as it stands.

[Lord Bridges of Headley]

My Lords, following what the noble Baroness, Lady Hayter, said in response to the last amendment, I will just put on record that I would certainly not wish to give the impression that I am complacent about these issues. I completely understand that we need to debate and discuss them. As I said right at the start, we need to kick the tyres here. I just wanted to make that perfectly clear.

Let me start by dealing, first, with the proposed new clause on serious incident reporting. It might help if I explain briefly the position as it currently stands. The Charity Commission already requires serious incident reporting from charities with an income of over £25,000 as part of annual return requirements and encourages all charities to report serious incidents immediately as a matter of good practice. The Charity Commission’s annual return regulations require charity trustees to sign a declaration each year that there have been no serious incidents in the charity in the year or to give reference to any serious incident reports already made to the regulator and also report serious incidents that have not previously been reported.

On the lists that have been referred to in the debate, I do not think that the order of the listing suggests how serious the Charity Commission thinks those issues are. However, I can tell the noble Baroness, Lady Hayter, that the Charity Commission will look again at the issues it defines as serious.

There are various other legal requirements on charity trustees to report certain matters immediately. For example, there is a duty under terrorism legislation to disclose information about certain possible terrorist financing based offences to the police. Specifically on safeguarding, the Safeguarding Vulnerable Groups Act 2006 places a requirement or legal duty on employers and volunteer managers of people working with children or vulnerable adults to make a referral to the DBS in certain circumstances where a person has been dismissed or removed from working with children or vulnerable adults. That is in addition to any referral to a body such as a local authority safeguarding team.

As regards charities themselves, charity trustees are ultimately responsible for safeguarding within their charity. The Charity Commission’s role in safeguarding is to ensure that charity trustees take steps to protect and safeguard their beneficiaries. This means that charities working with vulnerable beneficiaries must have in place appropriate safeguarding policies and procedures, and must monitor them on an ongoing basis to ensure they are effectively implemented. The Charity Commission can and does take action against charities and trustees where they fail to do so but it is not the role of the Charity Commission to investigate suspected abuse. If there are allegations of abuse of vulnerable beneficiaries, the Charity Commission expects trustees to handle them properly and, where appropriate, report allegations to the police, social services or other agencies. Where the commission itself has serious concerns, it can and does refer them to the police or other agencies.

As I said at Second Reading, the Bill is about striking the right balance. While on the face of it there are many attractions to imposing a new serious incident reporting duty on charities, we have to acknowledge that it would be a new reporting requirement that would affect tens of thousands of small charities. Furthermore, and this is an important point, there is also the concern that the charities that would meet their obligations under a duty to immediately report serious incidents are those charities that would do so as a matter of good practice, and have already taken appropriate action to address the issue. Charities bent on abusing their position of trust would be unlikely to report the matter to their regulator. The danger would be that we would simply create a lot of red tape for the vast majority of honest charities, while those poorly managed or involved in abuse would ignore the requirement.

Under the amendment, diligent trustees might consider it necessary to report to the Charity Commission every time there was a risk to beneficiaries or the charity’s reputation. It is not hard to see how the commission could be inundated with queries and unnecessary reports. There is also the question about whether the commission would be able to cope, and what it would do with such a volume of reports.

The Government are committed to minimising regulatory burdens for charities, particularly small charities. We do not want to impose new burdens, particularly when the implications for the commission and the impact on charities have not been fully considered.

I do not want to appear overly negative towards this amendment as I believe there is much to be said for it, but I hope that the noble Baroness will also accept that there are downsides and that we do not want to tie up small charities with red tape. I hope that on that basis she will feel able to withdraw her amendment.

[Lord Hodgson of Astley Abbotts]

I have a question, which does not have to be answered today. The Minister refers to the fact that the Charity Commission generally refers matters to the police. Are we satisfied that police forces around the country always refer matters to the commission? I wonder sometimes if the commission is not up here while the police forces down there are looking into things. Is the information flow sufficiently strong? I am not asking for a response today; this is something that we can pick up later. However, it is an issue that has come up from time to time in the discussions that we have been having.

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[Lord Bridges of Headley]

My noble friend makes a very good point about the information exchange between agencies across government, and I am more than happy to pick that up with him in writing or at a later stage.

I turn to the noble Baroness’s Amendment 11. This amendment seeks to empower the Charity Commission to disqualify an entire trustee board where it collectively fails to ensure adequate protections for children who are the charity’s beneficiaries. Later on we will come to debate Clause 10, which will confer the power for the commission to disqualify on a case-by-case basis; suffice it to say that it is one of the most important powers in the Bill. That clause is relevant to this amendment so it may help the Committee if I give a short overview of it now before going on to consider the noble Baroness’s amendment.

Most unfit individuals will be caught by the existing—and, under the Bill, extended—automatic disqualification criteria, but the Charity Commission needs a power to act in cases where individuals are not excluded by automatic disqualification. The whole point of this power is to give the commission the ability to disqualify an individual whose conduct clearly makes them unfit to be a charity trustee, where, if the commission were not to act, there would be a real risk, or at least a reputational risk, to charities.

We carefully considered the report of the Joint Committee on the draft protection of charities Bill, and made improvements to this provision as a result. More detail about the operation of the provision has been included in the Bill, and it is now a three-limbed test: first, one of the conditions A to F must be satisfied; secondly, the commission must consider that the person’s conduct makes them unfit to be a charity trustee, and draft guidance has been published on that; and, thirdly, the commission must consider that exercising the power is in the public interest, to protect public trust and confidence in charities. While the power may be relatively broad, its use would be targeted. The commission has said that it expects to use this power on a relatively low number of occasions each year.

The commission already has the power to act, and has done so, in cases where there has been a collective failure of trustees in relation to systemic governance issues. The powers to remove trustees in Sections 79 and 80 of the Charities Act 2011 do not explicitly or implicitly contain any restriction on removing trustees where that leaves one or none in place. Neither does the proposed disqualification power in Clause 10. There is, therefore, no reason why the commission would not remove all trustees on the ground of ensuring the safety and protection of children, where this was appropriate, proportionate and in accordance with best regulatory principles.

