Examination of Witnesses (Questions 1-)|
10 DECEMBER 2009
Q1 Chairman: Good morning everyone. Let
me welcome the Charity Commission, in the form of Dame Suzi Leather,
who chairs the Commission, and Andrew Hind, who is the Chief Executive.
It is always a pleasure to see you. As you know, it is our job
to keep an eye on what you are up to and, if I can say so, you
do make a point of reporting your activities to us on a regular
basis, for which we are grateful, and we have, at least annually,
the chance to ask you some questions about it. Thank you for your
letter in advance of this meeting and all the information that
you sent us. Would you like to say anything by way of introduction?
Dame Suzi Leather: Thank you very
much indeed for that introduction. We are very pleased to be here
as well. I think since we last met we have had some very significant
achievements: we have strengthened our compliance work; we have
improved its performance, its timeliness and its impact. Registration
times for new charities are down again; more charities than ever
are filing their accounts on time. On public benefit, we published
some research two weeks ago which shows high levels of awareness
and understanding of the public benefit requirement. There is
still more to do on that, but, I think, overall, it is very positive.
So we think that we have performed well in a difficult climate.
For the future, it is clear that all political parties envisage
an important and increasing role for the charity sector and, clearly,
that has implications for the independent regulator, because I
think our role in upholding the integrity, the independence and
maintaining public trust and confidence in the charity sector
will continue to be very important.
Q2 Chairman: Andrew, do you want
to add anything?
Mr Hind: No, I have nothing to
add, Chairman. Thank you.
Q3 Chairman: Could I start with,
broadly, this compliance area? I know that we are going on to
talk about other things, but your key role is this regulatory
role and the compliance role.
Dame Suzi Leather: Yes.
Q4 Chairman: I have tried to read
some of this material. You mentioned just now that you were improving
the reporting on time of charities, but I do see from the figures
that nearly a quarter of charities are still failing to submit
their accounts on time, and "on time" means, if I am
right, within 10 months of the end of a year. That does seem a
very high figure. Should not the regulator be doing better than
Dame Suzi Leather: I think, overall,
in fact, the proportion of the sector's income for which we hold
the most recent accounts and annual returns is actually rather
high. The target is 98%, but what we are actually achieving, both
for accounts and annual returns, is also 98%. So in terms of the
proportion of income that we have up-to-date information for,
it is very high indeed. You are right that we do not have 98%
of charities reporting their accounts on timethat figure
now is about 77%but that does mean that the remainder are
not. The vast majority of the remainder are very small organisations:
they are the organisations which do have to report to us but are
rather small. So that is the difference between having the actual
amount of the income and the overall numbers. Andrew, do you want
to say more?
Mr Hind: We absolutely share the
concern, Chairman. Suzi has explained some background to it. I
think what I would like to say is that this is on a very fast-moving
upward trend. About six or seven years ago the figure was around
60% and, in fact, there was a Public Accounts Committee discussion
about this, something like 10 years ago, where the issue was highlighted
and the Commission has done an awful lot since then. One of the
constraints on this, from our point of view, is that, unlike Companies
House and unlike a number of other regulators, we do not actually
have sanctions that we can impose to ensure that charities absolutely
do meet that ten-month filing requirementwe cannot fine
charities if they are latebut what we have done (and, you
might remember, we were beginning to brief the Committee on this
a year ago) is redesign our public register so that charities
that are late in filing, that do not meet that 10-month deadline,
are actually now bordered in red for everybody to see in public,
and, as Suzi said, that is already leading to an increase in submission
rates. So we are up to 77, 78, touching 80, and I think that is
going to go higher.
Dame Suzi Leather: That is a really
good example of the much-vaunted concept of "nudge"
in regulation. The simple mechanism of putting a red or a green
border around the accounts on the register for particular charities
has focused minds rather wonderfully.
Q5 Chairman: Perhaps I can broaden
this a little bit. Everyone is supportive of the charitable sector
but, at the same time, people who give money to charities want
to know that they are giving money to reputable organisations
that are properly run, properly accounted for, and so on. When
I went to your report on compliance what I wanted to try and find
out was could I see what percentage of the charitable sector seemed
to be running into some kind of irregularities. I find it difficult.
There are tables of figures here about numbers of investigations,
but what I just cannot find is the figure which tells me in how
many of the total of investigations you upheld complaints. You
say in your report on compliance, "Fraud, theft and significant
loss of funds are also common features." I wanted to know
what that meant. How common in the charitable sector, is fraud,
theft and significant loss of funds, where can I find that and,
more importantly, how can someone who wants to give money to a
charity be sure that they are not giving money to a charity that
is engaged in all kinds of irregularities?
Mr Hind: A number of quick responses
to that, Chairman. What we have tried to do on page 35 of this
report is give an overview of the number of cases we have been
engaged with, and I think that is a pretty good proxy for the
extent to which there is difficulty and abuse going on in the
sector. There are 180,000 charities. What page 35 of the report
you are talking about says is that we looked in detail at 1,500
complaints that came to us during the course of the year, we assessed
them and, on the basis of what we saw and the evidence we saw,
we opened 168 investigations of which 19 were formal inquiries
using our powers. So less than 200 cases were serious enough for
the regulator to actively engage. I think that is a pretty good
approximation of the extent of the problem in the sector of some
charities being abused, either for the purposes of fraud, in a
very small number of cases terrorist infiltration and money laundering,
in a very small number of cases the abuse of vulnerable beneficiaries.
We take every one of those cases very seriously, but I think the
public can have confidence that they are pretty isolated in the
overall scale of the activity of the sector.
Q6 Chairman: All those figures come
from complaints, do they?
Mr Hind: No, not necessarily.
They come from a whole series of sources. They certainly do come
from complaints from members of the public, from people within
charities themselves, from the media nationally and locally, from
Members of Parliament, but they also come from our casework and
from our monitoring of what is going on in the sector. So we are
very much on top of that. This is a new development for us. The
Back on Track report summarising our compliance work: it
is only the second year that we have published this volume, and
the reason we did it was to try to answer for the public at large
and everybody interested in the sector exactly the question you
have asked, which is how much is going wrong, why is it going
wrong, what kinds of things are going wrong and, critically, what
are the lessons that the regulator is pointing up for every other
charity to take notice of? This is not just a matter of record
of what has happened in the past in terms of our compliance work,
it is also a critical learning document for every trustee, and
what we do with this is circulate, through our newsletter, and
so on, to every trustee, the highlights of it, so that the lessons
can be learned about how you protect your charity from this kind
of thing happening.
Q7 Chairman: That is very useful.
So you are really saying it is certainly less than one per cent
of the charitable sector?
Mr Hind: Yes, very much less than
Dame Suzi Leather: I think also,
to go to your point about what does the public know, when we open
an inquiry that information is in the public domain.
When we put interim managers into a charity we put that onto the
website so that the public can find out what is going on, and,
of course, when we have finished an inquiry we publish those documents.
Q8 Chairman: Can I ask you one more question,
again, on the same issues about compliance. You give some very
nice case studies in your report of organisations that you have
looked at and found to be deficient in a variety of ways, and
then you offer lessons for the sector. Some of them you name,
though, and some of them you do not name, and I do not really
understand why, having named all the previous ones, we suddenly
get "a faith-based charity" and then a note says, "We
have not named this charity as we are working with its umbrella
body to produce a full child protection policy." The charity,
we are told, is a branch of a worldwide religion, and then some
pretty nasty thing happened which you had to investigate, but
I do not understand why we cannot know what this branch of the
worldwide religion is if we know all the other ones.
Dame Suzi Leather: My understanding
of that (and we will have to correct this subsequently if it is
not true) is that the information on and name of that charity
will be in the public domain when we have concluded that part
of our work.
Q9 Chairman: Is that the answer?
You tell us here what you have been doing and what you required
of the organisation. As it is a factual thing that has happened
and you have investigated and you have reported on it in your
report, I simply do not see why you would not say, along with
the other ones, who it was.
