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However, people in Britain are as generous with their time as they are with their hard-earned cash. Home Office figures show that in 2003, more than 20 million people were involved in some kind of volunteering in the community, half of whom were involved in formal volunteering more frequently than once a month. Some 3 million volunteers do work for one or more registered charities, and such work is equal to 1.5 million whole-time equivalent jobs. It was estimated in 2000 that the value of unpaid work to charities was more than £15 billion a year.
“The Government’s three aims for the Bill remain. The first is to provide a legal and regulatory environment that will enable all charities, however they work, to realise their potential as a force for good in society. Secondly, we want to encourage a vibrant and diverse sector, independent of government. Thirdly, we want to sustain high levels of public confidence in charities through effective regulation.”—[ Official Report, House of Lords, 7 June 2005; Vol. 672, c. 783.]
Those aims have been affirmed by the Minister today. However, the Joint Committee had some serious concerns that have not been addressed. The first was that smaller charities should not be overburdened with regulation, but should be encouraged in a climate that promotes philanthropy. Secondly, the independence of the Charity Commission and the charities sector should not be compromised. Thirdly, the new definitions of charities and the removal of the presumption of public benefit should not hit private schools, hospitals and religious groups the hardest. Last, but certainly not least, the Committee was concerned about the ludicrous proposal that excepted charity status should be abolished for armed services mess and sports non-public funds—a proposal that should be removed in its entirety from the Bill. It is the rejection of certain of the Joint Committee’s key recommendations covering those points that could prevent the Government from achieving all their stated and laudable aims.
I shall deal first with the independence of the charities sector generally. Among charities and the general public alike, there is growing disquiet that in Lord Dahrendorf’s words, the third sector has
“become a semi-government sector of public life”.—[ Official Report, House of Lords, 20 January 2005; Vol. 668, c. 938.]
In his interesting speech,
the right hon. Member for Darlington spoke of the importance of
partnership between government and the charitable sector, and it is the
importance of getting that balance right that I wish to flag up. There
is a degree of ambivalence—on the one hand, the voluntary and
charitable sector has an enviable record of providing outstanding care,
but on the other, we are talking of a desire to see a thriving,
independent charitable sector, which should not be dominated, fettered
and generally taken over by the state. The Cabinet Office paper,
“Private Action, Public Benefit” clearly defined the
Government’s objective as one of ever closer union, aiming
to
“enable the sector to become a more active partner with Government in shaping policy and delivery.”
That was the burden of the right hon. Gentleman’s comments. The Charity Commission, however, has made it quite clear that that approach is not a panacea. It warns:
“Increased co-operation increases charities’ reliance upon the State for funding and, in turn, creates a potential risk to charities’ independence.”
Such a loss of independence, the commission says, could lead to bodies being
“created with a stated purpose that is charitable, but with an unstated purpose that is concerned with giving effect to the wishes and policies of a governmental authority.”
The Charity Commission concludes:
“It would be difficult to avoid the conclusion that a body of that kind was not really a charity at all. Instead of being set up for the stated charitable purpose, it would exist in fact for the purpose of securing the benefits of charitable status while carrying out the wishes and policies of the governmental authority.”
In fact, there are already 731 charities that have a local authority as a trustee. More worrying is the fact that for 595 of them, the local authority is the sole trustee. In response to that, one of the most important of our unanimous recommendations was in relation to the independence of the Charity Commission and the provision that it should exercise its powers
“on behalf of the Crown”—
an arcane form of words that means that the Charity Commission would be closely bound in to the Government, ministerial diktat and departmental governance. In the light of the Government’s stated objective to encourage
“a vibrant and diverse sector, independent of government”—[ Official Report, House of Lords, 7 June 2005; Vol. 672, c. 783.]—
it is incomprehensible that the Government have, as yet, failed to remove what was clause 4(1) of the draft Bill, which proposed that the Charity Commission would perform its functions
“on behalf of the Crown.”
With that clause in place, the commission will continue to be, in effect, a Government Department, albeit a non-ministerial one. That means that it cannot appear to be fully independent of government. Witnesses before the Joint Committee warned of the risk of greater political interference and of prejudice to the commission’s quasi-judicial functions—I draw the House’s attention to paragraph 177 of the report. The Government’s rejection of our recommendation does not adequately answer those concerns. As if to add insult to injury, the Government failed to adopt the Joint Committee’s recommendation that the Charity Commission be more accountable to Parliament and its Committees and declined to give statutory force to a requirement for the commission to report to either House.
A number of witnesses from whom
the Committee took evidence expressed grave misgivings about the
effect of such a proposal on the credibility of the Charity Commission.