In circumstances where there is an impact on the beneficiaries of the charity, the commission has tended to appoint an interim manager, under Section 76 of the Charities Act 2011, to ensure the continued operation of the charity and to get it back on track before new trustees can be appointed and take over. However, there has been a case—and I will not name the particular charity concerned—where the commission has removed all 10 trustees on the board for collective governance failings.

The noble Baroness, Lady Barker, made a point about trustees having joint liability. The Charity Commission is required to act proportionately and so, in most cases, would target regulatory action on those most culpable or responsible for misconduct or mismanagement.

The noble Baroness’s amendment deals specifically with collective trustee failure relating to safeguarding. We would not want to cast any doubt on the commission’s existing liability to take action relating to collective trustee failures, or limit that by making specific provision. On the basis that the commission can, and does, already act to address collective trustee failures where it is proportionate to do so, I hope the noble Baroness will feel able to withdraw her amendment.

[Baroness Hayter of Kentish Town]

I thank the Minister, particularly on that second point. The reassurance that action for collective failure can be taken answers the point we were seeking to make.

On reporting, I have greater concerns. In answer to the noble and learned Lord, Lord Scott, we know of schools where abuse that was taking place was not being reported. Clearly, the recommendations and guidelines for reporting are not being followed. This is the problem. You have an educational establishment where abuse is going on and it is not being reported. It is that failure to report which gives rise to concern.

The noble Lord, Lord Hodgson said that we expect trustees to behave responsibly. Of course—but this issue is where they do not. I have now heard the phrase “red tape” used twice and I jib slightly every time I hear “red tape bandwagon”. It is not red tape. We are talking about protecting vulnerable people.

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[Lord Bridges of Headley]

I want to make this one point to the noble Baroness. I asked the commission what its communication to the sector would be when the relevant changes on automatic disqualification come in. I completely agree that we need to ensure that not only are these new measures properly communicated, but we take the opportunity to remind all charities of their existing responsibilities, not just on this, but on other issues, although I would suggest especially on this. I will not bore the Committee with the six bullet points that I have been given about e-newsletters, press releases et cetera, but I can assure the noble Baroness that I have asked the Charity Commission to do this. It has given me its assurances, which I am happy to pass on.

[Baroness Hayter of Kentish Town]

That is helpful. Having been reassured about the ability to take action where there is a collective failure, we probably will not pursue that. We may, however, want to come back on the bar on reporting.

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[Lord Watson of Invergowrie]

My Lords, I start by saying that the Opposition support these amendments as well. One of the issues arising among a number of organisations in response to the Bill is that it lacks clarity in various ways. If one of the more straightforward means of overcoming some of that lack of clarity is changing the wording as suggested here, then we should all welcome that.

The noble and learned Lord, Lord Hope, mentioned the recommendation of the Joint Committee and that the wording “aware of” was suggested. In response to the committee’s recommendations, the Government stated in their report of March this year:

“The Government will explore implementing the Committee’s recommendation to replace ‘privy to’ with ‘aware of’ with Parliamentary Counsel. The term ‘privy to’ is already widely used in the existing legislation and we want to carefully consider the implications of any change before committing to a change of wording”.

Following that consideration, the Bill was not changed and, of course, “privy to” remains in it.

The noble and learned Lord, Lord Hope, told us why he came back with amended wording. My only thought on the matter is that a former Law Lord’s understanding of the law would be something to which I would give weighty consideration—to put it mildly. Can the Minister say why, and indeed whether, Parliamentary Counsel continues to believe that that wording is right? This is a fairly straightforward change that should be made to the Bill.

[Lord Bridges of Headley]

My Lords, I stand with some trepidation to debate with the noble and learned Lord, Lord Hope, on this matter. Mention has been made of my right honourable friend the Justice Secretary and his remarks yesterday. I have been very careful in this debate not to use “impact” as a verb. I am also very intrigued by this area. This debate over the word “privy” makes me wonder whether it needs to be modernised in terms of the Privy Council, but I do not want to get into that right now.

It strikes me that what we are debating is what the layman understands versus what is legally accurate and watertight. The Joint Committee that considered the draft Bill, chaired by the noble and learned Lord, recommended, as the noble and learned Lord just said, that the term “privy to” be removed and replaced with “aware of”, so that the Bill referred to a person who was aware of an action that constituted misconduct.

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[Lord Watson of Invergowrie]

My Lords, we think this clause in its generality provides an important addition to the powers of the commission. It is appropriate that a person’s activity outwith their work with or for a charity should be taken into consideration. That is not to say that we are uncritical of the wording of the two paragraphs referred to in these amendments in the name of the noble Baroness, Lady Barker.

One reason it is a useful addition is that it would only apply after a statutory inquiry had begun. That would be a sign that the Charity Commission already believed that there was evidence of misconduct or mismanagement. That is clear from the last two lines of page 2 of the Bill. Of course, there are concerns—some of which noble Lords have referred to in the Joint Committee’s report. It is again a question of provisions being drawn too widely and lacking clarity.

The Government’s response to the Joint Committee’s report stated that they would,

“look to revise the draft Bill to make this clearer”.

Unfortunately that has not been done. I invite the Minister to say why the Government eventually proved unable or unwilling to do so. It is regrettable, although I do not think it constitutes a reason to remove the wording completely from the Bill. I do not think that is appropriate. We agree with comments that have been made about the need to refine the wording, and perhaps some attention might be given to the report published yesterday by your Lordships’ Select Committee on the Constitution on this and two other Bills. Paragraph 41 of the Select Committee’s report was critical of new Section 76A to be inserted by the Bill. I am sure the Minister has already read that report and taken it on board. It is important that that should be considered further before Report.

The final paragraph of that report states:

“The concerns identified by the JCHR from a human-rights perspective are mirrored by corresponding constitutional concerns on the grounds of legal certainty. We draw these concerns to the attention of the House”.

That simply adds to the arguments we have already heard in relation to these amendments.

An important suggestion of the Select Committee’s report is that conduct should be qualified in terms of its seriousness. It must be recalled that this activity does not need to lead to a charge or a conviction. On these amendments, and I think in a previous amendment, the noble Baroness, Lady Barker, mentioned that things that you do at one stage in your life these days follow you around through social media. It is very possible that a person a lot younger than me and a lot more able on social media might well do something that seems relatively trivial but that could come back to haunt them in later years. That has to be borne in mind.

