Martin
Horwood: The Minister is wrong on two counts. First, when
the £100 is received, it is not then
divided between expenses and charitable purposes. Even if his narrow
interpretation of charitable purpose is correct, the money is
inevitably given to the whole charity. It is never divided in the way
that he describes, but becomes part of the whole charitable income of
the charity, which is then divided between fundraising expenses and
direct charitable purposes according to the SORP
regulations.
Mr.
Turner: SORP is
guidance.
Martin
Horwood: I am corrected by the hon. Gentleman. The
expenses and expenditure of a charity is then divided. At no stage
would the pennies given into a collecting tin or the income from a
standing order be divided in the way that the Minister describes. That
simply does not happen. All the proceeds from such collections go to
the whole
charity.
The
Chairman: Order. Again, I remind the hon. Gentleman and
other hon. Members that interventions should be
brief.
Edward
Miliband: I am sorry that we did not get to hear the hon.
Gentleman’s second point. We will have to agree to disagree on
this. However, unusually for him, he is not living in the real world on
this point. The real world concern is that if money is raised for a
particular appeal, a significant proportion of that money should go
towards—
Edward
Miliband: If the hon. Gentleman listens for a minute, he
can then intervene. He should have a bit of patience. People think that
we should be assured that a significant proportion of money raised will
go to the relevant appeal. That is the long and short of this part of
the clause. The hon. Gentleman may claim and believe, with his wisdom
and expertise as a former “Ã1/4berchugger”, that his
understanding of the clause is far better than that of the
Government’s whole legal team, but we believe that he is wrong
on this. However, I give way to him
again.
Martin
Horwood: I shall attempt to be brief. For the record, I
have never done chugging, and I have lived in precisely that real world
for 20 years, and venture to suggest that I may well know more about it
than the Government’s legal team.
The second point that I was
going to make is relevant. Even with the ratios that the Minister
describes being applied to the direct charitable purpose, it still
might be worth the charity recruiting that donor, because, over time,
as the Henley Centre figures suggest, that donor might be worth
hundreds of pounds more. They might ultimately leave a legacy and be
worth thousands, or even hundreds of thousands, of pounds to that
charity. That brings me to a point that I made earlier about the
Charity Commission’s inability to judge what is adequate and
what is likely
income.
Edward
Miliband: The hon. Gentleman has moved partially back to
the real world with that intervention. He asks how the Charity
Commission will judge what is inadequate. Obviously, it would consult
fundraisers and charities to establish a benchmark, but it is important
to note—this might reassure the
Committee—that the commission would not refuse a certificate for
a first collection where the applicant has no track record. The point
of the measure is precisely to ensure that, in cases in which there is
a track record of large sums being raised but not being put to the
specific purposes for which they were raised, the Charity Commission
should be able to make a judgment. The power exists in legislation; it
is a power of local authorities. It is rarely used in the particular
ways that I have talked about and I suspect that it will be rarely used
in the future, but it is an important power for the commission to
have. That brings me
to amendment No. 142, tabled by my hon. Friend the Member for Bishop
Auckland, concerning the question of a fit and proper person
and “any person
authorised by him”. Her
concern is about the possible constraints that could be placed on
legitimate fundraising. I want to offer her some reassurance, because
it is necessary that a fit-and-proper-person test exists. This next
point might be of interest to the Committee. The need for there to be
due diligence to ensure that the fit-and-proper-person test is passed
already exists in legislation—in the House to House
CollectionsAct
1939. Again, I think
that there is a public confidence issue. I do not think anyone is
saying that Christian Aid, with its 250,000 collectors, must undertake
high-level scrutiny of every collector, but there may be some basic
requirements that it is worth ensuring are made. One such example might
be that a collector signs an undertaking that they have no unspent
conviction; it might be something very basic. I need to reassure the
Committee that I do not think that this will be an onerous or arduous
set of requirements, but it is important to have them in
place.
