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

House of COMMONS

Oral EVIDENCE

TAKEN BEFORE the

Public AdminiStration Committee

Regulation OF the Charitable Sector and the Charities Act 2006

Tuesday 4 December 2012

William Shawcross CVO and Sam Younger CBE

Nick Hurd MP

Evidence heard in Public Questions 473 - 606

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 4 December 2012

Members present:

Mr Bernard Jenkin (Chair)

Alun Cairns

Charlie Elphicke

Paul Flynn

Robert Halfon

Kelvin Hopkins

Greg Mulholland

Lindsay Roy

________________

Examination of Witnesses

Witnesses: William Shawcross CVO, Chair, Charity Commission, and Sam Younger CBE, Chief Executive, Charity Commission, gave evidence.

Q473 Chair: Can I welcome you both to this witness session on the operation of the Charities Act? Could I ask each of you to identify yourselves for the record, please?

William Shawcross: William Shawcross, Chair of the Commission.

Sam Younger: Sam Younger, Chief Executive of the Charity Commission.

Q474 Chair: Thank you. Can I just start by asking about the statutory objectives of the Charity Commission set out in the 2006 Act: public confidence, public benefit, compliance, charitable resources and accountability? Are these appropriate objectives for the Charity Commission?

William Shawcross: Yes, I think they are. The 2006 Act was a very important piece of legislation for us, clearly. It changed the nature of the Commission. Under my predecessor, Dame Suzi Leather, the previous chief executives, and Sam Younger in particular, the Commission carried out a very effective strategic review to make sure that the Commission evolved in the ways that were required by Parliament under the 2006 Act.

Sam Younger: I do not have anything to add. If you look at that set, they are all relevant. The one that has given me some pause, in the context of reducing resources in particular, is the one about the effective use of resources across the charitable sector, and the degree to which it is for the Commission to drive efficiency and effectiveness in the charities world, which I do not think it is. While our guidance necessarily is about making sure that charities comply with what they need to comply with, we would look to focus much more on the specific regulatory role than on the encouragement of charities to be more effective.

Q475 Chair: Lord Hodgson’s recommendation was that you should focus more tightly on your regulation of the sector. You seem to accept this recommendation.

Sam Younger: Yes, absolutely. In the strategic review we did in the wake of the last spending review, we concluded that we needed to focus on those things that only the regulator can do. That is in the field of regulation: we have to register charities; we have to provide generic guidance; we have to provide a range of consents; and we have to involve ourselves in the compliance work, if and when things go wrong.

Q476 Chair: Have you got the budget necessary to increase your regulatory purpose?

William Shawcross: I do not think we will ever have the budget necessary. As you know, the budget has been cut by 30% in the last few years. That obviously makes our task of regulation more difficult, but I agree that regulation is the principal responsibility of the Commission. It is above all the organisation that is designed to convince the public and to enable the public to believe that the charities sector is being kept charitable. Regulation is our most important responsibility. Obviously budget cuts have an impact on that but, under Sam in the last two years, we have reorganised to take account of the budget cuts and to be able to continue our regulation as effectively as possible.

Sam Younger: There are two dependencies in particular, in terms of the resource levels we have now, in terms of the ability to do the job. I am confident we can do the job. One of the dependencies is to reduce the demands on us. Part of that is through technology and trying to push people more to the website; part of it is through developing partnerships with umbrella bodies across the sector to try to shift some of the things that, historically, the Charity Commission has done to others. Those are both very important areas.

At the same time, the most difficult area for us is the reworking of our risk framework for what we do and do not take on. That is a rigorous framework. What we are looking to do through that, having restructured to triage the incoming demands more effectively, is make sure that we put our limited resources where there is most need. Inevitably, given the sheer number of things coming at us-we have almost 900 calls, e-mails and letters every single working day of the year to deal with-when we make those decisions, I would accept, as any organisation would, that we are not going to get it right every time. There will be occasions when we triage and say we are not going to look at something that, in hindsight, we should have looked at. Equally, we are then in danger of putting resources into things that are not necessarily worth the candle.

Q477 Greg Mulholland: Good morning. The Charity Commission is facing a difficult financial situation over the next few years. The figures are quite stark in terms of the reduction in funding, all of which comes from here, effectively, over the next few years. Lord Hodgson’s recommendation for changing the threshold would lead to a lot of voluntary registrations. Do you think that is something the Charity Commission would be able to handle in the new financial climate? When will the Charity Commission start to be able to administer those voluntary registrations?

William Shawcross: We will have to try to handle it, whatever the financial climate. There could come a point, if there were huge new reductions in our budget, when we would have to come to you and say, "With the greatest respect, we cannot any longer carry out our regulatory function efficiently enough." Lord Hodgson’s recommendation of raising the threshold of registration to £25,000 from the present £5,000 is obviously one that we have considered. It is a quite controversial suggestion and there has been a lot of debate about it. On the whole, our feeling is that, if you did that, about 28% of all charities now registered would come off the register, and they would be below the radar. It is important for the whole charitable sector that people have confidence that the overwhelming majority of charities are registered. It would be a problem if they no longer were.

Sam Younger: In terms of the regulatory burden, if you look at the package of measures that Lord Hodgson suggests, along with the raising of the threshold to £25,000, I do not think it is necessarily the case that it would significantly reduce our burden. While there would be some organisations that would not be registering, there will also be voluntary registration at every level. Also, part of his proposition is that any organisation that is a charity but wishes to benefit from Gift Aid and other tax concessions has to be registered. There would be a balance there. The danger, as we see it, is losing some of the transparency in the sector, which actually has also been quite an important theme of the Hodgson review.

Q478 Greg Mulholland: That leads very nicely into the next question, which is on exactly the concern that you express-that raising the threshold could create a "hidden sector" of charities that are then not required to provide key information, either to the Commission or the public. Taking that point head on, do you think that presents a real risk to public trust in charities, and do you think that that risk outweighs the benefit of reducing the regulatory burden on those charities, which is clearly the aim?

William Shawcross: It is a risk and that is why we have said that. Public confidence in the charitable sector is crucial and it is probably our most important function. As I said before, 28% of charities would come off the register, which is quite a big proportion. It is worth pointing out that, in Scotland, there is not even a £5,000 threshold; everybody has to register. Our experience is that most charities do want to register, despite the fact that there is a certain regulatory burden. It is not huge, I think, and not many charities complain that it is overwhelming, but charities want to have the benefit of being registered with the Commission. It gives them a certain seal of good housekeeping, if you like.

Sam Younger: I think it is important to note that the Lord Hodgson recommendations are very much in the spirit of saying there ought to be more regulation through the provision of good information to the public, which allows the public to take decisions about whether to support charities or not. In that context, potentially to take significant numbers of charitable organisations off the register and off the requirement to provide information and detail goes against that. I would be wary of it from that point of view. From a regulatory point of view, if organisations are charitable and something goes wrong, we are still required to take a look at it even if they are not on the register. That becomes less easy if we do not have ready access to details of those charities.

Q479 Greg Mulholland: How would you deal with that situation? That is a very interesting case study-when a charity is not registered and is not required to be, but needs to be looked into. How do you do that when you do not have the information?

William Shawcross: With greater difficulty, because we have to find ways of accessing it, but I would not overplay that point as against the point about broader transparency, which I see as more important. Nevertheless, it creates extra difficulty for us.

Q480 Greg Mulholland: Being blunt, you would rather not have this change to the threshold.

William Shawcross: Yes. On the whole, our position has been that the present threshold works well. Most charities are comfortable with it, and there would be, as you pointed out yourself, a hidden sector if the threshold were raised to £25,000. It is a subject on which reasonable people can differ.

Sam Younger: It is worth adding that we did a certain amount of public opinion work and public focus groups, in the context of our own strategic review, two years ago. The overwhelming view coming back from those focus groups was they did not understand why there was a threshold of £5,000. Any organisation that calls itself a charity and wants to have the privilege and kudos of being a charity should come under the same framework. It seems to me that, in public opinion terms, there is a clash there in what I can see is a very legitimate sense of whether there is a way of deregulating. From our point of view in taking the burden off us, the areas that are important to us are those where we can raise the threshold and reduce the number of areas where permission is required from the Commission formally for charities to undertake things. That is the area where we think it is more important to see deregulation.

Q481 Alun Cairns: Mr Shawcross, I want to raise charging for registration and returns. In your preappointment hearing, you thought that Lord Hodgson’s suggestion was a sensible option, yet you have recently conducted a survey of 100 voluntary sector organisations in which 47 agreed, 47 disagreed and six were undecided. Do you still stand by your previous statement and do you think you can achieve consensus?

William Shawcross: It is a perfectly plausible suggestion. The reason for doing it would be to help our financial flow. At the moment, any monies that we raised thereby would go to the Consolidated Fund. We would need to have primary legislation for any fees from charging to come to us, so it is a big change. Secondly, it is not clear how much money we would actually raise from charging. Thirdly, it would be a huge change for most of the charitable sector. What you have pointed to is a really crucial question: how this Commission will be funded over the next 10 years, for example. We have to look at all alternatives. One of the other suggestions that was made to me-not in jest but quite seriously-was that charities in the end will have to pay for regulation. Other sectors pay for their own regulatory bodies, so why not the Charity Commission? That is something we will have to look at, but that also would be a huge change and one that would be much resisted by charities.

Q482 Alun Cairns: Do you think that it could be used by the Government as a reason to reduce your budget even further over the long term?

William Shawcross: If we introduce charging?

Alun Cairns: Yes.

William Shawcross: Yes, it might well be. As I said, at the moment the fees would go to the Treasury, not to us, so there would be no financial advantage to us. It might be quite expensive to collect those fees. We would need to have the bureaucracy to do it.

Q483 Alun Cairns: Would you prefer a situation where the charges would come to you and you would just become selfsufficient financially?

William Shawcross: As I said to you, it would require primary legislation to do that.

Q484 Alun Cairns: Yes, but would you prefer that as an option?

William Shawcross: I do not know that I would prefer it as an option, but I think that we have to look at all options because, to be effective, the Charity Commission has to be properly funded. If there are further cuts, as there perhaps will be in many areas of government, we will have to look at how far we can be effective. As I just said, that is an alternative we have to look at, but it is not going to happen immediately.

Sam Younger: It is important to add, with the modelling we did, that if you look at the current amount that comes to us from public funding and model what it would take for that to be replaced by other funding, it seems to me that looking at realistic charges for transactions, if you like, is liable only to fund at the margin rather than comprehensively. If you were to do it comprehensively, it would have to be much more in the context of a levy on charities. When you run the figures, the levy that would be required from charities is actually pretty significant. It would run into great opposition. In particular, we have a concern that, if you went down that route and had contributions related to the income and resources of charities, you would land up with the vast majority of funding coming from the largest charities. There is a danger there to the independence of action of the Commission, because of that sense of ownership coming from those who are paying the most.

