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Lord Swinfen moved Amendment No. 18:

Page 7, line 28, at end insert—


"6. In performing its regulatory functions the Commission must have regard to the reasonable interests of trustees, charity staff, volunteers, donors, beneficiaries and other stakeholders in charities."

The noble Lord said: The amendment would require the Charity Commission to have regard to the interests of the people involved in charities as well as a charity's material assets. Those people include especially charity beneficiaries, who are often singularly unable to defend their own interests.

The commission has sometimes acted in a cavalier fashion towards a charity's people. Such behaviour has occurred and has been the subject both of Independent Complaints Reviewer findings and of admission, in retrospect, by the commission itself. The effects of such regulatory behaviour in certain cases have been deeply damaging to charity—to charities, trustees, volunteers and, most importantly, their beneficiaries.

In moving this amendment, designed to have particular regard to the interests of people involved in charities, I am aware that my earlier reference to some effects of Charity Commission regulatory conduct in the past may have given offence in certain quarters. I believe, however, that the absence of any mention of beneficiaries in the Charities Act 1993—and of their needs and interests—may have been a contributory cause of the failure of the commission as regulator to consider the possible effects of its actions and orders upon beneficiaries, who are among the most vulnerable and poorly protected members of society. Perhaps I should have looked at the matter when I took part in the debates on the Bill when it went through the House. Sadly, it stands to reason that if charity funds are summarily frozen and trustees and volunteers prevented from carrying on their humanitarian work, beneficiaries who may be partly or wholly reliant on such help, support and protection for their subsistence or safety may be seriously disadvantaged and damaged, at the very least. Think what would happen today if Oxfam's funds were all suddenly frozen and it could not help those in Pakistan, Kashmir and north-west India.

A careful reading of the Charities Act 1993 and the sections relating to the regulatory powers of the commissioners, and the circumstances under which those powers can be exercised will demonstrate beyond question that it is the material assets of a charity—its property and funds—that are to govern the exercise of regulatory powers. Important though it must be to protect such material assets, current charity law does not appear to place a sufficient emphasis or duty on the commission to pay particular regard to the reasonable interests of charity people.
 
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Surely in this century this Charities Bill should strive to redress the balance between the proper and necessary protection of a charity's property and the need to protect the interests and needs of the people who deliver or depend on such services. When we last debated the issue in Committee on 28 June, the Minister said that the amendment was not necessary. At col. 193 she said that that was because the Bill required the Commission to be "accountable and transparent" and that it "takes customer service seriously. She continued:

Even when the commission takes customer service seriously, and has established a feedback group, it is still possible that it may not have at the forefront of its mind a prime requirement to protect a charity's beneficiaries when exercising its regulatory powers.

The amendment would put on the face of the Bill a specific duty on the commission when exercising its regulatory powers to take full account of the reasonable needs and interests of charity people before it acts. After 400 years of charity law and regulation, with its heavy emphasis on the protection of the material assets of charities, would it not be right, fair, helpful and encouraging to all involved in the sector to see a specific duty placed on the commission to have regard to the interests of charity people? Surely the Government and the House should be prepared to accept a helpful and useful amendment. I beg to move.

Lord Bassam of Brighton: My Lords, as the noble Lord, Lord Swinfen, said, we discussed this at Second Reading and in Committee on 28 June. The noble Lord is concerned about the issue. In Committee he said:

He also said:

I take issue with the assertion that there is a gap either now or when the Bill is passed. Section 1(4) of the Charities Act 1993 states:

I repeat the phrase,

Whose needs? It is the beneficiaries' needs. The commission's new objectives in the Bill also have the interests of beneficiaries.

Lord Swinfen: My Lords, did the Minister say "Section one four"?

Lord Bassam of Brighton: My Lords, I did indeed say Section 1(4).

Lord Swinfen: My Lords, Section one, four—Section 14—refers to
 
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according to my copy of the Act.

Lord Bassam of Brighton: My Lords, I think that the noble Lord is right about Section 14. I shall check that point.

The commission's new objectives in the Bill also have the interests of beneficiaries running through them. Let us take, for example, the charitable resources objective, inserted by Clause 7 with new Section 1B. That objective is that the commission must promote the effective use of charitable resources. We can only judge how effective a charity is in using its resources with reference to whether the needs of the beneficiaries are being met effectively. The commission cannot meet this objective without considering the needs of beneficiaries.

The noble Lord's amendment goes further than the interests of beneficiaries, to include the interests of trustees, charity staff, volunteers, donors and other stakeholders in charities. Again the objectives and duties in the Bill clearly encompass the commission giving consideration to such other interested parties. One example is that the commission's first objective will be to increase public trust and confidence in charities.

Another example is that the commission is proactively seeking the views of those groups through the Customer Network, as my noble friend Lady Scotland mentioned in Committee. This is a formal channel through which those affected by the commission can have their say, and which will influence directly the commission's work.

A final example is the commission's accountability objective in the Bill. The commission must enhance the accountability of charities to donors, beneficiaries and the general public. The commission, in performing its own function, so far as is reasonably practicable, must act in a way which is compatible with its objectives and which it considers most appropriate for the purpose of meeting those objectives. In terms of the specific interests of donors and volunteers, the Bill gives the commission the duty to,

I hope that I have demonstrated that we can see that the intention behind the amendment is good, but there are many ways in which the Bill meets the needs identified by the noble Lord, Lord Swinfen. It is for those reasons that it is unnecessary for us to accept the amendment.

The noble Lord, Lord Swinfen, was right in his earlier assertion about Section 14.

Lord Swinfen: My Lords, I did not hear which section the noble Lord referred to. Will he repeat it?

Lord Bassam of Brighton: My Lords, Section 14.


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