The noble and learned Lord, Lord Hope, referred to evidence that the Joint Committee received about political causes. That is a concern. It could be that somebody who was publicly critical of government policy or of the Charity Commission might find that coming back to them. I do not mean that as a trivial point. The point is that we do not know what would be regarded as something that could effectively add to charges already assembled by the Charity Commission in targeting an individual. It is a question of uncertainty. We have heard this point several times this afternoon. In light of what the Minister has heard, I hope he will reconsider this matter, possibly with a view even to bringing forward a government amendment on Report. Given those remarks and the report of the Select Committee on the Constitution, I hope we may be able to look forward to that when we consider this matter again.

[Lord Bridges of Headley]

My Lords, this has been a very stimulating debate and I pay tribute to the noble Baroness, Lady Barker, for provoking it. I shall first address Amendment 5 about the proposed powers of the commission to take into consideration the conduct of a person outside a charity. I recognise that these are broad powers in that they allow the commission to take into account any outside conduct. However, these powers are necessary to enable the commission to address conduct which could seriously damage public trust and confidence in charities and need to be viewed in the context of the other criteria that apply to their use, along with the various safeguards in place.

Just as we have to place a large degree of trust in charity trustees to exercise their discretion properly in running their charities, we need to trust the Charity Commission to regulate independently and in the public interest. Of course, there is a range of safeguards, not least the independent judicial oversight provided by the Charity Tribunal, which has shown since it started work in 2008 that it is not afraid to criticise the Charity Commission in the few cases where it considers that the commission has overstepped the mark and acted disproportionately.

As I and others said on Second Reading, the Bill seeks to achieve a balance. The powers that it would confer on the Charity Commission need to be broad enough to make them useful. If they are too narrow they would be impractical and go unused—a point that my noble friend Lord Hodgson made. But charities need to know the circumstances when the powers may be used and I believe that the Bill achieves that balance.

The purpose of the noble Baroness’s first amendment would be, as we have discussed, to limit the other conduct that the Charity Commission could take into account when considering the exercise of its compliance powers. It is important that we retain this part of the clause as it prevents the undermining of public trust and confidence in charities, as all relevant—I stress “relevant”—conduct ought to be taken into consideration before the commission determines how to act accordingly. The commission could not take account of any irrelevant conduct. Indeed, I argue that the commission could be criticised for failing to act, or for taking only weak regulatory action, if it were unable to take into account relevant evidence of misconduct of an individual outside of a charity.

I shall illustrate this with an example. The Charity Commission opens an inquiry into charity A regarding concerns of financial mismanagement. It establishes misconduct and mismanagement against trustee X, an accountant, as large payments have been taken out and not accounted for. Blank cheques have also been signed by trustee X. The commission then approaches other relevant regulators which provide them with information that trustee X has had two cases of professional misconduct for accountancy irregularities in previous employment. Under Clause 3 as proposed, the commission would be able to take this other evidence into account before deciding what action it would be proportionate to take in the circumstances. If the amendment were to be accepted, the commission would be able to give no weight to this other, potentially compelling, evidence.

I emphasise that safeguards would be in place to ensure that any conduct outside of a charity would be only that which was relevant to the decision being considered by the commission. I shall illustrate those safeguards. 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 the charity under inquiry before it can rely on any conduct from outside the charity as a makeweight in its decision-making.

Secondly, the commission, when exercising its powers, must provide a statement of reasons under Section 86 of the Charities Act 2011, which would set out the evidence it relied on in making the decision. This would include any evidence it relied on from outside the charity. No amendment to the Bill is needed to ensure that that is the case; we can amend the Explanatory Notes to make that clear.

Thirdly, as with all the Charity Commission’s compliance powers, the commission would have to be satisfied that the exercise of the power would be in line with the principles of best regulatory practice, including that it is proportionate, accountable, consistent, transparent and targeted only at cases where action is needed, as set out in Section 16 of the Charities Act 2011.

Finally, there is, of course, 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 relevant power.

The noble Baroness’s second amendment would remove the condition that enables the Charity Commission to consider disqualification on the basis of conduct likely to damage public trust and confidence in charities. The power to disqualify from charity trusteeship and senior management positions is indeed a significant power. As such it is important that the process is rigorous but fair, and, once again, balanced.

I shall explain what that will mean in practice. First, the individual must have met tougher new criteria to become a trustee and not be automatically disqualified in the first place. Secondly, before the commission can decide to disqualify an individual, three new conditions need to be met, as set out in the guidance issued by the Charity Commission. First, one of criteria A to F is met; secondly, the individual is considered to be unfit to be a charity trustee, defined by that guidance; and, thirdly, the commission considers it,

“desirable in the public interest in order to protect public trust and confidence”,

in charities.

The commission then has to give notice of its intention to disqualify and give a period for representations to be made before any decision is made. If a decision is made to disqualify, the disqualification could take effect only after a period of time has elapsed in which the individual can lodge an appeal with the tribunal—that is, 42 days. If the decision is appealed to the tribunal, obviously the tribunal would be able to confirm or overturn the disqualification. In making a decision, the tribunal would consider the case entirely afresh on the basis of all the evidence before it; it would not simply review the Charity Commission’s original decision. Lastly, all the commission’s actions in this process would have to abide by Section 16 of the Charities Act 2011.

As was said just a moment ago, the Joint Committee that undertook pre-legislative scrutiny agreed that there was a,

“need for a broad power to disqualify an individual in certain instances, not all of which can be specifically identified and encapsulated in legislation”.

The noble Baroness, Lady Barker, referred to one scenario and asked whether a person could be disqualified on the basis of an overseas conviction in a country where homosexuality is illegal. An overseas conviction is not enough on its own. As I have said, the commission must also be satisfied that a person is unfit to be a charity trustee and that disqualification is in the public interest to protect public trust and confidence in charity. Furthermore, the conviction must concern a charity; on its own, it would not trigger disqualification. I draw the noble Baroness’s attention to that point in the little box on page 3 of the guidance, where it talks about a,

“conviction abroad for bribery or terrorist financing in connection with a charity or similar body”,

and says that such a conviction,

“would take account of any concerns raised about any court or other legal processes, their compliance with right to a fair trial … and whether the standards of evidence and justice would not be accepted in a UK or European court”.