Q485 Chair: Is there not something rather daft about the Government handing out tax relief to charities with one hand and then scooping it back to fund the state regulator with the other? It is not rather messy?

William Shawcross: I can see that. One suggestion that has also been made is that we should be paid out of the Gift Aid that charities receive. That is another possibility. Again, that is something that the charities would resist, but all these options have to be looked at very seriously. Over the next couple of years, that is one of our priorities.

Q486 Chair: How much would it cost to introduce a charging regime?

William Shawcross: I do not know. Do you know how much it would cost?

Sam Younger: I do not know the figures. There is a concern, depending on the charging. If you had something that was, as I was saying a moment ago, a sliding scale with quite significant charges for the larger charities as a single system to fund the Commission, you could actually see that that would work in terms of the cost of administering it. If you are thinking about small charges for charitable registration or annual returns, given the number of charities, and particularly small charities, and given the realistic figures you would be able to charge, there is a question of whether the cost of collection would actually justify the outcome.

Q487 Chair: You do not send out any invoices at all at the moment, do you?

William Shawcross: No.

Q488 Chair: You would have to introduce a completely new operation.

William Shawcross: Yes. It would be quite expensive. Someone said to me the top 5,000 charities in terms of income should each pay £5,000, which would get you £25 million a year. As Sam says, then they might indeed think that they owned the Commission and owned the regulator. That would not be a healthy thing, but it would certainly be the easiest thing to do.

Q489 Chair: The most efficient thing to do is for the Treasury to carry on providing a block grant.

William Shawcross: I do not know if "efficient" is the right word, but it is obviously the simplest. However, the Treasury may not wish or be able to do that. In Ireland, they have just legislated to create a charity commission, but they have not decided how they are going to fund it, so it has not yet taken off.

Q490 Chair: Finally on this topic, are you aware that this is the one response to the Hodgson review on which the Government have not given us a decision? There is obviously some disagreement. Are you aware of any unhappiness between the Cabinet Office and the Treasury on this matter?

William Shawcross: No, I am not aware of anything like that.

Q491 Chair: I am purely speculating, but it does seem likely that the Treasury wants the money and the Cabinet Office wants to keep everything the same.

William Shawcross: Nick Hurd is coming to testify to you very soon, I think.

Chair: We will ask the Minister later on.

Q492 Lindsay Roy: Good morning, gentlemen. Charities can currently apply to the Commission for the power to pay their trustees. Lord Hodgson has recommended that this power be automatic for large charities. Do you agree with that sentiment?

William Shawcross: It is something that some charities obviously want. We have not had many requests for it among charities. If we had-if there was an overwhelming requirement for it among the charitable sector-we would tell you that, but the case is that there is not.

Sam Younger: That is right. If you look at this year, we have had something like six applications all year.1 Actually, some of those were not to say, "We wish to pay our trustees now," but to say, "We wish to have the right to pay them if, in future, circumstances allow it." We are very conscious-this came out through our own strategic review-that it is a deeply controversial issue across the sector. There is a very strong attachment among a lot of people in the sector to the voluntary principle, and there is a fear that this will undermine it. From our point of view as a regulator, we would observe only that some charities have in their governing documents that they can pay trustees. They can come to us to ask that they should have the right to pay trustees, and that is a relatively simple and straightforward process. Sometimes charities are confused about this. It is perfectly legitimate to pay full expenses to trustees, and it is legitimate to pay for trustees’ services, if they are providing services outside of being trustees. When you ally all that with the research that has been done that says, by and large, that charities do not see their inability to pay trustees as a significant factor in their ability to attract the right trustees, our sense generally would be that we do not necessarily see that the case has been made for what would be a very controversial move.

Q493 Lindsay Roy: Under what conditions would permission be turned down?

William Shawcross: I do not know. Have we turned down any? I do not think we have, have we?

Sam Younger: It is really to make sure that the trustees are thinking positively about it and that there are controls on it.

Q494 Lindsay Roy: There has to be a clear rationale set out.

Sam Younger: Yes, a clear rationale for saying why they wish to have this right.

Q495 Lindsay Roy: You have to be satisfied that it is bona fide.

Sam Younger: Yes.

William Shawcross: Yes, but the striking thing is that we have had so few requests for permission to pay trustees.

Q496 Charlie Elphicke: Could I ask you about chugging: the practice that is described by its apologists as "face-to-face fundraising"? I noticed in an Ipsos MORI research paper commissioned by the Charity Commission this year that 67% of respondents agreed that some fundraising methods used by charities made them feel uncomfortable, which represented an increase. The Guardian did a poll on it as well back in July, and it found that 93% of respondents said that the practice should be regulated, should face greater restrictions or should be banned altogether. Does that concern you?

William Shawcross: Yes. I think it is very upsetting to people, as those polls indicate. Most people do not like being accosted in a sometimes quite belligerent and persistent manner in the streets. My view is that it is up to the trustees of charities not to let that happen. It is the trustees’ responsibility to make sure that their fundraising is collected not only in a legal and proper way, but in a way that does not offend people.

Q497 Charlie Elphicke: Looking at the comments on The Guardian’s website, there was one person who said, "I’ve seen these people step directly in front of people, follow people down the street, yell at people across the street, and a few times even lightly grab people’s shoulders. Can we really not just ban them?" That was recommended by 200 people. These are Guardianistas, not the red meat of the Daily Mail readership. These are the people who would be more sympathetic, one would think, to fundraising for charity. The really worrying comment was one that said, "Arm the unemployed with AK47s and allow them to shoot chuggers down like dogs."

Paul Flynn: Is this Tory policy?

Charlie Elphicke: That was recommended by 134 Guardianistas-people reading The Guardian’s website. Does that not highlight the level of concern and that action ought to be taken?

William Shawcross: It does highlight the level of concern, absolutely. It is for the charities, above all, to restrict that sort of activity. Local councils can impose more restrictions on the extent to which chuggers can operate on their streets.

Sam Younger: I think it is important to note, for the record, that it is true that the 2006 Charities Act provided a provision for the Charity Commission to have a role in public charitable collections. That part of the Act was never commenced, so there is no locus for the Charity Commission in that area. What was put into the 2006 Act was the selfregulatory framework for fundraising, which in the Lord Hodgson review has been seen to have been-let us say-sufficiently successful to be worth seeking to develop further. I noticed only earlier this week or late last week that the Public Fundraising Regulatory Association, which was a witness before you a few weeks ago, along with the Local Government Association, has established an initiative to try to make sure that they get proper licensing through local authorities, but noting that there may be a necessity, if that does not work, for there to be legislative backing for that. We would support all those discussions, but not expect to be in the forefront of them.

Q498 Charlie Elphicke: Self-regulation is not working though, is it?

William Shawcross: That is for Parliament to decide, in a way. As Sam says, it is not within our remit to govern chugging.

Q499 Charlie Elphicke: But there are powers in the 2006 Act which we have previously canvassed. Should we not move towards bringing them in?

Sam Younger: If what was in the 2006 Act came in, and we were talking about this in the context of funding earlier, there would be a significant resource issue. That has been part of the brake on it up to now and part of the reliance on self-regulation of fundraising.

Q500 Chair: If Parliament decided to exercise these powers or required you to exercise these powers, you would require more resources in order to do so.

Sam Younger: Undoubtedly.

Q501 Chair: Can you quantify that?

Sam Younger: It predates me, but the figure I have-and I will come back to the Committee if it turns out to be wrong-is that it would require something like £4 million per annum to make sure that you could undertake this properly and actively.2 I will come back to the Committee if that is not the right figure.

Q502 Charlie Elphicke: I think the public could live with a spending commitment of £4 million to deal with this invasion of the personal space of people just going about their daily business, which has got out of control.

Sam Younger: That may be so. First, there is the question of what the costs would be, and, secondly, there is the question of whether the Charity Commission is the right place to administer it. There is a case that historically local authorities have had the licensing responsibility.

Q503 Chair: Are you expressing a view here that, in an ideal world, the Charity Commission does not want this obligation, or the money to carry out this obligation? You think this is the wrong place.

William Shawcross: It would be a huge new responsibility for us, if we were to be active on the streets in way that we have never been before. It would be a big change of our duties. The sum of £4 million is actually quite large compared with our existing budget, so it is not something that the Treasury would hand out lightly. It seems to me more sensible that this should be handled, perhaps more effectively, by local councils. People should put pressure on trustees of charities that they think are abusing the position.

Q504 Charlie Elphicke: My concern is this: this is so serious it is damaging the brand of all charities in this country. It is so serious that Third Sector Magazine, the Bible of the charities industry, is having an active debate about whether to censor my comments and my inquiries into chugging. That is how serious this has become. I am concerned that, if I said to a person in the street or on the doorstep, "Look, for £4 million we could actually deal with the problem of chugging in this country and boost the charities’ brand across the whole nation," they would say, "This would be money well spent."

William Shawcross: I certainly hope that none of your comments were censored by any publication-I cannot understand why that should be the case-but £4 million is £4 million. I repeat that I think it would be a huge departure for us to have to police chuggers. It seems to me that it is more effective for local councils, trustees and the police themselves to be called in when necessary. I quite agree with you that it is a blight on the charitable sector and it has to be dealt with.

Charlie Elphicke: I should just finally say, for the record, that it is clear to me that Third Sector Magazine is saying that they are not going to hide away from this. They are going to expose all sides of it, and I think that is the right thing to do-it is what a free press should do.

Q505 Chair: Of course, if there was regulation on chugging, that might reduce what charities raise from chugging. Has that been quantified?

William Shawcross: I do not know if it has.

Sam Younger: I do not know of its quantification, but in all these areas, as I understand it, there is a constant debate within the charitable sector and fundraising about the relationship between the methods that are used and the return. Charities, with the environment as it is at the moment, will look to what produces a good return. The responsible charities will make sure that they do not do this in a way that is importuning the public excessively, but that will not always be the case. I very much take the point Mr Elphicke makes-this is something of real concern. It is absolutely right to point to the survey of public trust and confidence that we did and this being one of the key potential drivers of lack of confidence.

Q506 Chair: I am just going to follow up. Reflecting on this, nobody really minds being approached in the street by someone they know and trust like the Poppy Appeal or someone raising money for the local hospice. It is the unfamiliarity of some charities that are raising money. They feel that this is an intrusion. Do you think there would be some way of making a qualitative assessment as to whether a charity was sufficiently trusted in order to be allowed to approach people in the street? It might be different in different localities.

William Shawcross: I do not see how you could do that, and I do not think it would be for the Charity Commission to issue that kind of imprimatur or licensing. Again, it seems to me that that is the job of local authorities, particularly if it is a local charity.

