Social Investment

Susan Elan Jones Excerpts

Wednesday 15th June 2016 Westminster Hall

[Susan Elan Jones (Clwyd South) (Lab)]

I beg to move,

That this House has considered support for social investment.

It is a great pleasure to serve under your chairmanship, Mr Chope. I think it was the former New York governor Mario Cuomo who liked to repeat this quote:

“You campaign in poetry; you govern in prose.”

I apologise in advance because many of the practicalities relating to social investment and social enterprises are technical by their very nature, so most of my speech will be in prose, and pretty dry prose at that, but just for a moment I want a word of poetry, or at least a word of vision, to remind us what social investment and social enterprises are all about. As Social Enterprise UK, the national body for social enterprises, puts it:

“Social enterprises trade to tackle social problems”

and

“improve communities, people’s life chances, or the environment. They make their money from selling goods and services in the open market, but they reinvest their profits back into the business or the local community. And so when they profit, society profits.”

As a Labour Member of Parliament, I was interested to learn that it was the great social activist and researcher the late Lord Michael Young, author of my party’s 1945 manifesto, who 53 years later, in 1998, founded the School for Social Entrepreneurs. That perhaps reflects the fact that some of the best ideas for social improvement today come from the social enterprise sector.

Social enterprises are everywhere and can do almost anything. They are coffee shops, cinemas, pubs, banks and bus companies, to give but a few examples. Allow me, Mr Chope, to use the example of a social enterprise in my constituency: Splash Community Trust, which runs Splash Magic. That social enterprise was formed to reopen Plas Madoc leisure centre after Wrexham County Borough Council decided to close it in April 2014. The local community came together to save the facility, which the Splash Community Trust now runs for the benefit of the community. Splash Magic provides not only swimming and leisure facilities for the local community, but employment for local people, tackling health, employment and social problems. It is a great success story. This debate is about Splash Magic and every other social enterprise in our country, and how best we can support them.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Lady for raising this very important issue. She has outlined one example of how social enterprises can make a difference. Some 2 million people have been employed through social investment, and it contributes £55 billion to the economy and has helped many social ventures. Does the hon. Lady agree that more community groups and small charities need to be aware of the help that there is in accessing funds, such as the Big Lottery Fund and other charitable funds, and that they should not be put off by long, complex forms and in-depth requirements, and be left feeling unable even to apply for community-changing grants?

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[Susan Elan Jones]

I agree totally with what the hon. Gentleman says and the importance that he attaches to social investment—but now back to the prose. In 2012, according to ICF GHK’s report, “Growing the Social Investment Market”, which was commissioned by the Government, there were 68,000 social enterprises in the UK and they contributed at least £24 billion to the economy. Subsequent estimates suggest that the economic contribution could be far higher than that.

Social investment is of course the enabler of social enterprise. It is the use of finance to achieve a social as well as a financial return. The social investment market assists voluntary, community and social enterprises to raise capital that they may not be able to secure from conventional investment sources. It also helps investors to find organisations that will deliver for them a social as well as a financial return. The Charities (Protection and Social Investment) Act 2016, with which the Minister will be very familiar, gave charities the power to make social investments. I welcome that.

As it is often difficult for social enterprises to secure conventional bank loans, social investment is often a more suitable way for social enterprises to finance their activities. A significant reduction in grant funding in the voluntary sector and a move towards a dominance of contracts are two reasons for the increase in the popularity of social investment. Although social investors do expect a financial return, that often decreases in inverse proportion to the level of social return that investors wish to see. As a report for the Big Lottery Fund found, that means that social investors are often willing to accept lower financial returns if the social impact is greater.

Last year, a significant report was published. The “State of Social Enterprise Survey 2015”, supported by Santander, is the most comprehensive research undertaken into the state of the sector. It told of some great successes, such as how the proportion of social enterprises that grew their turnover in the 12 months prior to the report was 52%, well above the comparative figure of 40% for small and medium-sized enterprises. It also revealed that 31% of social enterprises are working in the top 20% most deprived communities in the UK. That is in itself an interesting figure and a sign of the social enterprises’ success.

However, the same research also stated that 39% of social enterprises believe that the lack of availability of funding or finance is a barrier to their sustainability, and although there was widespread support for the Public Services (Social Value) Act 2012, there was concern about its practical implementation. Both points need careful consideration and action.

I am sure that the Minister will want to praise Big Society Capital Ltd, which came about because people such as Martyn Jones, my predecessor as MP, campaigned on dormant bank accounts. Big Society Capital Ltd was set up under the Dormant Bank and Building Society Accounts Act 2008, which defined Big Society Capital as an organisation that exists

“to…enable other bodies to give financial or other support to third sector organisations”.

It was established by the Cabinet Office and launched as an independent organisation with a £600 million investment fund in April 2012. The investment fund comes from dormant bank accounts via the independent Reclaim Fund and four leading UK high street banks. Both my party and the Minister’s are rightly proud of Big Society Capital.

As co-chair of the all-party parliamentary group on charities and volunteering, I was privileged to chair a meeting recently on social investments. An interesting range of opinions were expressed, many by practitioners who deal with social investments and individuals who run social investment funds. There were many excellent contributions at the meeting. I pay particular tribute to John Smart of the transport industry social enterprise HCT Group, with whom I discussed some ideas in greater depth. In the light of the ideas raised at the all-party parliamentary group meeting, I will make the following proposals, and I would be grateful if the Minister responded to them in turn. First, I would be grateful if the Minister considered a change in accounting regulations to allow quasi-equity to be disclosed as equity rather than debt. It is often inappropriate and/or difficult for a social enterprise to take out loans. That is particularly true during their start-up phase, when they need capital for growth.

Under Charity Commission regulations, charities are unable to raise equity—that is, sell shares—or distribute reserves by way of dividend. That poses the question of how a social enterprise or charity can raise money for its development or growth. Quasi-equity investment allows an investor to benefit from the future revenues of an organisation. Under a quasi-equity agreement, an investor would receive a percentage of a social enterprise’s future earnings, which means that if the organisation performs well, the investor receives a good return. Conversely, if the organisation does not do well, the investor will receive little or no return.

