CORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 574-ii

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Public Administration Committee

Regulation of the Charitable Sector and the Charities Act 2006

Tuesday 23 October 2012

Sir Stuart Etherington, Sir Stephen Bubb, CATH LEE and Joe Irvin

Peter Lewis, Alistair McLEAN and Sally de la Bedoyere

Evidence heard in Public Questions 48 - 137

USE OF THE TRANSCRIPT

1.

This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2.

The transcript is an approved formal record of these proceedings.

Oral Evidence

Taken before the Public Administration Committee

on Tuesday 23 October 2012

Members present:

Mr Bernard Jenkin (Chair)

Alun Cairns

Charlie Elphicke

Greg Mulholland

________________

Examination of Witnesses

Witnesses: Sir Stuart Etherington, Chief Executive, National Council for Voluntary Organisations, Sir Stephen Bubb, Chief Executive, Association of Chief Executives of Voluntary Organisations, Cath Lee, Chief Executive, Small Charities Coalition, and Joe Irvin, Chief Executive, National Association for Voluntary and Community Action, gave evidence.

Q48 Chair: Welcome to this session on the triennial review of the Charities Act, and I would be very grateful if you could identify each of yourselves for the record.

Cath Lee: I am Cath Lee and I am Chief Executive of the Small Charities Coalition.

Sir Stuart Etherington: Stuart Etherington, Chief Executive of the National Council for Voluntary Organisations.

Sir Stephen Bubb: Stephen Bubb, head of ACEVO.

Joe Irvin: I am Joe Irvin, Chief Executive of NAVCA, the National Association for Voluntary and Community Action.

Q49 Chair: Thank you all very much for being with us today. Can I first ask about the Charity Commission’s budget, which is under a great deal of pressure? What effects are the reductions in the Charity Commission’s budget going to have on the work of the Charity Commission?

Cath Lee: We are seeing that they are moving away from the perhaps more supportive work that they have been able to do: the preventative work, the advice giving, and explaining and interpreting the guidance. But there is a very collaborative approach to managing that process, and they are in discussion with a number of sector bodies, us included, about how that process can be managed and how we can ensure that they both retain the responsibility for the regulatory side of that and ensure that organisations are still receiving the advice and support they need.

Q50 Chair: Can I make a suggestion? Because there are four of you, if you all agree with what the first person has said, you do not need to say anything. If you have something to add, that would be marvellous. Sir Stuart?

Sir Stuart Etherington: I have nothing to add.

Sir Stephen Bubb: No.

Q51 Chair: Dame Suzi identified the one-to-one support for charities as the casualty of the cuts and suggested that the umbrella bodies have to take over this role. Do you think that is a practical proposal from their point of view?

Sir Stuart Etherington: No, Chairman, not unless the umbrella bodies were resourced to do it. The umbrella bodies themselves are facing financial difficulties. I know that we and our colleagues from NAVCA put a proposal to Government about how advice services could be provided. We would be willing to do that, but that needs resourcing. We are not going to be able to do it with no resources.

Joe Irvin: We have been in discussion with the Charity Commission about this, as my colleagues have said. It looks as though both the force of the financial restraints on the Commission and also the recommendation of Lord Hodgson is that there should be concentration on regulation, not advice giving. I just wanted to point out that, on the Charity Commission website, they receive 3.5 million unique users a year, so it is a very well used service. If you compare that with the NCVO, its website receives about 0.5 million and ours about 150,000. It would be quite difficult for us to take on board that sort of demand. We are willing to try to help to do it; we want to support our members. In our case, we represent about 400 Councils for Voluntary Service and such, which support 160,000 local groups and charities. They are often in that position, but there are resources that need to be there to make it an effective operation.

Q52 Chair: What do we expect to happen? What do we expect the Charity Commission to be able to do? What is it reasonable to expect the Charity Commission to be able to do with their limited resources?

Sir Stuart Etherington: Just picking up Cath’s point, it is going to focus much more on regulatory activity-what it must do.

Q53 Chair: How is it going to support small charities?

Sir Stuart Etherington: It is going to be very difficult for it to do that. The solution that the umbrellas might come up with is more peertopeer learning, where organisations learn from one another, not just being told, and tailored materials that might deal with particular issues, but in general their advice function is going to reduce and the regulatory function is going to be where they focus.

Sir Stephen Bubb: I do not know whether you are going to come on to the issue of charges, but I suspect this is an area where the Charity Commission does now need to look. If their resources from Government are being constrained, it is entirely legitimate for them to look at sources of funding from elsewhere, for example registration charges. There are different views on that. When we consulted our members, they said they thought it was reasonable for there to be a small charge to register a charity, probably in line with the charges you pay if you are registering at Companies House, which is £14 if you do it online and £40 by post.

Q54 Chair: Do you think it is legitimate that the Government should hijack taxpayersubsidised resources that have been given by the public for charitable services effectively to fund a Government function?

Sir Stephen Bubb: Ideally, you would not want to be in this position, but the fact is that resources are constrained for the Charity Commission and their main source is Government. I think it is legitimate, as many of us have had to do.

Joe Irvin: Just let me try to paint a picture of the whole sector. There are 160,000 registered charities. The top 500 biggest charities account for nearly 50% of all the income of all charities, so there is a very long tail of small charities, as there is with small and mediumsized businesses. Nearly half of charities-I think it is 43%-have income below £10,000 a year and many of them much less than that. The sorts of charges that are being talked about, not just for registration but also for other services-being encouraged to join umbrella groups and maybe being fined-could together be quite onerous on a small charity on an income of less than £10,000, maybe only £1,000, a year.

Sir Stuart Etherington: I do not agree with Stephen’s view on this. The Charity Commission is there to safeguard the public interest. It is not there to promote charity; it is there to act as a regulatory function. In my view, that should be funded by Government because that is the function that it is performing. I also think the suggestion that fee income would generate additional income for the Commission is naïve, because I have known the Treasury long enough to realise that, if they felt they were able to generate money from elsewhere, any additional income would result in the reduction of the Charity Commission’s budget further. I am not sure that this money would ultimately end in improving the Charity Commission’s services; it would effectively be a passthrough tax.

Q55 Chair: Has the cart not gone before the horse? They are removing the money before the charging income is available. Do you think the Treasury is expecting the Charity Commission to charge?

Sir Stuart Etherington: I do not think they were necessarily, no. If they do charge, I cannot see that charge lobbying additional income in the Charity Commission, as I have suggested. I think it would be clawed back.

Cath Lee: Chairman, the only point I wanted to add was about proportionality. Following on from what Joe has said, the sum total of all the potential costs that have been put forward through Lord Hodgson’s recommendations would have a completely disproportionate effect on small charities. Membership fees generally have a higher proportionate effect on smaller charities than larger members. I have done some analysis, and the percentage that a small charity has to pay is far in excess of a larger charity, in terms of their total income. For example, they might have to pay 1% of their total income for a membership fee versus 0.0005%. If you aggregate all of those charges, that additional impact is a real disadvantage and a real disincentive to small charities to register. They do want to register; they see it is necessary for them to register to be transparent and accountable for the work that they are doing. If you then put on an additional burden of payment, it is going to make their lives even more difficult and create an imbalance in the sector.

Q56 Chair: Has anybody designed a charging scheme that might address equity between different sizes of charity? Those who are recommending charging perhaps have an obligation to suggest a proposal.

Sir Stephen Bubb: I did, Chair. Many charities that register also apply for limited company status, for which they then pay £14 online or £40 if they do it by post.

Q57 Chair: Regardless of the size of the company?

Sir Stephen Bubb: Yes, absolutely. Whether you would have a cutoff, I do not know, but that is not an onerous charge, in my view. It is a charge that they are happy to make if they want to register as a company. I would not suggest it is much more than that.

Q58 Chair: Is that an annual registration fee?

Sir Stephen Bubb: No, it is for a registration.

Q59 Chair: It is a oneoff. If you are Sainsbury plc, you pay £14 to Companies House to register and that is it.

Sir Stephen Bubb: Yes.

Q60 Chair: That is not going to provide very much income, is it?

Sir Stephen Bubb: No, absolutely not, but it will provide some income. I suspect if Stuart’s argument was to hold and there were very large sums of money coming in, there would be a temptation for the Treasury to claw that back. At this level, I do not think there is. If you want the Charity Commission to be effectively resourced, and there is no question that the Government will change its view on public spending and, therefore, the resources from Government for the Charity Commission will decline, it is entirely legitimate for the Charity Commission to look at a form of charging to bring in additional income. That is what our members said when we asked them and I think that is reasonable.

Q61 Chair: We will consider that issue. Does the panel think the Charity Commission should be charging for late filing of accounts as Companies House does for late filing of returns?

Sir Stuart Etherington: This has been an issue that has been around for a while, because the Charity Commission historically has had no alternative: either just accept that or ultimately strike people off the register, which is a bit of a nuclear button, but it is the only one that they have. There may be a case for fines for late filing; there are alternatives as well. It could be: yellow card, red card, you are off the register, if you do not file. In a way, that is potentially a bigger threat for organisations than to be fined. The other thing that Companies House does well is it writes to individual company directors when they file late. It is quite a frightening letter-not that I have ever had one, but I have seen one. It would seem to me that the Commission could do more to make individual trustees aware of their responsibilities and to remind them of that, and maybe strike them off the register if they fail to submit accounts for two or three years running. That might be more effective than fining.

Sir Stephen Bubb: I think you could do both. I would support the idea of fines.