Q507 Charlie Elphicke: My concern is not simply anonymous charities. There is a comment here in The Guardian: "My favourites are the ones from Scope, who regularly engage in tactics that, if they did it to somebody with severe anxiety, might well cause a panic attack." That is a "highly recommended" comment. Would you, as experts in this area and leaders of the Charity Commission, recommend to Parliament that it is time for Parliament to look at this area and seriously consider statutory regulation or, indeed, a statutory ban?

William Shawcross: This whole conversation demonstrates that it is a concern. It is a concern of ours. It should be a concern of the entire charitable sector, and it is clearly a concern, quite properly, of this Committee. What Parliament legislates on is your responsibility, not ours.

Sam Younger: It is worth noting here that the joint statement made in the last week by the PFRA and the Local Government Association acknowledges that, while they wish to do it within the selfregulatory framework, it may be necessary for there to be a statutory framework. That is for Parliament.

Q508 Paul Flynn: Did you follow the precedent of case law in producing the Charity Commission’s public benefit guidance of 2008?

William Shawcross: Under the 2006 Act, we were required to write the public benefit guidance. It is not an easy task, as you can understand of public benefit. The definition of public benefit was not written down by Parliament. I can quite understand why Parliament did not decide to define it; it is incredibly hard to decide. Parliament was correct: it has to evolve under case law. The tribunal was set up to judge and produce such case law. We produced public guidance in 2008, before either Sam or I were there. That guidance was considered by the tribunal in the case of the Independent Schools Council. Some of it was accepted and some of it was rejected. We are rewriting our guidance in the light of the tribunal’s judgments and that, it seems to me, is as it should be.

Q509 Paul Flynn: In your first foray into the public domain in your role, you did mention fee-charging schools, yet still ratepayers are subsidising them to a large extent. I have a figure here for the three public schools in Yorkshire. If they were not classed as charities, the taxpayer would have collected £863,000 from them rather than £183,000. Is this not the most egregious abuse of the charity laws and shouldn’t you be tackling it with some vigour?

William Shawcross: As I say, we made public benefit guidance an issue with the independent schools sector. That went to the tribunal, and the tribunal’s judgment was that the Commission should not be defining what public benefit each school or any other charity should be giving. It was up to charitable trustees to define and decide how much public benefit they should give.

Q510 Paul Flynn: This is the headmaster marking his own homework again. They can decide their own laws, whereas the schools that the great majority of the children in the country go to have to pay their full domestic rates. Is that fair and reasonable? I think the verdict on your chairmanship thus far is so far, so bad. You have chosen to attack three charities that are all favourite targets of the far right of the Conservative party. You have attacked the British Pregnancy Advisory Service, Save the Children and the RSPCA. Does this not prove that you are doing the bidding of your Tory masters who appointed you, rather than acting as a fair Chairman?

William Shawcross: Mr Flynn, that is a very interesting question. I am not aware of having personally attacked any of these charities.

Q511 Paul Flynn: You have certainly spoken about them. I have a quote here: "Several charities have recently become embroiled in controversy over alleged politicisation. Last month the family planning charity the British Pregnancy Advisory Service was accused of ‘cynically exploiting’ the controversy over abortion limits." Is that not you? This is a report of yours last week: "Earlier … Save the Children was forced to defend its first ever fundraising campaign to alleviate poverty in Britain after Tory MPs claimed it reflected a ‘political agenda’." In another case, farmers’ leaders attacked the RSPCA. Is this what your views are?

William Shawcross: I have a terrible memory, but I am not aware of ever having said those things.

Chair: Can I suggest, Mr Flynn, that there seems to be some confusion about this? By all means write to Mr Shawcross.

William Shawcross: Certainly, I will write to you, sir.3

Q512 Paul Flynn: What line are you taking on this? You have taken the line, I believe, of this document, which we heard about. Is this something that has impressed you?

William Shawcross: I have read that document.4 I made a speech last week in which I did not identify any particular charities in the way that you have just suggested, but I said that one important issue facing the charitable sector is the extent to which charities have become dependent upon the Government. That is an important issue, because it is confusing for the public if charities become less independent than they have always been. It seems to me that one of the jobs of the Commission is to guarantee, and help charities to retain, their independence of everybody, not only the Government. I think it is true that, in the 1980s, 10% of charitable funding came from Government; now it is close to 50%. That is a huge difference. I just think it is something that should be debated.

Q513 Paul Flynn: Which charities do you have in mind?

William Shawcross: I was just talking about the sector in general.

Q514 Paul Flynn: The point of this booklet, which we went into in some detail last week, is that the person who wrote it believes that the tobacco ban was a mistake. He was critical of the fact that Government money was used to help those campaigning for a tobacco ban. Would you regard it as essential that charities can compete with the vested interests of the tobacco industry, whose mission is to make money by spreading addiction to a dangerous and addictive drug in a way that is unfettered? There is a need to have a balanced debate. It is essential that Government help the charities that are putting forward a progressive point of view that has been hugely popular, reduced smoking and probably saved tens of thousands of lives.

William Shawcross: I agree with you on that.

Sam Younger: It is important to add that the question of what the Government fund charities to do is a matter for the Government and a matter for those charities, not a matter for us. The issue for us on guidance, which was referred to in that Sock Puppets report from the Institute for Economic Affairs, is to have guidance that we are satisfied is consonant with the law as it is-in fact, we have had no complaint that it is not. The law says that campaigning for charities is entirely legitimate, that political campaigning is acceptable in support of charitable objectives, and for a limited period, and that party political activity is not acceptable at any stage. Those are the rules as they are. We have had no challenge to that as guidance.

Q515 Chair: Can I return to the Upper-tier Tribunal case on independent schools? This seems to us to be an extraordinarily cumbersome way-and an expensive and stressful way-of dealing with the question of whether the public benefit test is being met. What can be done to make this much more straightforward, much less contentious and much less confrontational? Are you satisfied that, actually, the guidance you have issued was what Parliament intended when it passed the Act, or are you trapped by wording in the Act that forces you effectively to challenge the jurisprudence of previous judgments?

William Shawcross: To deal with the second part of your question first, we were required under the 2006 Act to produce public benefit guidance. We did so, and the tribunal in the Independent Schools Council case found that some of our guidance was correct and some was wrong, so we are changing our guidance accordingly. As to your point about expense and the cumbersome nature of the tribunal, this was set up by Parliament in the Act. The tribunal was a necessary way of charities being able to appeal against any judgment or decision that the Charity Commission made. We should not be the final arbiter of what is charitable and what is not, and what is public benefit and what is not. That is the duty and responsibility of the courts to decide, not us, but you are absolutely right that it is an expensive procedure.

I feel for charities that have to go into the expense of representing themselves before the tribunal. There is no call for them to employ expensive counsel, but naturally any charity fighting for its position will feel that it has to be represented in the best possible way. Counsel in any court process is expensive. The tribunal was set up in order to be much cheaper than having to go to the High Court, and it is an institutional problem that has developed since 2006. You are quite right that we should all be looking at how to make it easier for charities.

Q516 Chair: There should be a relationship between the charities and the Charity Commission that enables proper conversations to take place so that reasonable and rational compromises can be reached without resort to very expensive tribunal processes. Are you looking at alternative methods of dispute resolution about your guidance, which would be very sensible?

William Shawcross: We do have such conversations. Of course that is true.

Sam Younger: It is something we think about a lot, but it just seems to me that we cannot have it both ways. It seems to me it is important for Parliament to be clear about what public benefit means, and then we would be in a position to implement without this stage of the tribunal. Our public benefit guidance had to go into a vacuum, and it was put in after a very wide consultation with large numbers of interested parties. Mostly it was a matter of consensus by the end that that was appropriate, although it has been subsequently said that we were too detailed in it. If you are not going to define clearly on the face of the legislation what public benefit means, the Charity Commission has to take a view that, if you are going to have it developed through case law, you need the case law to do it. Indeed, my message since I have been at the Commission to ourselves is that we should not be afraid of going to the tribunal, because the tribunal is there as part of the architecture specifically designed in order to clarify difficult areas of law.

Q517 Chair: To challenge you directly on this, this seems to be the bureaucrat’s answer: pass the buck to a tribunal, instead of reaching a rational judgment that you think you can defend.

Sam Younger: No, as far as I am concerned, it is Parliament’s answer. Parliament said "public benefit" and made us define it. We can only take a view.

Q518 Chair: I do not accept this. You say, "We will take the leastrisk approach to this. This is what we will put in our guidance and we will let them come for us and settle it in the tribunal," instead of taking responsibility as Chief Executive of the Charity Commission and reaching a rational judgment that avoids all this absurd expense of going to law with millions of pounds spent on litigation. The tribunal is meant to be a lastresort process, not a way of designing policy. It seems to me that you are using it as a tool to design your policy.

William Shawcross: The problem is that the definition of public benefit is incredibly complicated, as you know as well as I do. It is a matter of dispute. All law is argument in the end, and that is what we have to deal with. Whether a particular charity coming to us for status displays enough public benefit, as is required under the 2006 Act, is something that we can have an opinion on, but we cannot make a judgment on in every case.

Q519 Chair: Do you feel that the Act intends to challenge the status quo preAct-that it intends the Charity Commission to start changing the definition of public benefit, just because the words "public benefit" appear in the Act?

William Shawcross: No, but it is a question that has to be defined more clearly than before, as I understand it. The Act set up the tribunal for just such difficult cases. I agree with you it would be much nicer if we could resolve all cases, or almost all cases, without going to the tribunal, and we certainly try to do that.

Chair: Moving on to religious charities, Mr Halfon.

Q520 Robert Halfon: Could you explain to me the decisionmaking process within the Charity Commission that sees that recognising the druids as a charity passes the public benefit test, but recognising the Brethren’s Preston Down Trust does not? Can you just explain to me how you came to that decision?

William Shawcross: Both these decisions were made before I came to the Commission, so I was not intimately involved in them.

Robert Halfon: Perhaps the Chief Executive can answer.

Sam Younger: Every request for registration-and there are a huge number-is looked at on its merits against the law as we understand it. They are looked at first by the experts in our registration team. There are many-indeed the majority of applications for registration that come in-that are slugged as low risk and go through very quickly indeed. The ones that are regarded as raising issues at the margins or questions about law are passed on to more expert people within that registration team, in collaboration with our legal service. In the case of the Druid Network that you refer to, that went through to a decision. There was then a decision review, and that happened to be taken as a full board discussion.

Q521 Robert Halfon: Did that go to tribunal?

Sam Younger: That did not go to tribunal. It could have been challenged by anybody.

Q522 Robert Halfon: Could you just explain what public benefit the druids give to society, just for the record?

