House of Lords
Wednesday, 10 June 2015.
3 pm
Prayers—read by the Lord Bishop of Derby.
Oaths and Affirmations
3.05 pm
Lord Young of Graffham took the oath, and signed an undertaking to abide by the Code of Conduct.
Food Standards Agency
Question
3.07 pm
To ask Her Majesty’s Government what plans they have to allow the Food Standards Agency to obtain full cost recovery in respect of meat inspections.
Baroness Chisholm of Owlpen (Con): My Lords, after two previous unsuccessful projects to achieve full cost recovery in 2009 and 2012, the FSA is seeking solutions by working more closely with the industry to achieve better outcomes. At present the Food Standards Agency has no set timetable to move to full cost recovery, but the Food Standards Agency will be reviewing this during the Parliament.
Lord Rooker (Lab): Does the Minister accept that the FSA has reduced its costs to the meat industry by 40% in the last five years? The National Audit Office has given a certificate to that effect—that the charges are fair. That being so, why do we continue to allow what is, in effect, the inefficient part of this £6 billion industry to claim up to 95% discounts, costing the public £25 million? Over the years, Ministers—Labour, SNP and coalition—were, to my knowledge, intensively lobbied not to allow the FSA to go for full cost recovery. Will this Government now stand up for the public?
Baroness Chisholm of Owlpen: My Lords, the noble Lord is of course an absolute expert on this subject. He was FSA chairman for four years, I think, if not even more, so he is certainly a terrific expert. The steering group on meat charging, an industry group, was established in 2013 as a mechanism to take forward reform on areas such as the discounts on meat inspection charges. It has an independent chair and is supported and facilitated by FSA staff. It has developed proposals which are currently subject to consultation, which started on 9 March this year and will close in two days’ time. The FSA intends to use the steering group to lead on a review of all areas, including full cost recovery.
Lord Cameron of Dillington (CB): My Lords, have the Government done an impact assessment on the possible burden on farmers if these FSA charges are introduced, either in the short term in relation to the extra costs being passed on to what are very marginal businesses or in the long term, when some medium-sized abattoirs which are hugely important locally, are closed as a result of these possible charges?
Baroness Chisholm of Owlpen: I thank the noble Lord for his question. This is a very important subject. The FSA does not charge farmers unless they are also the operators of approved premises that slaughter or cut meat; for example, if a farmer also owned and operated a slaughterhouse. As far as smaller abattoirs are concerned, discount proposals which have been looked at by the steering group would allow smaller abattoirs to benefit consistently from the highest levels of discount.
Baroness Walmsley (LD): My Lords, last week the FSA announced its five-year strategy and at the same time the Chancellor announced millions of pounds-worth of departmental cuts. Can the Minister confirm that the Government are not looking for further cuts from this important arm of government, which would affect the protection of the nation’s health? Would that not be very short-sighted, and in the long term move the costs from Defra straight to the Department of Health?
Baroness Chisholm of Owlpen: I will have to get back to the noble Baroness with a full answer on that subject, but this is all part of the steering group consultation which, as we know, closes in two days’ time. The group has been reviewing all these items during its consultation, and we need to wait to hear what it says before we go further.
Lord Cunningham of Felling (Lab): My Lords, since local government operates full cost recovery in respect of planning, for example, what is so special about abattoirs and meat-cutting plants? If the Government’s intention is to subsidise the less efficient aspects of the meat industry, why do they not do that openly and transparently and admit that it is a subsidy, rather than disguising it in the costs of the Food Standards Agency?
Baroness Chisholm of Owlpen: My Lords, the official controls carried out by the Food Standards Agency are a requirement under European legislation. The regulation that covers charging is currently subject to review. Final decisions in Europe are not expected until late 2015 at the earliest.
The Countess of Mar (CB): My Lords, does the noble Baroness agree that while it might be reasonable to charge full costs to the multi-million pound large and medium-sized abattoirs, we need to protect the smaller abattoirs, particularly in rural areas, and those that serve artisan producers, who have specialists?