I think that that is all pretty relevant with regard to her scenario.

[Baroness Barker]

Before the Minister moves on, the point that I made about Russia is that it is entirely possible that someone could be prosecuted there under its new, draconian laws about NGOs. That is not far-fetched; it could well arise that someone comes to this country from Russia having been found guilty of an offence under those laws against a charity, and that person then wants to serve as a trustee of a British charity. Believe me, organisations such as Stonewall are regularly subject to challenge as to whether their activities comply with all sorts of things, which they do. So it is not a far-fetched scenario.

[Lord Bridges of Headley]

I thank the noble Baroness for that point. The power would be discretionary and on a case-by-case basis. I refer her to test 3, which says that a,

“disqualification must be desirable in the public interest in order to protect public trust and confidence”.

It goes on to say that that the,

“test will, for example, allow the commission the flexibility to take account of circumstances in which the risk of (further) damage to charity is minimal and it would not be in the public interest to act against the individual”.

I am happy to write to the noble Baroness and illustrate this issue further, as she makes a good point.

As I was saying, condition F is a comparatively broad criterion, but we consider it necessary to enable the Charity Commission to address conduct that could seriously damage public trust and confidence in charities but which would not be caught by one of the other criteria. The condition needs to be considered in context of the other limbs of the exercise of the disqualification power—those that I have just described: fitness, and 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.

Regulation of Political Opinion Polling Bill [HL]

Lord Bridges of Headley Excerpts

Friday 19th June 2015 Lords Chamber

[The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)]

My Lords, I, too, congratulate the noble Lord, Lord Foulkes of Cumnock, on securing this debate. A lot has been said about the bet I made, so let me start by offering the noble Lord a cup of coffee, or something stronger, paid for by my bet, and we can toast the pollsters together.

When I first read of this Bill, my initial reaction was that it might possibly be a case of sour grapes that the noble Lord’s party did not win the general election, but then I realised I was being extremely unkind to the noble Lord. He has been talking about this for many years—I think it goes back to the 1980s—and, more to the point, he has a history of wanting to regulate and perhaps even ban things, starting with Space Invaders in the 1980s, so this is part of that.

I agree with what the noble Baroness, Lady Hayter, said about the Bill. It provokes an interesting debate, and we had a very interesting debate yesterday. I shall start by asking your Lordships a question: is this Bill good for democracy? My answer is, firmly, no. As a number of noble Lords said, the Bill is built on an assumption that the electorate should not be told what they themselves are thinking during a general election campaign, or at least during parts of it. Call me old fashioned, but I trust the people. I believe in giving them the information, however painful it might be for one party or another—and believe me, having worked in Downing Street in the 1990s, I know how painful it can be.

Let us consider the Scottish referendum. The noble Lord said that the YouGov poll set the campaign alight, and indeed it did. He called it a rogue poll. I respectfully point out that it was the first of three polls in quick succession showing that yes and no were neck and neck. The following day, TNS reported 50:50 and on 12 September, ICM reported 49:51—so three companies, all of which had reported big no leads weeks earlier, showed 50:50, plus or minus 1. Putting that key point aside, is the noble Lord saying that the public cannot be trusted with this information and that they cannot be told something that helps them weigh up how to vote in the critical weeks running up to the day they cast their vote?

Let me now ask your Lordships another question. Is the polling industry badly regulated at the moment? My answer is no. Pollsters know that the fortunes of their business rely on the credibility of their research. Unsurprisingly, therefore, the leading companies in the sector observe and abide by the code of practice that the twin regulators, the MRS and the BPC, have set out. I believe that we should leave them to regulate the sector, but I am sure the regulators will heed the words of the noble Lord, Lord Lipsey, who speaks with such authority and experience in this sector, and the fact that we are having this debate today, and will look at their regulations.

The need to abide by these regulations explains why the industry is so concerned about its failure to forecast the result of the election in May. The terms of reference of this inquiry, which holds its first evidence meeting this afternoon, are broad and far reaching. It is,

“empowered … to make recommendations about the future practice of polling”,

and to investigate,

“whether the findings and conduct of the polls were adequately communicated to the general public”.

That relates to the point the noble Baroness, Lady Hayter, made about reporting.

Let me turn to the opinion polling during the last general election. The noble Lord’s argument seems to be that thanks to the polls the Labour Party lost the election. So he wants to shoot the messenger. We do not know that this is the case; that is the point of the inquiry. Was there a sudden switch? Were people not being straight with the pollsters when asked for whom they would vote? Were the sample sizes wrong? Was the methodology at all to blame, and for how long were the pollsters getting it wrong—might this problem have distorted their findings for months? We do not know the answers to these questions, and that is the purpose of the inquiry. However, let me summarise what we do know.

In 1992 the pollsters also got it wrong, predicting a Labour majority. They changed their ways, and as my noble friend Lord Cooper and the noble Lord, Lord Lipsey, outlined, their methodology has changed. However, as the noble Lord, Lord Lipsey, said, it can always be improved. It seemed that it had been improved, because, as we saw in the 2005 general election, the polls were the most accurate predictions ever made of the outcome of a general election. This was without a regulator being set up after 1992, which demonstrates that it is possible to improve without regulation of that kind. In 2010, all but one of the nine pollsters came within 2% of the Conservative share, and five were within 1%. If opinion polls have become the sat-nav of the British constitution, it is quite clear that in May the sat-nav went squiffy, predicting that the British would turn leftish. Instead, the electorate ignored that and turned right.

Therefore, I humbly suggest that we leave it to the experts to find out what has gone wrong with the systems, but the noble Lord appears to disagree. He already knows enough to tell us to legislate. I humbly argue that this would be a good case of legislating in haste, and we have seen this kind of thing happen before. I, for one, do not want to see a Dangerous Pollsters Act—and the pitfalls of entering into this terrain are highlighted by the Bill itself, which has, if your Lordships will forgive me, a strange whiff of George Orwell mixed with Inspector Clouseau about it.

First: Orwell. The opinion police—for that is what these regulators would be—would have unlimited powers; the Bill simply lists those presumably deemed important. It would specify “approved sampling methods”. Consider online polling, now conducted by many pollsters. Back in the 2008 London mayoral elections, all the telephone polls showed Ken Livingstone was ahead. After YouGov published two online polls showing that he was trailing Boris Johnson, Mr Livingstone attacked the polling methodology. His office said:

“YouGov’s polls are misleading the public and we have therefore decided to make a formal complaint”.