In a typical social loan, the investor is investing in the organisation to help it to grow, taking the risk that the growth will occur. That is similar to a conventional equity investment, but the organisation does not issue shares. However, under current regulations, quasi-equity must be disclosed as debt on an organisation’s balance sheet. That can lead to the balance sheet looking over-geared, which is a particular problem when bidding for contracts, especially as commercial organisations tend to raise equity to fund expansion, and so do not face the same issues with their balance sheets.

A change in accounting regulations to allow quasi-equity to be disclosed as equity rather than debt would improve the social investment market. The change would be of great help to social enterprises that work with local authorities. When the social enterprise has the opportunity for open dialogue with commissioning authorities, it can explain its position and balance sheet. However, online portals are increasingly used as the method of bidding for local authority contracts, which provides no opportunity to explain the balance sheet position. Allowing quasi-equity to be disclosed as equity would go some way towards creating a level playing field between social enterprises and their mainstream commercial competitors. It would also be beneficial if contracting authorities could recognise that social enterprises, as not-for-profit entities, have different balance sheets from their commercial competitors.

Secondly, will the Minister consider an increase in the level of social investment tax relief? Individuals making an eligible investment can deduct 30% of the cost of their investment from their income tax liability, but only up to about £290,000 over three years. I know that there are many technical and legal issues, but change would attract more inward investment to the sector and allow social enterprises to expand and build on the good work that they are already doing to benefit society.

Thirdly, will the Minister further discuss the role of social impact bonds? There is clearly a wide range of different views on the subject, and I suspect that the Minister has heard many of them. The National Council for Voluntary Organisations, for example, is concerned about the fact that such a high proportion of the Cabinet Office’s spending—somewhere between £80 million and £105 million, I believe—is being committed to social impact bonds, which it sees as largely untested and as having a costly commissioning model. Although the organisation welcomes opportunities to learn more about how that model could be used to deliver social outcomes, it questioned whether SIBs should be such a high priority for the Cabinet Office, at the expense of other projects, until there is a better evidence base for their efficacy.

Some of us see social impact bonds as an effective way of de-risking contracts for the delivering social enterprise and the commissioning body, and as a good way for social enterprises to tap into available funds and have a social impact without the cost and commitment of loan or quasi-equity structures.

I am delighted to have had the opportunity to make my points today, and I look forward to hearing the Minister’s response.

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[Mr Wilson]

The Big Lottery Fund has some £700 million of grants at its disposal each year, and it is an important part of the funding landscape in this country. It does an awful lot of great work, and I encourage organisations that perhaps have not made funding proposals to the Big Lottery Fund in the past to do so now. The Big Lottery Fund is trying to do a lot to make it easier for organisations to get hold of grants and to ensure that it is focusing on some of the more disadvantaged areas across the United Kingdom.

Returning to my previous comments, I want the leadership that the Government have shown on social investment to continue. The Government are therefore supporting social impact bonds, as the hon. Member for Clwyd South said, and so far we have created 32 social impact bonds, which is more than the rest of the world put together. We have enormous experience of social impact bonds and the social impact bond market. SIBs work on the principle that the Government pay only for the outcomes that we want to see and that we agree should be delivered. Social investors provide the up-front investment to scale up innovative services and are repaid by the Government based on the outcomes delivered.

SIBs are being deployed to get to the heart of some of the biggest challenges that we face as a country. They often focus on things such as early intervention, which will help us to contain the ever-expanding demands on our public services. I recently visited the AIMS—accommodation, intense mentoring, skills—project of the Local Solutions organisation in Liverpool, which is supporting young homeless people into accommodation, training and employment. The programme allocates a trusted mentor to each young person to provide a single contact point, delivering personalised support across multiple services. The programme is financed via a SIB and is a great example of how commissioning for outcomes can give social sector organisations the freedom to do what is needed, when it is needed. SIBs help to foster genuine partnership between the Government, social sector organisations and social investors, supporting organisations that can innovate in ways that big government finds difficult. Perhaps most importantly, SIBs focus on delivering meaningful outcomes for people, and there is more to come.

As the hon. Lady will probably have picked up, the Prime Minister recently announced our new £80 million life chances fund, which is an important next step on the journey and will show how social investment can transform local public services. The fund is a down payment on a social impact bond market that I hope and expect to be worth £1 billion by the end of this Parliament. I want to see more social impact bonds and to support those who want to use this innovative source of capital, which is why we are working with the University of Oxford to create a new centre for excellence that will develop world-leading research in social impact bonds and innovative Government commissioning and will provide the practical support that local commissioners need as part of that process, but there is more to the market than social impact bonds.

[Susan Elan Jones]

The Minister is making some interesting points about SIBs, and the debate will clearly continue among organisations, but may I draw him on to the issues of quasi-equity and of equity and debt, please?

[Mr Wilson]

The hon. Lady made three specific proposals. The first was a change to the accounting rules, which she believes will help social investment by disclosing equity, rather than debt. I understand that, and I am happy to look at it. The second was an increase in the level of tax relief. Obviously I will need to discuss that with Treasury colleagues. Again, I am happy to look at it, but I cannot give her any commitments. Thirdly, she wanted to discuss further the whole investment in SIBs, which I have been trying to address.

I will talk about some other issues, too. Alongside charities and conventional social enterprises, new kinds of businesses are committed to making a social impact through their business without having constraints on how they distribute profits. Such businesses are part of the UK’s already diverse and growing social economy, and an independent review is currently considering how to increase the economic and social impact of mission-led businesses in the UK.

The hon. Lady mentioned dormant assets, which is another area that offers real opportunity. I believe there is a host of such assets that belong, in aggregate, to the public and should therefore be used to benefit society, not specific firms that may be sitting, unwittingly or not, on these stores of potential public value. I have set up an independent commission on dormant assets to explore what additional assets could be released to good causes, potentially transforming the way we support the sector.