Q62 Chair: Is there a case for looking for some efficiency gains between Companies House and the Charity Commission? Shouldn’t the Charity Commission use Companies House to do all the filing and registration? They have the systems to do that very efficiently, and the Charity Commission could concentrate on what it is meant to concentrate on. It would avoid charities having to make two returns. Very often a charity is a limited company as well and has to make two returns: one to Companies House and one to the Charity Commission.

Cath Lee: Chair, a word on the fines: I am not sure they would be effective. The current mechanism of naming and shaming, the red border, is very effective for small charities. They are very put off by that. It is about the reasons why they are filing late. For many of those charities, it is around capacity issues. Perhaps they have lost their Chair or they have had some droppingoff in the trustees. Some of the mechanisms that Stuart has suggested around more prodding and perhaps more warnings, with the threat of being removed if the practice does not improve, may be greater incentives to improve the practice, but I do not think a fine would do it, and a fine could exacerbate the problems. If you are taking money away from a small charity that cannot fund a finance person to come in and do their returns, you are going to exacerbate that problem.

Moving on to your next point about the relationship between Companies House and the Charity Commission, there is a huge opportunity to simplify and to cut down the red tape that has resulted from organisations having to work both to Companies House and to the Charity Commission. When the CIO is implemented, that will address many of those issues for many charities, and we have waiting lists of people who are desperate to transfer.

Q63 Chair: Any other comments on all that? Just very briefly one final question, going back to the other issue: if resources were not an issue, would it be appropriate to rely on or fund the umbrella bodies to provide support to smaller charities?

Sir Stuart Etherington: Yes, I think it would, Chairman. The reduction in money to the Charity Commission has forced it to refocus its role. I have always believed that it is an appropriate role for the umbrella bodies to provide advice and information to their members and the wider sector, and for the Commission to focus more on regulatory activity. I think that is happening, but of course the advice work is not being funded, so I would support your view.

Q64 Chair: Any dissent from that view?

Sir Stephen Bubb: No.

Joe Irvin: No. In discussion with the Charity Commission, one of the things that they pointed out to Stuart and me is that, although they give advice, they feel quite constrained in the advice they can give, because of their position as regulator. It is very hard for them to say to somebody who is applying, "Really, you shouldn’t be applying to be a charity. You should do something else or join in with another charity." That is very difficult for them, whereas it is something that we, or our members in our case, would be more able to do at local level.

Chair: Thank you.

Q65 Charlie Elphicke: Sir Stuart, morning. Turning to the case of the Independent Schools Council, the NCVO took the decision to officially intervene in the case between that council and the Charity Commission. Can you tell us why?

Sir Stuart Etherington: Yes. We have been engaged in discussions and debates about public benefit from way back, before the report was written that led to the 2006 Act. We felt that the Commission had not handled it particularly well, but we also felt it was important to establish whether or not public benefit was presumed or not presumed for other charitable objectives. We had always held the view that there were two hurdles that charities had to cross to be charitable. One was to have objectives that were charitable, and the second was to demonstrate a level of public benefit. Some people argued that, if you cross the first hurdle, it was presumed that you were providing public benefit. We thought that matter should be clear and clarified. In fact, the appeal tribunal’s judgment was extremely helpful in terms of the development of the law.

Q66 Charlie Elphicke: What impact will the Upper Tier Tribunal’s judgment have on the charitable sector as a whole?

Sir Stuart Etherington: There will be a number of different impacts. Firstly, the appeal tribunal makes it clear that this is a matter for trustees to determine. That is absolutely right; we agree with that. Secondly, there will have to be a statement of how public benefit is being provided, although it is for the trustees to determine that matter. That is important. Lord Hodgson saw that as important in terms of his report. It is established, clearly, that public benefit is at the heart of charity. That is why it exists and that is why it gets both public support and tax benefits.

Q67 Charlie Elphicke: Sir Stephen, you are the chief executive of the chief executives. Do you have a different perspective or are you in broad agreement with Sir Stuart?

Sir Stephen Bubb: I am in agreement with Stuart.

Q68 Charlie Elphicke: Are there any other views on this? Should we get rid of the whole concept of public benefit from the Act altogether?

Sir Stuart Etherington: No; I think it underpins the concept of charity and now clearly does. The difficulty that the Commission had in relation to public benefit is that, when Parliament debated the matter during the passing of the 2006 Act, it did not give any sort of steer to the Commission as to how it should interpret that. In Scotland, of course, they did. It is not true to say that there is a definition of public benefit on the face of the Bill in Scotland, but there is some guidance as to how it should be interpreted. I think, maybe, Parliament needs to look at that again. This is the place where the notion of public benefit should be discussed. Going back to the Scottish case, there are some guidelines that the Scottish Parliament placed on the Scottish regulator, which we do not do here. The courts have determined it to a certain extent, but that is a debate worth having. It is something that Lord Hodgson did not focus on too much, but it is now a matter for the courts and I wonder, at some stage, whether Parliament might want to revisit whether or not they wish to give some guidance as to how public benefit might be interpreted. It would certainly, I suspect, help the Commission.

Q69 Charlie Elphicke: Dame Suzi Leather basically said it would be enormously helpful if Parliament established a "partial definition" of "public benefit". Is that your position as well then?

Sir Stuart Etherington: Not a definition on the face of the Bill. I think that would be unworkable; it would be too inflexible. We have the common law for that, so not a definition on the face of the Bill. We were persuaded, when we were involved in the passage of the 2006 Act, that unintended consequences might be arrived at that would be to the detriment of charity. We agree that it should be flexible. We agree that there should not be a statutory definition on the face of the Bill, but perhaps there should be some guidance from Parliament as to how public benefit might be interpreted. I do not know quite how that would work, but it would seem to be quite helpful.

Q70 Charlie Elphicke: There is a view that the concept of public benefit was already there in the case law and that including it in the 2006 Act makes no difference at all, except the Charity Commission suddenly thought it had the ability to issue guidance on what it thought that meant, skewing it to, shall we say, a more metropolitan viewpoint, in the view of some. Would you say that putting in "public benefit" was a codification, rather than any meaningful change of the law?

Sir Stuart Etherington: I do not think the law changed as a result of the Act. The appeal tribunal feels that. There was a debate, as I mentioned, about whether or not public benefit was presumed under the other heads. The appeal tribunal has made it quite clear that there is no presumption and you do have to demonstrate public benefit, and then it established some tests. They set a bar in relation to proving public benefit. That is what they did.

In terms of the debate in Parliament, there was no definition that public benefit ever changed, and what the tribunal did was throw a light on the fact public benefit should not be presumed. It has to be demonstrated. Lord Hodgson points out, I think rightly, that one of the consequences of that is that trustees now have to think about this quite seriously and they have to write it in their annual reports. That is quite important. To quote Lord Hodgson, the man in the Dog and Duck would expect some form of public benefit to be demonstrated by organisations that have public confidence and also receive tax concessions.

Q71 Charlie Elphicke: Finally, do you think that it is important for the Charity Commission, in applying this whole public benefit test, not to take such a metropolitan view but more a wholecountry view? There was concern about the whole schools case; now they are trying to suppress the Plymouth Brethren and attack various religious groups, people feel, in my constituency and elsewhere outside London. Do you think it is important that the Charity Commission should recalibrate so that it does not look like it is just pursuing some kind of agenda dreamt up in Hampstead?

Sir Stuart Etherington: The issue in relation to independent schools was an interesting case study, because I think the Commission drew the terms of public benefit too narrowly and it should have been thinking more widely about how, in this case, independent schools provided public benefit, but it might apply to other institutions as well. It seemed to get very, very hung up on bursaries as a way of demonstrating public benefit, and I think you can demonstrate public benefit in much wider ways. Informally, we did talk to them about that. I do not know why they continued to pursue that particular way of defining public benefit. For me, it was too narrow. Others have argued, for example, linkages with local academies might be a way of doing that. There must be a range of ways of demonstrating public benefit, so I think that they were probably too prescriptive and too narrow in their definition.

Sir Stephen Bubb: I do not know what a metropolitan view is and whether that is what I am going to express, but historically, in the 19th century, the Charity Commission had a much more robust approach to this issue. For example, when they made a visitation, such as to the Bradford on Avon grammar school, they looked at the statutes for that school, which said that it was about educating poor people, and discovered it was educating toffs, so they closed it down. They did not have public benefit as a guide, but they knew perfectly well that the statutes for that school indicated it should be educating poor people, and they were not, so they closed it down. That is not a bad approach. I am not suggesting that you look at the statutes for Winchester and Eton, which also say that you should be educating poor people, and close them down, but it is an interesting point.

Q72 Charlie Elphicke: That is an issue to do with the objects and purpose of a charity, rather than public benefit, which is quite a separate matter. If a charity is not pursuing its objects and it is pursuing something completely different, then clearly that is where the Charity Commission should do tests.

Sir Stephen Bubb: Yes, but I suspect they probably also took the view that the toffs that they were educating were serving no purpose, too.

Q73 Charlie Elphicke: Many people criticise the Charity Commission for issuing guidance and not going round, regulating and checking that charities are doing what they say on the tin and what their purposes are. Would you agree that is something the Charity Commission should be doing once again, rather than just issuing endless notes of guidance and pontificating?

Sir Stephen Bubb: It is a fair point. It is quite difficult. The tradition is to establish this on a case-by-case basis, which is very sensible.

Q74 Chair: Do you think the word "toff" is a pejorative term?

Sir Stephen Bubb: Probably, yes.

Charlie Elphicke: I was ignoring it.

Q75 Chair: I was just wondering if it is an appropriate objective test of whether a body should be a charity or not, if it is a pejorative term. Obviously it is a lighthearted remark I am making, but doesn’t this underline how basically it is very difficult to be objective about this public benefit test when it comes to contentious matters like independent schools?

Sir Stephen Bubb: Yes.