Had the noble Lord’s idea of approved methods been applied by the opinion police, would they have permitted any online polls, or would they have banned them in favour of traditional polls, which got the outcome of that mayoral race so wrong? Here the speech by the noble Lord, Lord Lipsey, shows the immense debate around methodology. What evidence is there that such a debate could be resolved satisfactorily by a regulator?

Next, the Bill would provide guidance on the wording of questions—no doubt emanating from Room 101. The noble Lord raised that in an intervention. However, as my noble friend Lord Cooper said, trying to seek such agreement on wording is like chasing a will-o’-the-wisp. On the wording of questions, where is freedom of speech and debate if an unelected body is guiding pollsters on what they can and cannot ask the public? On top of that, the opinion police will have the power to ban the publication of polls “in such a period” as they consider “appropriate” before an election or referendum. What is appropriate? Might that be a week, a month, or several months before an election, and how and when is this decision to be made?

So much for Orwell. What of Clouseau? The inspector of the opinion police would have his work cut out. Consider what happened in his own country of France. As many of your Lordships may know, there had long been a ban on the reporting of opinion polls in the week before French elections. In the 1997 legislative elections some newspapers broke this regulation. One got round the ban by putting the findings of an opinion poll on its website, which was linked to a Swiss newspaper. The result: the French ban has been reduced to 24 hours. So, we can hear the hapless inspector crying, “Zut alors!”, as he realises that this law, which he is meant to enforce, was designed for an analogue age.

The Bill before us stipulates that “a person” who breaks the rules may be fined. In the digital age, what if that person, sitting in some far-flung country, sets up an online poll? What is to stop a foreign newspaper conducting a poll and publishing its results online? What is to stop a website with its servers based in another country publishing a poll? Will Inspector Clouseau chase after them? Then there is the definition of opinion polling. It is,

“intentions with regard to voting”—

that is, intentions as to how people would vote. In the jargon, this is the “top line”—the raw percentage that each party might secure.

It would appear that, even if these polls were restricted, it would be perfectly possible to publish polls related to a party’s or a politician’s competence, credibility, affability, whether they are in touch or out of touch—the list is endless. A poll giving rise to the headline “Labour not trusted to run the economy” would presumably be allowed. So, too, for that matter might be “Public alarmed by SNP/Labour pact”. All this would be permitted by the opinion police—a loophole so large that even Clouseau might be able to get through it.

That brings me to my third question: whom would the Bill benefit? Not the British public, that’s for sure. Instead, it would benefit two groups: first, private companies, especially in finance, which have deep pockets and want to get the inside track on what the public are thinking so that they can take positions on currencies and stocks before an election; and, secondly, the polling companies themselves, which would be able to charge a fortune for these private polls. Therefore, if this House wishes to give the banks and the hedge funds insider information on the democratic process, this Bill would certainly do the trick—and make pollsters rich in the process. However, something makes me think that the noble Lord, Lord Foulkes, is not in the hedge fund fan club.

To conclude, the noble Lord has done us a great service by highlighting the enormous pitfalls of going down the route of regulation. The Bill is unnecessary. Its measures would not work, and it would dent our democracy and curb our freedom of speech. We should be free to express our opinions and to know what others think. Unsurprisingly, therefore, this Government have strong reservations about the Bill.

Opinion Polling

Lord Bridges of Headley Excerpts

Thursday 18th June 2015 Grand Committee

[The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)]

I am very grateful to the noble Baroness for that introduction. Sadly, no one has come to me asking for my services, although my son keeps asking me to partake in the National Lottery each week, as he is sure I can win. I also congratulate the noble Lord, Lord Lipsey, on securing this debate and am very grateful for the other contributions, which were very interesting. Indeed, this has been a very thoughtful debate, although a short one. I am delighted that we have risen above the sterile argument about regulation, good or bad, although I will touch on that.

The noble Lord, Lord Lipsey, has, as the noble Baroness said, extensive experience of polling and psephology, and I certainly cannot claim to rival that. However, he and I do share the honour—I think I am right on this—and probably the scars of having worked in the back rooms of Downing Street, only to be handed our P45s by the British people. My noble friend Lord McColl and I were there in 1997, so we all know what it is like—this could turn into a bit of a group therapy session—when you are desperately hoping that the polls are wrong but they turn out to be right; or, as in this case, not quite so right.

It strikes me that the noble Lord’s speech in this debate has focused on one particular aspect of opinion polling—the methodology—and in particular those polls that are deliberately designed to get the answers wanted by those who commission them. I do not want to get too much into the details around the ComRes issue; if your Lordships do not mind I would rather rise above that and just talk about broad issues.

Let me start by putting the noble Lord’s mind completely at rest by saying that this Government have indeed no plans to regulate opinion polls. I am delighted that there has been an outbreak of consensus on this point. Many of your Lordships would agree that statutory regulation is not the answer to the issue that we are concerned about: accurate opinion polling. There is widespread agreement that opinion polls lubricate political debate. They help to get that debate moving and to air views, and regulation of any form of opinion polling would put us on a slippery slope towards an unwanted intervention in free debate, benefiting only those with deep pockets who could afford their own polls, as my noble friend Lord McColl so rightly said.

Touching on a few of the points that I think we will discuss in tomorrow’s debate on the same issue, the power that a regulator would yield would be entirely disproportionate. It would end up sanctioning research which could then be portrayed as the official point of view. I have no idea how this would work during a general election. Would it be banned? Would the regulator be asked to adjudicate on which questions were permitted, the methodology and so on? Also, what is the scope of this regulator? While those of us within the bubble of Westminster are fixated on political polls, as I am sure your Lordships are aware the vast majority of pollsters’ business is with commercial entities who want to test what consumers think. Just think about this—you would have a cat food television advertisement that would read, “Nine out of 10 say their cats prefer it, as certified by the Consumer Research Authority, Cracom”, or words to that effect. That would be disastrous and a slippery slope. It would be unwanted regulation of business and bad for democracy. Is this necessary? I think not—but no doubt someone can produce an opinion poll to show whether it is.