We have done, and are doing, a lot to support social investment, but I do not plan to be complacent. There is more that we can do, and I will continue to drive the agenda forward. The breadth and innovation of our social sector in the UK is truly inspiring, as the hon. Lady will have witnessed. We are surrounded by incredible organisations that deliver life-changing services and reach all corners of our society. For example, I visited the social enterprise Clarity, which has been providing employment for blind and disabled people for 160 years. Employment in manufacturing a range of beauty and household products enables Clarity’s staff to develop their independence, build their confidence and play a full part in society. Such organisations demonstrate exactly why I am so committed to the sector, which is why I am determined to build their resilience and sustainability so that they can thrive and grow.

Again, that is where social investment comes in. I want to make it easier for anyone to be a social investor, from individuals to foundations to corporate organisations. I want to help investors to connect, through their investments, with the causes that matter the most to them. I would like to see pension providers offer products in which a percentage of their members’ money goes to social investments. We are seeing that work successfully in the French pension system, in which billions of euros have been channelled to social impact investments. Product providers in this country have so far made limited progress on developing social investment offerings for retail investors, so that area has real potential.

Some organisations are pioneering retail products. Threadneedle, for example, has a UK social bond fund with tens of millions of pounds under management that can be accessed by individual investors. That is just the tip of the iceberg for retail fund offerings. Millennials will be the beneficiaries of the largest intergenerational wealth transfer in our history, and in the future successful investment managers and product providers will need to cater for their preferences. They are more interested in values-based lifestyles than previous generations, which includes consumption choices but also the way they want to invest. The Government want to back those people in the choices they want to make, as well as supporting the incredible social enterprises and mission-led businesses we have in the UK to grow in scale to make an even bigger impact on the lives of beneficiaries and communities that they are changing every day.

I am delighted to have had the opportunity to discuss social investment in Westminster Hall today. Social investment is important because it is part of the long-term future of civil society in this country. We have a truly inspiring social sector here in the UK that contributes not only to the lives of our citizens but to the economy at large. We have all seen at first hand the impact that such organisations are having and the difference that they make to people who need them the most. We all want to ensure that the sector can thrive, which is why I am focused on delivering a sector that is more independent, more resilient and more sustainable over the long term. We can see that social investment is working. There is demand from social enterprises and investors alike, which is why I know that social investment is here to stay and will continue to grow and drive this vital sector.

Question put and agreed to.

European Council

Susan Elan Jones Excerpts

Monday 22nd February 2016 Commons Chamber

[Susan Elan Jones (Clwyd South) (Lab)]

Will the Prime Minister tell the House whether he thinks rural communities in Britain would be better or worse off in the EU?

[The Prime Minister]

I represent a rural community—400 square miles of beautiful west Oxfordshire. There will be a range of views in my constituency, but I know when I talk to many of those who are responsible for producing food and for looking after our local environment that they see strong advantages from remaining in the European Union.

Charities (Protection and Social Investment) Bill [Lords]

Susan Elan Jones Excerpts

Tuesday 26th January 2016 Commons Chamber

[Anna Turley]

My hon. Friend is absolutely right. He pays tribute to the charities that do some of the most important work with the most excluded. Such people need a voice and are often those who suffer the consequences of bad policy making in this place. Charities often have to pick up the pieces of such policy making.

[Susan Elan Jones (Clwyd South) (Lab)]

I am slightly mystified by some of the comments about so-called political activity. We are talking about basic advocacy. We only have to go back to the end of the first world war to see the Royal British Legion campaigning for jobs for veterans and so on. We are not talking about party political campaigning. That is what the voluntary sector objected to in the 2014 Act.

[Anna Turley]

My hon. Friend is absolutely right. As she has ably demonstrated, charities have a long-established role in educating, informing the public, campaigning and securing positive social change throughout our history.

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[Anna Turley]

I am surprised that the hon. Gentleman has a problem with negative behaviour—I am afraid that it is a fact of life. Having looked at the evidence from the Charity Commission on that case, I still struggle to see what was wrong with the situation. I am very happy to continue that conversation with the Charity Commission.

The hon. Gentleman says that that was the only evidence given. More than 160 charities signed a letter to the Government ahead of the general election saying that the legislation should be scrapped, including Save the Children, the Salvation Army, Oxfam, Greenpeace, Age UK and Amnesty International. The charity sector is up in arms.

[Susan Elan Jones]

Surely the big problem that people had was that they did not like the idea of dodgy lobbyists giving money to dodgy politicians. It was not about victimising groups such as the Salvation Army. The hon. Member for Newark (Robert Jenrick) says that it was just the Badger Trust that was affected. If he had heard what the Countryside Alliance said at the all-party parliamentary group on civil society and volunteering about what it thought of the gagging Act, he would accept that a wide variety of groups are affected.

[Anna Turley]

My hon. Friend makes an extremely important point about the strength of feeling in the sector.

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[Maggie Throup]

I understand where the hon. Gentleman is coming from, but I believe that new clause 3 will encourage charities to go down that route and, perhaps, stray from their original intentions, however well-meaning they may be, thus inadvertently—not intentionally, I admit—misleading the public. I fear that the inclusion of the new clause could conceivably allow us to reach a point at which a large cancer charity, for instance, spent more on lobbying national and local government than on investment in research on and development of new cancer drugs. I think that that is what the hon. Gentleman was alluding to, but I disagree with him. For me, this raises a number of major issues.

The first issue is the impact on donations. Charities rely heavily on public donations to fight for their specific cause or issue. The Charities Aid Foundation estimated recently that in 2014 alone, £10.6 billion was donated by the British public to a vast array of good causes. By politicising charities, we risk donors turning away from charities whose cause they support because they do not necessarily share the charity’s political agenda or party alignment.

Secondly, the new clause would serve to allow larger national charities, which already dedicate significant resources to lobbying Members in this place, to strengthen their influence over Government policy and decision making. That would be to the detriment of smaller, often local, charities, of which we all have many examples, which would be further marginalised from the decision-making process because they simply could not afford to compete for airtime.

There is also a third point. Like many others, I would be deeply concerned if those charities that are very much a cornerstone of our society—the Royal British Legion, Macmillan, Age UK and the NSPCC, to name but a few—suddenly became vulnerable to infiltration from those who wanted to push a specific political agenda or to use the charity to criticise or support the Government of the day, rather than running it as a force for good.