I was once a goat keeper and we took our goats to a small abattoir. When that went, we could no longer take them to be slaughtered. Small abattoirs provide a valuable service and need to be helped.
Baroness Chisholm of Owlpen: The noble Countess is indeed right. In fact, I had a few sheep and used to take them to a private abattoir. This is exactly what the discount proposals will allow for. They will allow the smaller abattoirs consistently to benefit from the highest levels of discount.
Lord Hunt of Kings Heath (Lab): My Lords, the noble Baroness is speaking for the Department of Health because ultimately it oversees the Food Standards Agency. Can we come back to the question asked by the noble Baroness, Lady Walmsley? Ultimately, this is a question of public confidence in the food chain. Why have the Government cut, in-year, £200 million of the public health budget given to local authorities? Will that not impact on public education programmes on food and obesity? What is the Minister going to do about that?
Baroness Chisholm of Owlpen: I thank the noble Lord for his question—I think. I will get back to him with a full written reply.
Lord Foulkes of Cumnock (Lab): My Lords, will the Minister confirm that these cuts are those that were agreed by the coalition?
Baroness Chisholm of Owlpen: I cannot confirm that. On the other hand, we must wait for the steering group to come up with the results of its consultation. It is important to remember that the steering group is part of a larger group, which includes the meat industry. They are all working together, with an independent chair, supported and facilitated by FSA staff, to look into all the problems within this industry.
Legal Aid, Sentencing and Punishment of Offenders Act 2012
Question
3.14 pm
To ask Her Majesty’s Government, given the fall in the number of citizens who now receive legal advice in the field of social welfare law, whether they will bring forward the review of Part 1 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012.
The Minister of State, Ministry of Justice (Lord Faulks) (Con): My Lords, in 2014 we funded advice and assistance in over 51,000 new social welfare matters and issued over 11,000 certificates for representation at court. We are monitoring the impacts of legal aid reform and will conduct a post-implementation review within five years of implementation.
Lord Bach (Lab): My Lords, of course I thank the Minister for his Answer, but is he aware that everyone outside the confines the Ministry of Justice believes that LASPO has been a disaster? He referred to 52,000 cases in 2013-14. Perhaps I could remind him that in 2009-10, the number of advice and assistance cases was 471,000. This means that more than 88% of our fellow citizens, who, I need not remind the House, are the poor, the vulnerable and the disabled, who previously benefited from legal advice, are now effectively deprived of access to justice. Two powerful parliamentary committees, the Justice Committee and the Public Accounts Committee, have made severe criticisms of the Act. Does the Ministry of Justice reject all their findings, and does the Minister not agree that, now we have a new Government, this is the right time to review how the Act is working?
Lord Faulks: My Lords, the LASPO Act has not been a disaster. It was necessary to make some sensible and well-directed changes to legal aid. In social welfare, the most important cases concerning people’s housing and their ability to stay in their house are still within scope, but some of the lesser matters are not. Of course we keep the matter under review, but the noble Lord will know that the legal aid reforms did not take place until April 2013, there having been a spike before then. It is important to see how they are affecting people over the longer term, which is why this Government repeat what the previous coalition Government agreed, which is that we will look at the whole system in much more detail, but only within five years and not before.
Lord Howarth of Newport (Lab): My Lords, given that the Ministry of Justice is one of the departments vulnerable to further depredations by the Chancellor in his drive for economy and to scale down the state, will the Lord Chancellor and his ministerial colleagues in the department this time round stand up to the Treasury and insist that equality before the law and equal access to justice are beyond price in our constitutional heritage and indispensible to a liberal society, and that they will defend them to the hilt?
Lord Faulks: I can assure the noble Lord and the House that all the Ministers in the Ministry of Justice are wedded to the rule of law and to access to justice. But the question that arises out of social welfare law is whether it is always necessary for everybody who has quite real problems to have a lawyer at £200-odd an hour, or whether there are better and more effective ways of giving advice.