Mr Hind: I think if we could,
Chairman, we will give you a full analysis of that after the meeting.
I think there may be some child protection issues in here and
a concern about the fact that the identity of young people involved
needs to be protected, but I will check that and make sure you
have the full issue.
Q10 Chairman: I understand, of course,
you are not going to name them, but I do not understand why you
cannot even tell us what the branch of the worldwide religion
is that this issue relates to?
Dame Suzi Leather: Let us look
at this. I clearly get the message.
Chairman: Perhaps you can think about
it in the next half an hour or so and perhaps you can think of
a reason why you have not told us. Gordon.
Q11 Mr Prentice: I am interested
in those charities that are raising money for a purpose which
is outside their charitable objectives. I wrote to you, Mr Hind,
about this and you told me that between 26 November 2008 and 25
November 2009 there were 33 cases which involved charities acting
"outside their objects or misapplying charitable funds".
I am quoting back to you your own words. What happened to those
charities? What happened to the 33 cases where they were raising
money, basically, under false pretences?
Mr Hind: Each case will have been
looked at on its merits. If there were cases of members of the
public giving funding to a charity on the basis of misrepresentation
we would ensure that funding given in those circumstances was
In most cases trustees will recognise the concerns that we are
expressing, they will change their behaviour, they will ensure
that they either act only in accordance with their objects in
the future or, if we think there is merit in the case, agree with
us an extension to the objects.
Q12 Mr Prentice: You said earlier you
did not have any sanctionsyou used the little red box and
so onbut for people who are raising money under false pretences,
presumably, there are criminal sanctions: people are prosecuted,
put behind bars.
Mr Hind: Absolutely.
Q13 Mr Prentice: Has anything happened
to any of those 33?
Mr Hind: Mr Prentice, I need to
be clear. When I said we do not have sanctions, I was purely talking
in respect of the Chairman's first question, which was about charities
filing their accounts with us. We do not have sanctions to make
them do that. We have a whole range of sanctions to ensure that,
where there is abuse of charitable status, where there is fraud,
where there is misrepresentation serious things are done about
that, including, of course (and there are plenty of examples of
this), us passing cases over to the police and trustees are prosecuted.
Dame Suzi Leather: Actually, in
the last month somebody has received an 18-month prison sentence
for setting up a sham charity.
Q14 Mr Prentice: You will know about
the case in my own constituency. I am generalising from the particular
here, but Islamic Help is based in Birmingham and its main charitable
objective is to be able to respond to emergency disasters quicker,
but on its website it has been asking for money. It wants £1,050,000
by 10 January to convert an old medical fabrics mill into a giant
boarding school for Muslim girls. As you know, the biggest boarding
school for girls at the moment is Cheltenham Ladies' College:
650 girls. What Islamic Help wants is a 5,000 place boarding school.
I have written to you about this, and I think Islamic Help is
operating way outside its charitable objectives. This is from
its website. I am assuming you are in touch with them and asking
them to return money to all the people who gave money thinking
it was for this new educational institution.
Mr Hind: I am not sure that it
would be right for me to engage in a dialogue
Q15 Mr Prentice: People are still
giving money to this charity.
Mr Hind: about the absolute
detailed specifics of the case, but, on the general point that
you raise, that kind of concern is something that we absolutely
involve ourselves with on a robust basis and, if the evidence
is that what you say is happening is happening, then we would
ensure that something was done about that, yes.
Q16 Mr Prentice: It says here, and
this is from the website: "Muslim watchdog. In this day and
age Islamaphobia, women's rights within Islam and other issues
brought up against Muslims are one of the mainstream topics within
the media all over the world." In its college it is going
to have a Muslim watchdog to advise, not the girls, but the sisters.
The sisters will be given special training in how to tackle these
issues professionally and appropriately.
Dame Suzi Leather: This is the
subject of a current case.
Q17 Mr Prentice: Yes. I only raise
it because people may still be giving money to this charity, Islamic
Help, and I want people out there to know that you are investigating
Mr Hind: We are in contact with
the charity, Mr Prentice. We will keep you fully informed. As
ever, serious accusations get dealt with robustly by the Commission.
Q18 David Heyes: I think it is now
the second year that you have had a 5% budget cut and you are
in line for two further years of a similar level of budget cuts.
That has got to have an impact on the organisation. Yet I do not
pick up from your annual reports or the other documentation that
we have seen that that is a great concern to you. I think you
would expect the top people in an organisation like yours to be
anxious about a cut that has got to be 20-25% overall over a four
or five-year period. What are the consequences of that?
Dame Suzi Leather: Mr Heyes, I
can quite assure you, we are clearly aware of the fiscal situation
and the difficulties that many public sector organisations and
others are in and are going to be in, and I have also mentioned
that all parties clearly envisage a strong role for charities
in the future, but I would want this Committee to understand that
we have already achieved very significant efficiencies and I do
not think there is any fat left to trim. We have already achieved
significant staff reductions. We have moved our London office
to save money. We now have less space in our Liverpool office,
our largest office. We have introduced some changes to the way
we do things. The take-up of online services has been a notable
achievement. We have introduced smarter working throughout our
processes and we have outsourced a quarter of our back office
functions, but I think it is absolutely clear that any further
cuts will affect our core functions, and those core functions
are important. As a regulator and a registrar we have a statutory
responsibility for registering new charities, for maintaining
the register so that the public can see the sort of information
that you have been talking about, to ensure that charities only
spend charitable funds (Mr Prentice's point) on what they are
legally allowed to do, to ensure that trustees are acting in accordance
with the law. We have to give authority to changes to many charities.
They cannot make those changes, for instance selling land, without
our permission. I think we have a very important role in ensuring
public accountability of charities, and we have to give advice,
and the Hampton Review showed that it is important that regulators
are able to give advice. Our worry is that in making those cuts
to core services what it is going to be necessary to do is cut
that advice to the sector. That may be a necessary cut, but in
many ways it will be a false economy because we would be shifting
the costs on to precisely the most vulnerable parts of the sectorthose
small charities, community-based organisations who are the least
able to afford lawyers and accountants. So I think we are in a
very difficult position.
Q19 David Heyes: Just to be clear,
though, are you talking about anticipating cuts over and above
the 5% per annum that you expect in the next couple of years?
Do the comments you have just made relate to next year and the
year after? You say it will be impossible to achieve the cuts
that are scheduled already for you without causing some serious
Dame Suzi Leather: I think what
I am saying is that the cuts we have already made we have had
to make because we were cash flat for three years and then we
were on minus five for three years. So we have already made very
significant changes. Further cuts now (and, of course, we recognise
that there are going to be cuts in the next spending round, possibly
very significant cuts) will affect our core services. We will
not be able to be the same organisation that we are now, able
to support the charity sector, which all parties think is very
important for the economy.
Q20 David Heyes: All this against
a background of talk about an enhanced role for the third sector,
the charitable sector, in service delivery and so on.
Dame Suzi Leather: What we are
saying is there is a contradiction there, yes. I think the achievements
we have made have been very remarkable, because our staffing numbers
have come down, our budget has been reduced, we have made 16.5%
in regulation savings,
which is very considerable, and that is taking into account all
the changes in the 2006 Act. So we have already done that, is
what we are saying; we have already come an awful long way. It
is very difficult for an organisation like us to know where to
go. We cannot make further cuts without affecting the kind of
organisation we are and the kind of services that we can provide.
Q21 David Heyes: But despite all that,
you say (and, obviously, I believe what you say) your salaries
budget actually went up last year. We have looked at the average
salary that your staff get. I think the increase average is about
seven per cent. That is quite a significant increase in individual
salaries in an overall salaries budget against that very constrained
Dame Suzi Leather: There is a
very good reason for that. We recognised that, in order to be
as effective and efficient as we could be, we needed to upskill
the capacity of our staff. For instance, in our compliance work
in the last few years we have brought in people who come from
police, security backgrounds, who have enabled us to be much more
effective in this area of our work. Those people, naturally, come
in at higher pay bands, so there has been an increase in the wage
bill at the same time as the overall staff numbers have gone down,
but that is what has helped drive our effectiveness.