I am sure hon. Members will agree that we do not really need any more politicians. Yes, it is only right and proper that charities should play their role in shaping our society by seeking to influence Government, nationally and locally, but they also have much more to offer society without widening their scope into out-and-out political campaigning—or, as some might call it, the dark arts. That is why I will be voting against the new clause this afternoon.

[Susan Elan Jones]

It is a great pleasure to speak in today’s debate. We often have wonderful debates in this place about what Britishness is about and what our culture is about. I actually think that the voluntary sector in this country represents the best of British—that is, the best of English, Welsh, Scottish and Northern Irish. As politicians, we do not always say thank you, but our starting point today as we consider the Bill should be to say a very big thank you to our hard-working and diverse voluntary sector in this country.

We should also remember that most charities in this country are relatively small. They operate in communities, and it is not our job in this place to be a pain in the neck for the 900,000-plus trustees of charities around the country who give their time voluntarily to make management and governance decisions, or for the charities’ many volunteers. The motivation of those people is undoubtedly to do good in our society and in our country.

We cannot, of course, forget the exceptions—the horror stories—including the dreadful death of Olive Cooke, who appears to have been hounded by 90 charities sending her 460 letters asking for donations in the course of one year. Nor can we forget the undercover Daily Mail report on what appeared to be severe malpractice in the call centre from hell. And nor should we forget the case of Kids Company and all the abuses that went on there. Incidentally, those abuses could and should have been dealt with by the Government and by the Charity Commission under its existing powers. We see those cases as exceptions, but they are nevertheless important and it is right that we are having this discussion today in Parliament.

Members on both sides of the House will see elements of voluntary activity in their own political traditions, and we can certainly develop some sort of empathy with different parts of the voluntary sector. We on this side of the Chamber can look to the labour movement, the co-operative movement, the working men’s and women’s organisations and a whole range of other bodies, but I know that the Minister for Civil Society, the hon. Member for Reading East (Mr Wilson), will also be moved by Edmund Burke’s notion of the little platoons. What I ask today is that he does not overburden those well-behaved little platoons in our country with red tape when it is not needed. Most of us would agree that where regulation is needed, the sector itself generally does that job best. I, for one, would give a warm welcome to the fundraising preference service, which will deal with some of the totally unacceptable abuses of practice in fundraising.

Charities (Protection and Social Investment) Bill [Lords]

Susan Elan Jones Excerpts

Thursday 3rd December 2015 Commons Chamber

[Tommy Sheppard (Edinburgh East) (SNP)]

I rise in my capacity as the Scottish National party’s spokesperson on the Cabinet Office to make a brief contribution to the debate. You will note on the Benches behind me the absence of Scottish Members of Parliament. Please do not take that to indicate a lack of interest; it is merely an acknowledgement of the fact that the provisions in the Bill do not apply to Scotland and that our constituents will not be encumbered by them. That said, we have a few observations to make on the measures.

This is a certified Bill, but you will note that there is no willingness on the part of Scottish Members to take part in the debate anyway, so perhaps this could serve as an illustration of whether or not it was really necessary to burden the House with the amendments to Standing Orders relating to English votes for English laws. I want to make an effort to be constructive and to help the Government, so if you wish to speed up the passage of this legislation, I can assure you that we will not seek to make any further contribution to, or have any further influence on, the matter under discussion. You could therefore dispense with the legislative consent stage, should that become necessary.

There is a different system in Scotland, obviously, and I pay tribute to the Office of the Scottish Charity Regulator—OSCR—which has, since 2005, provided support for 23,500 charities of all shapes and sizes in Scotland. I want to pay particular tribute to OSCR’s trustees. I have some personal experience in this area, because I served for seven years as a trustee of the Edinburgh Festival Fringe Society, which is one of the larger such organisations in Scotland. It has benefited greatly from the support it has received from OSCR. That said, even though we have a different system, we live on the same island and the regulations that apply in England and Wales set some of the context in which we operate in Scotland, so we have an interest in the legislation relating to England and Wales that is passed in this House.

[Susan Elan Jones (Clwyd South) (Lab)]

May I make a quick point? Not many people will be aware—I myself was not until about six months ago—that every charity in Scotland is registered with the regulatory body, whereas in England and Wales many of the smaller charities are not. I think that that is of relevance to the wider debate, and I wonder whether the hon. Gentleman has a view on the matter.

[Tommy Sheppard]

All I can tell you is that it works well in Scotland, and we tend to take the approach “if it ain’t broke, don’t fix it”.

I will make a couple of points on specific aspects of the Bill in a moment, but first I want to welcome the Minister’s general support for the role of charities in our society throughout the country. It is important to recognise, however, that the people involved in charitable organisations are not just there as service providers who deliver things. They are also a valuable source of information and opinion, which can inform many of our social policies, and despite the Minister’s support, the Government may have some bridges to mend with the charitable sector in some areas of social policy. In particular, more than 60 disability organisations and charities have been critical of the Government’s changes to disability benefits. Let us contrast that with the situation in Scotland, where the leading children’s charities have actually praised the Scottish Government for amending some of the regulations.

Turning to the Bill, there are some clauses in which you are bringing the situation into line with that in Scotland. Clause 2 relates to the time limit on the suspension of trustees and clause 8 relates to property. These provisions already apply in Scotland in more or less the same way. I note that in clause 10, which covers the criteria for the disqualification of trustees, you are going a lot further than we have done in Scotland. Our approach would be to let you get on with that and see how it works out—

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[Susan Elan Jones (Clwyd South) (Lab)]

It is a great pleasure to take part in the debate on this Bill. I want to make a few points. I think many people welcome the fact that the Government are taking action to prevent individuals who are unfit to become charity trustees from doing so and are tackling abuse and mismanagement of charities more effectively. However, I have a few questions over some details.

There is widespread agreement across the voluntary sector and among the general public—this very much recognises what the hon. Member for Erewash (Maggie Throup) said—about the problem with predatory fundraising when it is done in an unethical way. It is good that the sector itself is coming forward with the idea of a fundraising preference service. That will be very important.