Q76 Chair: Therefore, wouldn’t it be better if Parliament made its view plain?

Sir Stuart Etherington: I suppose it depends how you make your view plain. If you write a definition on the face of the Bill, it is going to be okay for a while but not afterwards. Let me give you examples of how Scotland approached this. They asked, in terms of their test, that private benefit be balanced against public benefit, how disbenefit is balanced against benefit and whether there are any unduly restrictive conditions on obtaining the benefit. These sorts of things do set a framework for guidelines. I admit, ultimately, these are judgments that have to be made by individuals on the ground looking at particular charities. My point is that it is for Parliament to debate the nature of public benefit and also to provide some form of guidance for the Commission. That would be my perspective.

Q77 Chair: Is the panel concerned that the Charity Commission and indeed the board of the Charity Commission have spent an inordinate amount of time debating this matter? Is that a good use of the Charity Commission’s effort? Should Parliament not just cut through the knot?

Sir Stuart Etherington: The problem was that Parliament charged them with doing just that and, therefore, they did take a long time over it, because it was something that they took quite seriously. I think my honest view is that Parliament itself should have had some role in discussing the principles of public benefit that should have underpinned the Act. The failure to do that and passing that over to the Commission was part of the problem, not the whole, because the Commission did not interpret public benefit correctly. Parliament plays some role in not having had that debate and giving some guidance, and I would like to see that in terms of a parliamentary debate.

Q78 Chair: Is there not a danger that, instead of Parliament’s views being taken into account, it is the trustees’ political views or the Charity Commissioner’s political views that are reflected in the judgment on this issue? I should just place on the record that Dame Suzi herself was, in the end, excluded from discussion on this, because she had a conflict of interest. She has had a lot of flak on this issue, which really was down to her fellow commissioners.

Sir Stephen Bubb: It was not a political conflict though.

Q79 Chair: I appreciate it was not a political conflict, absolutely right, yes. Thank you for that. But are we just passing the buck? Is Parliament just passing the buck?

Sir Stuart Etherington: I think Parliament did pass the buck in the 2006 Act, because it did not really debate what it meant by public benefit. This is the place in which those debates should take place and guidance should then be given to the Commission. The appeal tribunal has done a good job in clarifying this, and ultimately it is the courts that determine common law and the intention of Parliament but, at the end of the day, there was insufficient debate about the nature of public benefit during the passage of the 2006 Act.

Q80 Greg Mulholland: Sir Stuart, you mentioned the man or woman on the Clapham omnibus or indeed the man or woman in the pub talking about this. It cannot be that hard, surely, because those said people in the pub or on the bus would have a very simple sense of what a charity is, which is to provide a benefit to people outside its own immediate community and clearly a wider benefit for society. Why is it proving so difficult to get to a simple workable-not even necessarily a dictionarystyle definition-set of clear tests that could be introduced to stop the confusion?

Sir Stuart Etherington: There are now some tests established by the appeal tribunal. They set the bar in relation to public benefit. They also made it clear that you do have to demonstrate public benefit, but I think it probably has to be done on almost a case-by-case basis, because all charities are different. Some are small; some are large; some are providing social care; some are providing education. The exact application of public benefit will differ from organisation to organisation. The way in which the courts have acted in relation to this is appropriate. What I would have liked to have seen a bit more is the legislature a bit more engaged in this discussion.

Q81 Greg Mulholland: Just to quote from the NCVO’s own submission to the review, it said there should be "a single definition of charity and a single public benefit requirement for the whole of the UK [and] … for tax purposes" and then there should be further legislation to "clarify the law" upon public benefit, although it should not produce a "comprehensive definition of the public benefit requirement". Do you therefore find it worrying, indeed rather extraordinary, that the review being conducted by Lord Hodgson has said that there should be no action taken to harmonise the public benefit definition across the UK?

Sir Stuart Etherington: I can see how you could not reconcile those two positions. One, Lord Hodgson can answer for himself, but I think he concluded that it would be far too complex to achieve, given devolution and the way in which politics and government in Scotland is developing, vis-à-vis England, Wales and Northern Ireland. I think he thought it was too difficult a nut to crack, in fact. Our worry is that UKbased charities now have two registration authorities and, if they operate in Northern Ireland, shortly they will have three registration authorities. If you are the British Red Cross, for example, and you operate across the United Kingdom, you have to file accounts in England and Wales, in Scotland and ultimately also in Northern Ireland. The definition of public benefit is different in Scotland and England. That presents operational problems for a number of charities. Certainly the information we get from UKbased charities and indeed from lawyers helping those charities, in terms of registration, filing and reporting requirements, is that it is problematic for them. I would like to see it tackled. I can understand how Lord Hodgson found it an incredibly difficult nut to crack.

Q82 Greg Mulholland: Considering that we have different definitions in different parts of the UK, there is the Independent Schools Council tribunal and now the issue regarding the Plymouth Brethren, it is a mess. You said that Lord Hodgson said it was too difficult to tackle, so the main problem arising from the drafting of the 2006 Act has been ducked by the person who has been put in a position to review it. Do you not think that is a failure?

Sir Stuart Etherington: I think he should have addressed more the UK issue, but he must have concluded that it was extremely difficult. I would like him to have addressed that issue. It may be too difficult because the legal structures are moving further and further apart. There is not much that Lord Hodgson can do about that. What I think one should do is to look at how the public benefit test is being applied in different countries and to see whether there is any possibility for harmonisation. I fear, however, that is quite a difficult task to achieve because law is developing in different ways, but it probably is a subject for further work.

Q83 Greg Mulholland: There are two ways this could go. The mess not being tackled in the review is a cause of concern, but either it needs to be better clarified to give charities and indeed the public better guidance or you scrap the whole concept of public benefit altogether and have a much more laissezfaire approach, and allow charities to determine their own. Lord Hodgson, a Conservative peer, was appointed by David Cameron and charged with the review and has ducked that issue. The new person in charge of the Charity Commission is William Shawcross, a rightwing commentator. Do you think there is a concern that things are drifting down a particular ideological path here?

Sir Stuart Etherington: It is terribly important that the Commission is apolitical in its operation. That is an important consideration. I do think that these issues are not easily resolved, and I do not perceive any ideological take in relation to this. There are issues that are complex about public benefit. They are emerging in different ways in different parts of the United Kingdom. I personally think that is regrettable, and I would have hoped that the legislature, during the passage of the 2006 Act, spent more time considering carefully what they meant by public benefit.

Q84 Greg Mulholland: I would like some comments from the other panel members, if they wish to, but this is now the review that is going to advise Parliament on what we do, and it has ducked that issue. If you are criticising the 2006 Act, you must therefore be criticising the failure in the review to deal with the issue that you are talking about. If the review does not recommend it, it is very unlikely Parliament will do anything about it whatsoever.

Sir Stuart Etherington: We made a firm recommendation to Lord Hodgson’s review that this matter should be considered again by Parliament. I still continue to believe that.

Q85 Chair: Isn’t there another way of approaching this question? Instead of trying to harmonise and dedevolutionise charity registration, just say that if the Scottish charity commission, OSCR, registers a charity, it is registering a British charity and that charity should be allowed to operate in any part of the United Kingdom. It is the same for Northern Ireland. The British Red Cross would register with the Charity Commission and therefore be registered for charitable purposes in all parts of the United Kingdom. Wouldn’t that be much simpler? Then the public benefit would naturally harmonise because, if it did not harmonise, there would be a certain amount of arbitrage between different authorities.

Sir Stuart Etherington: You may be right, but the passporting issue has been raised between the regulators and they have not been able to resolve this.

Q86 Chair: It requires a legislative change, doesn’t it?

Sir Stuart Etherington: Yes, I think it probably would.

Q87 Chair: Would you be opposed to that?

Sir Stuart Etherington: No.

Q88 Chair: Anybody?

Sir Stephen Bubb: No.

Chair: We had better put that one in the report then.

Q89 Greg Mulholland: Turning to registration of charities and the recommendations for the registration threshold, first of all, do you all feel that the proposal to extend the threshold from £5,000 to £25,000 is a good thing? Clearly it has implications for certain sizes of charities, but do you think it is broadly good for your members and for the sector?

Joe Irvin: We do not think it is a good thing for the sector. I am sure that other colleagues will add to this as well. The threshold has gone up from £1,000 to £5,000 already. It is quite a big leap to go up to £25,000. If you bear in mind what I said earlier about the average size of a charity, it is quite clear that, with nearly half of charities being under £10,000 turnover, this means taking out quite probably a large majority of charities from registration. We have had a proposal for voluntary registration [under that] previously and that has never been enacted.

Why is this important? I am sure Members of the Committee understand this, but organisations want to be a charity and have a charity number because there is a great deal of public trust and goodwill invested in charities, which we all have to maintain as the whole charity sector, which we do. The Charity Commission every two years does Ipsos MORI polling on ‘who you trust?’, among various people in society, and charities have consistently come in the top three and, I have to say, unfortunately quite a lot higher than politicians, although MPs do come above ministers in that. They have maintained that because of how they have acted; there have not been such great scandals. There is a lot of trust invested in charities and, therefore, many members of the public, foundations and even public authorities will only support registered charities because they see that as a mark of quality and of intent. That is why it is important. To raise the threshold to £25,000 and to say that those below are going to be secondclass citizens, effectively, could have quite considerable consequences for those organisations.