Q22 David Heyes: From what you are
saying, the future looks much less up-front help and advice to
charities but much more emphasis on compliance?
Dame Suzi Leather: We are looking
with staff, at the moment, at how we can further refine our processes,
but we have statutory responsibilities, the most important of
which, I think, are to maintain the integrity of the register
and our compliance function. Set alongside that, ensuring that
charities, for instance, are not being abused by terrorism or
other criminal activity, clearly falls into the "must do"
category. What it is more difficult to prioritise, I think, is
the help and advice, some of it informal, that we give to small
charities day by day. Our helpline gets 210,000 calls a year.
Many of those calls are from trustees, from small community-based
organisations that just want a bit of information, and we can
help them with that.
Q23 David Heyes: The Millbank area
is quite expensive. The Labour Party could not afford to maintain
its premises there, but you have moved there. What is the reason
Dame Suzi Leather: Much, much
less space. We are saving £1 million a year in the office
move that we made this summer.
Mr Hind: There was surplus space
in the Government Estate, Mr Heyes. We have got a sub-lease from
the Audit Commission. They had surplus space, as a result of making
their own changes and efficiencies, and, I think, from that point
of view, it is a sensible move because we moved from somewhere
where we had an external commercial landlord to having, as it
were, a fellow government department landlord and, as Suzi says,
considerably cheaper. I just want to supplement what Suzi said
to Mr Heyes about what the implications might be of further funding
cuts. The problem with this is that it is, over the medium term,
perhaps the relatively short-term, cyclical, because the less
advice we can give, both specifically and generally, to charities
and to the sector at large about good governance and how you effectively
convert public donations into effective charitable outcomes and
impact, the more, over time, there are going to be problems in
charities, coming back to the Chairman's first point. So although
at the moment the proportion of serious issues arising in charities
is significantly less than 1% , as we were discussing right at
the beginning, I think all the signs are that that would begin
to escalate probably quite quickly if we got into a situation
that you are asking us to describe where we simply were not able
to afford all the advice-giving part of what we do, which is a
very important second arm of a modern regulator's armoury following
the compliance arm. So it is not just about "nice to haves
would have to go". What would happen is that the core fabric
of charity, in our view, would, over time, begin to suffer, because
the regulator would be insufficiently equipped to do its job properly.
Q24 David Heyes: A final point on
that then. Those are very serious worries that you have articulated,
and they are on the public record here, but what are you doing
about having that debate with government? They are your funders.
Are you giving them this message? What kind of response are you
Mr Hind: As Suzi said, we recognise
that we have to hold two things in balance. We are a non-ministerial
government department. I am a civil servant. I have to recognise,
and Suzi and the board of the Charity Commission recognise, that
public spending is going to be severely constrained in the future
under whichever administration comes to power in 2010. So we are
not unrealistic and we are not operating in isolation from the
rest of economy, but at the same time, clearly, we have got a
responsibility, as you are encouraging us to, to be realistic
about what we think the future prospects are as a result of funding
cuts, and, yes, of course, we are having those discussions with
officials and Treasury ministers.
Q25 David Heyes: Is there a response
to it? Is it positive dialogue?
Mr Hind: I think the response
is they recognise what we are saying. We have no indication of
what the results will be of that, in funding terms, from 2011
onwards, just as, I think, most other parts of the public sector
do not yet know either.
Dame Suzi Leather: I think it
is quite important to understand what our advice and guidance
can mean. For instance, the tool kits that were have provided
in the last few months on collaborative working and mergers and
something we call Big Board Talk have all been tools to help charities
as governing bodies, the trustees, face the difficulty, the economic
downturn, help them think through what the problems are, and they
have been very, very well received by the sector. Big Board Talk
was endorsed by the CBI, which was very nice as well. So these
are really important things that we provide to help the charity
sector itself weather the storm.
Q26 Chairman: On the office issue
that David raised, and I ask this because I do not know the answer
to it, but I see that the Commission has four offices in different
parts of the country. The question I would ask is: do you need
to be in London at allyour regulatory role, I would not
think, requires thatand do you need to have four offices
in different parts of the country?
Dame Suzi Leather: If you were
designing a Charity Commission from today, I do not think you
would place it in four different parts of the country, that is
for sure, but we are where we are and moving from where we are
and closing an office would be extremely difficult, not only for
our staff, but also would be very expensive. So that is the difficult
situation we are in. We have other offices because years and years
ago it was government policy to empty out. We have a Wales office;
we have a Taunton office; the Liverpool office. Clearly, a rational
cool look at this would say four offices does not make sense,
but we do have four offices. We have done what we can do. We have
moved within London and we have downsized very considerably the
amount of space we have in Liverpool. In fact, I think about 77%
of our staff are already out of London.
Q27 Chairman: The thought is only
that every organisation at the moment has to think quite radically
about all these issues.
Dame Suzi Leather: And, of course,
we are thinking radically.
Q28 Paul Flynn: The eminently sensible
decision to have the Wales office in my constituency in Newport
West is something that I applaud, and there is room for expansion
Dame Suzi Leather: Thank you.
Q29 Paul Flynn: While I note nothing
is being done about it at the moment, can you tell me why Eton
School and Winchester School were exempt from charitable status?
Dame Suzi Leather: They have been
in the list of exempt charities for many, many years. I am afraid
I will have to ask a colleague why it was originally the case.
I do not think it was our decision.
Q30 Paul Flynn: Is it anything to
do with the number of old Etonians in the Cabinet at the time?
Dame Suzi Leather: They have been
exempt since 1960, presumably since the Charities Act 1960.
Q31 Paul Flynn: We have no idea why
at the moment, and we would be fascinated to receive your reply
to explain why this was done.
Mr Hind: I think, Mr Flynn, I
can be absolutely certain about the fact that it would not have
been a Charity Commission decision, even back in 1960. It would
have been a parliamentary decision to include that as a schedule
to the Charities Act, but we will try and dig into history and
let you know what the debate was that led to that decision.
Q32 Paul Flynn: We will live for
the moment when we have your reply. The Penylan House Jewish Retirement
Home, which I know very well, which is the home of my eldest constituent,
May Mandelson, is being questioned because they are not performing
their functions. I believe their functions were to provide a retirement
home for Jewish people. There are very, very few Jewish people
in the Cardiff and Newport areas now. The Synagogues are closed
in both areas. There is the famous case, which one of your staff
quoted to me, of another charity in Wales which is devoted entirely
to the provision of petticoats for fallen women. Understandably,
the demand has rather declined in that area as well! If these
charities are there and their purpose has really gone, what action
have you taken to give them a new role and what is being done
in this particular home?