It is worth bearing in mind, however, that across England and Wales there are 943,000 trustees, and we in this House bear some responsibility for making sure we do not scare them to death with regulation. The bulk of charities in this country are not like Kids Company, which appears to have got away with a remarkable amount. We are talking about people who give up their time to serve on management committees, often when they do not have much time to give up. We do not always do that well in the diversity of trustees. I think the average age is 57, and only about one in 200 is between the ages of 16 and 24, so I would be reluctant to do anything that scares off too many people. However, there is a case for returning to the proposal suggested a few years ago by Lord Hodgson for time limits—for larger charities only; it would be ridiculous for the village hall committee and many smaller management groups. I hope that can be considered during the Bill’s passage.

I have a couple of other small points. Members have already suggested that clause 1 gives the commission an absolute discretion to publish an official warning to a wider audience. However, charities depend heavily on funding and reputational matters, so if there is no real right to appeal against a warning and no minimum notice period, that needs to be looked at.

The issue with clause 11, which centres on the power to disqualify from being a trustee, relates to clarity. We agree in principle that, if there is genuine abuse, it is important that such a power can be used. On clear cases, there is a question about whether the amount of discretion available is too wide; many of us agree that that needs to be defined much more clearly. The hon. Member for Congleton (Fiona Bruce) raised the issue of past behaviour in her extensive speech.

I welcome the Bill. It is part of the consideration of how charities develop in the modern world, but we have to be careful. It is so easy for us to add new regulations that frighten charities, especially smaller charities, from doing their work. Often, charities start off very small. For example, Your Space in Black Park in my constituency started off very small, but it has now become a state-of-the-art charity working with children and young people with autism. Such things often begin from little acorns, but we must not smother the little acorns with too many regulations. I am not sure whether it is possible to smother little acorns, but if it is possible I do not think we should do it.

Although I broadly welcome the Bill, we need to look at some of those details. In the last Parliament, the Government made changes following the Committee stage of the Small Charitable Donations Act 2012. I hope we can debate at a later stage the issues I have raised.

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[Mr Wilson]

I thank my hon. Friend for her contribution this afternoon and her question. She raises some extremely important issues, with which I intend to deal in full. As she has asked, let me just deal with the public benefit and religion issue first. Religious charities play a hugely important role in our public life. Over 25% of registered charities have a religious purpose and are often working in some of the most hard-to-reach communities. The advancement of religion is one of the oldest charitable purposes, and there is no question but that it is under threat. There are more than 25,000 registered religious charities, almost all of which have no difficulty in demonstrating their public benefit.

My hon. Friend mentioned the Plymouth Brethren in her speech. Its case was an exception, and I am pleased that it was resolved in a sensible way, even though it took too long. I will come back to some of the other issues that she raised later in my comments.

All the proposed commission powers in the Bill have a right of appeal, in most cases to the Charity Tribunal, ensuring that there is independent judicial oversight of the exercise of the commission’s powers. There have also been some questions, notably from my right hon. and learned Friend the Member for Harborough (Sir Edward Garnier), about the rehabilitation of offenders.

The Government believe that individuals with serious convictions should not be able to hold the position of charity trustee and have control over charitable funds and fundraising activities until those convictions are spent or a waiver from disqualification is obtained from the commission. The waiver regime exists to enable disqualified individuals who wish to be a charity trustee to apply to the Charity Commission for their disqualification to be overturned.

A waiver application would be considered on a case-by-case basis, and the Charity Commission would take into account the nature and seriousness of the conduct that had resulted in the conviction and consequential disqualification.

A decision by the Charity Commission not to grant a waiver could be appealed to the Charity Tribunal, which would consider the matter afresh. That strikes me as a fair and proportionate system that on the one hand protects charities from individuals who present a known risk, and on the other hand provides for the rehabilitation of offenders and a way back into charity trusteeship on a case-by-case basis.

People have also raised concerns about the official warning power and the fact that there is no right of appeal to the Charity Tribunal. There is a right of appeal, which is judicial review. That is the same position as now, where the commission publishes its operational compliance case reports on non-inquiry cases that have attracted public interest and that highlight important lessons for charity trustees.

The Bill provides for a period of time to allow representations to be made in relation to an official warning, which the commission would be obliged to consider. There is then the option of judicial review. We consider that proportionate.

A right to appeal an official warning to the tribunal would be disproportionate and could tie the commission up in red tape, rendering the power impractical for its intended purpose. The last thing that we want to do is give the Charity Commission powers that it cannot use, and for which it could be criticised for failing to exercise several years hence. The Joint Committee that undertook pre-legislative scrutiny agreed that, with the appropriate safeguards in the provision, judicial review was the appropriate route for appeals.

Let me turn now to fundraising. I was deeply disappointed to see the extent of poor practices by large charities in relation to their fundraising. That matter was widely exposed by the media earlier this year following the sad death of Olive Cooke. Since then, further damaging cases have come to light, and once again the reputation of charities has been put at risk by the actions of a small minority. Public trust and confidence in charities have not been this low since 2007, and charities now rank 12th in the list of most trusted institutions, below supermarkets and television and radio stations. Only 48% of people said they trusted charities.

In response to the fundraising scandals, we acted swiftly to amend the Bill in the other place to reinforce charity trustees’ responsibilities and accountability for the charity’s fundraising. Clause 14 will encourage charities to exercise greater control and oversight of those who fundraise for their organisation. It will ensure that there are proper processes for dealing with vulnerable people and will generally safeguard the public. Large charities will make this commitment public through their annual reports so that anyone can hold them to account for how they interact with them.

I asked Sir Stuart Etherington to conduct an independent review of how fundraising regulation could be improved to safeguard vulnerable people and better respect the public’s wishes about how and whether they are contacted. He was supported by a cross-party panel of peers. I have since accepted the review’s recommendations in full, and I am now encouraging the sector to move quickly and firmly to show that it gets the public’s anger and concern and is committed to making self-regulation work.