For example, in its evidence to the Joint Committee on the draft Bill,
the Charity Law Association stated that if the
commission
“is a Government Department, then it is likely to lessen, rather than increase, public confidence in charities. It will be seen as susceptible to being used by the Government to further its own policies.”
It is important that the commission be accountable to Parliament rather than to the Crown. The National Council for Voluntary Organisations went even further, arguing that it was not enough for the Bill simply to stipulate that that the commission be answerable to Parliament, but that it must give at least some outline of how the mechanism of that accountability should operate in practice.
Parliament would need to enforce regular and detailed monitoring of the finance well-being and the regulatory effectiveness of the Charity Commission. Speaking from my experience on the Joint Committee, I hope that the Home Affairs Committee will take up the recommendation that it hold an annual evidence session with the Charity Commission. I also hope that there can be a debate every year, in Government time, on the annual report of the Charity Commission in both Houses, as the Joint Committee suggested.
My next point is on the introduction of a blanket public benefit test. At present, if an organisation’s purposes lie within the three named heads of charitable purpose—the relief of poverty, the advancement of religion and the advancement of education—it is presumed to be acting in the public benefit, unless a positive reason for doubt is presented. In the Bill, it is proposed to change that presumption, requiring all bodies to show that they are acting in the public benefit, as defined in law, before they are granted charitable status. The reversal of the presumption of public benefit will primarily impact on private schools and hospitals and religious groups, which previously came under the three headings of the preamble to the legislation about which the right hon. Member for Darlington spoke so eloquently, but which now, as the House knows, must prove a public benefit.
Although the Bill does nothing to override existing case law, so it will not change the definition of public benefit itself—it is inevitable that the requirement to demonstrate public benefit will make it harder both to register as a charity and to remain as such. Moreover, the nature of the legislative requirements will mean that charities will be subjected to ongoing public benefit checks. Inevitably, it will be the smaller charities that will bear the brunt of the legislation, which are the least able to deal with that sort of regulation in terms of both manpower and expertise.
Ultimately, everything will turn on how the Charity Commission operates the public benefit test. One of the most valuable contributions that the Joint Committee was able to make, and where it had a positive effect on clarifying the thinking within the Home Office and the Charity Commission, was in causing them to produce what I believe we called a concordat on how that part of the legislation will be operated. However, that is no guarantee that the change to the public benefit test will not produce uncertainty and turbulence to educational and medical bodies, whose activities have long been regarded as for the public benefit.
None the less, I urge the Government to stick to what has been agreed and what is in the Bill and to ignore the old Labour class warriors chuntering on the Government Back Benches and revving up to amend the Bill in that respect. Let us hope that the new arrangement will work out as most of us believe it should. In that sentiment, I have no doubt that I have the full support of the right hon. Member for Darlington.
Lastly, I wish to join Lord Craig of Radley in his outrage at the intention to abolish excepted charity status for armed services mess charities. An excepted charity, as authorised by a 1965 statutory instrument, has no obligation to register with the Charity Commission, although it must still meet the requirements of the Charities Act 1993. The real concern must be that, in due course, the threshold for registration will be reduced from a turnover of £100,000, and that more and more small armed forces charities will be required to register and to come under the closer regulation of the Charity Commission.
Excepted charities that choose not to register with the commission do not have to submit accounts, prepare and transmit annual reports, or complete annual returns. The rationale behind this reduced regulation is that accepted charities, such as the armed services charities, are those that are under the control of another body acting in a regulatory capacity. There are about 15,000 armed services funds, which are charities. They are spread across the three armed forces. Their purposes range from officers and sergeants’ mess accounts to service, sporting and recreational activities. A defining characteristic of such funds is that they derive their income not from the public, but exclusively from military personnel.
Ministers have assured the Grand Committee in the other place that those funds will not lose their charitable status. On Report, a Government amendment has included in the list of charitable purposes the promotion of efficiency in the armed forces of the Crown. However, that does not change the fact that an entirely superfluous bureaucratic burden will be added. It will be superfluous because the funds are more than adequately supervised by the Adjutant General. Far more so, I might add, than by the Charity Commission, which in the past has failed to satisfy the Public Accounts Committee and the National Audit Office. It caused the Joint Committee to express doubts as to its ability to meet the demands of the proposed wider remit. The commission has some way to go, and I sincerely hope that it will do so compellingly to demonstrate clearly, in today’s parlance, that it is fit for purpose.
The points that I have raised are minor but extremely important. They could make the Bill even better if they were included in the measure. I hope that the Government will reconsider them in the terms in which I have put them, and consider seriously including them in the Bill in Committee or on Report.