Dame Suzi Leather: I rather thought
that fallen women did not wear petticoats actually! The way that
we have helped that particular charity to respond to the demographic
situation you have described is, in a sense, quite similar to
how we respond to the petticoat situation. Several years ago the
charity came to us and said that there was not a sufficiently
large Jewish community to be able to be viable as a care home
devoted to those people, and so we agreed with the charity that
they would be able to extend their charitable objects beyond serving
Jewish people and, indeed, now, I cannot remember the figures,
but certainly 10 or 12 people, I think, in that home are non Jewish,
but the home still runs in accordance with the Jewish faith. But,
as you know, charity law holds that charities may charge fees
for their services, they may, indeed, charge high fees for their
services, but if they do they have to make sufficient opportunity
for people who cannot afford those fees to benefit in a material
way from the charity's services, and that material way does not
simply mean something small, tokenistic, unplanned. We looked
at that care homeit was one of three care homes we looked
at in the first round of public benefit assessmentsand
we look at all the fee-charging charities in the round. So we
look at how much reserves they have, if they have reserves, what
their income is, what their outgoings areso we look at
the capacity that a charity has for doing moreand it is
difficult territory making these judgmentsas you told us
last year, I think, that it was going to be. We have to look at
what that charity is managing in the round, whether it is providing
help in order to pay fees or whether it is providing other indirect
benefit, and see whether that overall package does, in our view,
meet the sufficient opportunity to benefit for people who cannot
afford the fees. It does not mean that to everybody who comes
who cannot afford the fees they have to say yes to, but there
has to be a sufficient opportunity; and looking at the income
of that charity, looking at its reserves, looking at its policy
for supporting people who could not afford the fees, we did not
think at the moment that they are demonstrating sufficient public
benefit. What we are doing with the organisations (and they were
not the only onesthere were two schools as well who could
not satisfy us that they were delivering a sufficient public benefit)
is that we have given them a period of time, first of all, to
say will they work with this, are they committed to trying to
show public benefit, then a further period of time to come up
with a plan to implement how they will demonstrate public benefit,
and then they will be given a further period of time in order
to be able to demonstrate that. We recognise that times are difficult,
and we have publicly said that this will be difficult for some
organisations; it will take time. We have said we would not expect
it to take, normally, more than five years in order to do that,
but I think it is fair to give charities time to adjust.
Q33 Paul Flynn: On the question of
schools, you lay great store by the number of bursaries that public
schools offer and you regard that as their principal benefit,
but is it not a disadvantage in many cases to the schools, where
the leaders of the schools, the pace-setters of the schools, are
taken from them, depriving the schools of the advantages they
have from them when they are put into the alien atmosphere of
a public school? This is a great disadvantage to many of our comprehensives,
who lose some of their best pupils. How is this a public benefit?
Dame Suzi Leather: I think there
are two issues which you have raised there. First of all, as to
whether we are putting all the emphasis on bursaries, the answer
is we are not putting all the emphasis on bursaries, although
I think that some of the press reporting has given many people
that impression, but we have tried to correct that impression,
with varying degrees of success. The fact is that providing subsidy
for high fees is the most direct way in which you can show that
you are providing an opportunity for people who cannot afford
the fees to benefit, but there are other ways, and we have said
that we will take into account those other indirect benefits.
What I think would mostly happen, and certainly has happened in
all the ones we have looked at so far, is a mixture of the two.
So there is some help with the fees and there are some indirect
benefitspartnership working with other schools, for instanceand
it may be that a school would be able to demonstrate to us, only
through that partnership working, those that what we call indirect
benefits, that it is bringing sufficient public benefit. This
is difficult in case law because there is not actually case law
at the moment to support that, but certainly we are open to schools
and care homes and other high fee chargers showing us public benefits
through those indirect mechanisms. Your second point was really
a more general one about the overall benefit or disbenefit of
having charitable independent schools, and I do not think that
is for the Charity Commission: I think that is for Parliament
to decide. What we have to do in making assessments of individual
charities is look at what is the evidence of benefits and harms
from those individual charities, and, clearly, the benefits have
to outweigh the harms.
Q34 Paul Flynn: Why is it unacceptable
for fee-charging charities to benefit only the wealthy but acceptable
for religious charities to confine their benefits to the religious?
Dame Suzi Leather: The religious
charities are not defining their beneficiary class. If you are
advancing religion and the way you are doing that, for instance,
is to hold services, you cannot say, "This is a Christian
service. You cannot come in if you are Jewish"that
would not be acceptablebut
the beneficiary class issue is rather different with fee-chargers,
and, as I have said, case law, charity law does have this principle
that, in order to be able to demonstrate public benefit, high
fee-chargers do have to provide a sufficient opportunity for people
to benefit in a material way from the benefits of that charity
to be able to show public benefit.
Q35 Paul Flynn: Do you think that provision
of a prayer lineI understand you can ring up and someone
will pray with youor a public religious service that is
available is a benefit for everybody?
Dame Suzi Leather: Yes, it is
outward facing. It has a public character, yes. You are not charging
people to come to a service. That would not be public benefit.
If you said Matins is going to cost you 500 quid, that would be
an unreasonable charge.
Q36 Paul Flynn: But a service provided
to, say, Evangelical groups or Catholic groups or various other
denominations is something that is going to be of advantage to
only a small, tiny in some cases, minority of the population.
To humanists, to atheists it is not a benefit.
Dame Suzi Leather: Charity law
holds that it is not the overall numbers of beneficiaries that
count as much as the potential openness of the class. For instance,
you could have a playing field in a small village that vanishingly
small numbers of people are ever going to use. It is a tiny village;
it is in the middle of nowhere. Nevertheless, it can be charitable
because it is not artificially restricting the people who can
benefit: the people from that village. All the people from that
village can benefit.
Q37 Mr Liddell-Grainger: I have just
been looking at your board. Have you got anybody who has actually
come from industry on your board? I will answer it for you. Every
single one of you, like yourself, are quango queens. Your board
is made up of people from either the BBC or organisations. You
have only got three or four people who are lawyers and the rest
are all from quangos. Have you nobody from business?
Dame Suzi Leather: I am not quite
sure what you mean by that.
Q38 Mr Liddell-Grainger: Read the
obituaries, if you want to call them that, from all of you: one
BBC, next one Tropical Healthcare Trust, the next one is an independent
adviser for social development, the next one, Cardigan Vale NHS
Trust, the next one is a lawyer, fine, the next one, lawyer, the
next one, co-founder and former chairman of a communications consultancy,
an assistant director of regulation policy. I can go on. They
are all people who have come from quangos.
Dame Suzi Leather: No, I do not
think that is true.
Q39 Mr Liddell-Grainger: Who are
the business people on there?
Dame Suzi Leather: I think John
Williams, who it says has a background in marketing and corporate
Q40 Mr Liddell-Grainger: I said him.
That is fine.
Dame Suzi Leather: would
say he was from the private sector.
Q41 Mr Liddell-Grainger: Yes, which
other ones? There are 12, or 13 technically.
Dame Suzi Leather: I think both
our lawyers would say they were from the private sector.
Q42 Mr Liddell-Grainger: Yes. There
are four lawyers.
Dame Suzi Leather: There are nine
people on the board, nine non-executives. So that is a third of
Q43 Mr Liddell-Grainger: There are
12 altogether, are there not?
Dame Suzi Leather: No, because
we do not have executives on the board. The board is simply the
non-executives. So a third of them are from non public sector
Q44 Mr Liddell-Grainger: Which are
lawyers. What about somebody from, say, Shell or, it does not
matter what, from an actual business background as opposed to
just to lawyers and quangos?
Dame Suzi Leather: I do not appoint
people to the board, Mr Liddell-Grainger.
Q45 Mr Liddell-Grainger: Do you think
it is a good idea; never mind, "I do not do it"? Do
you think it is quite a good idea that you should have a broader
Dame Suzi Leather: I am absolutely
delighted to have the board members I have. I think it is an extremely
strong board. I think the mixture of skills, competences and backgrounds
we have is superb.
Q46 Mr Liddell-Grainger: You have
got two from the BBC, which is a pretty bad start, and there is
you. Have you ever had a proper job? Because it is all to do with
Mr Hind: Ian, Mr Liddell-Grainger,
I should say
Q47 Mr Liddell-Grainger: You can
call me Ian. Do not worry, Andrew.
Mr Hind: I am sure there should
be an element of formality in the interchange between witnesses
and the Committee. I think what Suzi is saying is that there are
eight board members.
One of those has a very clear commercial business background.
There is a wide range of other experiences. To say that there
is no business experience present in the CVs of these other people
would be quite wrong. I think there is a significant amount of
Q48 Mr Liddell-Grainger: I will tell
you the reason I am asking the question. Your popularity since
2005 has gone up 3%the trust, the way that members of the
public look at the Charity Commission. In 2005 it was 63%; this
year, the last accounting year, it was 66%. People do not trust
you. You are not growing in the stature of the British public.