Helen
Goodman: Is the Minister suggesting that, as part of the
due diligence test, all collectors should sign a form saying that they
do not have any kind of unspent conviction? I thought that one thing we
were trying to do was to rehabilitate offenders and help people who
have had difficult lives, and that one of the routes for doing that was
through the voluntary sector. I hope that he is not, inadvertently,
imposing a new
condition.
Edward
Miliband: I definitely do not want to impose conditions
and it would not be for me to do so. The Institute of Fundraising has
guidelines on what a test of being fit and proper should be for
collectors, and we can rely on it to offer us a way forward on this. I
do not think that there is an issue in this regard.
That takes me on to my hon.
Friend’s worry about clause 53(2)(b)(i), which relates to the
due diligence test overall. I may have not completely understood what
she was concerned about, but her amendment would remove the
fit-and-proper-person test completely. I am happy to give way to her if
she would like to be more specific.
Helen
Goodman: What would an organisation such as Christian Aid,
which as the Minister says has 250,000 collectors, have to do? When he
has explained
that, we may be in a better position to judge the reasonableness of what
it has to
do.
Edward
Miliband: As I say, the judgment will have to be made in
consultation with the Institute of Fundraising and others. The issue is
not about imposing large obligations on lots of different collectors. I
want to reassure my hon. Friend about that. The risk is not necessarily
associated with the largest organisations, but if there is not a
fit-and-proper-person test in the Bill, we will be left open to the
charge of undermining public confidence in charitable collections. I
shall be happy to have the Charity Commission circulate to Committee
members before Report a sense of how it intends to apply the test. I
hope that that reassures Committee members.
On amendment No. 138, tabled by
my hon. Friend, I am sympathetic to the idea that we must find a way to
ensure that the process of applying for the public collection
certificate—I said it was a test of the commission—is
non-bureaucratic. The problem with the amendment is that registration
happens only at the point of formation of the charity. She suggests
combining registration and application, but I am not sure that
registration is the answer.
My other point to my hon.
Friend, which answers a question that she posed to me, is that in the
regulatory impact assessment, 8 to 10 per cent. of charities were
estimated as likely to apply for public collection certificates. The
problem with combining an annual process with registration for a public
collection certificate is twofold: first, only a small proportion of
charities may want to apply for them, so the danger is that we will
lengthen the form for all charities, even though only a minority will
apply for the certificate; and secondly, the certificate is issued for
five years rather than one. My hon. Friend shakes her head, and I am
happy to give way to her.
Helen
Goodman: I know that that is the formal position, but is
the public collection certificate held by the organisation or by the
trustees? Although the Bill says that the certificate should last for
five years, the Minister will find that if the certificate is held by
the trustees, they will have to go through the whole process set out in
clause 55.
Edward
Miliband: In the case of an incorporated charity, the
certificate is held by the charity as a corporate body; in the case of
unincorporated charities, it is held by an individual trustee, a number
of trustees, or, if there is a fundraising director, by the fundraising
director. Clause 55, which we may come to, exists precisely to provide
an easier method of transferring the certificate. We must face up to
the fact that there is an issue with unincorporated charities. The fact
that they have to re-register their trustees each year if their
trustees change is precisely a facet of the constitutional nature of
unincorporated charities.
My hon. Friend has raised an
important issue, but it is not one of deep principle. I undertake to
talk to the Charity Commission about how best it can come up with a
non-bureaucratic process. If it can be combined with an annual process,
it should be, although I have raised some doubts about why that may not
be
possible. I understand that the form will be downloadable from the
commission’s website. The general issues that my hon. Friend has
raised are completely
right. 10
am Finally, I want
to go back to the hon. Member for Cheltenham and his concerns about the
Attorney-General. Amendment No. 149 would affect a traditional and
rather underused role—I do not think it should worry the
Committee—of the Attorney-General as friend of the court and
protector under the Crown of charities. It would be possible to remove
that right from the Attorney-General, but I do not think that it would
be desirable. The power will be used extremely rarely, but it is
sensible to leave it in the
legislation.