Lord Marks of Henley-on-Thames (LD): The National Audit Office also reported on the LASPO reforms last November. A key finding was that there had been, as predicted, a large increase in litigants appearing in person, with an estimated extra cost of £3.4 million a year. May we now have a full and urgent cost-benefit analysis to assess what changes could be made to improve access to justice without driving up unduly the cost to the public purse?
Lord Faulks: Well, it is interesting that the noble Lord is now very much against the legislation that the coalition Government promoted. Neither his party nor the Labour Party in their manifesto suggested that they would reverse any of these cuts. Indeed, they did not suggest in either of their manifestos that they would look at it any earlier than we intend to do. Of course—
Lord Marks of Henley-on-Thames: My Lords—
Lord Faulks: No. Of course litigants in person provide challenges. There are a number of strategies, which I have told the House about before, to enable them better to access justice. We remain alert to try to improve those as far as possible.
Lord Mackay of Clashfern (Con): Is the Minister able to say whether the advice centres that are available to people of all means are sufficiently active to deal with the problems that may or may not arise out of the LASPO Act but, in any case, may require a degree of knowledge of social security legislation which not all lawyers possess but which are very much concentrated in advice centres? Is that not a better way of dealing with this problem than the old system of individual legal advice from individual lawyers?
Lord Faulks: My noble and learned friend makes a good friend—I mean, a good point: he is a good friend. We have given significant sums to various bodies: £16.8 million to the advice services fund, £107 million to the transitional fund launched in 2010 and £68 million to the advice service transitional fund. It is important that advice is accessed via these means, and I entirely agree that much assistance can be derived thereby.
Baroness Lister of Burtersett (Lab): My Lords, the Government are threatening a further £12 billion in social security cuts. This is bound to increase the need for advice on social welfare law. Does this not strengthen the case made by my noble friend for bringing forward the review of how Part 1 is working so far?
Lord Faulks: I think that the noble Baroness is referring to universal credit. The point about social welfare reforms I have already answered. Of course the Government are aware of all the potential difficulties that may confront individuals with cuts in either welfare provisions or access to legal aid, which was the subject of the Question. We will be having a careful look at these as they happen, but there must be a systematic review, and that is our intention.
Baroness Ludford (LD): My Lords, will the Government act to ensure that all company directors are obliged to have legal expenses insurance so that they do not need to have recourse to legal aid if they are prosecuted, for instance, for fraud?
Lord Faulks: I am grateful to the noble Baroness. I know that this was part of the Liberal Democrat manifesto. It is a matter on which, at the moment, we have no plans to legislate. The Liberal Democrat manifesto contains a number of wise things, including the suggestion that we should,
“develop a strategy that will deliver advice and legal support to help people with everyday problems like personal debt and social welfare issues”.
Baroness Butler-Sloss (CB): My Lords—
The Lord Privy Seal (Baroness Stowell of Beeston) (Con): My Lords, if we follow the convention that it is important that all groups get a turn in each Question, we have not heard from the Cross-Benchers, so I suggest that we hear from the noble and learned Baroness, Lady Butler-Sloss.
Baroness Butler-Sloss: My Lords, are the Government looking at the way in which exceptional circumstances are being dealt with? There is a lot of criticism that they are not being properly dealt with. Will they look at that, if they are not already doing so?
Lord Faulks: I think that the noble and learned Baroness is referring to exceptional funding provisions. There has been less take-up than was originally anticipated, but I am glad to say that the percentage of applications that are granted has greatly increased since April 2013 and is now 25%. That probably reflects the fact that there is a better understanding in the legal profession about exactly what the exceptional funding is supposed to cover, which is a potential breach of convention obligations or EU law. I do not think that I can comment further because the matter is the subject of a judicial review which we are resisting strongly.