Mr Hind: If I was allowed to say
that that is nonsense, I would want to say it.
Q49 Chairman: Do say it. You are
entitled to say it.
Mr Hind: That is absolute nonsense.
Q50 Mr Liddell-Grainger: It is not
Mr Hind: No, Mr Liddell-Grainger;
that is nonsense. It is a misunderstanding. I think it must be
based on a misunderstanding of what that statistic is about. That
statistic is not about public confidence in the Charity Commission:
it is about public confidence in charities and charity. I would
put it to the Committee that seeing an increase from 6.3 out of
10 to 6.6 out of 10 in public trust in charity over the last two
or three years, against a backdrop of a massive decline in public
trust in almost every other part of public life that any of us
can think ofsocial work, journalism, dare I said it, parliamentarians,
and so on
Q51 Chairman: We could see it coming!
Mr Hind: that actually
is a very significant achievement. In terms of what people think
about us, you need to refer to the stakeholders' survey, which
shows, over three or four years, the scoring, on a scale of one
to ten, has gone from 4.1 to 6.7. That is something like a 25%
increase in the confidence that stakeholders have in the job the
Charity Commission is doing over a very short time.
Q52 Mr Liddell-Grainger: Stakeholders
are stakeholders. What about the public? Your KPI 1 is public,
is it not? It is page 19. I am sorry.
Mr Hind: Yes, but it is not designed
to be trust in the Commission; there is a much broader point here.
Q53 Mr Liddell-Grainger: The point
I am making is why have you not gone out to the public to say,
"What do you think of the Charity Commission?" You have
gone for stakeholders. Stakeholders have vested interests. We
should know that.
Mr Hind: I think, actually, we
were very careful (and I can give you a detailed list of who the
stakeholders were) to include in that number a number of severe
critics of the Commission.
Q54 Mr Liddell-Grainger: Could we
have a list of the severe critics?
Mr Hind: Indeed, you could.
Q55 Mr Liddell-Grainger: I would
be interested in talking to some of the severe critics.
Mr Hind: It is a public document.
Dame Suzi Leather: It is a public
Q56 Mr Liddell-Grainger: Have you
got a copy?
Mr Hind: Can I try and complete
the answer, because I think I can help a bit further. We do, within
the survey you have pointed to, also ask for details about the
public's view of the Commission and the public's levels of awareness
of the Commission. It is not a headline indicator reported in
the annual report, but what that shows is that something like
90% of the public are really keen to ensure that there is a regulator
in whom they can have respect and confidence taking responsibility
for the charity sector,
because without that they are not prepared to make donations,
and the level of awareness of the work that the Charity Commission
does has increased quite significantly. When you look at a whole
series of measures, I think, whether you are talking about the
public, whether you are talking about those in the charity sector,
who, I completely accept, are stakeholders but with a vested interest,
whether you are talking about the media, parliamentarians, people
in business, they would say, "We actually rate the Commission
pretty highly for the job it is doing."
Q57 Mr Liddell-Grainger: That is news
to me. I think most of the stuff you get, the reason your profile
is higher, is because the papers were talking about the schools.
That is what has heightened your profile; but I am intrigued that
you go to stakeholders on one and the public on another. We know
statistics and you do: you are a civil servant. Surely the whole
idea of this is to find out exactly what people think. I was interested
to see also that you have investigated four charities and you
found they were not up to requirements. What are the four? Was
one of them the one we have talked about that Tony brought up?
Dame Suzi Leather: All of that
information is in the public domain. All you have to do is look
at our website.
Mr Hind: The research that is
reported here was conducted before we published the assessments
on schools, so the increase in the Charity Commission's profile
and everything I said about that was pre schools. No doubt our
profile will have increased even higher following the assessments
we published in July.
Dame Suzi Leather: The research
that we carried out on trustees' understanding of public benefit,
which we published two weeks agothat was 1,500 trustees;
that is quite a large sampleshowed that 76% know about
the requirement, and in larger charities it is even higher, it
is 71%. So that is important, because we do have a statutory responsibility
for providing guidance and for explaining the operation of the
public benefit requirements. I think the fact that we are able
to achieve figures like that at this stage is very encouraging,
but, clearly, we have some way to go. Many people still do not
know about the public benefit requirement, and we have work to
do to ensure that they do.
Q58 Mr Liddell-Grainger: Lastly,
the 400 charities that fall into the exempt charities, how many
of those have you exempted and how many, like Eton and Winchester,
Mr Hind: We have not exempted
Dame Suzi Leather: They are not
decisions taken by us.
Q59 Mr Liddell-Grainger: But there
are 400 that are existing anyway. Presumably Oxford, Cambridge,
Durham, Eton and WinchesterI am just taking it from your
letterand universities in Wales, student unions in England
and Wales are part of the 400, are they?
Mr Hind: Yes. That is right. So
there are two things happening. Those are going to come under
our regulation and then there are a number of other exempt charities,
like universities in England and museums and galleries exempted
by legislation in the past, who are going to come under the regulatory
ambit of principal regulators HEFCE and DCMS.
Q60 Mr Liddell-Grainger: Which was
to begin on 30 November. Has it actually begun?
Mr Hind: It has begun, yes.
Q61 Mr Liddell-Grainger: The girl behind
you shook her head.
Dame Suzi Leather: The exempt
ones, I think, are starting early in 2010.
Mr Hind: The process is, but they
are not yet registered.
Q62 Mr Liddell-Grainger: When do
you hope to get that done by?
Mr Hind: I think that depends
on regulations being laid in the House to enable us to get on
with it, Mr Liddell-Grainger. So, in fact, the delay is not with
us; we are waiting for regulations to be laid.
Chairman: I am going to move it on. Ian
is a robust questioner and I would encourage that, but sometimes
slightly over the top.
Q63 Mr Liddell-Grainger: I have read
Quentin Letts' book!
Mr Hind: As long as you are happy
for robust answers it does not matter.
Mr Liddell-Grainger: That is great. That
is what we are here for.
Q64 Chairman: He does not mean to
Mr Hind: Chairman, while we have
got a lull, may I come back to you on the question you gave us
30 minutes to answer?
Q65 Chairman: Yes.
Mr Hind: I think I got the answer
within 30, but have not had an opportunity to put it to you.
Q66 Chairman: Let us have it now.
Mr Hind: The anonymised case study
you pointed to was in respect of a branch of the Jehovah's Witnesses.
We have subsequently published an inquiry report and we are still
working with the umbrella body to improve their child protection
policy. We can give you further information, but that is now on
the public record.
Chairman: I am grateful for that.
Q67 Mr Walker: Do some small charities
now fear the knock at the door from the Charity Commission? I
am concerned about small charities like the one Paul was highlighting.
I understand there is a small school in Preston that is under
a lot of pressure at the moment. It only charges annual fees of
£4,500-£5,000. Is there a danger that the Charity Commission
is bullying some smaller charities?
Dame Suzi Leather: I would be
very surprised to hear that. That is not what the charities are
Q68 Mr Walker: I am asking the question.
It is a concern I have.
Dame Suzi Leather: I am very surprised
to hear that. That is not how we have gone about doing our assessments
at all. We have asked the charities concerned that we have done
assessments about, "How was the process for you?", and
we have had no feedback like that whatsoeverin fact, quite
Q69 Mr Walker: So there is not a
sort of frisson of fear out there, "My gosh, are we actually
doing this right? Are we going to get in trouble from the Charity
Commission? Is the Charity Commission going to want to audit our
Dame Suzi Leather: I think there
are some misconceptions about the Commission. I think many people,
for instance, suppose that we have an inspectorate. We do not
have an inspectorate. We clearly have people in our investigation
department who go out and do investigations, but I do not think
small charities see us other, in general, than very supportive
because we give so much support and guidance to small charities.