Sam Younger: Again, I would have to come back to you on the specifics of it, and I will do so happily.5

Q523 Robert Halfon: The Brethren have been forced to go to tribunal-and to spend hundreds of thousands of pounds-because you say they do not pass the public benefit test. You have forced them to go to tribunal, and yet for the druids you say that you have some little committee that decides internally. They seem to pass without question. Surely that shows that there is a significant inconsistency. Why is it this particular organisation-this particular religion-has been singled out in this way?

William Shawcross: It is not a particular religion being singled out in this way. The Brethren are a Christian denomination and there is no way in which we would single out Christianity in this way. I made the point the other day in a speech that we are very much aware of the hugely important role that Christianity has played in charitable purposes for the last four centuries. There is no way in which the Commission would wish to discriminate against Christians or indeed any other religion. In the case of the Brethren, my understanding is that there was concern in the Commission, because of their doctrine of separation and exclusiveness, which is in their title, as to how much public-as opposed to private-benefit they could give. This was the argument about their public benefit responsibilities.

Q524 Robert Halfon: As a Jewish person, I cannot do Holy Communion in a Catholic or Protestant church, so there is an essence of doctrinal separation, yet they have no problem in getting the public benefit. The Holmes v. AG case in 1981 set a precedent that the Plymouth Brethren were for public benefit, and the current challenge to the Preston Down Trust seems to fly in the face of this court judgment.

William Shawcross: With regard to your question, particularly about communion, I can go to a synagogue and I do quite often go to synagogues. On Sunday, I went to Brompton Oratory. Although I am not a Catholic, I could take part in communion, although I did not take the sacrament. Similarly, my wife, who is a Catholic, can come to my Anglican church. There is no question, I think, that the Brethren are slightly different from that.

Q525 Robert Halfon: I am absolutely allowed to go to a Brethren church and sit in the church. I may not be able to take Holy Communion, but I can sit there and participate in their activities, and yet they have been singled out. Is it really your role-was that really the public benefit test-for you to single out a religion and adjudicate over different kinds of religious persuasions? The doctrine of separation is totally different from whether or not the Christian Brethren actually provide public benefit-and they clearly do provide public benefit, with all the charitable work that they do. Whether or not they have a doctrine of separation should really not be your business. What should be your business is whether they provide public benefit. I could say to you that the public benefit that the Christian Brethren provide across the country, with their 16,000 members and 300 churches, is a lot more than, let us say, the druids, who seem to pass your public benefit test with very little question and are not forced to go to tribunal. Can you not see the inconsistency in this?

William Shawcross: I can see the argument about it and I absolutely understand that. I understand the concern of the Brethren, and I am sorry that the tribunal, as the Chair said, is very expensive for charities that have to go before it. On the question of the Brethren, as you know, there are different views. Lady Berridge expressed a different view about the Brethren in the upper House recently, and these are facts that have to be discussed and adjudicated by the tribunal.

Q526 Robert Halfon: But there will be different views about druids; there will be different views about my own religion. I could point to examples of certain branches of my own religion that I may not agree with. They would certainly have ways that I do not necessarily follow or agree with, but that is not the same as whether or not they provide a public benefit. The public benefit test is, in essence, charitable works and activities, and the Brethren have a clear record of providing charitable activities, and yet you have singled out these people. You have forced them to go to tribunal and you still do not provide the answer, so why are they being singled out?

William Shawcross: I accept that you are saying it is very difficult for the Brethren and I regret that, but I repeat also that there are different points of view on the Brethren’s activities. Lady Berridge expressed them very forcefully.

Q527 Robert Halfon: As I say, there are different views within every religion about the activities of that religion.

Finally, there was a debate in the House of Commons recently, as you are well aware, in which MPs from every single party in the House of Commons, virtually, got up and condemned the Charity Commission. I myself genuinely feel you to be a vindictive organisation, as you have singled out this religious organisation in this way. Do you not worry about your reputation in the House of Commons, or do you just think that all the MPs are wrong and you were right to single out this particular religious group?

William Shawcross: Of course we worry about it. It is very upsetting for the Charity Commission to be described and seen in this way. As the regulator of the charitable sector, it is very unfortunate for us and we do not want that to happen. I regret that there is such strength of feeling against the Commission as such, when I think what we were trying to do was to carry out our statutory duty.

Robert Halfon: Which you did not do for the druids.

Chair: Order, Mr Halfon.

William Shawcross: Sometimes we make mistakes, inevitably, like all organisations and like all humans. I hope that we try to discharge our functions responsibly and decently, and that is what I hope we have done in this case.

Robert Halfon: What are you going to do?

Chair: I call Mr Mulholland.

Robert Halfon: I just want him to comment on my question.

Chair: You have had a lot of questions.

Robert Halfon: I think the Chief Executive should comment on the question.

Chair: You have just said you were going to ask your last question.

Robert Halfon: I do not want any more questions; I just want the Chief Executive to comment on the question that I asked.

Chair: I will give Mr Younger an opportunity to comment.

Q528 Greg Mulholland: Some of us take a different view from that, I think you will be relieved to hear. To try to take this back to a more rational position, is this difficult issue-and it is a difficult issue for you and a very difficult issue for the Plymouth Brethren, with the understandable worries that they are facing-not an example very simply that the definition of public benefit is wholly inadequate? Specifically when it comes to religion, there is an unwillingness to say whether or not religion in itself is a public benefit.

William Shawcross: I do not think I would quite agree with that. Some 20% of all charities registered with us are religious charities. They are overwhelmingly Christian, but also Jewish, and there are other faiths as well. I do not think the fact that a charity is religious causes any problems for its definition in terms of public benefit per se. You are right that, under the 2006 Act, we have to develop case law on public benefit in religions, education and a whole variety of charitable purposes. It takes time and is difficult. I am very sorry that the Brethren have had to go to this expense on this occasion. As the Chair said, the tribunal is turning out to be more expensive than I think Parliament envisaged in the 2006 Act. It is certainly true, as the Chair said, that we seek to resolve these issues in house, as it were, in the overwhelming majority of cases, and I think we have done this.

Q529 Greg Mulholland: Specifically on this issue, I believe that this is the nub of the issue. The Plymouth Brethren are the specific case that has been brought, but equally the Brethren as a whole were just an organisation that was not particularly well known in this country. Since the ruling of the Charity Commission, they have come forward and been much more open and engaging with MPs and their local communities to demonstrate their benefit. Certainly I have seen the community benefit that they have been providing by engaging with people in my community. That being the case, would it not be better, if there was an initial ruling, to then say, "Actually, now we are convinced that there is a public benefit"? Is there not a better way of doing it than the process that is currently there, which is going to cost so much money unnecessarily, when the benefit can and has then been proved?

William Shawcross: If new evidence comes forward, we would consider that and the tribunal would consider that on both sides. That is something that we have to wait for. The question is before the tribunal and I hope that it is decided promptly.

Q530 Paul Flynn: The debate attracted the attendance of an unusually large group of MPs-a total of 47-though those numbers dropped immediately and considerably when it was announced by Fiona Bruce that the Plymouth Brethren do not vote. The tone of the debate was such that a group of rather gullible MPs who had been intensively lobbied by the Plymouth Brethren-they have been here as well, and they have given a certain point of view-interpreted this not just as an attack on the Plymouth Brethren, but an attack on Christianity. It is unbelievable that people could think that a body like the Charity Commission could be attacking and trying to undermine Christianity. The evidence, as you suggested, that is coming in from the blogosphere and in Baroness Berridge’s speech suggests that this is a cult that is very different from any other Christian group. Could you confirm that the Charity Commission is not running a crusade against Christianity?

William Shawcross: I can certainly confirm that. I would not be Chairman of any organisation that was running a crusade against Christianity or indeed any other religion. The Commission has registered, I think, 1,000 new Christian or Christianrelated charities in the last year, and 400 new charities of other religious faiths. I was asked by a Member of Parliament recently whether the Commission was part of a plot to secularise British society, and I said, "Absolutely not." I can confirm that: the Commission has never been in the business of doing that and it never will be, as far as I am concerned.

Q531 Chair: Mr Shawcross, I was intrigued to hear that you immediately jumped to Lady Berridge’s comments when there have been many comments, particularly in the Westminster Hall debate, that were pretty universal, I felt, having attended part of that debate. Can I put it to you that a bad decision was made by the Charity Commission before you became its Chair? You are now in the position of defending decisions that were taken previously. Would the sensible decision be to conduct an internal review to look at the evidence and the comments that have been made, and maybe come out with a new decision thereafter?

William Shawcross: I am certainly not going to comment on the first part of your question. My predecessor and Sam Younger, the Chief Executive, ran the organisation extremely well before I came in. I am very grateful to them for being able to take charge of such a well-run organisation as the Charity Commission. You are correct; I could have, I suppose in theory, have said, "Let me look at the evidence. I think this should come back," but my view was that the evidence was disputed, as the testimony from Baroness Berridge suggests, and it would have been improper for me to interfere with the judicial process that had already begun. It had already begun before the tribunal, which was set up by Parliament for just such complicated issues in the 2006 Act. I thought that, given where we were, it should continue.

Q532 Alun Cairns: Surely if new evidence has come to light, it would be incumbent on the Commission to look at that evidence and potentially to come up with a new decision, whatever that may be. It may well be to uphold the existing decision, or it may well be to change the original decision, if new evidence has come to light. I suggest, in all of the debates that have taken place and the evidence that has been made available, there may be something new that therefore would place on you a new responsibility, as Chairman, at least to consider that evidence.

William Shawcross: You are absolutely right. Of course we consider new evidence in every case, not just the Brethren’s case, as it comes to light.

Q533 Alun Cairns: Would that not be the most straightforward decision?

William Shawcross: It might be, but the evidence that has come to light since this decision was taken is contradictory, which you know, Mr Cairns, as well as I do. It is quite difficult for us, now that the case has gone to the tribunal, suddenly to say, "We will take it back." We might view all that evidence and decide that the original judgment was correct and that it should go back to the tribunal. That would just delay the process even longer for the Brethren.

Q534 Charlie Elphicke: Mr Shawcross, this obviously did happen before you came on board, but the matter of the druids was a decision of the full Commission, from what Mr Younger is saying. Does it not concern you that the matter of the druids and the Plymouth Brethren is turning the Charity Commission into a laughing stock?

William Shawcross: I certainly hope it is not turning-nor has it turned or will it turn-the Charity Commission into a laughing stock. We do a lot of very serious work and it is difficult to make judgments on these issues, of course. On the matter of the druids, I understand that a decision was made that they were a charity that was principally involved in education from a religious point of view and that they gave clear public benefit on those grounds. On the matter of the Brethren, my understanding is that it was the doctrine of separation that caused most concern as to whether their benefit was more private than public.

Q535 Charlie Elphicke: I am an Anglican-an evangelical Anglican but an Anglican nevertheless. If I go to a Catholic church, I cannot take communion, because those are the rules of the Catholic Church. Do they or do they not therefore display public benefit? These are the same principles on which your organisation has ruled out the Plymouth Brethren.

