Examination of Witnesses (Questions 100
- 119)
WEDNESDAY 9 JUNE 2004
MR STUART
ETHERINGTON, MR
STEPHEN BUBB,
MS MARY
MARSH AND
DR JOHN
LOW
Q100 Bob Russell: So there is recognition
within the charitable sector that regulation is needed. You are
very averse to the Home Secretary having those reserve powers,
so you would wish that to be removed.
Ms Marsh: No.
Q101 Bob Russell: You are happy for
it to be there, are you?
Ms Marsh: Absolutely.
Mr Etherington: We need to be
clear about how the Home Secretary will assess whether it has
failed.
Q102 Bob Russell: So you are happy
for the Home Secretary to have that power although you never wish
him to use it, so that it will concentrate the mind of the charitable
sector on the self-regulation. Will you be submitting, if you
have not already done so, what you think the Home Secretary's
power should be to help you?
Mr Etherington: That is a suggestion
that we will take away and we will come back to you on it.
Q103 Mr Foulkes: I wonder if you
could also come back on another suggestion. You mentioned the
two cases in Scotland, Moonbeam and Breast Cancer Research. We
assume that everyone going into this area is nice, kind and well-meaning,
but crooks can go in and take advantage of people's generosity,
particularly for the kind of causes that you represent. You seemed
to imply the only way to deal with it is through criminal law.
Can you tell us of any other suggestions as to how that could
be dealt with? Have you had similar problems south of the border?
Mr Etherington: I am not aware
of problems south of the border. Yes, there are good practice
guidelines that probably have already been issued in relation
to third party fundraising. There is a whole self-regulatory piece
that can be done there. These points could be well made to the
fundraising profession when they give evidence.
Q104 Lord Phillips of Sudbury: Although
deeply in favour of self-regulation, it seems to me that everybody
on the panel this morning comes from charities who will make very
sure that everything is done properly, but there is a tiny number
of wayward organisations and I am fearful that with no regulation
at all, because they do not have to comply with your self-regulatory
criteria and so on, you could get a series of high level public
abuses which could damage the whole sector because all you have
got to do now is pay a few people and you could pay them very
excessive amounts for doing door-to-door collections. They never
tell you on the door what proportion they are keeping, they will
not tell you; it is up to the person at the door to ask if they
are being paid for it and what they are getting. I put it to the
panel that this is opening the future to real abuse that could
damage all of you.
Dr Low: Honestly, the arrangements
that are defined within the Bill around collections will strengthen
the regulation. Licences are required and there will be clear
redress.
Q105 Lord Phillips of Sudbury: They
are not required, are they? For the local short-term collections,
no licence or permit is required.
Dr Low: For smaller local charities,
sure. It depends how small you want to go. If you look at a small
village fete or a school fete making a collection at that event,
then do we want to have a licensing regime—
Q106 Lord Phillips of Sudbury: I
am talking about door to door. At the moment, they can make collections.
Dr Low: They can.
Q107 Lord Phillips of Sudbury: Door
to door and street collections are now not regulated at all.
Dr Low: That is not my understanding.
Q108 Lord Phillips of Sudbury: It
is in our brief, local short-term collections.
Dr Low: Local short term?
Q109 Lord Phillips of Sudbury: Yes.
Dr Low: That is correct and that
seems proportionate to the risk and the amount of exposure that
is involved. I am not concerned about the short-term collections,
that is not the major concern, but some of the other fundraising
techniques do need to have very clear, well-developed and appropriate
regulatory structures and we believe that the sector, and not
just the fundraisers but also the trustees and the management
of the charities, can produce a framework that is capable of providing
the structures that will build confidence in the public in how
the money is being used and how it is being raised.
Q110 Chairman: Why should short-term
collections be exempt from the regulatory framework because, interestingly,
earlier in our discussions, you seemed to be arguing collectively
for rather less emphasis on regulation but, in this regard, you
seem to be arguing—and indeed it has come from the sector
as Mary quite rightly was saying earlier—more regulation?
Why should there not be an exemption for short-term collection
because, if you are uncertain about the potential for abuse contaminating
your ability generally to raise funds and support and enhance
public goodwill, why should there not be a problem with a short-term
collection? Is that abuse not likely to arise there as it is anywhere
else?
Ms Marsh: It is this proportionality
of the scale of the risk of it.
Q111 Chairman: My understanding of
that answer—and we had the Home Office Minister answering
a written question in the House of Commons just recently following
extensive consultation—is that effectively there is no regulation.