Mr Hind: We would be really concerned,
Mr Walker, if there was that concern. I think what I would say
to add to what Suzi has said is that what we have done in the
area of public benefit in the assessments, particularly in the
area of the fee-charging charities, the care homes and the schools,
has been whipped up as something that it really is not. I think
there have been some with vested interests who have perhaps tried
to scaremonger a bit. It is in the interests of professional advisers
to take the line that you said some may be hearing, that the Charity
Commission will be coming knocking on your door demanding explanations
but that is absolutely not the reality.
Dame Suzi Leather: What we are
seeing is a kind of return to basics because of the public benefit
requirement. So charities up and down the land are focusing now
on "what do we do for public benefit and how are we going
to express that?" Because the main change that all this is
going to be about is in trustee annual reports; it is not by the
Charity Commission carrying out assessments. We have done 12 in
the first year; we have recently announced that we are going to
do another four. This is not the main driver. The main driver
and the main change is public accountability, and the research
we have done on public understanding, trustees' understanding
of the requirement, is that in larger charities, already, I think,
almost 40% of charities have revisited their charitable aims.
So that is a very good sign. I would also say that, although the
requirement to register (which had been raised from £1,000
to £5,000 in April 2007) is there, about 50,000 small charities
with an annual income of under £5,000 want to be registered
because they like being on the Register of Charities. In regulation
it is a rare thing for the regulated sector to fight to be within
the attention of the regulator, but it does happen in charity
regulation because people feel proud of it.
Q70 Mr Walker: You mentioned you
were doing these "Big Board" conversationsa slightly
unfortunate title, I think.
Dame Suzi Leather: Essentially
it is a tool kit to stimulate debate in trustee boards.
Q71 Mr Walker: Okay. The Charity
Commission were leading those.
Dame Suzi Leather: No, we simply
provided a check-list of questions that we thought it would be
helpful for boards of trustees to ask themselves to prepare themselves,
as best they possibly can, for the economic situation they find
Q72 Mr Walker: We have had a charitable
sector in this country for hundreds of years. In fact, we have
almost led the world in the charitable sector. We have done extremely
well at it. Is not the Commission slightly over-reaching itself
by suggesting to many successful charities, "These are the
questions that you may like to ask yourself about how to cope
with the downturn"? I will tell you why. I am not going to
attack you in the robust terms of my colleague, but, clearly,
looking at your own board, there is hardly anybody on it who has
actually ever managed profit and loss in the private sector. So
I am not sure what level of expertise you have to advise charities
on what to do in an economic downturn, bearing in mind your money
comes directly from the taxpayer, or whoever, regardless of what
is going on in the economy.
Mr Hind: Charity trustees are
not managing profit and loss accounts, they are actually managing
what many would consider to be even more complex animals than
Q73 Mr Walker: They are raising money
from people and, obviously, their ability to raise money is affected
by the economy.
Mr Hind: Yes, and I think what
our board has, and I hope our executive team has, is pretty in-depth
commercial skill and experience in that area but supplemented
by a very real understanding and awareness of the issues that
are arising in charities, and, actually, to be an effective charity
trustee or an effective charity executive, you have to marry those
two things. We issued this. This is it. It is called the Big Board
Talk. The title is just a bit of, at one level, branding. It was
not a paternalistic exercise saying, "Every trustee in the
land, please sit down and ensure you go through this and give
us the answers by Monday morning." It was actually a response
to requests that we were getting day by day from dozens and dozens
of charities saying, "Can you give us some advice about the
kinds of things we need to think through in order to protect our
charity, as far as we can, from the adverse impacts of the economic
downturn?". On the basis of the experience we have got and
talking to a number of charities who were already doing it, large
and small, and we had a couple of meetings around the country
to put it together, we came up with the 15 questions we think
it would be really helpful for all trustees to consider whether
they need to ask themselves and take action, and we left it to
them. This is not the Commission saying, "You must do this."
It was the Commission saying, "If you are worried about the
economic downturn in the context of your charity, here is something
we think you might find helpful. Go away and do with it whatever
you want to do with it", and the feedback we have had on
this has been absolutely amazing. The key thing has been trying
to give trustees courage, actually, to do a number of things:
to focus on their core and to get back to ensuring that they are,
in difficult economic times, only doing the things that are absolutely
at the core of their mission (and Mr Prentice's question was relevant
to this earlier on), things that are core to your charitable objectives
are the things you really should prioritise at difficult times.
The other thing we said was that this is probably the time to
start using the reserves that you have built up during the good
times. This is a rainy day, if ever there was one. One of the
things we see is that trustees, and very often those with commercial
experience, are dead keen to build up reserves and be prudent
during good times, but they are pretty reluctant to use those
reserves for the purposes that they were intended, which is to
sustain delivery to beneficiaries during the bad times, and we
have tried to give charities courage to do that if they think
it is right in their context.
Q74 Mr Walker: Two very brief questions,
Chairman, and then I will have had my turn. Firstly, do you think
you will see some charities trying to escape from charitable status
and to remove themselves from the ambit of the Charity Commission?
Secondly, you mentioned that case law is still developing. Do
you think there may be some legal challenges to the Charity Commission
from care homes, from private schools, where they perhaps feel
the Charity Commission has over-reached itself?
Dame Suzi Leather: There may well
be challenges to us, and actually we would welcome that because
what you would get if you had challenges is that case law would
move on and there would be cases for us then to draw on as well.
We do not see that as a bad thing. That is why we have been very
supportive of having, for instance, the Charity Tribunal introduced.
That is helpful.
Mr Hind: On the escape point,
a fundamental defining characteristic of charities is that they
are for the public and the assets are for the public. So, in fact,
you cannot escape, using your word, Mr Walker. Once you are a
charity and you have assets which are charitable, you cannot then
decide that you would like to pull those assets out and put them
into some other constitutional form. Our role, where charities
and their trustees decide that they want to do something different
or times have moved on and the assets need to be used in a different
way, is to make a decision with the charity about how effectively
they can be used somewhere else. We have quite a number of cases
where trustees come to us and say, "Look, we think we have
done our job, we want to escape from it", if you want to
use that term. We will then make a decision about where the assets
should be transferred so that they can be put in support of comparable
charitable objectives within the auspices of a different charitable
Q75 Julie Morgan: First of all, I
want to say that I regret the way you were questioned by my colleague
and I would like that put on the record. Last year you changed
your guidance to charities on campaigning, giving them more freedom
to campaign, and that was something that I welcomed. I wondered
if you had any views on how that has developed, whether you have
got any examples of how things have changed.
Dame Suzi Leather: Thank you very
much. I do not think our views changed, I do not think the rules
changed, but our guidance, I think, was made easier to understand.
We dropped the use of terms like "ancillary" and "dominant",
which, I think, in ordinary people's speak was a little bit confusing,
but it is good to hear that charities have welcomed it, and it
is our experience also that charities have welcomed it, but I
think it is important that, particularly in the next few months,
we absolutely underline the importance of charities maintaining
their independence, and they must not be, or be seen to be, linked
to political parties. You know, because you understand this, that
charities may carry out political activity, but only in support
of their charitable purposes, and, indeed, we think that sometimes
political activity in support of their charitable purposes is
the most useful thing they can do. I think, more commonly, charities
do a mixture of campaigning and providing services, and often
their experience of service provision influences the campaigning
they do and gives it a firmer evidence baseI think that
that is an advantagebut charities, of course, cannot have
political purposes, and that has quite a wide meaning. It means
that they must not support or oppose any political party or campaign,
candidate or manifesto, and we do come down very hard on charities
that overstep the line. There have been cases in the last year
or twothis has involved all political parties, I should
saywhere charities have given money to political parties,
for instance, which is an absolute, no, noyou cannot do
thatand we come down on those charities that have done
that very firmly and we publish the inquiry reports or the regulatory
case reports that we have made.
Q76 Julie Morgan: Can you tell us
some examples of charities that have done that?
Dame Suzi Leather: Yes, Catz Club,
for instance. That involved giving money to a political party.
Which other ones?