William Shawcross: I do not think that the Catholic Church’s rules on sacrament are quite the same as the doctrine of separation of the Brethren.

Q536 Charlie Elphicke: Let us turn to the Westminster Hall debate. It is just on the issue of the reputation of, and people’s trust and confidence in, the Charity Commission on this side of Parliament. To use the words of the Minister in the debate, he noted down the description given of the Charity Commission as "rotten", "discriminating", "a bureaucratic bully", "pressuring the little guy", "a hidden agenda", "unjust", "inconsistent", "arbitrary", "a wolf in sheep’s clothing". He then said, "This has been quite a rough day for the members of the Charity Commission." Would you agree with the Minister and what are you going to do about it?

William Shawcross: Would I agree with the Minister in what sense?

Charlie Elphicke: That was what he said. I read out his speech.

William Shawcross: Those are phrases that he read out but, no, of course I do not agree with the Minister on that. I do not believe that the Charity Commission is any of those things. I think the Charity Commission has a very difficult job in adjudicating the 160,000 British charities and making sure that, under the regulations, those charities are kept acting according to their own charitable purposes and nothing else, and that they do not abuse those purposes. It is not an easy task, but it is an essential task, and I think that we do it well. If we make mistakes, I regret them and of course they should be corrected. Overwhelmingly, we certainly try to get things right.

Q537 Charlie Elphicke: We are all concerned about Baroness Berridge and what happened to her family some 20 years ago; it is a matter of considerable concern. Of course, you often get situations where there are fragments and elements of any religious organisation that go to extreme ends in any religion. We know all about those sorts of situations. But would it be right to tar the whole organisation, or the whole religious group, with that same brush, particularly given that these events seem to have happened some time ago?

William Shawcross: No. It is not right to tar any organisation with one brush; I quite agree with you. This case concerns one meeting hall, Preston Down, and that is the organisation in question.

Q538 Charlie Elphicke: Can I urge all the Charity Commission to come back and look at this case? I am concerned about the lack of confidence that so many parliamentarians expressed in the Westminster Hall debate-47 MPs is a lot of MPs, particularly concerning a group that does not even vote, so we have no electoral interest in the organisation. That should give pause to the Charity Commission. You really ought to corporately come back and review this decision, and review where the balance lies, because to have this amount of concern in Parliament indicates that the balance has not been got right by the Charity Commission.

William Shawcross: As I mentioned to you before, Sir, we do review these cases all the time, and in this particular case, as I say, there is other evidence from Lady Berridge and other Members of Parliament who have expressed concerns that are very different from those set out in the debate to which you refer. Of course, the strength of feeling in Parliament is very important to us and we bear it in mind. As I said, if we took the case back from the tribunal, which I am not sure would be entirely proper, we would have to consider it all again, and we would have to take in all the new evidence from Lady Berridge and others, and it would delay the decision for Preston Down. That would be even more unfortunate for them. At the moment it is with the tribunal, and the tribunal can adjudicate on all this evidence-old and new.

Q539 Robert Halfon: When you talk about bearing in mind the strong parliamentary opinion of dismay at the role of the Charity Commission, as has been evidenced by my friend sitting next to me, that is all you are doing. You are bearing it in mind, and then you are just ignoring it. What you are doing is taking evidence from one or two individuals who have their own personal stories. Now, if you take the example of the Roman Catholic Church, which I have huge respect for, it has recently been the subject of a child abuse scandal. No doubt there are individuals who could come to you and say that terrible things have happened within that Church and that they should not pass the public benefit test, but I doubt for one moment that you would force the Roman Catholic Church to go through a tribunal and to suffer indignity in the way that you have forced the Christian Brethren to do, and refuse to review the thing and take the evidence of a few people who have had unhappy experiences. My point to you is that in every religion there are issues that go on and people who have unhappy experiences, but you still have not explained why you have singled out the Christian Brethren in this way.

William Shawcross: I am sorry if you think I have-

Chair: Is there anything further to add on this?

Robert Halfon: I want a comment from the Chief Executive, who says nothing on this issue.

Q540 Chair: Mr Younger, is there anything to add?

Sam Younger: I do not think that there is anything to add, really. I would only say that the descriptions that Mr Elphicke read out were described by the Minister-he did not add this-as "quite wild".

Q541 Charlie Elphicke: That was a mishearing. I specifically said, "These are the comments that the Minister recorded," and the Minister then said, "This has not been a great day for the Charity Commission".

Sam Younger: Yes.

Robert Halfon: Of which you care nothing. You only take the evidence of the people you want to hear from.

Chair: Mr Halfon, please.

Sam Younger: I was not saying that those were things that were the views of the Minister, but I was saying that he added that the descriptions he quoted, which had been brought out to him, were actually "quite wild". I have been in the Charity Commission for two years. All I see is dedicated public servants working as hard as they can to interpret the law in very difficult circumstances. I must say that I resent-and I know my staff enormously resent-those accusations that have come on. Of course it was a difficult day for the Commission, and of course it was a worry to people in the Commission, but I think the overwhelming sense was that these were very unfair attacks on dedicated public servants doing as good a job as they can.

Q542 Lindsay Roy: Can you confirm, gentlemen, whether the Plymouth Brethren are a registered charity in Scotland still?

William Shawcross: I believe they are a registered charity in Scotland, are they not?

Sam Younger: I think there are meeting halls registered in Scotland. It is important to note that a number of times it has been said the Commission are "picking on". We have applications for registration and we have to consider each one on its merits against the law. In this case of the Preston Down Trust, we did not feel able to register it. The correct way of then proceeding is to go to the tribunal to clarify the elements of law, and that is what is happening.

Q543 Lindsay Roy: Are there different criteria for public benefit in Scotland than in the UK?

Sam Younger: The law is different, yes.

Q544 Charlie Elphicke: The issue with the Westminster Hall debate is this: the independence of the Charity Commission is really important, and it is an important part of our democracy, but we are now having a situation built where so many MPs in a parliamentary debate are expressing a lack of confidence and going round saying, "Maybe we should start legislating, take away that independence and have a greater sense of control." My point is that that should greatly concern the Charity Commission. It should be a real cause for concern. Do you take on board the fact that there is a feeling in Parliament that decisions made by that Charity Commission do not strike the right balance?

William Shawcross: I am really concerned that you should say that. Obviously it is a matter of huge importance to us what Parliament thinks. Going back to what Mr Halfon said, we certainly do not ignore the sense of Parliament. All I can repeat-and I am sorry to be repeating myself-is that there are other judgments that have been expressed not only in Parliament but elsewhere about the Brethren case. Lady Berridge congratulated us on not giving instant charitable status to the Brethren.

Q545 Robert Halfon: As I said to you, I could find Catholic people who would condemn the Catholic Church and say that they should not get the public benefit test, but I doubt they would have to go through what you have put the Christian Brethren through.

William Shawcross: I am very sorry for the Brethren to have to go through this. I do not like any Christian charity to have to go through this process, but this process was created by Parliament, not by us, for the adjudication of public benefit.

Q546 Chair: May I just ask you a question about process? The decision on the druids gives rise to 21 pages of reasoning why they passed the public benefit test. What have you published, in terms of reasoning, as to why the Preston Down Trust does not pass the public benefit test?

Sam Younger: As always, there has been extensive discussion with the Brethren and their legal advisors throughout, and a letter detailing the reasons why we felt we needed the law to be clarified and why we were not able to-

Q547 Chair: That is not published on your website, is it?

Sam Younger: It is in the public domain.6

Q548 Charlie Elphicke: Were you Chief Executive of the Commission when the druids were approved?

Sam Younger: I had been there a week when the board meeting took place.

Q549 Paul Flynn: Can we just say of the Westminster Hall debate that instead of it being a bad day for the Charity Commission, it was a very bad day for Parliament, because it showed a group of MPs of extraordinary gullibility and a heightened sense of victimhood falling for one line of an argument? The Baroness Berridge case, which is a very powerful one that has been presented by her and others, makes it clear that the Exclusive Brethren are distinctive in many ways, in so far as no other religion refuses to live in semi-detached houses in case they are contaminated by their non-Brethren neighbours. It is a very different group of people, because they believe so powerfully in separation, and if they believe in separation, they have no claim on making a contribution to the public good.

Chair: Was that a question?

Paul Flynn: Yes. Would you agree?

Chair: Anything to add, Mr Shawcross and Mr Younger?

William Shawcross: No. I would just add that the letter that Sam refers to-to the Brethren-was sent to you, and I think it is on your website. Secondly, I would like to reiterate what Sam said: I have been at the Commission for only a few weeks, but I have been very, very struck by the extraordinary diligence and integrity with which people at the Commission are working on this and many other issues. I can assure you that there is no antiChristian bias or antianything else bias on the Commission that I have seen, and I am sure that there is not.

Q550 Chair: This letter does not run to 21 pages, does it?

William Shawcross: No, I do not think it does.

Q551 Chair: It is not published on your website. I am just wondering if it would improve the accountability and the transparency of decision making-

William Shawcross: I am not sure what rule we have about publishing documents on ongoing investigations, but I agree with you-I do not see any reason why it should not be on our website. If it is on yours, it certainly should be on ours.

Robert Halfon: You certainly do not have any antidruid bias; no one can accuse you of that.

Chair: I think you have made your point.

Q552 Alun Cairns: I accept that, Mr Younger, you were there only for a short time and that, Mr Shawcross, you were not there at the time the decision was made. I accept the comments you made about diligent staff working very hard-everyone can make an error, and errors are made by many on regular occasions. Surely it would be incumbent on you to look at things in the light of new evidence that has arisen, and hopefully save many organisations and individuals a lot of heartache, and also a lot of money at the same time.

William Shawcross: I think we have already answered that question. Of course we would continue to look at new evidence on this and every other case. My concern on this case is that it would delay a decision for the Brethren even longer.

Chair: We have two further questions on political campaigning, but I am going to ask the Committee whether we would like to deal with them in correspondence, given that the Minister has now been waiting 15 minutes, or whether we want to pursue this orally with the Charity Commission now. Shall we move on? I am grateful to the Committee for that indulgence.

Thank you very much for dealing with some very contentious issues. I would just like to put on record my appreciation of the Charity Commission staff, who are working under very difficult circumstances dealing not only with these issues, but with the downsizing of the organisation. We understand how hardpressed the organisation is and we are grateful for their diligence and hard work. I would be grateful if you could pass that on from the Committee.

Examination of Witness

Witness: Nick Hurd MP, Minister for Civil Society, gave evidence.

Q553 Chair: I now welcome you, Minister, to this session on the review of the Charities Act 2006. Will you first of all identify yourself for the record?

Mr Hurd: Nick Hurd, Minister for Civil Society.