Martin
Horwood: As regards a number of the amendments, the
Minister has made reassuring statements about the intent of the Charity
Commission and of the Bill. I suppose we will have to trust his good
and generous soul and the practice of the Charity Commission. I hope
that the practice follows the theory that he has set out. The proof of
the pudding will be in the eating, and we shall have to review that in
due course. On those grounds, I might seek leave to withdraw amendment
No. 146 and I would be content to see others not pressed.
Amendment No. 38, tabled by the
hon. Member for Bishop Auckland, sets out a legitimate, and cost and
regulation-saving,
process.
Helen
Goodman: I am grateful for the kind words from the hon.
Gentleman. I think that the Minister was saying that the amendment was
technically defective because I had confused the registration process
with the annual return process. Had I written in the annual return
process, I think that it would have been a better
amendment.
Martin
Horwood: I am sure that the hon. Lady is absolutely
correct, and so I am reassured on that front, too. It would be the wish
of the whole Committee to see the Minister address the issue of
combining the annual return with the application for a certificate. The
fact that the time scales might be slightly different does not rule out
the possibility of combining the two on one form. It simply would not
be necessary for people to fill in both parts on every
occasion. On
amendment No. 148, which is similar to amendment No. 139, my concerns
are still there and nothing that the Minister has said has reassured me
that he is being advised about the real world. The impossibility of the
commission being able to judge what is adequate has been almost
underlined by the fact that he made comments about a ratio of income to
expenditure that would be perfectly legitimate if it was justified by
the future income.
The Minister is looking
disparagingly at his notes, but public collection certificates will
apply to standing orders. The standing order might be for as little as
two or three pounds a month. At the point of solicitation, it is quite
clear that if a paid fundraiser was involved, the costs would vastly
outweigh the income or the amount
being applied to the charitable purposes of the charity. Over time, that
amount would build up, which is why standing orders are a popular form
of fundraising, and would give the donor the opportunity to give more
and to give to emergency appeals. The Minister shakes his head, but I
invite him to tell me where I am going wrong with that
scenario. I have had
responsibility for tens of millions of pounds of charity income that
was derived from precisely that source. Those regular standing orders
build up over time and form an enormously valuable and cost-effective
source of income for major and smaller charities. Sometimes they can
lead to legacies worth hundreds of thousands of pounds—and
occasionally millions of pounds—that can make the recruitment of
a donor to a good cause an extremely worthwhile process, even if at the
very moment of solicitation the ratio does not appear to be very
beneficial for the charitable purpose. That is a difficult judgment
call for even professional fundraisers to make. One must take into
account all sorts of aspects, such as what used to be called in the
jargon the attrition rate—that is, the likelihood of donors
falling out of the standing order relationship at a future date. Those
rates and ratios change from year to year, as the nature of fundraising
and the popularity of different fundraising methods change.
It is incredibly difficult to
see how the commission could ever have the expertise to judge what an
adequate application of the funds to a charitable purpose was or what
the likely amount of the proceeds from a collection would be, because
those are difficult enough for the fundraisers to judge themselves. For
the commission to have the right to refuse an organisation a
certificate on that basis seems a dangerous step. I support amendment
No. 139, which stands in the name of the hon. Member for Bishop
Auckland and I should like to press amendment No. 148 to a Division
should the opportunity arise.
On amendment No. 149, which
stands in my name, the Minister has explained that the Attorney-General
will be acting in the traditional role of protector of charities. All I
can say is that charities are lucky to have so many protectors in the
Bill. It seems a strange argument to say that we should support the
clause on the grounds that it will almost never be used; nevertheless,
I bow to the Minister’s greater legal expertise. I shall not
press amendment No. 149 to a Division but, bearing in mind my remarks
about amendment No. 148, I beg to ask leave to withdraw the
amendment. Amendment,
by leave, withdrawn.
Clause 51 ordered to stand
part of the Bill.
Clause 52 ordered to stand
part of the Bill.
| 