I also expect the sector fully to back the new fundraising regulator, both financially and through compliance with its rulings. In the past few weeks, I have announced that Lord Michael Grade has been recruited as the interim chair of the new body and will oversee the set-up and initial phase of operations. I am confident that he is the right man to lead this important task and that the sector will unite behind him to address these urgent issues and restore public trust in fundraising.

The new regulator will also host the fundraising preference service, a tool that will allow people to opt out of receiving fundraising requests and that will stop charities wasting resources on approaching those who do not wish to hear from them. A working group is currently being set up to establish how the service will work in practice. In addition to a simple reset button, there will no doubt be a few more nuanced options should people wish to opt into certain charities only. Crucially, it will provide everyone with a way to get off charity contact lists they no longer wish to be on.

Charities need to demonstrate that fundraising and its self-regulation can work in the best interests of the public. They will have the chance to do so at a summit tomorrow, when the next steps for implementing better self-regulation will be announced. I hope that this will be a constructive and collaborative meeting where charities show their commitment to the new self-regulator and to meeting the public’s expectations. Should they fail to do so, I stand ready to step in to safeguard the public and their trust in charities.

For that purpose, I will seek to add two reserve powers to the Bill: one to compel charities to sign up to the new regulator and a second to mandate the Charity Commission with regulation should the sector fail to rise to the challenge. I also welcome the commission’s revision of its guidance for charity trustees on fundraising, which it has published today. It reminds trustees of their duties and responsibilities in relation to fundraising, including the need to protect their charity’s reputation and that of the wider sector.

The Bill also provides support to social investment. As many will have seen in the autumn statement, the Government have shown a strong commitment to social investment, having invested £80 million to grow social impact bonds in the UK. For charity investors, the power of social investment enables them to increase their mission impact and sustainability by making investments that provide a financial return as well as furthering the purpose of the charity. Although most charities can make social investments under the current law, it can be complex and costly to do so. The new social investment power for charities in clause 15 was recommended and drafted by the Law Commission to overcome that complexity and reduce the costs of investment for charities. It was widely supported on consultation.

The UK is already recognised as a world leader in social investment, an area in which the Government have taken pioneering action. For example, we have set up Big Society Capital and stimulated the use of social impact bonds to deliver services to some of the most disadvantaged in society through initiatives such as social outcomes funds. With the power of social investment conferred on charities by the Bill, we take another step forward in building a sustainable social investment ecosystem.

I now turn briefly to interventions and speeches. My hon. Friend the Member for South West Wiltshire (Dr Murrison) asked about the transparency of direct debit fundraisers. Professional fundraisers are already required to state how much they are paid for asking the public to donate, but I would be happy to discuss the matter further in Committee. I was delighted by the contribution from the hon. Member for Edinburgh East (Tommy Sheppard), who spoke for the SNP and may well have set a precedent under English votes for English law: he said that the SNP would not be taking part in any other stages of the Bill. I hope that that precedent will now stand.

I thank my hon. Friend the Member for Erewash (Maggie Throup) for an uplifting speech and her comments about her inaugural volunteering day. I hope it sets a precedent for other MPs. It is great to see that that will now become an annual event, and I certainly wish it well. I also thank the hon. Member for Clwyd South (Susan Elan Jones) for supporting the fundraising preference service. For the sake of fundraising in the future, it is important that it works. I also thank my hon. Friend the Member for Aldridge-Brownhills (Wendy Morton), who told us the wonderful story about poppy knitting in one of her villages. It demonstrates the value of civil society and the contribution of charities. She is absolutely right that a small kindness can make a big difference.

For several reasons, legislating for a maximum trustee term does not appeal. The evidence is that 50% of charities are carrying at least one trustee vacancy, and we must be mindful that the role is a voluntary one. My hon. Friend the Member for Erewash mentioned the impact on small charities and made an important point about minimising the burden of regulation, as did the hon. Member for Clwyd South. We are keen to minimise the burden of regulation on small charities. For example, the new reporting requirement on fundraising in clause 14 will apply only to charities with incomes over £1 million, and the new fundraising self-regulator will need to consider exemptions for small charities from the fundraising preference service.

My hon. Friend the Member for Newark (Robert Jenrick) made a strong speech that clearly set out how big charities were causing great concern for some smaller charities. It is certainly our intention to try to protect them. The Opposition raised concerns about campaigning. To be clear, charities cannot engage in party-political campaigning, and where they undertake any other types of campaigning to support their charitable purposes, they must avoid adverse perceptions of their independence and political neutrality. In addition, they must not embark on campaigning to such an extent that it compromises their legal status as a charity. The Charity Commission provides clear guidance, in CC9, about what is permitted. It makes it clear that charity law recognises that non-party political campaigning can be a legitimate activity for charities and sets out the general principles.

A concern was raised about whether the commission should be able to publish official warnings. Charities exist for public benefit and depend on public support, so there should be transparency and publication of official warnings when the regulator considers it necessary to intervene, unless there is a good reason not to publish them. There should always be an opportunity, though, to make representations about the factual accuracy of a statutory warning before it is published, and a process for representations is included in the Bill. Concerns were also raised about the scope of official warnings being too broad. We consider the scope to be right and clear. Under the Bill, a warning can be issued in respect of a breach of a statutory provision, breach of a commission order or direction or breach of a trust or duty.

I will turn briefly to the concerns about extremism raised by my hon. Friend the Member for Congleton (Fiona Bruce). Extremism or the terrorist abuse of charities of any kind is very rare but must be addressed to protect public trust and confidence in charities. Although it may not represent most of the Charity Commission’s compliance work, it represents a serious risk to public trust and confidence. The reforms proposed in the Bill are not specifically focused on counter-terrorism or extremism—they would enable the commission better to tackle all types of abuse of charity—so the Bill does not seek to define extremism, nor should it. Charities and their work can be an important protection against extremism. We have no intention, as I said, of undermining freedom of religion or freedom of speech, and the Bill has been certified as compatible with the European convention on human rights.

[Susan Elan Jones]

rose—

[Mr Wilson]

I am going to finish there as I know that many Members want to get away from the Chamber today.