Q554 Chair: Can I first ask about the Hodgson review and just enter a little plea? We were looking forward to taking evidence from you in the absence of your response to the Hodgson review, and we got your preliminary response to the Hodgson review at 5.30 last night. Well done, but we would have preferred it a little sooner. What held it up?

Mr Hurd: Well, Mr Chairman, thank you for inviting me this morning. I am sorry if the letter arrived later than the Committee would have liked; these things are ready when they are ready, and unfortunately it was not ready until yesterday afternoon. I should say, of course, that it is in large part an interim response to Lord Hodgson’s excellent review. I wish to wait and see the report of this Committee before issuing my final response, because I would expect that your listenings and your review will help to shape our final response as well. So, it is an interim response; the final response will come after the publication of your report.

Q555 Chair: Can I take it therefore that there are areas of disagreement within the Government? Let us be open about this and transparent-there are contentious areas in the Hodgson review about which there is disagreement.

Mr Hurd: No. On this occasion, in this context, the Government are in a relatively harmonious position. As you know from the response, if you have had time to look at it, we operate a traffic light system. There are recommendations where we are in a position now to issue a red light saying, "We are not going there". There are also positions where we issue a green light saying, "We want to get on with that," and there are quite a lot of amber traffic lights where we need to do a bit more work, a bit more thinking and a bit more talking. I hope that, by the end of February, say, we will be in a position to advance those a little further.

Q556 Chair: The shortest section is about Charity Commission charging, about which you are undecided. Am I allowed to speculate that what the Treasury wants might not be what the Cabinet Office wants?

Mr Hurd: There might be different priorities as far as those are concerned, although I would not say that that is a raging and heated debate at the moment. The reason it has got an amber light on it is that obviously it is an enormously emotive issue as far as the sector is concerned, and I have no interest in stampeding down a course that is so emotive, particularly at a time when, as everyone on the Committee knows, funding pressures on the sector are immense. I do not want to be adding to the problems of the sector in that respect in the short term. It is an issue that merits a broader, deeper debate than a few weeks or months, and since the publication of Hodgson’s report has allowed.

Q557 Chair: I suppose we should be grateful that you are taking your time as you consider that, if there is pressure to turn the Charity Commission into more of a selffunding organisation at the expense of the charitable sector that it is meant to serve. If the Cabinet Office was taking a robust view on that matter, in defence of charities, it is no less than I think this Committee would expect. Can you summarise which of Lord Hodgson’s recommendations you do plan to accept and the time scale for implementation?

Mr Hurd: I will take a minute, Chair, to set out the framework for this review, which I think has been well executed. I have made it clear from the start that there are two lenses through which I will view every recommendation and they are around two very simple questions: first, what does this do to make life easier for a charity; and, secondly, what does this do to help increase the public’s trust in the charitable sector? If there is not a good enough answer to either of those questions, I am not really interested in looking at it further, because those are the priorities.

Those are the two filters through which we looked at it. As the letter sets out, in what I hope is a helpful way, we have identified a traffic light system to look at things. In terms of the recommendations raised on the definition of "charity" and "public benefit", we side with Robin’s view on that-that on balance we should continue to rely on case law rather than seeking to make a statutory definition of "charity".

In relation to the remuneration of trustees, which is a very emotive issue in the sector, we have put up a red light-we are not going to go there. In terms of the rule, form and functions of the Charity Commission, we basically accept his recommendations. In terms of the issue of Charity Commission fee-charging, we have got an amber light, so more work needs to be done. In terms of the complex debate around registration and thresholds, that merits another amber light.

In terms of the whole transparency agenda, we accept his recommendations, as we do on the various other deregulatory proposals. In relation to social investments, we have given it a green/amber, and in terms of his recommendations in relation to fundraising, selfregulation and charity collections in public places, we give that a green light-we are not prepared to accept his recommendations.

Q558 Chair: Thank you. Do any of your accepted recommendations require legislation?

Mr Hurd: Off the top of the head, no. That is obviously quite important to us, because legislation takes time, and our instinct is to try and support recommendations that could be implemented reasonably quickly.

Q559 Chair: Fee charging would require primary legislation.

Mr Hurd: I believe so, which is why it is not something that we are going to stampede towards.

Q560 Alun Cairns: Minister, the Charity Finance Group say that it is difficult to assess the impact of the 2006 Act because of its failure to implement several priorities due to financial constraints. Would you accept that, and do you think the Act was overambitious?

Mr Hurd: The Act gave the Charity Commission a very difficult job in the sense that Parliament basically said, "We accept that the definition of ‘charity’ will continue to reside in common law, but we will place an obligation on the Charity Commission to help with the definition through an obligation on them to publish some guidance." Now, distilling several hundred years of case law into a useful, clear piece of guidance is a very challenging task. I happen to think that they made a decent fist of it.

I happen to think the process set up, whereby they are effectively challenged in law, is perhaps not ideal, or as quick, cheap and effective as perhaps Parliament had hoped, but it is not a bad system in itself. It is quite fashionable and easy to duff up the Charity Commission, but we probably should recognise that in this place we gave them a very difficult job to do.

Q561 Alun Cairns: Why were several parts of the Act not implemented?

Mr Hurd: In terms of the licensing, the whole issue around fundraising, the emotive issue around face-to-face chugging and all that, it is a case of prioritisation. There is also recognition that we needed to take into account the position and capacity of the Charity Commission to respond effectively to new regulation. Is new regulation absolute priority and is the Charity Commission set up to respond in an effective way to it? Those are two considerations that probably underlie why some aspects of that Act have been deferred.

Q562 Alun Cairns: Can I tie both answers together in terms of the obligation to publish guidance and their capacity in your second response? Do you think that the Charity Commission therefore is forced to refer to the tribunal instead of making decisions off their own back?

Mr Hurd: I do not think that anyone could accuse the Charity Commission of not taking decisions. Those decisions have, on some occasions, unleashed hell, but the backstop is the tribunal and a legal judgement. I do not think that that is a bad process; on some occasions it has maybe been a bit messy and a bit noisy, but I do not think it is necessarily in itself a bad process. The Charity Commission takes a view, that view is challenged and effectively a judgment is made in law, which sits in law and is the frame for the debate from thereon. That was what we saw in the case of the independent schools, where eventually the tribunal made a judgment that has settled the issue for the moment.

Q563 Alun Cairns: As a result of the lack of capacity in the Commission, does it therefore mean that more costs are put on to a charity that needs to go to the Commission? We have been debating the Plymouth Christian Brethren and the additional costs that will be forced on to them.

Mr Hurd: I am not sure I accept the premise about lack of capacity. The Government need to be mindful-need to be absolutely sure-that the Charity Commission is in a position to act in the most effective way, as in its regulatory function, in response to new regulation. The fact of the matter is, as this Committee will well know, that the budget for the Charity Commission has been reduced quite significantly. Therefore, what the Charity Commission has been able to do, and what it does now, is different from what it has done in the past. It is hunkering down on its core regulatory function.

We have to be mindful of its capacity. I am reassured by the leadership of the Charity Commission that they feel that the regulator is in good shape, and in a good position to do what it needs to do. Governments, and those people who set its budget, always need to be mindful of that.

Q564 Lindsay Roy: You have said that the threshold for compulsory registration is an amber light. Is that because of the tension between the two criteria you set out earlier: being easier to operate and trust?

Mr Hurd: The whole architecture of registration and thresholds now is a bit messy, probably not ideal and a product of evolution over many years. It is in large part an amber light because I need to be very clear about what I might call the net-net benefit of the package that Lord Hodgson has presented-and it is a package. I am also very clear, because we have done some pretty rigorous listening with the sector, that reaction to it has been very mixed, so it needs a bit more time for the arguments to be had and concluded about that.

Q565 Lindsay Roy: Is there a considerable concern about public confidence?

Mr Hurd: What Robin was proposing was something that starts from a deregulatory instinct, while allowing smaller charities the opt-in, because, as most of us know, lots of small charities attach a lot of importance to their registration with the Charity Commission-it is something that they feel they need. Robin’s package-and it is a package-is quite neat, but I have to balance that against a concern that it might leave large sections of the charitable sector under the radar, and the implications that that might have for public trust.

Q566 Lindsay Roy: You would still have an opt-in opportunity.

Mr Hurd: Yes, but that is why I say the Hodgson package has two or maybe three important parts. Raising the threshold is the bit that has caught everyone’s attention, but it also contains a recommendation that those charities below that threshold that want to register with the Charity Commission should still be allowed to do so, and the Charity Commission should be obliged to process that registration. It is, then, a raising of threshold and, if you like, an optin.

Q567 Lindsay Roy: Your feedback would be that the majority of charities in that category would want to opt in?

Mr Hurd: In conversations I have had in the past, not least with the Commission and those organisations that claim to represent smaller charities, they have said to me that they have not been in favour of raising the threshold. The music from the sector has been quite mixed; that is why it merits an amber light at this stage. It just needs a bit more time.

Q568 Chair: Returning to the question of whether the charities should make a contribution to the funding of their own regulator, for you, are the Government deciding that this is an issue of principle, or is it just a question of practicalities? Previously, the Government have always been minded in principle against asking the charitable sector to pay a levy or charges for the Charity Commission. Have you already crossed that boundary? Is this just a question of practicalities, or is this, for you, a big issue of principle?

Mr Hurd: The default position of the Government is that the Government will continue to cover the bulk of the Charity Commission’s costs.

Q569 Chair: The bulk of. At the moment it covers all the Charity Commission’s costs.

Mr Hurd: For the future that I can foresee, I expect the Government to continue to be the majority funder of the Charity Commission.

Q570 Chair: The Government are now the 100% funder of the Charity Commission.

Mr Hurd: Yes. We have not pushed Robin Hodgson in any sense on this; this is something that he has come back to us with. My position is that, as I stated before, this is an extremely difficult time to introduce the concept of additional charging to the charitable sector. That is my position. The Government have to be mindful, again-this comes back to the point Mr Cairns raised-about the capacity of the regulator.

The bit that interests me, where I think there is, in the short term, room for a discussion, is where charities are taking up a lot of the Commission’s time with registration applications that are very nonstandard. They carry with them a degree of complexity and soak up a lot of time, not least legal time. I am told, for example, that the druids’ application took three years of the Charity Commission’s time. There may be an argument in that context for what you might call differential charging-the right for the Charity Commission to recoup some of those costs.

That is a principle I am open to some discussion on, but my personal view is that politically it would be quite wrong for the Government to move away from the current situation in which, effectively, the taxpayer funds the regulator, to something that is significantly different from that. From the horizons I can see, I cannot see a very big shift.

Q571 Chair: We have just heard from the Charity Commission that they issue no invoices whatsoever and that they have no system for charging, invoicing and chasing up bad debts-all that. There would be additional cost involved in introducing a charging system, which is not currently necessary, because the money comes in a grant from the Exchequer.