As regards innovation, a number of your Lordships picked up on what I think is a key point. Regulation would threaten the debate and innovation on which polling depends. Polling is similar to that most dismal of sciences, economics. It was famously asked of the economics profession why it did not see the crash coming. Yet despite this collective failure, no one has yet called for statutory regulation of economists—not that I want to put ideas in your Lordships’ heads. This is because we understand that the technical problems inherent in economic forecasting cannot simply be regulated away. We know that improvement will only come through intensive research, open debate and rethinking of old assumptions. I would argue that it is just the same with the science of public opinion polling—a point that the right reverend Prelate the Bishop of Derby spoke eloquently about.

As the noble Lord, Lord Lipsey, well knows, this science is a far more complex business than simply phoning up random members of the public and asking what they think. Samples have to be weighted and there is no consensus about the best way to do this, obviously. Surveys have to take account of cognitive bias, and methodologies are constantly being tinkered with and adjusted. Indeed, there is a certain amount of competitive edge that companies have within that. I was particularly struck by the right reverend Prelate saying that asking someone how will they would vote days before a general election can have some bearing on how they actually behave when they enter the polling booth—picking up that little stubby pencil, their hand hovering over the box and then saying, “Actually, I am going to put my cross here”. To compare those two thoughts and those two reactions to the question is very difficult, and this is exactly what I hope the Sturgis inquiry into the last election is going to get to.

This brings me to the question of conflicting polls—one poll suggesting the public support something and another poll suggesting they oppose it. My response is, as a number of your Lordships have been saying, let us interrogate the methodology and debate the issue further, and then let the public decide. This, I would argue, is what freedom of speech and expression is all about. I strongly believe that the public—aided by a free press and vigorous debate in Parliament and elsewhere—can smell a dodgy poll. As the noble Lord, Lord Lipsey, said himself, the poll he is concerned about seemed to receive very scant coverage or mention in your Lordships’ House during the debate.

If people discover that a poll is dodgy, there are means of making complaints, as the noble Lord, Lord Lipsey, is now following. However, I would further argue that just as frightening from the pollsters’ perspective is the route that ends by being placed in the stocks of public opinion, and the shame of one’s work being lampooned and castigated by the public. Having read the weighty analysis of the poll on the parent embryo survey and what has been said about it, my strong sense is that this remains perhaps the best route to address the noble Lord’s concerns, despite what he says. It is not for me to say whether the self-regulatory bodies should do more, but if I were in their shoes I am sure that, in light of this debate and others about polling, I would want to take note of what the noble Lord is saying.

This brings me to self-regulation. I declare that in the private sector I did not just place bets, as the noble Baroness predicted, on what I thought a company might or might not do; I actually commissioned a number of opinion polls from reputable companies on issues that were of relevance to private companies. In my experience, great care was taken by pollsters to ensure that no question was seen to be leading or partial. Any suggestion from me or anyone else in the organisation I was representing that a question was, and it would be rejected and changed.

I endorse the comment of the noble Lord that the vast majority of opinion-polling companies abide by the rules and standards of the Market Research Society and the British Polling Council. One has to ask why these companies do so. It is clear that there is a simple reason: it is in their interests to ensure that their research observes the letter and, crucially, the spirit of the code of practice, and that they are seen to be asking balanced questions and presenting answers in an impartial way. Only then does their research command the respect of politicians, the media and, in turn, the public.

Furthermore, the industry fully understands that transparency and trust go hand in hand. Members of the British Polling Council must already publish their results in full, with the questions exactly as asked, a description of the sampling methodology, the raw unweighted data and, crucially, the name of the client commissioning the survey.

On the specific point the noble Lord, Lord Lipsey, has been addressing about the assembling of the questionnaires themselves, if he or anyone else who is interested cannot sleep at night they might to turn to the MRS’s guidelines for questionnaire design. It is a nice, weighty document of about 28 pages, which states:

“Members must take reasonable steps to ensure … that participants”—

that is, those who opinion pollsters are polling—

“are not led towards a particular point of view”.

This applies to the objectives of the research, and to structuring and writing questionnaires. I am sure these guidelines will be taken into account in considering the issue the noble Lord raised; as he himself said, let us see what happens.

Moving on, all this shows that like any other business or service, the polling industry’s prosperity is built on trust. If opinion polls are to be taken seriously, people—be they the public, journalists or your Lordships—must trust them. If opinion polls become a laughing stock, pollsters go out of business. Why would anyone commission research if they feel they cannot trust the results? This is why, as my noble friend Lord McColl and other noble Lords have mentioned, the polling industry is undertaking such a thorough investigation of what happened at the general election. It is in not just our interests but its own that it does this. It is just as concerned as everyone else to get to the nub of what went wrong. As has been mentioned, the inquiry’s first evidence session is tomorrow.

To my mind this is the right response to a poll failure—a transparent review of what went wrong, followed by innovation and experimentation. The methodology has to be, and be seen to be, robust so we all await the result of this autopsy with interest. I trust that the noble Lord will make his voice heard in this inquiry, and that it will be heeded. Furthermore, the noble Baroness made a number of interesting points about the inquiry taking on board experience from other countries.

Government regulation certainly would not solve many of the issues relating to methodology that the noble Lord mentioned. Regulating the industry would simply centralise the debate and decision-making process, with no guarantee that the challenges surrounding sample size, questions and so on would be overcome. A statutory regulator would be too slow and unwieldy to respond to the innovation and change brought about by big data, cognitive psychology and the digital revolution. Indeed, it would be an analogue solution in a digital age. Crucially, such regulation could—and in my view definitely would—stifle the very debate that opinion polls seek to inform. That is why government regulation is the wrong answer to the right question—a question about conduct and methodology. It is a question that the noble Lord has every right to highlight, and the existing self-regulatory bodies have every reason to heed. The Government do not plan to regulate the opinion polling industry. As Walter Bagehot wrote, and I am sure the noble Lord will say:

“The place of nearly everybody depends on the opinion of everyone else”.

Whether the decision not to regulate will have an impact on the place of government, I am not sure; I suspect we would need an opinion poll to find that out.

Civil Society

Lord Bridges of Headley Excerpts

Thursday 11th June 2015 Lords Chamber

[The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)]

My Lords, I am delighted that my first debate is on the civil society. I would like to echo all those who thanked the right reverend Prelate the Bishop of St Albans for tabling the Motion, and to thank him and so many others in the House for their extremely thoughtful speeches.