I end
where the right hon. Member for Darlington, the Chairman of the Joint
Committee, ended his speech, in saying that the Bill is long overdue.
It will make a tremendous contribution to updating charity law. It will
help to ensure that the brand is protected and enhanced. There are
tremendous opportunities, working with the charitable sector, to
advance the
objectives that we all hold within society. I hope that the Government
will consider what I have said on these minor points to see whether the
Bill can be made yet
better.
6.32 pm
David Lepper (Brighton, Pavilion) (Lab/Co-op): First, I place on record that I am a trustee of a small local charity, Ardis, that is based in Brighton and Hove. It works on behalf of people with dementia in that area. I am also a member of the Association of Town Centre Management. The reason for that declaration might become clear when I say that I wish to concentrate my remarks on part 3, and particularly on street collections. Despite the comments of the hon. Member for Cheltenham (Martin Horwood), I have no hesitation in referring to the street collectors as chuggers—charity muggers. That is because of the outrageous activities of some paid street collectors in my constituency.
I am talking of those who are paid on behalf of charities to stop people in the street and encourage them, on the spur of the moment, to sign up to regular direct debit payments to extremely worthy charities. I question whether that is the best way to encourage people to make thoughtful donations regularly to a charity. Perhaps payroll giving might be a better form of making donations. Nevertheless, a number of charities use the street collector method.
When the Bill was in draft form, I think that the Government took the view that the problems caused by street collections could be dealt with by self-regulation. I welcome the terms of the Bill generally, as have others, and as debate on the Bill in draft form and in another place has continued, I am glad that there are now to be two stages of regulation in terms of collections. Those stages will not, it seems, harm in the least local charities that collect by holding the tin and not shaking it, or from time to time shaking it, but I hope that regulation will help to curb the chuggers.
The two stages involve the charity obtaining a certificate from the charity commissioners, followed by a form of local authority licensing. I gather that the Government’s proposal is to talk with local government representatives and councils about guidelines for the licensing system. Alongside that, a self-regulatory code of fundraising practice will be developed. That is all good, but when it comes to discussing the guidelines I hope that those involved will bear in mind the local experience in Brighton city centre, in my constituency. I am sceptical about the self-regulatory approach on the basis of that local experience.
I shall quote from a letter about chuggers—I could quote from others—from one of my constituents, which was written in September 2005. It reads:
“The sheer rudeness of these people is breathtaking...the money...would be better spent on helping those who the charity is trying to help”
rather than on paying the collectors. It continues:
“People should have the right to go about their business without being insulted for not being able to afford to give a monthly donation to charity.”
That, unfortunately, is not an unusual experience that I have had reported to me by one of my constituents. Others have told me of similar stories.
Local traders have contacted me, particularly about the North Laine area of Brighton, where there are quite narrow streets and many small shops and businesses. Day after day and week after week, many charity collectors gather there. They stand close together and they block shop doorways. It is obvious from what is reported to proprietors that those collectors are intimidating potential customers. Sometimes they are offensive to those who ask them to move on.
All that has happened despite attempts to negotiate a local code with the help of the Public Fund-Raisers Regulatory Association. I have raised with that association issues that have been discussed at meetings of the all-party group on charities and voluntary organisations, and there have been failed attempts with the association to sort out a local code of practice.
On 16 March last year I presented a petition that was signed by 200 people, which states:
“The Petitioners...declare that the Public Fund-Raisers Regulatory Association agreed to amend the voluntary code of practice in order to address traders’ concerns...The Petitioners declare that operatives”—
“are ignoring the amendments”—
that is to the code of practice—
“as well as the standard requirements of the voluntary code of practice”.
That was the experience after attempts to resolve those issues voluntarily. I spoke to the chief executive of the Brighton and Hove business forum, Tony Mernagh only last week to ascertain the position now. He wrote in a letter of 22 June:
“Chuggers continue to be as much of a problem as they ever were. Our attempts to control the nuisance factor by a voluntary agreement did not work. The PFRA were not prepared to agree to some of our requests and were half-hearted about asking their members to abide by the voluntary code and the vast majority do not.”
Tony Mernagh attached an 11-point code, most of which is based on a national voluntary code with some local amendments, a code which, he told me, is still, by and large, being flouted.