Mr Etherington: There is a requirement
to notify.
Q112 Chairman: That is right, there
is a requirement to notify. Presumably it is notified and somebody
makes a note of it in the local authority.
Mr Etherington: I think the point
Andrew makes, if I can just pick up on it, is that there is an
issue about larger charities will self-regulate this well; smaller
organisations locally may have more trouble. There may well be
a capacity issue here of actually enabling people to understand
. . . I do not think that deliberate abuse is common. I think
these cases are exceptional but are damaging when they occur because
the sector depends totally on public trust and confidence in this
area and I think that maybe developing good practice and assisting
smaller organisations in understanding what is good practice might
be a useful way forward. We maybe need to think about how we create
some of that capacity. I am not convinced that a regulatory environment
will necessarily do it. If one looks at how the regulatory environment
is currently implemented in a range of areas in local areas, it
has proved inadequate and it is getting more sophisticated.
Q113 Lord Campbell-Savours: Should
a certificate of fitness be mandatory?
Ms Marsh: In relation to . . .
?
Q114 Lord Campbell-Savours: Collectors?
Ms Marsh: I think it is getting
to understand the scale. I am concerned about the very, very small
charities entirely run by volunteers and the impact on them because
it is yet another of the many, many issues around the diversity,
but if there is any materiality to the fundraising and anybody
who wants to do it, then clearly they must have a certificate
of fitness.
Q115 Lord Campbell-Savours: Should
it be mandatory?
Ms Marsh: I am not quite sure
whether there should be a threshold.
Q116 Lord Campbell-Savours: In the
1992 Act, it talks about enabling a person providing . . . Whereas,
in the draft, it talks about where an application has been made
under section 62 for a certificate of fitness. Presumably, it
is not mandatory at the moment.
Ms Marsh: I do not know in relation
to smaller charities. I will have to look into that and look at
the transfer across between the two.
Chairman: We will follow that up with
our advisers. Can we move on to the other area that is very, very
important for many charitable organisations which is their ability
to trade and I know there are some concerns about the stance that
the Government have taken.
Q117 Mr Foulkes: All of you have
said that you want the provision on trading to be revisited. It
was recommended by the strategy unit, I think in Scotland the
McFadden Commission recommended it as well. I do not understand
why it is not included in the Bill. Can you give the arguments
in favour of trading, so that if we want to recommend that it
should be reinstated, we can do so with good arguments.
Mr Bubb: We were very surprised
that this was the one recommendation that, at the last minute,
was dropped and we understand that it was in the last 48 hours,
we suspect because of representations from the small traders around
the unfair advantage they felt charities shops had. We do not
think there are good reasons for not reinstating this recommendation.
In fact, we think there are very strong arguments that the Bill
should be now changed to allow those charities that choose to
do so to undertake all their trading within the charity and that
the safeguards set out in terms of proposed trustee duties in
the original report should be there. Eight-four per cent of all
respondents on this issue said that they wanted this change. Across
my membership, this is applied to large charities and small and
medium-sized charities but it is of particular issue for the small
and medium-sized charities. It is a real regulatory burden on
them. One example I give you which I strongly recommend is that
of one of my members who runs the National Coalmining Museum in
Wakefield. He has written to the Committee and gives very detailed
evidence about the costs.[1]
To make that museum viable, he runs conferences and a shop. Under
the current system, he has to set up a separate trading company
to run the shop and the conference facilities. The staff are the
same but their activities have to be apportioned between the two
companies. He gives a brilliant example in terms of the ordering
that he orders in, on average, 20 loaves of bread a day but that
he has to have two separate order books, several invoices: 12
loaves for the conference facility, eight loaves for the café
and then a record kept if there is a sandwich exchanged between
the conference facility and the café. He says that that
costs them, in terms of the staff time, about £30,000.
Q118 Chairman: You keep saying "he",
but I think it is a lady called Margaret Faull.
Mr Bubb: Yes, it is.
Q119 Chairman: I do not want you
to get in trouble with one of your members.
Mr Bubb: For those charities that
are actually trading, income generation to keep the organisation
going, it would make a big difference. Some of the larger charities
actually choose on the grounds of transparency, risk and asset
division to run a separate trading company and would still be
able to do this, but for those where it imposes a significant
burden, actually there is not that much of a difference in terms
of the tax or the level playing field issue because they should
be able to do so.
1 See Ev 319 and Ev 550 DCH 6 and DCH 207. Back
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