Churches across the right reverend Prelate’s diocese are involved in projects to make our society stronger, so I know how passionately he feels about this subject. I also pay tribute to others who have spoken in this debate, all of whom have contributed so much to communities across the country, be it to hospices, educational charities, health organisations or credit unions—the list is very long and varied. I hope that I can do justice to the many interesting points that have been made.

I would like to start with a quote about neighbourliness, which runs as follows:

“In our own life the intimacy of the neighborhood has been broken up by the growth of an intricate mesh of wider contacts which leaves us strangers to people who live in the same house … diminishing our economic and spiritual community with our neighbors”.

These words were written not in today’s Daily Mail nor in the Telegraph, but 100 years ago by the sociologist Charles Horton Cooley—a name I have to say I am not that familiar with—an American who was writing at a time of profound social change in America.

I quote this to echo a simple point made by the right reverend Prelate the Bishop of Rochester: throughout history, what some people have hailed as progress, others have seen as unwanted, corrosive and unsettling change, and for each generation the pace of change seems to accelerate and, with it, the sense of dislocation. Today the pace is indeed dizzying, as the noble Lord, Lord Kennedy, just said: the digital revolution, globalisation and the changing nature of our society are just three of the forces shaping our world. It is little surprise that once again many of us feel a sense of bewilderment and disorientation, especially at a local level, as the noble Baroness, Lady Barker, pointed out.

That is the backdrop to our debate today, and while I heed strongly what many have said about the problems facing our society, I cannot help but wonder sometimes whether we are succumbing to that very British disease of seeing the glass half-empty. I do not for a moment want to belittle the concerns that the right reverend Prelate the Bishop of St Albans expressed in his perceptive speech, which others have echoed in different ways—especially the noble Baroness, Lady Uddin, in her very eloquent speech. We in this House are not here to sweep problems under the carpet but to debate how they might be solved, yet I would like to slightly redress the balance and bring a little bit of sunshine into the debate.

First, on political tribalism, obviously there are divergent views about how we might run our economy, for example. But there are good cases where parties come together, such as the scrutiny given to the charities Bill, which I presented to your Lordships yesterday, or the National Citizen Service, which the noble Baroness, Lady Royall, mentioned. Yes, we need to get more people engaged in politics and involved in their communities. But let us not overlook the progress that has been made: 3 million more adults volunteered last year compared to 2009-10. I could cite many examples of this but will consider just a few.

The National Citizen Service has seen 130,000 participants. There is the hugely successful Community Organisers programme, training over 6,000 organisers to work in hundreds of communities up and down the country: or Code Club, a network of volunteers who teach coding in primary schools. On top of all that, obviously, is the kaleidoscope of charities that continue to enjoy the unstinting support of the British public, which the right reverend Prelate the Bishop of Rochester spoke eloquently about. Just last night, for example, as I returned home to Battersea, I came across hordes of runners who had taken part in the Race for Life—a sight which made me feel exhausted—in just another example of the big-hearted, generous spirit one finds in communities across the country.

Giving is up since 2009-10, with 75% of individuals giving to causes important to them. This is worth about £11 billion a year, making Britain one of the most generous nations on earth. So we should pay great tribute to the civil society sector, which over the past few years has remained resilient through difficult times. Supported by nearly £200 million of investment from government, huge numbers of organisations have had to transform themselves to be able to continue to deliver effectively in very different and fast-changing economic and social environments.

We should also acknowledge the transformation that the Government have made to improve regulation and simplify, where possible, the environment for charities. Here I pay tribute to the excellent work undertaken by the noble Lord, Lord Hodgson of Astley Abbotts, through his drive to unshackle good neighbours and deliver a valuable review of charities legislation. The right reverend Prelate the Bishop of Rochester made a point about the simplification of regulations. While we can and must consider how we address the challenges we face, we should not forget the good things that are already being done and we should always think about how we can do better still. The question is how.

Here I turn to the term “civil society”. Much ink has been spilled defining this term and theorising about it. The right reverend Prelate and my noble friend Lord Cormack both referred to Magna Carta. Here I dredge my brain and my history lessons, but I think that I am right in saying that the Magna Carta of 1225 as opposed to that of 1215 was granted by the King because he needed to raise extra cash and tax. This highlights in one’s mind the critical link between civil society and liberties on the one hand and economies on the other. As my noble friend Lord Griffiths of Fforestfach eloquently pointed out, strong civil societies are built on strong, enterprising economies in which low taxes encourage investment and reward hard work, in which the state does not crowd out nor overregulate private enterprise, and in which the fruits of labour are shared fairly and wealth creation is not despised but championed. These are economies in which jobs are created, giving people that all-important independence, a sense of worth and, above all, the freedom to follow their ambitions and realise their dreams. More than that, they are economies in which the state can truly afford to invest in schools and hospitals and help those in greatest need—economies in which people can afford to help others, not just look after themselves. I am not saying that without money individuals are devoid of a sense of charity, altruism and a wish to help others, but simply pointing out that in a prosperous economy, people have greater ability to help others and to strengthen the bonds on which a civilised society is built. Conversely, in an economy that goes bankrupt, it is the poorest who suffer most.

A strong economy is the bedrock of a civil society, but what are the bricks? I turn to the House of Bishops’ letter. I thought that it was a very good letter, and rather than dwell on the differences of policy—for there are some—I would rather focus on where we agree. There are many points on which I agree with the House of Bishops—indeed, my copy of the letter is well thumbed—but I will cite just three. The first is a point that the noble Baroness, Lady Prashar, focused on: Beveridge. The letter says:

“Beveridge understood that if the state is given too much power to shape society it will stifle the very voluntarism that prevents the state from being hopelessly overburdened by human need”.

How very true this is, and it is unfortunate that we did not heed those words more when they were written.

My second quote is:

“When law and regulation intrude too far into everyday life, they create a ‘chill factor’ where anxiety about the rules prevents people acting freely, sensibly or with wisdom, even in areas which are not, in fact, governed by official regulations”.

I say, “Hear, hear” to that as well, and it raises the very interesting points about the duty of negligence that the noble Lord, Lord Griffiths of Burry Port, made.