For those
reasons I have no hesitation, despite the comments of the hon. Member
for Cheltenham, in referring to many street collectors as charity
muggers. Far too many chuggers have been operating in my constituency
and I hope that the proposals that are before us will help to regulate
an unacceptable situation. When it comes to Ministers or officials
working with local councils or local council representatives on
guidelines for a licensing system, I hope that local experience will be
considered. From what I read in newspapers, the experience in my
constituency is not perhaps unusual because similar complaints are made
elsewhere. As I have said, I hope that local experience will be taken
into account when drawing up the guidelines to allow local authorities,
in issuing licences, to have genuine powers to control the
location and the frequency of collections and the numbers of collectors
involved.
I finish by repeating my earlier recommendation: people should think seriously about whether a spur-of-the-moment decision in the street to sign up to a regular donation to a charity is the best way to make such a donation. Payroll giving is surely a far better alternative.
6.40 pm
James Duddridge (Rochford and Southend, East) (Con): I fully support what the hon. Member for Brighton, Pavilion (David Lepper) said about chugging. While I cannot claim to have been a chugger, I have certainly been a shaker, and I am concerned that, according to my hon. Friend the Member for Isle of Wight (Mr. Turner) I acted illegally. Having encouraged other shaking in Rochford and Southend, East, I hope that I did not fall foul of the Government and will not be arrested on my return to my constituency.
Joking apart, my hon. Friend said that it is sometimes important to make a small difference. From the outset, may I say that I support the Bill, and welcome the changes to trusteeships that make it easier for people to contribute as trustees? However, following my intervention on the Minister, I am concerned that people with learning disabilities cannot contribute as trustees. Like a number of Members on both sides of the House, I offer my constituents, particularly organised groups, the opportunity to visit to the House of Commons and, a few weeks ago, I was pleased to receive a visit from the SHIELDS—supporting, helping, informing everyone with learning disabilities in Southend—parliament, which is a group of people with learning disabilities who have been directly elected as councillors to act as an advocacy group in Southend and, more widely, to represent the interests of people with learning disabilities. Last week, it adopted a constitution, but it was distressing for people who had been elected by their peer group to discover that they could not make a contribution as trustees. In fact, they were lumped into a single group with people with general mental incapacity. While those councillors have serious social problems, collectively they are a bright bunch and have a huge contribution to make. It is therefore deeply unfair that they should be thrown together with people who, under the Charities Act 1993, are convicted of offences including dishonesty and deception or who have become bankrupt.
The SHIELDS parliament has got round the problem by using a provision in the constitution to appoint trustees. It states:
“The Trustees have added responsibilities to safeguard the charity in order to benefit the Learning Disabled population of Southend, and to further the objects of the charity by facilitating their legal and moral wishes.”
“The wishes of the Learning Disabled population of Southend will be gathered by the Shields Parliament and communicated to the Trustees via elected parliamentary councillors.”
The SHIELDS
councillors, who cannot act as trustees, have asked several members of
the community, including me, to become trustees, and I should
certainly like to do so, and urge people in Southend to support those
directly elected representatives. It would be much better, however, if
the councillors could be trustees
themselves.
The SHIELDS parliament and its facilitators have worked closely with the Charity Commission, so it is unacceptable that they should have had to resort to a rather cack-handed way round the problem, as mandating trustees to gather views via elected councillors is hardly the ideal solution. I therefore urge the Minister to take the opportunity offered in chapter 9 of the explanatory notes to table Government amendments or accept cross-party amendments to allow people with learning disabilities who can make a contribution to become trustees, particularly, but not exclusively, of charities that work with people with learning disabilities. I accept that a trustee organisation with a critical mass of people with learning disabilities is slightly more challenging from a legal perspective than general groupings, but both groupings are extremely important.
Having made my main point, may I touch on other subjects? I am concerned about the removal of the presumption of public benefit, as it constitutes an attack on schools with charitable status. Members have talked about the direction of travel which, I believe, should encompass foundation hospitals, greater choice in education, and trust schools, and should lead us to the conclusion that more schools, not fewer, should have charitable status. I am concerned, too, about mega-charities that conduct large-scale operations. One cannot look through the appointments section of the big papers without finding jobs with attached salaries that, in some cases, are as large as that of the Deputy Prime Minister. I am concerned, not about the impact of professionalisation on charities’ output, but about that career path, which is detached from reality.
Unlike the right hon. Member for Cardiff, South and Penarth (Alun Michael), who is no longer in the Chamber, I remain concerned about the involvement of charities in political and campaigning activities. I do not wish to mount a general attack on charities, but I am reluctant, or certainly less willing, to give money to organisations such as Oxfam that do good work in Africa, where I have worked, and Christian Aid, because they have been involved in political activities or things that I perceive as political activities. Guidance would create greater confidence in what the Minister described as the charities brand.