Cath Lee: I can only wholeheartedly agree. I think it will be a very damaging move to raise the threshold. Small charities are very much like the people who are in the Dog and Duck. They are set up by the people who are in the Dog and Duck. They are ordinary people. They do not really engage with the law. They are aware of the Charities Act when they need to do something, for example change their governing documents. For them, the concept of charity is embodied in that charity registration number. They do not differentiate between the definition of charity within charity law and their charitable objects. They think that, because they are a registered charity, they are a charity. If you remove that possibility from what are about 120,000 charities, it will put them in a hugely disadvantaged position and potentially, if they are not able to raise money, result in a lot of very good work going undone and therefore our society being damaged.

Q90 Chair: Sorry; can I just correct you? There is no suggestion that their right to register should be removed. That seems to be what you take it to be.

Cath Lee: I know it was the intention that voluntary registration would come on stream. It would only be an acceptable policy if voluntary registration was not only possible but actually practicable. Given that voluntary registration has not been implemented, there is a lack of confidence in the sector, and particularly amongst members, that it is not going to happen with any timeframe that makes it practicable. If voluntary registration was available and it could be seen to be easily accessible and not done after all the other categories of charities waiting to register, it would be a better recommendation, but it is still not good, because basically charity is charity is charity, whatever your size.

Judging a charity by its income level is not the only way to judge the impact, size, reach and the difference that a charity can make. Many charities have very little income. We have charities on our books that have £5,000 or less income and yet they have hundreds of volunteers. Now those charities do a lot. They do a high volume of work and they achieve great impact. They are never going to reach that £25,000 threshold. It implies that growth is necessary; growth is not always necessary in some of these small local charities, and yet they still need to raise the £5,000, £10,000 or £15,000 income that they need to keep going and continue to deliver their work.

Q91 Greg Mulholland: When we heard from Lord Hodgson, he was very confident that very few smaller charities would deregister below the new threshold and also was confident that the "overwhelming result will be charities below £5,000 revenue rushing to register". The thrust is that this will allow and encourage more charities to be registered, not less. You clearly do not share that confidence. Why not?

Cath Lee: For me, the confidence is not there because voluntary registration has not been implemented. If voluntary registration is implemented, it will be implemented after all the accepted charities have been registered and the transfers to CIO status have happened. That is a long time. We have about 10 potential small charities phoning us wishing to start up every month, and that is the tip of the iceberg compared with the Charity Commission. If they are not compulsorily able to register and voluntary registration is not practical-it is not going to happen if the Charity Commission will not be able to do it-there is a block there for them to therefore continue and start their work.

Joe Irvin: If all the current charities are going to stay registered, which might well be true, then what is the purpose that is achieved by raising the threshold? What is the purpose? Is it somehow for the convenience of the Charity Commission? The case for that has not been clearly articulated. It seems to me that it is aimed at making it harder for new charities to register or deterring new charities from registering, perhaps just for the administrative convenience of the Charity Commission. I think that is a mistake because, as we have come to realise, in the business world, small companies and start-up companies are really important, and I think small charities and start-up charities are just as important. They are often the lifeblood; they are often where new ideas come from. I sat next to somebody at a charity awards ceremony last week who had set up a charity aimed at trying to tackle stalking. It was only set up in 2011, and already Parliament has taken notice of that and changed the law. They received an award on the back of that, because of their work. Why would you want to make it hard for new charities to register or deter them from registering? I do not see the purpose of that.

Q92 Greg Mulholland: Funnily enough, you have asked my next question, which was: why do you think this is being introduced? You have obviously answered rhetorically, so you are certainly not clear. If anyone else would like to comment, why is this being done? Clearly there are concerns, particularly from smaller charities. Sir Stuart, Sir Stephen?

Sir Stuart Etherington: I am not sure why it is being done. Lord Hodgson presents it as part of a package, which is about voluntary registration. He perceives that some of those currently not registered would also have registered, but there are a lot of assumptions built around what is being suggested, and I do not favour the increase of the threshold either. I think it would probably be detrimental in the end, because that package is not in place and there is no suggestion of the ease with which it could be brought into place. It is based on a number of assumptions, which I think need to be tested. Would for example more charities below the threshold voluntarily register? I am not sure that they would. To have the word "small", not necessarily to have a registration number, and to suggest that you are not a registered charity would seem to me to be pretty detrimental to a lot of people. I do not favour the raising of the thresholds. I do not think the arguments are necessarily well worked through.

Q93 Chair: It does not seem it would have much effect.

Sir Stuart Etherington: I cannot see what it is for.

Chair: I think that is the point, isn’t it?

Q94 Greg Mulholland: It is hard to know until we have a sense of why it is being done, which I do not think is quite there. The key thing that we are hearing is that this absolutely should not be done unless voluntary registration is properly enacted. The two should be done at the same time. There is a sense that it certainly is not necessary and may be a concern.

Joe Irvin: It might well have an effect, if you did not have voluntary registration and you suddenly introduced this, not on the existing charities, as you say, but on new charities coming through, on the flow of charities coming through. It would have a detrimental effect in that case.

Q95 Chair: Thank you. This has all been very helpful. Moving on to the question of the payment of trustees, this seems like a bit of a hornets’ nest Lord Hodgson has nudged. The question is whether we should kick it into a fury by supporting this recommendation. Sir Stephen, you are in favour of this.

Sir Stephen Bubb: Yes; I do not think it is a hornets’ nest at all. It has never been the case that it is illegal or unlawful to pay trustees, and there are charities that pay trustees. It is actually very difficult, however, to get the Charity Commission to agree, and a tortuous process. Our view is that those charity trustees that feel they can make a case to pay trustees should be allowed to do so. That is what Hodgson is recommending. I think that is entirely sensible. When we asked our members about this, the majority, around 75%, said that they would not want to take advantage of any relaxation and pay trustees, but 25% said that they would. The issue is not whether charity trustees should be paid, but whether those charities that believe payment would benefit the charity should be allowed to do so. Our belief is that absolutely they should.

There are three reasons for that, the three reasons adduced by members. First of all, they believe that it could increase diversity. There is evidence from public appointments, where now most nonexecutive appointments in the public sector are paid, that it has increased diversity in the appointment process. The second point is enabling people to acquire the skills that they feel they need, business skills for example, where people wanting nonexecutivetype appointments do generally expect to be paid. Thirdly, there is an issue about professionalism. There is a view that, if you make a payment, not a very large one, you establish a contract, which is around professionalism. You expect trustees to turn up, read their papers and behave, as opposed to it being a form of patronage.

Let me give you a few examples of where payments have been made, because it illustrates this. The Chairman of the RNIB is paid. There was a long argument with the Charity Commission about that, but he is paid because the charity took the view that to be their Chair, who is always a blind person and elected, is quite onerous and the person that they appointed had to give up their job. Why should they have to give up their job and income to become the Chair? They made the argument. Who are we to say that charity, and there are others in that case, should not be allowed to make a payment?

Q96 Chair: But there are contrary views.

Sir Stephen Bubb: There are.

Sir Stuart Etherington: I will kick off. This is a view that many of the umbrellas hold, not just NCVO, so this is not just a football match between ACEVO and NCVO; this is widely held by others.

Sir Stephen Bubb: Yes, but they are wrong.

Sir Stuart Etherington: I do not think they are wrong, Stephen, if that is what you just said. I was just going to argue why I think they are right. The voluntary principle clearly goes right to the heart of charity. That is absolutely of critical importance. This is the wrong time to introduce measures of this kind, and the existing mechanisms for charity trustees to obtain payment through the Charity Commission are not tortuous and onerous, as Stephen has suggested. I think it is pretty straightforward. There might be ways to simplify that and, indeed, the Charity Commission has simplified that.

I think it would ultimately have damaging effects on public perceptions and trust if it was felt that charities, large charities in this case, could pay their trustees whatever they wanted to from charitable funds at the will of those trustees. There are no checks and balances in the system. It might have a detrimental effect on other volunteers. It might cause quite serious conflicts of interest, create additional costs and provide a slipperyslope argument, with pressure on other organisations to follow suit. There is no evidence that voluntary organisations would attract people with particular skills in relation to this and, if they do want to target people with particular skills, they are able to do so under existing legislation by seeking the views of the Charity Commission.

There is no evidence that it broadens the pool of potential candidates. Research actually shows that, within organisations that paid trustees, there was no increased diversity on the board or indeed more effective governance. I would just like to bring the Committee’s attention to the fact that this was debated at great length in prelegislative scrutiny that took place before the 2006 Act. Indeed, the members of that committee commissioned a particular study to look at this, because it was raised again. It never seems to go away. I will just read a very short paragraph. The committee looked at the US experience. They were particularly concerned about the effect on foundations, particularly what we would call "family foundations", but they would call "private foundations". They concluded this: "The US experience carries warnings about the risk of loss of public confidence in charities generally through excessive payments to trustees. We are not satisfied that recruitment problems have reached such a level in this country that a power wider than that proposed in the draft Bill is necessary." I do not think things have changed since the prelegislative scrutiny committee drew that conclusion.

Nobody would have any control here over what trustees decided to pay themselves. I think Lord Hodgson was wrong when he said to the Committee that somehow it is important to exclude small charities from this, because they might make themselves large payments, on the assumption that large charities would not, necessarily. It is not the fact that they would or would not; they might. No one could stop them. The Commission, safeguarding public interest, would have no role in establishing what trustees decided to pay themselves. It would be, in my view, a retrograde step.

Q97 Chair: Trustees can be paid anyway for their professional services.

Sir Stephen Bubb: Yes.

Sir Stuart Etherington: Exactly.

Cath Lee: Yes.

Q98 Chair: They can be paid for outofpocket expenses. We know that is already occasionally subject to abuse. Why is this the great cultural change? Why is there religious divide on this issue?