This Bill is about protecting charities and safeguarding their place in the public’s mind. It is about ensuring that charities will not fundraise in a manner that victimises the most vulnerable in our society, and it is about giving charities a new way to utilise their assets through social investment. Charities rely on the public’s trust and confidence. Abuse, where it happens, must be rooted out. These measures have broad support, as my right hon. Friend the Minister for the Cabinet Office said earlier: 83% of the public and 92% of charities support new powers being introduced for the commission.

Charities play a vital role in our communities and this Bill aims to bolster their position in the public’s trust and help them to continue the good works they have being doing for hundreds of years, continuing our country’s long and rich tradition of charity. On that basis, I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Charities (Protection and Social Investment) Bill [Lords] (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Charities (Protection and Social Investment) Bill [Lords]:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 7 January 2016.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Proceedings on Consideration and up to and including Third Reading

(4) Proceedings on Consideration and proceedings in legislative grand committee shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which proceedings on Consideration are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and up to and including Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of any message from the Lords) may be programmed. —(Sarah Newton.)

Question agreed to.

CHARITIES (PROTECTION AND SOCIAL INVESTMENT) BILL [LORDS] (Money)

Queen’s recommendation signified.

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Charities (Protection and Social Investment) Bill [Lords], it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided. —(Sarah Newton.)

Question agreed to.

Syria

Susan Elan Jones Excerpts

Thursday 26th November 2015 Commons Chamber

[The Prime Minister]

I can absolutely give my hon. Friend that guarantee. There is already a deconfliction strategy, and the RAF would be part of that. We can give further details closer to the time.

[Susan Elan Jones (Clwyd South) (Lab)]

I was struck by what one of my constituents said last weekend, which was that the attacks that happened in Paris could easily have happened in north Wales. There is no doubt that such attacks could happen not only in our major cities but in our towns and villages as well. There is immense concern about that. Let us assume that the House gives its support to the Prime Minister for these air strikes. Can he outline how he and his Secretaries of State will update the House on what is happening? If there is to be support, there must also be consensus afterwards.

[The Prime Minister]

As I have said, I am very happy to be guided by what the House would find most helpful. I think that regular updates from the Dispatch Box would be useful, and I would also be happy to have discussions with Select Committees as appropriate. Perhaps we could look at putting something into the motion, should a motion come forward, to guarantee regular updates so that colleagues could be kept informed.

Community and Voluntary Sector Funding

Susan Elan Jones Excerpts

Tuesday 24th November 2015 Westminster Hall

[Susan Elan Jones (Clwyd South) (Lab)]

It is a great privilege to serve under your chairmanship, Mrs Moon. I am not sure whether this requires a declaration, but I am co-chair of the all-party parliamentary group on civil society and volunteering, which is administered by the National Council for Voluntary Organisations. I put that on the record; I might have got into trouble if I had not.

Six minutes is not a lot of time to talk about this. As it was in 1601 that the Charitable Uses Act came to this House, we have been discussing charities and their development for the past 414 years. In England and Wales, we have got about 180,000 registered charities and there are probably as many again that are not registered. Charities have a combined income of £40.5 billion a year, similar to the figure for 2006. Of that, £13.3 billion is from Government sources, down £1.7 billion since 2010-11, and 83% is from contracts. Many of those points were made most eloquently by my hon. Friend the Member for Bradford West (Naz Shah), who spoke magnificently at the start of the debate.

Wherever we stand on the ideological spectrum, we all know that the public sector cuts will hit hard, so I will put in a plea for the charities’ old block grants. I know the history of contracts and the rest of it, but, as well as providing value in terms of simplicity for smaller charities, they also deal with capacity building. The core funding can and should be monitored. Indeed, when I was a manager of a small charity in London, I think I faced a lot more monitoring than Kids Company did for its multi-millions. That should be looked at, because it would enable those charities to develop and grow in funding and capacity.

It is right that controversies and indeed slightly dodgy fundraising practices are looked into, and it is right that we are considering those issues in the Charities (Protection and Social Investment) Bill. I, for one, will welcome the development of a fundraising preference service, but we know that charities need to raise money and always have needed to. We have seen that throughout our history, whether it was Dr Barnardo or those lesser known and less wealthy philanthropists such as those individuals and families who, in Victorian times, ensured that orphaned, destitute and illegitimate children became part of their family. They did not have the money or get the big plaques, but they were part of that bigger society.

To look to the new generation, I agree wholeheartedly with the hon. Member for Chippenham (Michelle Donelan) that we must look again at gift aid. I suspect that many of us make direct debits and the like and sign the little gift aid forms in the old-fashioned way. However, there is a new generation out there. Demos, in its “Introducing Generation Citizen” report in 2014, made the point that 13 to 19-year-olds have a real desire to help others through social action. Of course, many younger people do donations by text, so we need philanthropy for a modern age and a new generation of givers. Think, indeed, of Stephen Sutton and how crowdgiving led to more than £3 million for a charity in a year—that is a phenomenal legacy from a phenomenal life. Cancer Research UK’s no make-up selfies raised £2 million for charity and received more than 800,000 donations by text.

We know the history of gift aid and as a society we should be proud of how it has developed and increased, but surely it is time to look at making it automatic for text donation. The Government must look at that. We made the point in the Small Charitable Donations Act 2012—this is not for gift aid, but it is similar—that charities can automatically claim back on a gift from an unknown donor, so I hope that the Minister will look at that.

We are looking at our communities and discussing the charities and community organisations, which I think reflect the diverse aspects of Britain: the different societies; the wealthy philanthropists; the miners’ welfare organisations; the Churches and other faith groups; and a whole series of initiatives.

Let us not forget that the NHS did not start off as a national, state-sponsored health service; it actually began in small communities where people had ideas. When we talk about the divisions between voluntary sector and state and private sector, we forget that often a good idea is piloted in the voluntary sector and people think, “This is good. We will have a bit more of this and then we will do it locally or nationally.” At the heart of the debate, we need to look at funding and where clear problems are caused by the funding cuts, but we need to be innovative and pluralistic and celebrate that work. It is not that we want a big state; what we challenge the Government for is a much bigger society.