Mr Hurd: Yes, Chairman, that information from them is relevant. If I could just finish my point, we have to look at the net-net on that. In terms of the principle, that warrants some discussion. If the Charity Commission’s resources are being used up in a big way by an organisation, there could be an argument about charging something to that organisation.

Q572 Chair: You do not look very comfortable with this.

Mr Hurd: I am not comfortable with the idea of adding to the cost burden of charities at this moment in time.

Q573 Charlie Elphicke: Minister, did I hear you correctly saying the druids took three years to have their application approved?

Mr Hurd: That is what I understand, yes.

Q574 Charlie Elphicke: Had you been the decision maker, do you think you would have granted them charitable status?

Mr Hurd: My personal view on it does not matter, not least because I have never seen the evidence.

Q575 Charlie Elphicke: Following that debate in Westminster Hall, are you quite concerned that people are putting the druids and this Plymouth Brethren together, and drawing conclusions that lead them to have a loss of confidence in the Charity Commission, as you recorded in your responding report?

Mr Hurd: It was a very emotive debate. I come back to the most important position: the Charity Commission is an independent regulator; it took a decision; and that decision has generated a very big debate. As things stand, the tribunal will make the final judgment on that. That is not a bad process. What my view is, as a Minister, is irrelevant.

Q576 Robert Halfon: Given the Westminster Hall debate-and you read out all the criticisms of MPs from all parties-does it not concern you that Members of Parliament from all parties have a very negative view of the Charity Commission and its role?

Mr Hurd: It is part of my job, as I did in that debate, sometimes to stand up for the Commission and say what I said at the start, which was I think that it has been given an incredibly difficult job by Parliament in this process. We can all have different views on individual decisions; what concerns me is not the individual decision, but whether the underlying process is robust and the right one. All I am concerned about is the integrity of the charitable system that underlies this.

Q577 Robert Halfon: Your role is, as you say, to be independent-not just a person who defends the Charity Commission willy-nilly-and to represent the views of Members of Parliament as well.

Mr Hurd: Yes.

Robert Halfon: Given that clearly, as you read out, the views of so many Members of Parliament from all kinds of political parties were so negative about the Charity Commission, do you believe that the Commission has a significant reputational problem that it needs to repair with Members of Parliament?

Mr Hurd: That debate served a useful purpose in terms of making crystal clear, if it was not clear before, to the Charity Commission the strength of feeling on this issue. It knew that already, because it has been inundated with letters, but the debate was extremely powerful in terms of crystallising the problem that it has in terms of that individual decision. I would say, Robert, that the fact is that none of us has seen the full evidence on which the Charity Commission took its decision. It is difficult for us all to reach final judgments on it if we have not seen the evidence, and none of us has.

Q578 Robert Halfon: A final question, and then I am off. Do you not think though, given the clear public and parliamentary upset about the decision that has been made regarding the Christian Brethren, and the inconsistencies highlighted by my Hon. Friend of the druids, that the Government need to look seriously at the role of public benefit and how it applies to religion, and possibly step in and legislate so that we do not have these kinds of situations arising again?

Mr Hurd: In relation to the Brethren, the bit that I regret most is the amount of money that they have apparently had to spend in terms of their process. I do not have a view on the individual application, because I have not seen the evidence-and even if I did, it would not matter. The substantial point is: is the process that we set up from the 2006 Act the right one? Is it sufficiently robust?

What I have said in my letter is that, on the whole balance of evidence, I tend to side, or have sided, with Robin Hodgson’s view that we are better off sticking to definition through case law built up over hundreds of years, rather than seeking to try and distil that into a piece of statutory guidance, which will inevitably be rigid. By continuing to rely on case law, and appeal to law, you have a more flexible process that allows for some evolution. The Committee may have a different view about that.

I have looked at the process. It can be frustrating-it is perhaps not ideal-but in relying on case law rather than Parliament revisiting the whole issue of whether we can distil hundreds of years of case law into a statutory definition that will work, on balance we are better off with the current situation.

Robert Halfon: If-

Chair: Very briefly, Mr Halfon, because you have asked a lot of questions today.

Q579 Robert Halfon: If you see injustice being done, do you not think it is the role of the Government to correct that injustice, rather than going with the status quo and, dare I say it, the Sir Humphrey option?

Mr Hurd: Yes, but your premise is that an injustice has been done. I do not have a view that an injustice is being done. I am waiting for a tribunal to review the evidence-evidence that I have not seen, because it is not my business to see it, and nor have you seen. You have taken a view; I have not taken a view. The view that matters is the view of the tribunal, if it gets to that point.

Chair: Minister, you said that you may be concerned about whether this is the best process. I can assure you that we are going to be looking at this process and we will be making recommendations about process, which I hope will be useful.

Q580 Greg Mulholland: Following on from Mr Halfon’s question, let me quote a couple of passages from your letter to Lord Hodgson, Nick. You say, first of all, "We look to the tribunals and courts to quickly provide legal clarity where questions arise". Let’s face it, that does not happen quickly, and realistically it probably cannot happen quickly. Secondly, in terms of the guidance, the letter says, "It is little surprise that the Charity Commission’s statutory guidance on public benefit, which is itself an attempt to distil the principles of public benefit derived from case law into several dozen pages of guidance, has proved a difficult challenge".

Is the reality that your decision not to pursue even a part-definition is not only a bit of a cop-out, but is putting the Charity Commission in this invidious position of having to somehow distil the case law into guidance, which has caused a problem with the independent schools, and is now a problem with the Preston Down Trust, and which is leading to these unfair, quite invidious and sometimes hysterical accusations that it is somehow pursuing some agenda? It is trying to do this, but surely the better thing would be to have at least part-definition so that the Charity Commission would not be put in such a position.

Mr Hurd: I have said from the start that I think the Charity Commission was put in a difficult position by Parliament. I have said from the start that I think it has made a decent fist of the guidance. Of course it has been challenged, and a process has been set up to resolve those challenges. Of course, Greg, I would like it to be a quicker process. I would like it to be a cheaper process for those involved, and any ideas that the Committee has to improve that process I would be extremely interested to hear.

There is a reason why Parliament effectively passed this ball, because we have to recognise that condensing 100 years of case law into a statutory definition that works and stands the test of time is a very hard thing to do. That is the conclusion that Lord Hodgson has reached, and it is a conclusion I share. Alongside that, there is some merit in having a relatively flexible process that is allowed to evolve, rather than relying on a rigid definition that may have to be revisited. I have some misgivings about the potential politicisation of this process, whereas I think definition by law is a better way to go. Is any of this ideal, Greg? No, it is not, but it is a case of choosing the best option.

On part-definitions, I note that they have introduced them in Scotland. We will watch the progress there carefully. I am not entirely convinced that a part-definition will help to bring the clarity that the people are looking for. I will keep an open mind on that and we will review how things go in Scotland, but I have not been persuaded up to this point that a part-definition is going to add a huge amount of value.

Q581 Greg Mulholland: A very quick supplementary: do you not think that leaving this role to the Charity Commission of having to distil this guidance has precisely led to an unfair politicisation of this whole debate, and it being attacked of having a certain agenda-of being antireligion, antiChristian or left wing-or bias when it is trying to do what Parliament has set out that it should do?

Mr Hurd: There have been two areas of controversy. The first is independent schools, which we know is politically very charged-people come to that debate with all kinds of baggage. That is a given. It is a hot potato and, in hindsight, we will all have different views on how wise the approach of the Charity Commission was to that issue. In relation to the Brethren, and the concerns about wider implications for religious organisations, I have said in the debate-I continue to believe it-that I take the Charity Commission at face value in saying that all it is concerned about in the Plymouth Brethren case is the Plymouth Brethren case. A fact that did not come out of the debate was that the Charity Commission continues to register hundreds of religious organisations each year. We probably have to accept the fact that the Plymouth Brethren case is about the Plymouth Brethren.

Q582 Greg Mulholland: The process is key here. In your letter you rightly say, "We also think it is right that all charities should be able to demonstrate their public benefit in return for charitable status". That is key and is important in this case. The first point there is that, since the original ruling, the Plymouth Brethren have got out. It is not in their nature to get involved in PR and telling people what they are doing, but they have had to do that, and they have done that. The problem then is the process by which they can challenge the original decision only by going through the tribunal.

There is a very interesting quote from your speech in the debate, when you said, "Unless the Charity Commission takes a different view on the evidence presented to it by the Brethren, it is for the tribunal to decide". You suggested in that debate that the Charity Commission could change its mind on the basis of subsequent evidence presented by the Brethren, and the Brethren themselves have suggested the possibility of going to the Attorney-General for a clarification that the Commission could then accept.

That being the case, do you accept not only the frustrations of the Plymouth Brethren at having to go through this costly process, but also the point about the cost to the taxpayer? Is there not a better way of allowing the Commission to say, "Okay, we have had more evidence, we have now looked at it again and changed our minds," or going to the Attorney-General? Could that process be improved so that we do not have this costly and lengthy process?

Mr Hurd: I certainly regret the length and the cost. Coming back to your first point: should the Plymouth Brethren and other charities demonstrate public benefit? Yes. Is it in their interest to demonstrate public benefit? I would argue yes as well. Have the Plymouth Brethren been stirred up to be a bit more expressive and vocal in terms of communicating their public benefit? Yes. Does the Charity Commission have an opportunity to stand down the case? I understand that it does, but it has to take that decision itself, and there will not be any political pressure on it to do so. Can the Attorney-General intervene? Yes, he can, but that is up to him.

Again, if there is a choice between this process and Parliament trying to seek a definition that puts hundreds of years of case law in some neat, punchy, clear way, that would be very hard. There is a very good reason why Parliament passed this ball in the first place. We have been round this track before. If there is a way to make the Commission’s process and the tribunal process crisper, quicker and cheaper, I am all ears, but, in terms of those choices, I come down on the side of looking for definition in case law, rather than putting pressure on Parliament to try to condense hundreds of years into a new statutory position.

Q583 Chair: Minister, you are aware of what they are doing in Australia, which is precisely the opposite of what we have done in our Act. They are producing a taxonomy of types of charity in order for Parliament to much more closely control what is a charity. Is this something that has crossed your radar and that you have considered?

Mr Hurd: Coincidentally, I have a meeting with the relevant Australian Minister this afternoon, and that is one of the things we will be discussing.

Q584 Chair: We had a meeting with them. They are struck by our experiences and want to avoid some of the issues that we have dealt with. Can I ask you to amplify something else that you said, which I think is rather significant? You do not want the process of deciding what a charity is to be politicised. Can you tell us what you mean by that?

Mr Hurd: I think there is a risk. For example, some of the proposals around what a part-definition might require would require perhaps secondary legislation taken through by Ministers. That sort of process does lend itself to some degree of politicisation, whereas the current system, whereby a judgment on the Plymouth Brethren is taken independently in law, is instinctively, for me, a better process than some definition debated through Parliament.