Sir Stuart Etherington: I go back to my point about the role of the regulator. The role of the regulator is to maintain public confidence in charity and to protect the public interest. My view is that the payment of trustees would be a highly visible area in which charities might be doing things. I think it would come under intense scrutiny as to how they were paying themselves, who was deciding, what their performance was and who was determining what rates of pay would be established. The Commission, charged with safeguarding public confidence, in an area where public confidence is potentially being eroded, would have no role to play. I think it is appropriate to pay trustees if necessary. It is also appropriate that the regulator takes a view on who should be paid and what they should be paid.

Q99 Chair: Sir Stephen, I think you want to come back, but many of the people you represent are already the most highly paid people in the charitable sector. One might describe you as representing the toffs of the charitable sector.

Sir Stephen Bubb: Thank you very much, Chair. The point you make is interesting, because historically staff in charities were not paid, of course. The first chief executives in charities were the clerks, the trustees, who brought the coffee and wrote the minutes and were not paid. There was a similar debate about whether paying people to work in charities would lead to a decline in trust and confidence, and it certainly has not. The fact that there are relatively highly paid chief executives running charities has not led to a decline in trust and confidence.

There are two points to make in light of what Stuart said. First of all, the evidence: I have already pointed to one set of evidence, which is the change in public appointments from a position where people were not paid to a position where they are. These are not large sums of money, but that has had an interesting effect in terms of the people who are recruited to public appointments, both in terms of diversity and skills. The second point to make is that any one of my members who has tried to introduce payment has found it extraordinarily difficult, including the example I gave of the RNIB.

Finally, the point Stuart is making is important, around charities’ trustees just deciding to pay themselves what they want. In the evidence we gave to the Cabinet Office after Hodgson, we suggested that this would be an area where the Charity Commission would need to give guidance. Indeed, when they do give guidance to charities that are introducing pay, they usually propose that the charity establishes an independently chaired remuneration committee and that they publish what they pay trustees. There are safeguards that you absolutely should introduce to ensure that there are not any conflicts. I come back to the point that Lord Hodgson made, which I absolutely agree with, which is that we should trust the trustees themselves. If they want to make the case for payment, they should be allowed to do so.

Q100 Chair: What is the problem that this is designed to solve?

Sir Stephen Bubb: The three areas I indicated earlier. The reasons why charities want to do this, the ones that do, are the three areas of diversity, skills and professionalism. Let’s be clear as well: in terms of the survey that we did, 75% of my members said they would not want to take advantage of this, but 25% do. Why should we therefore say to those that they should not be allowed to pay trustees? Why should we say to the RNIB that they cannot pay trustees? That is the point.

Q101 Chair: Do you think the RNIB would be suggesting this if it was not quite a wealthy charity?

Sir Stephen Bubb: I do not know.

Q102 Chair: Isn’t there something intrinsically special about the fact that the people who have the ultimate responsibility for our charities are doing it as a voluntary effort, as a citizen, as part of our society? I hesitate to use the word "big" in front of that, because it gets political, but it is about being a citizen. Very often, trustees are people with particular skills, often people of higherthanaverage means, who wish to put something back into society. Isn’t the whole business of paying trustees undermining that fundamental principle? Even your highestpaid chief executive is working for volunteers.

Sir Stephen Bubb: I do not think, given what I have said, that we will ever be in a position where the majority of charity trustees are paid. Indeed, even amongst my members that want to pay their trustees, some of them are arguing that they should pay only the Chair, because of the position the Chair holds, as in the example I gave. I do not see this as a major problem. To go back to the point, of course you can, if you have the strength and the patience, persuade the Charity Commission now. What Lord Hodgson is proposing is actually not a big change, but it would enable those charities that can make the case to do that without the Charity Commission’s permission.

Q103 Chair: Cath Lee and Joe Irvin, I think you support Sir Stuart’s view, but is there anything you want to add?

Cath Lee: No.

Joe Irvin: No; I think he put the case very well.

Chair: Very good. Very efficient, thank you very much.

Q104 Alun Cairns: Sir Stephen, complaints about charities: Lord Hodgson considered a charity ombudsman or extending the remit of another ombudsman to include complaints against charities, because in the current arrangements the Commission would only investigate serious mismanagement or misconduct. Do you think that an ombudsman or that power is required elsewhere?

Sir Stephen Bubb: It is an interesting proposal. Given the previous discussion we had on the question of resources, there must be some concern that, as you say, the Charity Commission can look at cases of only very serious misconduct. I think there is a case for that.

Sir Stuart Etherington: Everybody starts off thinking an ombudsman is a great idea and then they look at it closely and decide that, actually, it is not too good an idea. Where Lord Hodgson came down is to suggest that professional bodies and umbrella organisations might play a greater role in accrediting or monitoring complaints procedures. In general, if somebody has a serious legal complaint, it is for the Commission and dealt with by the Commission.

There is another area, where people might complain about something a charity did but it was not a regulatory infringement of any kind; they just might not like the way they had handled it or they might want to complain about the standard of service that they were offered or something of that nature. Our view, and we have always encouraged this, is for charities to have complaints procedures, proportionate to their size, of course. I think Lord Hodgson’s conclusions are correct. We might play a role, all of us, in promoting and accrediting complaints procedures. Where those complaints would then end up, if they were escalated to the charity and beyond, is an interesting thing. You are going to speak to people from the fundraising sector later. It is an interesting question for fundraising. There the solution is selfregulatory bodies. I would not want to promote too many selfregulatory bodies, other than the excellent ones in relation to fundraising. I have fallen out with the idea of an ombudsman a bit. It would be operating between the industry and the regulator, and I do not think there is enough space there to justify the expense. I started as an enthusiast, and I have become much more sceptical.

Q105 Alun Cairns: Sir Stephen, you seemed a little bit more pro. How do you answer the issue about cost and whether that should be borne by the taxpayer or elsewhere?

Sir Stephen Bubb: Going back to our previous discussion, if you were establishing that, it would have to be funded by the Exchequer. Certainly where else would that funding come from?

Joe Irvin: As we said, if there is a breach of charity law, or indeed other law-because charities and people are subject to other law as well-that would be dealt with. That is the issue we are talking about: the nonbreachoflaw complaint. We have internal complaints procedures. We promote that among our members. Our members, who are councils for voluntary service, often act as an informal arbiter, if you like, in their local area, if local charities seek to do so. My indication from them is they would be wary of taking on a quasijudicial role.

In the resources argument, you started by saying the resources of the Charity Commission are being constrained and, therefore, they cannot perform this role as well, so let us set up something else, but that is just going to cost the same amount of money. If there is not the money for the Charity Commission to do it, I do not see how there is money for an ombudsman to do it.

Q106 Charlie Elphicke: Sir Stephen, the charity War on Want is pressing for restrictions on charitable campaigning to be abolished, allowing trustees to direct all the charity’s resources to this end, if they are convinced that it is "the best way of achieving the charity’s … objectives in the long term". They say that the restrictions are "the last hangover from an obsolete belief that charities should engage only in relief or palliative care". Do you think they are right?

Sir Stephen Bubb: That quote is rather good and I agree with that. That is, in a sense, one of the historic roles of charities in the UK. They have always had that dual role. Most of them have a dual role of delivering services and also, as the Quakers would have it, of speaking truth to power. The RSPCA, when it was founded, absolutely was around helping and supporting sick animals, but also campaigning for a change in the law. I think that has always been a strong role for our organisations and one that we should celebrate for two reasons. Reason number one is that a vibrant democracy needs a noisy, edgy, vibrant civil society. That is what we have in this country. That is what Putin is trying to stamp out in Russia.

The second reason is that when the state is deciding, as it is, in terms of public services and reforming public services and wants charities to deliver more services, what it is doing is intelligently commissioning from organisations, like the disability charities or mental health charities, that both provide services but also speak on behalf of their users and the people who make up that charity. I am not talking about War on Want, but if you take an organisation like the National Autistic Society, it is absolutely always going to be in a position where it wants to provide services for autistic people because it believes it can do that significantly better than the state-there is huge evidence to support that-and it will always campaign on behalf of autistic people if a change in the law is needed, as it has done. I think that is a great strength of our democracy and a great strength of public service reform.

Q107 Chair: Could we see if there is any dissent from those views?

Sir Stuart Etherington: I do not agree with the War on Want position and I am quite happy to expand on that, if that would be helpful.

Q108 Charlie Elphicke: Yes, please do.

Sir Stuart Etherington: Clearly people can form associations and campaign about what they want, within the law. This is about charities and campaigning. I think the law and the guidance that we currently have is good guidance, under CC9. It was debated. I chaired a debate-I think it might have been in this room-where on the one side Helena Kennedy was arguing pretty much the War on Want position, and on the other Greg Clark was arguing for the retention of the current system. The current system says that charities can campaign to further their charitable objectives: they can campaign with part of their resources, but not all of their resources, or they can campaign with all of their resources for a limited period of time. There was an argument, similar to the one put by War on Want, that charities, as opposed to other associations, can campaign all the time with all of their resources. It seems to me then that you are placing them much more in a political position. They have, it seems to me, to be balancing their campaigning with their knowledge, evidence and also the support of their beneficiaries or in concern for their beneficiaries. I am quite comfortable with the law and the advice as it currently stands. If we pushed any further, we would be into slightly more dangerous waters.

Q109 Charlie Elphicke: Could I just follow up on that, Sir Stuart? I do not know if you are aware of it, but Ipsos MORI did research this year on public trust and confidence in charities, and they found that respondents said their trust in charities had declined in the last two years. 7% of them ascribed the decline to political bias and pressure by charities. 7% said that is what had caused them to lose trust. They thought the charities should be walking the walk, rather than talking the talk.