Mr Hind: I am sorry, just give
me a moment to think about that and I will come back to you.
Q77 Julie Morgan: What is your response?
What do you do to those charities that do something that is so
Dame Suzi Leather: If somebody
reports to us that they think a charity has given a donation to
a political party, we investigate that, because they are not allowed
to do that. I think the important thing is that the investigation
of that is a public document, so it is absolutely clear when charities
have over-stepped the line. We have published quite a few case
reports recently on this.
Mr Hind: Yes, one was the Royal
United Services Institute. There have been three cases in the
last year. In fact there has been a case concerning donations
by a charity to the Labour Party, donations by a charity to the
Conservative Party and donations by a charity to the Liberal Democratsthree
different charities, three different sets of circumstancesand
in each of those cases what has happened is that the donation
has had to be returned by the political parties in question, which
We have publicised the fact that this happened. We have ensured
those charities understand what they can and cannot do and we
have been working with the Electoral Commission to get some guidance
published in the run-up to the election to ensure, on the broader
point, that charities are clear about the space they have got
to engage in campaigning and legitimate political activities but,
also, where the line is drawn and beyond which they cannot go
and if they do go we will take severe action, because there is
nothing that is going to be more corrosive of public trust in
charity than the public beginning to have a concern about the
fact that in some way they are operating in political space.
Q78 Julie Morgan: So you are waiting
for guidance from the Electoral Commission.
Dame Suzi Leather: No, we produce
our own guidance.
Q79 Julie Morgan: Have you produced
Dame Suzi Leather: We have existing
guidance on campaigning, and that is in the public domain. It
is on our website. We will produce new guidance before the General
Electionwe will probably produce that in Februaryand
we are working with the Electoral Commission to ensure that there
is as much consistency as there possibly can be.
Q80 Julie Morgan: Because, obviously,
this period is going to be very important with these issues?
Dame Suzi Leather: Yes.
Q81 Julie Morgan: Are there any other
things you are planning to do in the run-up to the General Election
to ensure that charities do not get involved in party politics?
Dame Suzi Leather: Clearly, we
will be publicising the guidance we produce.
Q82 Julie Morgan: It seems amazing
to me that any charity thought they could give money to political
parties. Has anything happened to those charities, apart from
being shamed, so to speak, publicly?
Dame Suzi Leather: I think "very
embarrassed" would be a good description.
Q83 Julie Morgan: But nothing other
than that, they have been able to carry on?
Mr Hind: They were all one-off
incidents. Clearly, we have the powers that we were talking about
earlier on. If we are not satisfied with the co-operation of trustees
or changed behaviour in a given set of circumstances we can take
further action, but we did not believe it was necessary in those
cases to do anything other than, in a sense, name and shame through
the publication of our reports. It would not really have been
proportionate to take that further.
Q84 Kelvin Hopkins: In your letter
of 26 November, the section on the Charities Act 2006, charities
registering as exempt charities, you say there has been a delay
in laying the statutory instruments. It is three years after the
Act was passed. Is there a mystery about the delay?
Mr Hind: No.
Q85 Kelvin Hopkins: Is it departments
Dame Suzi Leather: No, I do not
think it was; I think it was a technical hitch, no more than that,
and we are hoping that this will be cleared up early in the New
Q86 Kelvin Hopkins: Has it caused
problems for you?
Dame Suzi Leather: No, I would
not say so.
Q87 Kelvin Hopkins: The elephant
in the room (and I raised this when you came to see us before
and, indeed, privately) is public schools, boarding schools, which
cater for the better off who want a privileged education for their
offspringsmall classes, and so onand they do academically
better than they would do because of those extra resources. This
is an on-going debate. Has it exercised you at all, in the sense
of people raising this with you: the fact that they are regarded
as charities and they get tax benefits to look after the rich?
If this tax was not being paid, there would be more money to spend
on the rest of population in their education and this would be
clearly sensible, fair, just and rational.
Dame Suzi Leather: I said in an
earlier answer that I think these overall judgments about whether
certain forms of education are a good or a bad thing are not for
the Charity Commission, I think that is for Parliament. Parliament
asked us to do a job on public benefit. The first 12 assessments
that we have carried out, and it is perhaps too early to draw
very firm conclusions, we have learnt from those assessments and
I think the charity sector itself has also learnt from those assessments.
We have been encouraged by charities' understanding of the public
benefit requirement and we have been encouraged by the many rather
different ways in which different charities are able to give examples
of public benefit. I think it has confirmed that our approach,
and actually Parliament's approach really, was the right one:
that we should make these judgments on a case-by-case basis, that
you cannot really have an overall benchmark, for instance, on
bursaries because every charity is different, and the sort of
package of public benefit, as it were, that they want to put together
will be different according to their circumstances. What we have
to do is look at what they are doing with fee subsidy provision,
look at what they are doing with the other partnership activity
and work out whether we think it is sufficient. So I do think
that the overall impact so far has been that both charities and
the general public understand a bit more about what this public
benefit requirement means, and that is a very good thing. We will
be producing a research report towards the end of next year on
trustees' annual reportshow are charities reporting to
us on their public benefit, because it is a requirement for charities
to do thatand I think that there we will get some composite
material on what the impact has been. Of course, in 2011 there
is going to be a review of the public benefit requirement, so
that will be another opportunity to see what has been the sum
of all this activity and drive, but, as I have said before and
I will say again, the real change is in public accountability
for what charities are doing so that people can look at the trustee
annual reports of a charitable independent school and look at
what they are doing, look at what their bursary amount is, look
at the partnership activity, and people will be able to make up
their own mind about whether they think that is sufficient to
demonstrate their part of what they get for charitable status,
because in return for charitable status, in a sense, you get a
lot of benefitstax breaks.
Q88 Kelvin Hopkins: It does strike
me that bursaries is tokenism, to give a veneer of respectability
to privileged education for the rich, but I would not expect you
to comment. The other concern is that the public schools are a
very powerful lobby with connections at the very highest level
in politics, and it must make you rather nervous about tackling
this issue and saying anything more than the relatively bland
comments of the kind you have made so far, with respect. I do
understand the pressure you would be under in those circumstances,
but I think it is right that these issues should be raised publicly,
because if you take those out of the picture, people would look
more favourably on charities in general. Anyway, that is a side
Dame Suzi Leather: I think what
will happen, Mr Hopkins, as a result of the detail that is going
to come in trustee annual reports is that public debate (and there
obviously will be a continuing public debate) will have a better
evidence base. So people will not only have the overall pro or
anti this form of education, but those views will be underpinned
by some evidence about what all these organisations are actually
doing, and the truth is that many of them are doing a great deal.
Q89 Kelvin Hopkins: I have absolutely
no doubt that those who go to these schools have a more intensive
education than those who do not and they have advantages throughout
life as a result. Can I change the subject slightly? It is a big
question, but would it not be possible to divorce automatic tax
exemptions from the issue of charitable status and to give the
tax exemptions to charitable givingsimply to the giving
rather than the expenditure? Everybody would understand charities
are about giving and the tax exemption is given to those who get
advantages for giving rather than having charitable status and
giving tax exemptions on expenditure. This would, I think, overcome
the schools problem.
Dame Suzi Leather: There is a
category of organisations, and I think it is a category with only
one sort of organisation in it, which is community amateur sports
clubs, and I believe those are organisations that do not have
to register with us but do get tax breaks. So, yes, and I think
that was part of the 2006 Act.
Mr Hind: The bigger point, Mr
Hopkins, is that this is a matter for the Treasury; it is not
a matter for the Charity Commission.
Kelvin Hopkins: I realise you cannot
make the political statements that we should make, but, on the
other hand, I think it is right to raise these issues in this
public forum. I hope they are not without relevance to the debate.
They are the questions I really wanted to raise. I have no more
Q90 Mr Prentice: Can I just say I
think your website is great.
Mr Hind: Thank you very much.