Oral Answers to Questions

Susan Elan Jones Excerpts

Wednesday 21st October 2015 Commons Chamber

The Prime Minister was asked—

[Susan Elan Jones (Clwyd South) (Lab)]

Q1. If he will list his official engagements for Wednesday 21 October.

[The Prime Minister (Mr David Cameron)]

This morning I had meetings with ministerial colleagues and others, and in addition to my duties in the House I shall have further such meetings later today.

[Susan Elan Jones]

I thank the Prime Minister for that answer. Following an extensive public consultation, the Government’s retail sector champion, Kevin Hawkins, described our current Sunday trading laws as

“a workable compromise. Most people seem to be satisfied with it most of the time.”

Does the Prime Minister agree?

[The Prime Minister]

I do not agree. I think that there is a strong case for change, but it is a change that we should allow local authorities to decide on, which is why we will be putting in front of the House, in the Cities and Local Government Devolution Bill, the opportunity for that to happen. Let me give the hon. Lady and the House two examples of where I do not think the current situation works. First, there are these restrictions on opening hours for many stores—[Interruption.] Someone shouts, “What about families?” Well, there are many stores that families would like to shop in, but if they go to those stores they have to walk around for hours before they are actually allowed to buy anything. Secondly, people can already shop on Sunday—and anywhere they like—on the internet. I think that it is time to modernise our approach, give families more choice and help create jobs at the same time.

Oral Answers to Questions

Susan Elan Jones Excerpts

Wednesday 19th November 2014 Commons Chamber

[Mr Wilson]

I do indeed. In the past, the Charity Commission was rightly criticised for regulatory failings. It now has new leadership, as I mentioned, with a strong board and a new chief executive officer. The Prime Minister has just given it an additional £8 million, and it will hopefully get new powers through the draft Protection of Charities Bill.

I think that my hon. Friend was referring to the concerns that were expressed on the front page of The Times this week about the threat from terrorism and extremism. The House needs to recognise that there is a threat to charities of abuse for terrorism purposes. For example, three men were convicted in 2013 for fraudulently using Muslim Aid charity logos to collect £14,000. I am right behind the Charity Commission in its efforts to ensure that it is a strong and robust organisation.

[Susan Elan Jones (Clwyd South) (Lab)]

I am glad that the charities Minister will meet the Charity Commission. As a matter of urgency, will he also meet Her Majesty’s Revenue and Customs and his colleagues in the Treasury to sort out the nonsense whereby smaller charities in particular find it difficult to set up the gift aid system? That is a correct tax relief, but it is not going to many charities because of the red tape involved.

[Mr Wilson]

I will be happy to meet HMRC. I would say that we have the autumn statement coming up, and the hon. Lady might like to look out for anything that might appear in it.

Recall of MPs Bill

Susan Elan Jones Excerpts

Monday 27th October 2014 Commons Chamber

[Mr Winnick]

Yes, it might be. As I said at the start, there is bound to be a recall mechanism that the House will approve by a majority—that is inevitable—but I stress what the Labour spokesman and others have said about the importance of distinguishing between conduct and policy. I was in the last Parliament and I have no doubt that we did ourselves a great deal of damage. It is said that the House of Commons has never been popular. It was said last week that in October 1834, when the building went up in flames, people actually cheered, and I have even heard it said—although I find it difficult to believe, because I am not aware of any great scandal or any allegations of MPs taking unfair rations—that the House of Commons was not particularly popular during the war. We should not have any illusions. Nevertheless, damaging and justified accusations were made against many Members and, even though a large majority of MPs were found not guilty of fiddling their expenses, collectively the accusations did us a great deal of damage, and had that damage not been done, it is unlikely we would be discussing this matter now. I have no illusions about that.

I do not question for one moment the sincerity of the hon. Member for Richmond Park. I know that he has a genuine view, which he has expressed—indeed, I think he expressed it before he came to the House of Commons—but I have to say, for the reasons I have stated, that I have some disagreement, to say the least with what he is proposing. I would rather have a different mechanism.

The only other point I would make is about the danger of tit for tat. I will not mention a certain Member, but I can imagine that in this Parliament there would have been a great deal of pressure from one side to start the recall mechanism. If that had happened, the other side would inevitably have acted in the same way. It is always the same in the House of Commons: if one side starts a process that is damaging to the other side, the other side responds accordingly. We could have this tit-for-tat business—it might not happen, but it is a possibility—where MPs put great pressure on their leaders by saying, “Why don’t we start the recall process? The other side did it over X; why don’t we do it over Y?” I wonder whether that would do much good for the reputation of the House of Commons.

[Susan Elan Jones (Clwyd South) (Lab)]

It seems to me that one of the big issues with trust in politicians concerns money. Does my hon. Friend agree that we really should look at Members’ second jobs, which has a lot to do with the erosion of trust?

[Mr Winnick]

I am sure my hon. Friend is right. At the end of it, I hope we will all reach a consensus of a kind—well, at least a majority.

EU Council, Security and Middle East

Susan Elan Jones Excerpts

Monday 1st September 2014 Commons Chamber

[The Prime Minister]

I always believe in consulting this House. I did so over Syria and over Libya. What I—as well as the Foreign Secretary and Defence Secretary—will try to do is to keep the House permanently updated. As I said in answer to a previous question, that is the right approach and it has been taken by successive Governments. If, however, something needed to be done urgently to protect a particular British national interest or to prevent some humanitarian catastrophe, it might be necessary to act and then come to Parliament. I have said nothing new in that, but it is important for people to understand the situations we face.

[Susan Elan Jones (Clwyd South) (Lab)]

I very much welcome what the Prime Minister said about the importance of tackling the extremist narrative. Is he aware, however, that his parliamentary candidate in Dudley North told The Independent on Sunday:

“Jihadist narrative answers the questions that these young people ask”,

and that

“IS provides an opportunity to do something real, exciting and spiritually nourishing”?

Those comments are preposterous; what does the Prime Minister propose to do about them?

[The Prime Minister]

I will check the context of those comments, as I expect the candidate went on to say how wrong that is, which I know is his view. It is unreasonable to cite what I suspect is a partial quote rather than the whole thing.