Sir Stuart Etherington: I think charities have to combine the provision of services with trying to influence public policy. Some will just provide services, but it seems to me if you see a glaring need that you think public policy could address, you are almost duty bound to raise issues consistent with your charitable objectives around that. It seems to me to be absolutely central. We have seen recent evidence of that: RNID, for example, campaigning for digital hearing aids; we have seen the Gurkha campaign; we have seen the British Legion, for example, in relation to rate relief. You see a lot of campaigning activity that is directly related to beneficiary needs, whether those beneficiaries are homeless people, whether they are exservicemen or whatever they are. I think it is an essential part of that, and 7% does not seem a particularly high figure to me.

Cath Lee: I am not sure this is going to add very much. For most of our members, it would be a nice problem to have. They just do not have the capacity to do the highlevel policy work that they would want to. But I would really agree with what Stuart said about the current legislation being okay and fit for purpose as it is.

Joe Irvin: I would just add that I agree with Stuart and Stephen, in most of what they said, because Stephen was saying that there ought to be independent campaigning charities and I think there should. Because a charity, whether it is a mental health, disability or any other charity, is paid by the public sector to perform a public good, that should not buy silence or compliance in everything that they say. I do not think that is right. They should be independent, so I agree with that. I do not agree with what War on Want said, which is that we should abolish the restriction. They are probably falling into the same camp as those who say, "Why aren’t political parties able to be charities?" The reason is that we are not allowed to be party political. The current rules are just about right; we do not get a lot of problems with them from our members. They stay within those rules.

The figure you quoted was not a 7% drop in public support, was it? It is a tiny drop in public confidence, I think, and out of 100% of the drop, 7% named this. Now, there will be one or two campaigns that are not very popular with sectors of the public. On the one hand, Life, for example, on antiabortion or Stonewall saying on the side of buses, "Some people are gay. Get over it!" may jar with some people. That may have been offensive to one or two people, but I think it is right for those charities to be able to exist and to put those points of view, both of them.

Q110 Charlie Elphicke: Sir Stephen, just to come back to you on this, there is a lot of concern about political campaigning. Sir Stuart draws the distinction that, as an adjunct to what you are doing, you then educate, tell people about what you are doing and say, "This change is needed," but some charities go completely the other way and just spend all their time campaigning. Indeed, people feel they politically campaign. Do you think that is fine and goes with the "anything goes" philosophy that you have?

Sir Stephen Bubb: I quite like your walking and talking analogy. For the vast majority of my members, that is exactly what they do. They are delivering services and they are also campaigning. I am not sure I would go completely extreme and abolish the guidance; I am not sure I would completely go down that route. Some of Stuart’s points on that are good, but I think I am probably a little more radical on this than Stuart, in the context that we always have to be very careful to safeguard the independence of charities from people who want to shut us up. I would like to always be in the camp of saying I am in favour of campaigning, because that is core to what we do as charities.

Q111 Chair: The War on Want proposal really would open the prospect of political parties becoming charities.

Sir Stuart Etherington: Exactly.

Q112 Charlie Elphicke: Why not? Is that a good idea?

Sir Stuart Etherington: I am sure you provide a good service, but I am not sure that it’s being a charity.

Sir Stephen Bubb: We had a very interesting debate in ACEVO when the Chief Executive of the Liberal Democrats wanted to join. In the end, we decided that he could.

Q113 Chair: Of course. Wouldn’t you say, Sir Stephen, that we all want a vibrant civil society? Is not one of the lamentable facts of our civil society at the moment that political parties seem to be withering away, because they are given a pariah status because they are not charities? They are nasty political parties. Notice I am using the word "they" here.

Sir Stephen Bubb: Many of my members have more members than the three political parties put together. I do not think that is a good thing, Chair.

Chair: This is part of a wider debate than I think Lord Hodgson intended us to have.

Q114 Charlie Elphicke: There is one thing I wanted to follow up on, if I may, Chairman, which is this: the IEA has criticised political campaigning by charities that are in receipt of income from the state. Sir Stephen, this is an issue you touched on, which is that your charities retain their independence from ghastly politicians who want to shut them up, suppress them and things like that, but there is a slight difference here, where the charity gets money from the state and then runs a political campaign to get more money from the state. Is that charity really independent and is that kind of campaigning really appropriate?

Sir Stephen Bubb: The campaigning is absolutely appropriate. Speaking truth to power and biting the hand that feeds you ought to be in the memoranda and articles of all charities. I mean that seriously. Going back to the two points that I made, one of the reasons that the state contracts with our sector to provide services-to get the hardesttoreach back into jobs-is because of the particular skills that we have. Part of that is drawn from the legitimacy that our organisations have from working with people with addiction and the like. Part of that legitimacy is drawn from the political campaigning. Intelligent commissioning realises that, and realises that what you get from commissioning us, as opposed to A4e or Serco, is that authenticity and legitimacy, and that is something that you want to buy. The UK is actually in advance of many European countries in the way it commissions from our sector, because it understands that legitimacy. The idea that you would try to snuff out the role that we play in campaigning, through contracts, would be absolutely wrong.

Joe Irvin: I concur with that. If public authorities want to contract voluntary organisations to perform a public function, that should not buy silence and it should not buy acquiescence. My aunt by marriage was one of the early people starting Scope, which was then called the Spastics Society, and they made a lot of noise and they needed to, because there was segregation of people who had cerebral palsy.

Q115 Chair: How do you stop Government, controlled by a political party, buying a loud and independent supportive voice by giving money to a charity that campaigns vociferously for policies that it wants to implement?

Joe Irvin: We are talking about how charities behave and we are constrained by not being party political, within those rules that are explained by the Charity Commission very well. I am just saying that those charities should be independent. You should not buy silence; you should not buy cheerleaders; and you should not object if people continue to campaign, for example, for people with cerebral palsy. I would just say at the end that I did look up the Institute of Economic Affairs, which proposed this, and they are a registered charity themselves.

Q116 Charlie Elphicke: Sir Stuart, what do you think? You get money from the state. Should you campaign for more money from the state?

Chair: Who is campaigning for less money?

Sir Stuart Etherington: I would concur with my colleagues that, in fact, organisations are often funded to provide services by the state, because they often provide them better and in more niche ways to vulnerable people and others. They will use that experience in order to change public policy and favour their beneficiaries. I think that is inevitable and not undesirable.

Chair: This has been a very full session and you have been very selfdisciplined, despite there being four of you, all with very well informed views about this matter. We are grateful for your evidence; it has been very helpful. Thank you very much indeed.

Examination of Witnesses

Witnesses: Peter Lewis, Chief Executive, Institute of Fundraising, Alistair McLean, Chief Executive, Fundraising Standards Board, and Sally de la Bedoyere, Chief Executive, Public Fundraising Regulatory Association, gave evidence.

Q117 Chair: Welcome to this second session this morning on the Hodgson review of the Charities Act. I wonder if you could each identify yourselves for the record, please.

Peter Lewis: Morning, Mr Chairman. I am Peter Lewis. I am Chief Executive of the Institute of Fundraising. We bring together 5,300 individual fundraisers and 360 of the biggest charities that fundraise.

Sally de la Bedoyere: Good morning. I am Sally de la Bedoyere and I am the Chief Executive of the Public Fundraising Regulatory Association.

Alistair McLean: Good morning, Mr Chairman. I am Alistair McLean. I am the Chief Executive of the Fundraising Standards Board.

Q118 Chair: Now I am a firm believer that you do not make an omelette without breaking eggs. The issue here seems to be that the act of asking people to give money to charities causes anxiety and unhappiness. Isn’t this an inevitable friction and why are we concerned about this?

Peter Lewis: I think that is a very good question. Normally, it is a pleasure for people to give money, and we forget too often that actually it is the pleasure in the donor giving money that we should be trying to elicit. Any charity that is asking for support is enabling the donor to give to a cause that donor cares about. As you quite rightly said, if you do not ask, you do not get. It is quite strange in this country at the moment that we expect more giving to happen without more and better asking. That is exactly what the Institute is about; it is about training people to be better fundraisers to make the ask better, so that hopefully we can get more money to good causes.

Q119 Chair: Can I just suggest that, if you agree with what has just been said and you have nothing to add, we move on?

Alistair McLean: Yes. Mr Chairman, all I would add is that, in our role as the selfregulating body for fundraising standards in the UK, it is important that the ask is done properly, and that the public has a right of reply, in terms of how that ask is done. Also, it is absolutely appropriate that charities should be able to ask.

Q120 Charlie Elphicke: It is all very well to talk about omelettes, breaking eggs and saying everything is all just fine, but we do have a situation where a poll has shown that two-thirds of the public say that some fundraising methods used by charities make them feel uncomfortable. 70% say that more should be done to regulate the fundraising activities of charities. These are people who feel they are just harassed by chuggers and hard selling. Do you not think it is time to draw in and win back the public trust when it comes to fundraising?

Peter Lewis: No, I do not think so, with respect. There are various bits of data that you can look at that show a great deal of public trust and confidence in charities. Some of my colleagues earlier talked about how that public trust and confidence in charities remains high. That does not mean that we are complacent. We, as the Institute, started developing codes of best practice over 20 years ago, because fundraisers, more than anyone, understand that public trust and confidence in charities is absolutely crucial. Setting guidelines for how people do make that ask for support is absolutely crucial. The beauty of selfregulation is that it can develop over time and it can respond to things as the environment changes. Last year, there were more complaints about email fundraising. We set up a group to look at how we could improve the code and make sure the charities deal with that better. There was a case around the Three Peaks Challenge. Again, it is exactly the same: we take the evidence around the issues that are arising; we deal with them and we move on. The situation is ameliorated.