My third quote is:

“The Church of England strongly supported the Big Society”,

and its ideals,

“could still be the foundation for the new approach to politics, economics and community which we seek”.

I am delighted to read those words and will set out a few characteristics of such a society.

I will start with a slight caveat. I adhere to the principle that:

“Out of the crooked timber of humanity no straight thing was ever made”.

As John Stuart Mill warned us, large, grandiose plans to shape society may dwarf, maim, cramp and wither human faculties. Instead, we need to give people and the communities in which they live more freedom, more choice and more independence. Indeed, we need to buttress the tolerance and open-mindedness that the noble Baroness, Lady Neuberger, eloquently referred to, echoed by the noble Lord, Lord Anderson, while avoiding the pitfalls of multiculturalism that the noble and learned Baroness, Lady Butler-Sloss, spoke of.

What does this mean in practice? There are a number of aspects, but I will cite just a few. First, such a society is one where people, wherever they come from, have opportunities to get up and get on in life. What does that mean? A million more pupils are now being taught in good or outstanding schools. But this Government will go further, tackling those schools that are coasting or failing so that all our children get the best possible start. This includes being taught about our democratic system and citizenship at key stages 3 and 4, as I am sure my noble friend Lord Cormack knows, although I will peruse with interest his points about citizenship.

Secondly, such a society is one where more people have the chance to fulfil their talents. Some 2.3 million jobs and more than 2 million apprenticeships were created during the last Parliament. More women, lone parents and older workers are in work than ever before. Our aim now is to achieve full employment and create 3 million more apprenticeships.

Thirdly, a civil society is one where the less well-off are supported, while those who fall on hard times are helped back on their feet. In the last Parliament the number of households where no one works fell by more than 600,000, its lowest level in a decade. Now, with a tax-free minimum wage and a welfare system that rewards effort, we will create more opportunity for those who can work, while continuing to protect those who cannot. I was delighted to hear the views of the right reverend Prelate the Bishop of Rochester on this as well.

Fourthly, it is a society in which the Government are close to the people they serve. A number of your Lordships raised devolution. I say that free schools, local enterprise partnerships, elected police commissioners and local communities being given new powers over key community assets are all policies to strengthen ties and relationships between neighbours—bridging social capital, as the right reverend Prelate said and as the noble Baroness, Lady Royall, mentioned.

Next, while controlling immigration, we need to welcome and support those who come here to settle and who do their best to contribute to society. The noble Baroness, Lady Neuberger, made a number of eloquent points on this and I would be delighted to talk to her further. If I may stress one point to her, it is that the DCLG has an £8 million community fund to teach the English language, from which 33,500 adults have benefited.

Finally in my list, a civil society is one in which volunteering is encouraged and charities supported. Let me turn to a couple of specific points on that. My noble friend Lord Patten made a forceful intervention referring to big charities, and especially to their fundraising techniques. As he said, my honourable friend the Minister for Civil Society met with the self-regulatory bodies and made it clear that action must be taken, and quickly, to protect the long-term reputation of charities and address concerns expressed in recent days. As regards pay, that is a matter for charities’ trustees. They need to publish details in their accounts if senior executives are paid more than £60,000; that transparency will give the public the ability to decide whether to support those charities. Charitable trustees need always to bear in mind that it is upon the trust and generosity of the public that their future depends.

The noble Lord, Lord Judd, was absolutely right to point to the need not to overwhelm the charitable sector with new regulations. We need to get the balance right and I am confident that the new powers contained in the charities Bill are focused, targeted and proportionate. The third specific point, relating to community funds, was made by the noble Baroness, Lady Prashar. I can make no commitments as regards funding from this Dispatch Box but I intend to write to her about the very interesting points that she raised.

While rebuilding our battered economy, much has been done over the last five years to help strengthen our civil society. Let me give just a few examples. The Centre for Social Action is investing £40 million in high-impact social action projects driven by communities, seeking to work better with public services, including for people who need full-time care, the elderly and those who need support to live the final stages of their life in dignity. The Government have also created the world’s first ever social investment bank, Big Society Capital, unlocking more than £100 million of funding for communities at local level through Community First. As I mentioned, the National Citizen Service has seen more than 130,000 young people experience a programme of activity that has at its heart a message of individual responsibility, with more than 2 million hours of social action and 7,000 community projects stemming from this programme alone. As I also mentioned, one of the key aims of the charities Bill, which was debated yesterday, is to encourage charities to make more social investments that will deliver both a financial and a charitable return. Charities currently have more than £60 billion of assets, yet just £100 million of that is invested in such projects. This is a great opportunity for our little platoons to do more in their chosen fields.

So over the next five years, this Government would like to see more social action and volunteering, with community participation embedded in our lives from young people’s schooldays onwards. We would like: increased levels of giving and philanthropy; more businesses with greater sustainability at their heart; more social investment, enabling investors who want to use their money to have a profound social impact and deliver positive social change; and stronger, more resilient, more capable and more empowered communities, with a rebalancing of power away from government, enabling those communities to make more of their own decisions, shape their future and respond to the challenges that they face. But, where people need them, we would like better, more responsive public services, utilising the expertise of voluntary, community and social enterprise sector volunteers.

I end by thanking the right reverend Prelate the Bishop of St Albans for tabling this Motion. It has been a debate rich in insight and full of ideas as to how we can strengthen the bonds which underpin our communities. While we may disagree on some of the means, I think that we can all agree on the ends: a bigger, stronger, tolerant society, where communities seek fulfilment and well-being by each doing their bit; a society where communities are more resilient, capable and empowered; a society where people are encouraged to help others; and a society which has an active and diverse voluntary, community and social enterprise sector. This is civil society, built on the solid foundations of a strong economy, and I look forward to debating and discussing with your Lordships what more can be done to help foster this society in the weeks and months ahead.

Charities (Protection and Social Investment) Bill [HL]

Lord Bridges of Headley Excerpts

Wednesday 10th June 2015 Lords Chamber

Moved by

[Lord Bridges of Headley]

That the Bill be read a second time.

[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.

Charities (Protection and Social Investment) Bill [HL]

Lord Bridges of Headley Excerpts

Wednesday 10th June 2015 Lords Chamber

[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.

Bill read a second time and committed to a Grand Committee.