Q585 Chair: Do you think that the 2006 Act has given rise to these very vexed disputes? If so, what is wrong with the 2006 Act that has given rise to them? I do not think that anybody particularly thought there was anything wrong with the law before.

Mr Hurd: No. What the Act changed, in terms of what was required of the Charity Commission, was a requirement to publish some guidance. As you remember, the thrust of the Act was to raise the profile of public benefit and give that greater weight.

Q586 Chair: That does constitute a change in the legal environment.

Mr Hurd: It required a change in terms of what was required of the Charity Commission, which was to publish guidance, and the law also required it to do more in terms of promoting the public benefit requirement. It took a view, in relation to independent schools, that it was going to be proactive in terms of investigating the public benefit, as demonstrated by schools. That was very politically charged and that created a great deal of noise. That eventually got resolved through an upper tribunal.

In relation to the Plymouth Brethren, I do not think it has gone into this process with a view to causing a great row about the status of religious charities. I genuinely think-I may be a bit naive about this, but I do not think so-it was presented with an individual case, about which it has misgivings, and therefore this process was reached.

Q587 Chair: May I just be absolutely clear? You are of the opinion, and it is implicit in the Act, that the Charity Commission carries out a quasijudicial function when it decides who shall and who shall not be a charity, and that that should be beyond political influence.

Mr Hurd: It is required to publish guidance, and it ultimately has the decision on who to register as a charity.

Q588 Chair: That is a quasijudicial decision, is it not?

Mr Hurd: I do not know if I would describe it as that, but that is its power.

Q589 Chair: It is trying to interpret the law, is it not?

Mr Hurd: It has the power to decide who qualifies for registration as a charitable organisation, but it is subject to challenge.

Q590 Chair: It is ultimately a legal question and not a question that should be subjected to political opinions-that is your view.

Mr Hurd: I think it would be very hard for this place to reach an effective statutory definition of charity and public benefit.

Q591 Chair: That is a different question. Can I ask you to reflect on these questions and write to us, perhaps after you have taken legal advice? This is a very important question. To what extent should the Charity Commission be responsive to public opinion and, indeed, opinion in Parliament; and to what extent is it established in order to deliver decisions that are based soundly on law and insulated from subjective political judgment? That is the question, is it not?

Mr Hurd: Yes, it is an independent regulator and therefore not subject to political interference, and its judgments or decisions are there to be challenged in law through a legal process.

Q592 Chair: If the Charity Commission is deemed to be making the wrong decisions, and these are upheld by tribunals, it is the law that needs to be amended and not the Charity Commission that should somehow be held accountable, because it is accountable to the law in these matters.

Mr Hurd: It is ultimately a legal judgment. Where there is a difference of opinion and where there is a challenge, it is decided by the tribunal.

Q593 Chair: When you have perhaps reflected a little more on this, you could write us a more definitive response to these questions, because I think it would be very useful for our inquiry.

Mr Hurd: Of course.

Q594 Greg Mulholland: Given the level of interest in the Preston Down Trust case, I have a quick final question. I absolutely agree with the view you espoused in the letter, which is that charities should be able to demonstrate their public benefit. In 2009, the Charity Commission felt that the Plymouth Brethren had not demonstrated that public benefit. In 2012, if the public benefit test was passed and the Charity Commission accepted that, from the evidence that has been presented since then, the issue need not go to tribunal. Is that correct?

Mr Hurd: I understand that there is a window of opportunity for the Charity Commission to review any new evidence and take a view on that. There is no political pressure in that process at all.

Q595 Greg Mulholland: No, you have established that.

Mr Hurd: That is my understanding.

Q596 Charlie Elphicke: Do you find it invidious-even frustrating-that you effectively have responsibility without power?

Mr Hurd: Responsibility for?

Charlie Elphicke: For the Charity Commission. But no power over what it does.

Mr Hurd: I have responsibility for reviewing the legal framework under which charities operate, and the Charity Commission is the independent regulator of the sector. It is independent of me.

Q597 Charlie Elphicke: You do a strong job of representing the Charity Commission to Parliament and the people. How do you represent the concerns of people and Parliament to the Charity Commission?

Mr Hurd: You are trying to present me as an advocate of the Charity Commission and its decision. What I will advocate and stand up for, because I think someone has to, is its independence. We set it up in a specific way, and we can agree or disagree with its individual decisions, but this is what we asked it to do, and it is an independent regulator-sometimes we have to respect that. As we laboured in a previous day, ultimately its decisions are subject to challenge in law, and that challenge is resolved in law.

Obviously it is there as an independent regulator in a way to protect the integrity of the charitable system, and to protect the interests of donors and the taxpayer. Therefore, it has to be responsive to the public in that respect; that is part of the challenge of that role. I do not think it does a bad job in that respect.

Q598 Charlie Elphicke: If Mr Shawcross came to you and said, "As a new Chairman, I want to rework the Commission and rework the board, and have some new appointments," would you support him in that process? What would your role be in that process?

Mr Hurd: He is an independent Chairman. We obviously lead the process of appointing him. We think he is an excellent appointment and we look to support him in any way we can. The Commission has a fantastically difficult job to do, and it is incumbent on us at the Cabinet Office to help in any way we can. We wish him every success.

Q599 Charlie Elphicke: There is a lot of public concern about chugging-opinion polls are off the chart in terms of the level of worry about it. Mr Shawcross said it was for Parliament and the Government to take action. Do you think it is time for action?

Mr Hurd: I think three things. I think, ultimately, it has to come into the licensing regime, but anything that requires primary legislation is going to take a bit of time. My instinct is always to try to see whether self-regulation works, preferably with the hint of a big stick behind it. Having looked at what is going on in terms of what are called voluntary site agreements, which are agreements between the regulator and the local authority-there are around 50 in place at the moment-the evidence seems to be that they are working quite well in terms of reducing public concern about chugging, which is very real. My instinct is to encourage more of that before hitting it with a big stick. I am also wary of imposing too many more burdens on local authorities at this point in time.

The final consideration is that while you and I may not like chugging-you and I may cross the road-and while it may annoy lots of our constituents, chugging raises something like £85 million a year for charities. There are lots of people out there who respond positively to that conversation on the street-unfathomable as that might be to you and me-and that £85 million is extremely valuable to the sector at the moment.

We will be moving to bring face-to-face chugging into the licensing regime. My current instinct is to give as much air and space to self-regulation and testing the effects of the voluntary site agreements, which now contain mystery shopper arrangements, the ability to raise fines and other provisions. My instinct is to give that as much space as possible before the big stick.

Q600 Charlie Elphicke: Finally, my concern is that the poll of the Charity Commission shows that over two thirds of people think that there ought to be action. In July, when The Guardian said, "Should there be more restrictions on chugging?", 93% said yes. Some of the highest recommended comments were, "I've seen these people step directly in front of people, follow people down the street, yell at people across the street, and a few times even lightly grab people’s shoulders." Another highly recommended comment said, "Arm the unemployed with AK47s and allow them to shoot chuggers down like dogs". These are Guardianistas; this is not the Daily Mail-not the red meat eaters. There is substantial public concern and a desire for action to be taken. Will you look at taking action?

Mr Hurd: Charlie, your premise is that no action is being taken, but it is being taken through things called voluntary site agreements, which are regulating chugging in agreement with local authorities. The evidence is that in the 50-odd areas where it is happening, it is working quite well. That has been stiffened by the ability to raise fines, so something is happening and it appears to be working, which is why I want to encourage more of that, rather than relying on a legislative process that will take a long period of time and impose some burdens on local authorities, which may not relish that at this moment of time.

Q601 Charlie Elphicke: Are the chuggers in the last-chance saloon? Is this the last chance for them to clean up their act-or else?

Mr Hurd: I want to see selfregulation work. I want to see more voluntary site agreements, because I want chugging to come into licensing regime and I want it to be regulated effectively. On the evidence I have seen, the voluntary site agreements seem to be a very welcome step in the right direction. Where we will end up ultimately will be chugging in some comprehensive licensing regime, but I want to see selfregulation given a bit more space to work, because the evidence I have seen in the areas where voluntary site agreements are in place is that they do work.

Q602 Lindsay Roy: In the interim, what advice would you give to citizens who feel threatened, harassed and intimidated by people on the street who are chugging?

Mr Hurd: They could always do what I do: cross the road. You can avoid a chugger.

Q603 Chair: Where can they complain?

Mr Hurd: There is a regulatory body for chuggers. That is a legitimate point of complaint. They can also complain to their local authority.

Q604 Chair: Or to Cabinet Office.

Mr Hurd: If they ultimately want to complain to me, of course that is their right.

Q605 Lindsay Roy: Police.

Mr Hurd: If there is a case of genuine harassment, of course, yes. We all ultimately have the opportunity to avoid them.

Q606 Chair: I will simply ask, if I may, about whether you think the rules on political campaigning by charities are operating effectively.

Mr Hurd: I think they are about right, in the sense it is quite clear that charities can get involved in campaigning only when that clearly serves their charitable purpose. I would also be very reluctant, Chairman, to go down a path that sends any message to charities that somehow their campaigning role, their advocacy role and their independence from the state are being challenged or undermined in any way. Their ability to speak truth to power is part of their value to society, and that sometimes involves saying very uncomfortable things to us. I would be very wary about undermining that power they have.

The law is extremely clear: political campaigning can happen only when it clearly serves a charitable purpose. We have had millions of examples of charities that have campaigned around things like public smoking, when the cancer charities were very much in the lead on that debate. That should be welcomed and encouraged.

Chair: I think we have nearly got you in on time-a few minutes over, but thank you very much.

Mr Hurd: I will write to you as requested.

Chair: I am most grateful for that.


[1] Note from witness: Since 1 April 2012, the Commission has received a total of seven requests from charities to pay their trustees. Of these, five were granted and two are still pending.

[2] Note from witness: £4 million represents the annual running cost at the time the calculation was made. There would be an additional set-up cost.

[3] Notes from witness:

[3] The words cited here are not those of Mr Shawcross but of various different sources quoted in a newspaper article: http://www.telegraph.co.uk/news/politics/9711825/Charities-warned-to-stop-interfering-in-politics-by-new-watchdog-chief.html .

[4] I.e. the Sock Puppets report as presented by Mr Flynn.

[5] Note from witness: Please see supplementary written evidence CH 62 and CH63 : http://www.parliament.uk/documents/commons-committees/public-administration/Combinedcharitiesev19Dec.pdf

[5]

[6] Note from witness:The Charity Commission’s decision letter was available on the committee’s website at the time of the hearing: http://www.parliament.uk/documents/commons-committees/public-administration/LetterfromKennethDibble.pdf

[6]

Prepared 14th January 2013