It is very important to understand that, if you do not ask, you do not get. We did YouGov polling earlier in this year. Even with social desirability criteria applied, 66% of people only gave as a result of an ask. You need to ask in order to get support. The codes set out exactly how you should ask. Where there is bad practice, it is our job, the three of us, to stamp out that bad practice. However, we do acknowledge that some forms of fundraising do cause some public distress, and that is exactly where we come together to set the codes and to maintain that public trust and confidence.

Chair: Forgive me; I must ask for slightly shorter answers. That was a very full answer and, nevertheless, very helpful.

Q121 Charlie Elphicke: Hold on a second. You guys say it is your job to stamp out bad practice. Right? Effectively, you are the overseers and protectors of the consumer, judging by what you are saying. Ms de la Bedoyere, you are on record saying, "Many complaints made about face-to-face fundraisers are not about breaches of the Code of Practice or our own rules but simply about the presence or existence of fundraisers-some people just do not like to be asked to support charity." I say to you, firstly, that does not indicate a great level of consumer concern. That sort of basically indicates a sense of explaining away. Secondly, what proportion of complaints about face-to-face fundraising do you think are caused by the inappropriate behaviour of a fundraiser?

Sally de la Bedoyere: There were two parts to that. Firstly, that comment in context is really referring back to what Lord Hodgson also referred to last week, which is about behaviour transference. There is an element of certainly face-to-face fundraising, which I and the PFRA are involved in enforcing and regulating, where people might feel guilty and do not like that. There are indications from the research that the Fundraising Standards Board did last year that could be 25%. We have our own internal research that suggests that could be higher. However, that is not to suggest that it is not important or that we do not take it seriously. The perception is sometimes greater than the reality. For sure, less than 3.5% of complaints that go to the Fundraising Standards Board are about facetoface fundraising.

Having said that, what we have done, certainly in the last year, is respond to what is going on in the market and take our responsibilities very seriously. We have doubled our mystery shopping programme, we have increased our compliance work that is going on and we have increased our outreach programme so that we can do more local agreements with local authorities, because that is where we are getting the research and the feedback that we can really change the reality of what is going on, and improve the standards.

Alistair McLean: All I would say, in our role as the Fundraising Standards Board, is that we are the publicfacing body responsible for public complaints. We have been set up by the Institute of Fundraising some six years ago and we are very much work in progress. We have made enormous progress in the last five years, in terms of dealing with public complaints and being the place where the public goes when they wish to complain. I will accept that there are certain fundraising techniques that people do not like, but the reality is that our own members report back to us, and we have some 1,500 members who represent virtually 50% of all voluntary funds raised in Britain today. It is a sizeable percentage of all the funds raised in Britain. Face-to-face fundraising is certainly a significant area of complaint, but it is way down the list in terms of those areas that are the most predominant areas of complaint, like direct mail.

Q122 Alun Cairns: Yes but, Mr McLean, Ipsos MORI shows that 90% of the public have not heard of your body.

Alistair McLean: That is absolutely correct. In fact, I was going to turn that on its head and say that public awareness, from a standing start six years ago, has gone from 0% to 10%. You are quite right; our sums add up.

Charlie Elphicke: That is grasping at straws.

Alistair McLean: We have made progress. I turned it into a positive. From a standing start, prior to the FRSB being set up, the public did not have a formal route through which it could feed back about fundraising standards, and feed back about fundraising methods and techniques. It now has that body. In five years, we have grown from 0% to 10% of public awareness. I should add that the Charity Commission has got a public awareness of some 55%. Bearing in mind that the Charity Commission was established, as part of the Charitable Trusts Act, in 1853, we have a way to go in the next 150 years to try to get a public awareness of 55%, but it is definitely a challenge and it is something that Lord Hodgson mentioned. Our public awareness is not enough and we need to work harder on that.

Q123 Charlie Elphicke: We have a situation where Dame Judith Mayhew of the New West End Company said, "The activities of chuggers undoes much of the good work of businesses and the local authority to welcome visitors and create the friendly atmosphere that is needed to ensure that the West End [of London] remains the world’s top shopping destination." She says what we actually have is chuggers going around and having a "harassitastic" time, as I am sure Boris Johnson would say, and there is much public concern. I am not hearing from you guys any engagement, understanding or acceptance of that public concern, and I would ask you what steps you take to assess whether faceto-face fundraisers actually abide by the code of conduct, in practice not in theory.

Sally de la Bedoyere: It is in all our remits, but what we are doing is enforcing the Institute of Fundraising’s codes of conduct, which are pretty strict. Harassment, obstruction and standing outside or within three metres of shop centres are against the codes. There are very clear guidelines on this. What we do, particularly PFRA, is go out and mystery shop. We have compliance checks; we have a system of penalties and sanctions that was brought in just two months ago, I might say, which actually has financial implications for the agencies of the charities if there are breaches there. We do take it enormously seriously.

One of the things we are doing and one of the important things to know is that our work with the Local Government Association and with the Association of Town Centre Management is a deliberate proactive stance to engage, look at some of these issues and ensure that, if we can create local site management agreements with these councils and authorities, we can then enforce those, enforce the codes that the Institute has in place and ensure that better practice and standards take place. It is an area that we take very seriously and respond to.

Q124 Charlie Elphicke: Let me press you. Do you guys accept that there is a problem when the Telegraph investigates chugging and finds that fundraisers deliberately mislead shoppers and break the code of practice that regulates their activity, and when a survey of local councils carried out by the LGA found that 81% of authorities have received complaints about the conduct of street fundraisers? Do you accept there is a problem or are you just in denial?

Alistair McLean: We have to accept there is a problem. That particular exposé of the Telegraph in June raised some serious concerns about the conduct of a fundraising agency on the streets of London, and it has been taken very seriously by the sector. We have investigated that particular case and we are due to publish that report. I am happy to supply that, Mr Chairman, to the Committee next week, when that will be made available.

Chair: That will be very useful, thank you.

Alistair McLean: It was considered very seriously by the sector. It is fair to say there was some evidence of poor fundraising practice that took place. That has been dealt with. I hope that, when you read the report, you will consider that it has been handled proportionately. Remember that we are a selfregulatory body and the sector is involved in trying to regulate based on the evidence that comes to us-the complaints that we receive. We respond to those complaints. We are increasing responding to those proactively and in a constructive way, but it would be foolish for us to sit here, wash our hands of it and ignore the issues of particularly something that seems to divide society, which is face-to-face fundraising. But there are other fundraising techniques that irritate the public and we must accept and recognise that. We go back to this point where it is absolutely a requirement for the public to be asked to give, and it is also their right to say no.

Peter Lewis: We have to remember that I think we would all acknowledge that there is noise around face-to-face fundraising. It is noise that we have to address, because it is not productive. At the same time, we have to remember that, last year, as a result of face-to-face fundraising, on the street or on the door, 865,000 people gave longterm support to vital charitable causes-to support a homelessness charity, to support research into cancer-as a result of that ask. Another 400,000 people supported a charity long term through an approach in a private space, for example a shopping centre. That is over 1.3 million people last year who through face-to-face fundraising signed up to a direct debit to support a charity doing vital work, bringing over £130 million of income to those important causes.

We have to have a balance here between a charity’s duty, the need for charities to ask for support to get vital longterm support, and maintaining public trust and confidence. We are not complacent. I joined the Institute just over a year ago now, and I spend a lot of my time going around the sector talking to directors of fundraising, and they were concerned about the noise around face-to-face fundraising. As a result of that, we brought together a Summit just before the summer, and there are task groups now looking at whether we need to strengthen the code and make sure there is a framework for training face-to-face fundraisers, so we can have a better assurance that the standards are there. We are not complacent, but we do need to remember the purpose for which charities are asking for support.

Q125 Charlie Elphicke: Our concern is the cost at which that money is raised for those good causes, when you do so much reputational damage and the fundraisers do so much reputational damage to those good causes. Our message is that you guys should get your house in order or Parliament will act and legislate in this area.

Peter Lewis: The charities that you are talking about are large brands that we all know very well, and they are very well able to deal with their own brands. They are very brandconscious. As well as developing important services, they monitor how the public is feeling about them. Organisations know what their return on investment is for their fundraising, using face-to-face funding. They know that, for every £1 they invest now, in five years’ time they will get at least £2.50 back. Over a 10year period, they will get £4 back. For example, British Red Cross, over the next 10 years, is expecting to get over £500 million from face-to-face fundraising, as a result of signing up people to support them through direct debits.

Chair: Okay, I think you have made your point.

Peter Lewis: It is very, very important money for the sector.

Q126 Chair: Isn’t the problem that however strict your codes of conduct are, there are severe limits on how you can control street fundraisers?

Sally de la Bedoyere: The new penalties and sanctions regime came in recently, but with two months of data-I am not going to start spouting data out-the better evidence at the moment is anecdotal amongst our members. What is happening is they are taking any penalties that are being handed out by mystery shoppers and taking that on board to identify training needs and how they raise their standards. There is a real effect that is going to come through, in terms of what is going on with this.

The other thing is very much going back to these site management agreements with councils. There was another piece of research, also by the Local Government Association, which showed that, where they are in place, 81% of them are finding it works very well. Plymouth was getting 50 complaints a month; it is down to two. Cardiff, in the first six months, had one complaint. If you talk to Norwich Council, they will tell you how well it is working. We have 52 of these and another 20 in the pipeline. That is why we are forcing them through as much as we can, and would encourage and ask that there is more encouragement for them to work with us because, where they are in place, we can manage any breaches very quickly. This is not about a public complaint coming through to the Fundraising Standards Board. This is about someone ringing up saying, "I am being blocked," or "They’re in the wrong place," or "Something needs to happen." That is where we have people who can deal with it immediately and that is where the effectiveness happens.