Q91 Mr Prentice: I think it is easy
to navigate. I found out a huge amount about charities that I
was interested in by going onto your website. You are going to
update it in January, I believe.
Dame Suzi Leather: Yes.
Q92 Mr Prentice: We have been talking
about accountability. It is a great tool to shine a spotlight
on charities via your website. Is there a section in the Charity
Commission that deals with Islamic charities? Do you have a little
group that just focuses on Islamic charities?
Dame Suzi Leather: We have for
the last 18 months, two years had a Faith and Social Cohesion
Unit. In 2004, I think, we started to do some outreach work with
all sorts of faith organisations to find out whether the Commission
was providing the kind of support, advice, help that they needed,
and one of the main findings of that piece of work was that they
wanted a specific unit that came from Muslim charities, they wanted
a unit within the Commission that understood their faith, their
organisational structures and could support them, and we were
able to get some money about 18 months, two years ago in order
to set this up, really to support the governance of Muslim organisations
and mosques in particular. It was not ever intended, I do not
think, that we would only ever look at Islamic organisations,
but we would start with Islamic organisations, faith organisations.
We had historically had a very strong relationship with Christian
organisations, many of which actually are excepted from charitable
status, but we had done a lot of work with them. We had much less
good understanding of mosques and yet the Muslim faith was the
fastest growing faith in this country. So I think we had a way
to go on that. The purpose of the Faith and Social Cohesion Unit
has been to bring more mosques into registered status and to strengthen
the governance of the ones that are.
Q93 Mr Prentice: Are there particular
problems, particular issues that affect Muslim charities?
Mr Hind: I think we would say
there is a lower level of awareness of what it means to be a charity.
I think that is something we see and it is something that is self-confessed,
as it were, from Muslim communities, as Suzi was saying. What
we have been trying to do is work with a number of umbrella groups
around the Islamic part of the sector to build up that understanding.
Dame Suzi Leather: I think, from
the financial point of view, a smaller proportion of the monies
raised within those organisations was going through accountable
channels. One of the benefits of this piece of work is that this
proportion has been increased, and it has been very successful;
it has been welcomed. In terms of registration, since October
2007, when the unit was first started, we have had a 40% increase
in registration of mosques.
Q94 Mr Prentice: Okay. I spoke about
Islamic Help and the 5,000 place Pendle Boarding School for Girls,
but next door to me in Burnley there is the Al-Ehya Trust, which
has just been renamed the Mohiuddin Trust, and they have purchased
the old Burnley College and they are setting up Mohiuddin International
Girls College which will have 1,500 places. I know it is not your
job to comment on educational policy, I understand that, but the
Mohiuddin Trust, when it talks about its objectives, mentions
strengthening inter-community relationships and building stronger
community integration and cohesion and, in that context, I just
wonder if the Charity Commission would take a view on the number
of girls at this International Girls College that would be drawn
from overseas or the number of girls that would be taken to the
school from the immediate locality because it could have a hugely
destabilising effect on other schools in the immediate area. Do
you understand what I am saying?
Dame Suzi Leather: I do not think
that what you are talking about is really a matter for the Charity
Commission, but one of the other changes we have brought about
is we have introduced an Advisory Committee on Faith within the
Commission, and that is a committee which meets two or three times
a year and has representatives of all the main faiths in this
country. One of the things we have been talking about recently
is how we can strengthen partnership working between faiths and
inter-faith activity. From a governance structure, from a Charity
Commission point of view, there is quite a lot of interest in
doing that. I think that in future we could have quite an important
role in bringing different charity organisations that are faith
based together to share experience, for instance, in how you do
strengthen governance, how you do induct trustees, how you do
ensure that your organisation is effective and efficient; but
one of the benefits that might flow from that would be greater
Q95 Mr Prentice: I suppose I should
know this, but how easy is it for a charity to change its charitable
objectives? Is it a performance or is it relatively straightforward?
Mr Hind: Relatively straightforward,
providing the substance of what the charity wishes to do in the
future is broadly similar to what it wanted to do in the past.
If it wanted to do something fundamentally different, then that
would be something that we would have to discuss with them and
ensure that we were satisfied that it complied with the legal
Dame Suzi Leather: I would use
the word "flex" rather than "change". I think
you can flex, for instance, the beneficiary class if there are
changes to society. For instance, the Jewish care home based in
Cardiff. No longer is there a sufficient Jewish population there
to support a care home, so we have enabled that charity to flex
its beneficiary class to include people who are not of a Jewish
Q96 Mr Walker: Is that mission creep
Dame Suzi Leather: No, I do not
think it is mission creep.
Mr Walker: If you have got spare money,
can you not do more with it? Would that not be a good thing? You
could find other good causes to support as a charity.
Q97 Mr Prentice: I do not want to
go over old ground. My main concern is where you have a charity
which explicitly is there for the relief of disasters overseas,
whether it just requires the stroke of a pen to change the charitable
objectives to include educational establishments in the United
Kingdom. That is what I am getting at.
Dame Suzi Leather: I would say
that is well beyond "flex".
Q98 Chairman: We are going to end
now. Could I say, as usual, we have had quite a vigorous session,
which is what you expect when you come here. I apologise for the
fact that Ian was excessively unpleasant and personal. He is a
public schoolboy. I suspect he wanted to get a favourable reference
in the Daily Mail, which no doubt he will get. The Daily
Mail, of course, as you know (and I am sorry that Mr Letts
has gone), specialises in attacking you in the most personal and
offensive way. That is what he is paid to do. He must get some
kind of perverse pleasure in life for being offensive to people.
We do not mind, because that is our job, but when he attacks people
who cannot answer back, that is the hallmark of a bully through
the ages. So I just want you to know that we value the work that
you do and we value the work that the Commission does and we value
the way in which you account to us and the spirit in which you
do it. I do not know whether we will see you again, because this
is going to be the end of a Parliament, but it has been very good
doing business with you and we wish you well.
Dame Suzi Leather: Thank you very
Q99 Mr Walker: If you are attacked
personally by Quentin Letts, wear it as a badge of honour. My
children read the Daily Mail avidly to see what nasty things
he is saying about their father, so you must not worry about it
Dame Suzi Leather: Thank you very
1 Note from witness: Latest figure: 81% for
year to end November 2009 Back
Note from witness: Where it is in the public interest,
we issue a public statement at the beginning of a statutory inquiry.
In other cases, we would always make this information available
is asked. Back
Note from witness: In such a case the funds would be treated
as proceeds of crime. Back
Note from witness: This is the percentage reduction in
the administrative burden on charities which we expect to achieve
by May 2010. Back
Note from witness: The move will save the Commission an
estimated £13.1 million in running costs over a nine year
period in comparison to our previous location at Harmsworth House,
ie £1.45 million per year savings. Back
Note from witness: In the case of charities which advance
religion, the beneficiary class is the whole community. Charity
law holds that a charity can restrict who can attend where the
restriction is reasonable and relevant to its charitable aims.
Where a religious belief encourages its followers to conduct themselves
in a socially responsible way in the wider community, the public
in general benefits when the values held and expressed by that
religion are put into practice in a way that leads to the moral
or spiritual improvement of society. Back
Note from witness: The Commission has eight board members
in addition to the Chair. Back
Note from witness: The survey of public trust and confidence
in charities carried out for the Commission by Ipsos MORI in 2008
showed that, when the Commission's role was explained to them,
just over half of those surveyed (53%) felt its role to be "essential",
two in five (38%) felt it to be "very important", whilst
a further 8% stated it to be "fairly important". In
total 98% felt the Charity Commission's role was important. Back
Note from witness: The reference here is to three cases
of charities supporting political parties, not all of which involved
making financial donations directly. In the case involving the
Labour party, donations were made by the charity Catz Club in
breach of charity law, and these were returned by the party. The
other two cases referred to are the Royal United Services Institute
and Prince's Trust. We have published Regulatory Case Reports
giving details of all three cases and these are publicly available. Back