I have raised a number of subjects, but the one on which I should like the Parliamentary Secretary to dwell is the question of trusteeships for people with learning disabilities—I would be more than happy to meet him with a delegation to discuss the issue. The SHIELDS parliament, which is a very good organisation, believes that it is unique—I suspect that there are other such organisations, but they have not been brought together—and it has made a good proposal. With the Minister’s help in the Bill, perhaps we can improve its representation.
6.47 pm
Mr.
John Grogan (Selby) (Lab): It is a great pleasure to
follow the hon. Member for Rochford and Southend, East (James
Duddridge), who made a measured speech which, while based on local
experience, had national implications on which we should all reflect.
The highlight of our debate, however, was the moment when my right hon.
Friend the Member for Darlington (Mr. Milburn), at the end of a long
and thoughtful speech, asked Ministers to satisfy themselves that the
public benefit test, as applied by the Bill, will make a difference. In
my brief and modest remarks, I should like to ask whether Ministers
have satisfied themselves that it will be a rigorous test of public
benefit.
The hon. Member for Sutton Coldfield (Mr. Mitchell) characterised some Labour Members as old-fashioned class warriors. I do not look at myself that way: I am a Yorkshireman who does not believe in “summat for nowt”, and I think that all institutions that benefit from the public purse should justify themselves. Representing one of the United Kingdom’s more rural constituencies, I like to think that I have my ear to the ground of middle England. When organisations such as the National Council for Voluntary Organisations, the Royal National Institute of the Blind and Age Concern ask for further clarification in the Bill, I sit up and take notice, and that is what I seek from Ministers.
We have a dream team on the Front Bench. It is a great pity that the Minister for the Cabinet Office is not in the Chamber, as she gave me a great deal of good career advice when she was Chief Whip. Her talent for tact and diplomacy is known throughout the House, as is her closeness to No. 10, and those qualities will be important in securing the passage of the Bill. To complement her strengths, we are lucky to have a rising star in the Parliamentary Secretary, who is close to the Chancellor, speaks about the renewal of the Labour project and, indeed, social democracy, and has demonstrated great intellect in his interventions. I hope to persuade that dream team to just go a little further and ask the questions that my right hon. Friend the Member for Darlington asked.
I refer to the voice of middle England and what the Charity Commission is saying about the Bill. I attended the same briefing that my right hon. Friend the Member for Cardiff, South and Penarth (Alun Michael) attended last week. I noted carefully the words of Andrew Hind, the chief executive of the regulator. He said that there was a worrying lack of clarity in the underlying case law. He certainly did not want inflexible wording in terms of a definition of public benefit on the face of the Bill, but he said that he would like clarification, possibly on the face of the Bill, about the application of this test.
We have all seen the press release from the National Council for Voluntary Organisations and the words of its chief executive, Stuart Etherington. The NCVO says that, at present, the Bill extends the public benefit test to all charities on the basis of existing case law. However, it goes on, for charities that charge high fees for their services, this means that they will have to show only that the less well off are “not entirely excluded”. This does not go far enough. Anyone able to benefit from a charity service must have a reasonable chance of doing so, says the NCVO. Stuart Etherington is quoted as saying:
“Charities have long recognised the need to update charity law, and have pressed for this important legislation. The Charities Bill must protect and promote the charity ‘brand’, by making it clear that only those organisations that benefit the public can be charities.”
We have had a number of suggestions as to how the application of the public benefit test could be clarified in the Bill. The example from Scotland was given, and there are other examples. The noble Lord Phillips in the other place made a suggestion. I do not think that the fact that Scotland has passed one law and we may be about to pass another one can be entirely dismissed. For example, if, to take a completely random example, Fettes in Scotland was ruled not to be worthy of charitable status in Scotland under one regime, could it then apply in England under another regime, and perhaps up ship, and so on? One of the phrases that keeps coming up in many of these amendments concerns charges not being “unduly restrictive”. That has some merit and should be considered by Ministers. After all, the alternative is simply to rely on case law. My right hon. Friend the Member for Darlington, whom I feel very close to on this issue, said that he did not think that it was a sufficient defence for, shall we say, private schools to claim public benefit just on the ground that they saved money from the public purse. But when one considers the only major case in this area in the last 40 years, one can draw precisely that conclusion—that public schools would have that defence. In 1967 the case of Re:Resch, concerning a private hospital run by nuns in Australia, was appealed to the Privy Council. Lord Wilberforce, in giving the judgment upholding the charitable status of the hospital, said:
“It would be a wrong conclusion...to state that a trust for the provision of medical facilities would necessarily fail to be charitable merely because by reason of expense they could only be made use of by persons of some means”.
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