Q127 Chair: That is an interesting bit of evidence you have given us there, but again none of your organisations have particularly high brand recognition and you are probably not getting the complaints that reflect what people feel. Isn’t there a role for the Charity Commission in this to be at least the conduit of complaints, so that there is a formal way of people complaining to the Charity Commission and passing the complaints on to you?

Alistair McLean: In our role as a selfregulatory body, we do need the support of the umbrella bodies and the Charity Commission to build a brand and build awareness. Chair, you are right in that, probably, because we are not well known enough-either of us-the public does not necessarily have a route to make that complaint. But one thing is for sure: when they do make a complaint, those complaints are dealt with professionally, very thoroughly and very comprehensively. It is a journey; unfortunately, we have not reached that particular destination, but we do require the support of the Commission and the umbrella bodies.

Q128 Chair: What does the support of the Commission mean? What should be the role of the Charity Commission in this?

Alistair McLean: To build selfregulation, the critical piece here is exposure. I think one of the gentlemen in the previous session informed the Committee that the Charity Commission gets over 3.5 million hits from either the public or indeed other charities in the sector, whilst the NCVO have only 0.5 million and NAVCA have only 150,000. If the Charity Commission had the FRSB tick logo on its website, and all the charities that were members of the FRSB on that website, that would be one way in which they could significantly assist us. This is something, I must say, they are considering at the moment, but it is one way that they would assist us in terms of exposure. There are other things that we are working with the Charity Commission at the moment to try to develop. We are working with them over the Christmas campaign. There are new developments with the Commission that we are intending to roll out over the course of the next few months.

Peter Lewis: If I may, just as a word of caution, we do need to be very careful we do not invent a sledgehammer to crack a nut. Fundraising complaints are very, very small at the moment, 0.001%1 of complaints, compared with the number of asks. We have to be really careful because, in a selfregulatory system, this is donors’ money we are talking about. What we need to work together to achieve-and this is where we think a selfregulatory system is the best way-is an efficient and effective system that does not waste donors’ money unnecessarily but, at the same time, maintains public trust and confidence. We would not support loads of donors’ money going on promoting a complaints process.

Chair: Anything to add? We have to be very quick now. I am sorry about that. We are very pressed for time.

Q129 Alun Cairns: Mr McLean, you tried to put the positive spin on it earlier, when we talked about 90% of the public having not heard about the Board. With fewer than 1,500 members, you are falling well short. Are you disappointed with the membership figures so far?

Alistair McLean: Mr Cairns, I would accept that, when the Buse report was written in 2006 suggesting some of the targets that the Fundraising Standards Board might achieve, there were two targets set. The first one was that it may be reasonable to expect the Fundraising Standards Board to achieve, over the five years, membership accounting for 25% of voluntary income. The other target it set was a charity membership of between 2,000 and 3,000 members. On the first point, we were home and hosed; we well exceeded the 25%. Our 1,500 members represent virtually 50% of all voluntary funds raised in Britain, so that is a significant impact and those charities are doing a lot of that fundraising. But in terms of overall members, I fully accept that we have some work to do and that is part of the journey.

Q130 Alun Cairns: What efforts have you made to make the membership universal?

Alistair McLean: There have not been any efforts to make the membership universal, because there are so many charities that do not do fundraising. Early on, we talked about the 160,000 charities in Britain. Nearly 50% of those have a voluntary income of less than £10,000. They do not need selfregulation overseeing them, because those charities are run by small communities and local areas that do their own regulation. Nobody is going to mess around with the small amount of funds that they have got. It is the larger charities, those charities that Lord Hodgson suggested have a voluntary income in excess of £1 million, that should all be expected to join the Fundraising Standards Board and to sign up to the selfregulation standards that we demand of them. That would be one of the many recommendations that we would strongly support, and would definitely help us grow our membership.

Peter Lewis: We asked our members whether they would like a universal system. They would. They sign up to our codes; they would like everyone to have to comply with the codes, and we would ideally like the FRSB to be able to adjudicate against everyone, whether or not they are members of the FRSB.

Q131 Greg Mulholland: No one would suggest that there is not a fairly confusing public face in terms of charity regulation. I wish to refer to an article in the Guardian on 6 August by Joe Saxton, which said, "The Institute [of Fundraising] has queried whether the suppliers on the PFRA board have a conflict of interest, and the PFRA has asked the Institute the same question about its board. The Institute is holding summits without inviting the other two parties. If this is happening in public the mind boggles as to what is going on behind closed doors." Are you part of the problem?

Peter Lewis: I think we are trying to sort the problem out. You understand very much as MPs, who are part of the legislature, the system that we have here. We, as the Institute of Fundraising, bring the charities together to write the law. We are the legislature. The PFRA is the police in relation to face-to-face fundraising. They are the police going out checking practice. The FRSB is the judge, so it is absolutely right that we split those three roles. You do not want to be judge and jury in the same place. It is absolutely key that we get those relationships right. We have been discussing that over the last six months. The FRSB is now seen as the publicfacing complaints body. We write the code. There should be a distinction between us and them, because that is the right tension. The PFRA is making sure that people are complying on the street.

Q132 Greg Mulholland: The legislature, the judge and the police never always get on, but are you getting on better than that article suggests?

Alistair McLean: It is fair to say that the challenge put to us by Lord Hodgson was significant. It is his first recommendation in his report regarding selfregulation. He said it is beholden on the three of us to get together and agree who should be the publicfacing body. In the face of not six months but about a month and a half, bearing in mind a month of that was summertime, we got together, and the Chairs and the Chief Executives of the three organisations sat down and agreed that the FRSB should be that publicfacing body. We are reasonably fast and nimble on our feet; we pay attention to those criticisms that are levelled at us; and we move forward on it. Yes, there is good tension and there should be good tension between us, in terms of rule setting and enforcement, but we have made significant progress in the last few months in achieving that.

Q133 Greg Mulholland: Are you aware that Lord Hodgson said that the strong recommendation is that "there needs to be a single, central point of responsibility. This is not an easy challenge for the sector, but if the sector fails to address it, self-regulation will ultimately fail," which of course then means we would be looking at statutory regulation. Heads having been knocked together, do you think that is avoidable and do you think you will make self-regulation work?

Alistair McLean: I fully agree. We have reached that point. There is lots of work that we have to do behind the scenes to finesse these decisions, of course, but that decision has now been made and it is a very powerful one for the sector to be able to step forward on.

Sally de la Bedoyere: We are all very confident we are working together. I came in only three months ago, so I am relatively new to that, but coming from a background of two years of fundraising has been enormously helpful. Certainly the conversation that we are all having is making the process as clear as we possibly can.

Q134 Greg Mulholland: There certainly seems to be progress and you are getting on perfectly well today, I note. Can I ask a more fundamental question, if I may, in the limited time that we have? We had a long discussion about chugging, which is an area of public concern, but do you think there is a mistake in looking only at the regulation, whether it is selfregulatory or statutory, of fundraising? Why do we not have more and more transparent regulation of equally important aspects of charitable activity, the obvious one being not just how the money is raised, which we have been talking about, but how the money is actually spent, and also how charities look at their accounts, the levels of pay for chief executives and administrative costs? Why are we so fixated on regulation of fundraising and do you think there is an opportunity now for this review to look at having regulation, and hopefully selfregulation, for charities in a much wider and more appropriate way?

Peter Lewis: I was involved in the NCVO advisory panel that fed into their response to the review. I would simply concur with Sir Stuart this morning, who said initially it looks like a really good idea but, actually, when you get into the detail, it is very confusing. Is there a space for any greater selfregulation to fill?

Q135 Greg Mulholland: Selfregulating or not, are you saying there should not be any regulation of how charities spend their money and being more accountable for that?

Peter Lewis: I would just concur with Sir Stuart, who, having looked closely at the space that there is for any greater regulation, came to the conclusion that there was not space for an ombudsman to look at complaints. In relation to how charities spend their money, fundraisers more than anyone know that they need to show their impact and they are absolutely focused on showing the impact that their charity has. Their expenditure around fundraising and administration is obviously part of that communication with their donors.

Q136 Greg Mulholland: Do you think charities are sufficiently transparent across the board?

Peter Lewis: I think charities take decisions on the basis of their own charitable cause, and know that the only way they get support from individual members of the public is by being absolutely clear on the impact they have.

Sally de la Bedoyere: The only thing I would add is to respond to your question of whether there is an opportunity there, in terms of the selfregulatory framework, to look at more of it. There potentially is, because of course face-to-face and particularly street fundraising has been so under the spotlight that it is probably, in a way, more transparent than a number of other forms of fundraising. The return on investment, what the costs are up front, what is happening with it and what it is going to deliver have had to become really transparent. Within the codes of practice and within the complaints system, there is an opportunity to see whether that form can be expanded even more. That is very much down to the trustees and the charities to deliver.

Q137 Chair: Are there any further questions? You were given six months by Lord Hodgson to get your act together, and you think you are going to succeed.

Sally de la Bedoyere: Absolutely.

Peter Lewis: Yes.

Alistair McLean: I think, Mr Chairman, the very significant recommendation in his report was requiring the three of us to get together and agree a publicfacing body dealing with complaints. The public do not care about the FRSB, the Institute or the PFRA. They only care that, if they have a complaint, they can make a complaint and that complaint will be processed. We have reached agreement about that and that is a significant positive step.

Chair: If there are no further questions and no further comments, it just falls to me to thank you very much indeed for giving us evidence in a great spirit of what you can do. We look forward to seeing the results of that. Thank you very much indeed.


[1] Note from witness: Factual correction: less than 0.001% of complaints.

Prepared 20th November 2012