Apprentices
Question
3.22 pm
To ask Her Majesty’s Government what plans they have to expand the apprenticeship programme for 16 to 18 year-olds.
Baroness Jones of Whitchurch (Lab): My Lords, on behalf of my noble friend Lord Lennie and at his request, I beg leave to ask the Question standing in his name on the Order Paper.
The Parliamentary Under-Secretary of State, Departments for Business, Innovation and Skills and for Culture, Media and Sport (Baroness Neville-Rolfe) (Con): Over the next five years, we will support 3 million new apprenticeships. We are developing a package of measures to achieve this growth by getting more employers to
offer apprenticeships so that many more young people can benefit from this valuable route to a successful career.
Baroness Jones of Whitchurch: I thank the Minister for that reply. She will know that the Lords Library has produced statistics showing that of the apprenticeships available, only one quarter are currently going to young people under the age of 19. On top of this, by the admission of the Government’s own funding statement, funding for apprenticeships is going down. Of the 3 million new apprenticeships that the Government are promising to create by 2020, how many will be for 16 to 18 year-olds? Does the Minister agree that schools should be doing far more to encourage young people to consider alternative vocational entry into work?
Baroness Neville-Rolfe: My Lords, young people will inevitably be a huge focus of the scheme, but it is right not to exclude others because people can need to develop lifelong learning after the age of 19. We will be making a total investment of £1.5 billion in apprenticeships available in the current year, and I am delighted to say that training for 16 to 18 year-olds is fully funded by the Government, with a particular emphasis on English and maths.
Baroness Garden of Frognal (LD): My Lords, following on from the previous question, what plans do the Government have to invest in careers information, advice and guidance to ensure that not only young people but teachers and parents are fully aware of the value and opportunities offered by apprenticeships?
Baroness Neville-Rolfe: This is a very important point. We need to change the culture so that people see apprenticeships as an important career option. Since 2012, there has been a statutory duty on schools to provide independent careers guidance, including on the apprenticeship options. The careers and enterprise company will help schools to build strong links with employers. This is an area where we can really make a step change. Indeed, we can do that ourselves by the work that we do, speaking in schools and with the youngsters of today.
Baroness Wall of New Barnet (Lab): My Lords, given that the further education colleges provide the greatest part of the training that is essential for extremely important components of apprenticeships, and given that the Minister has just confirmed that the Government’s target of 3 million apprentices by 2020 is still in place, what is being done to ensure that the FE colleges such as those that are members of the 157 Group, of which I am a patron, have the funds to support this expansion?
Baroness Neville-Rolfe: My Lords, apprenticeships will be a priority area in the spending review. The noble Baroness rightly talks about the role that FE colleges can play, and I look forward to discussing further with her group how we can ensure that that money is well spent and links in with employer demand,
which is essentially the approach that we now have to apprenticeships. There is so much more that can be done.
Lord Broers (CB): My Lords, I of course support the increase in the number of apprenticeships. However, I have heard concern from senior industrialists about the large variation in standards when it comes to what is expected of an apprentice—what knowledge they are meant to have, especially theoretical. There is serious concern about these large variations across industries and other institutions. Are the Government going to become involved in trying to improve the rigour of the standards that are expected?
Baroness Neville-Rolfe: The employer-led approach, with our trailblazers and so on, will actually mean that standards are set that employers want. We have improved quality already, for example by having a minimum duration of 12 months and requiring apprenticeships to be paid jobs. But there is more to do. One thing that we are going to do is hold ourselves to account by reporting every year on progress against the 3-million target, including other details. That plus the target will really make a step change in this area.
Baroness Perry of Southwark (Con): Does my noble friend agree—
Lord Stoneham of Droxford (LD): My Lords—
Baroness Perry of Southwark: Does my noble friend agree that the shortage of skills in the general population is probably one of the most serious problems that this country faces, and that this Government’s attempts to build up the skills base through this increase in apprenticeships should be warmly welcomed by everyone in the House?
Baroness Neville-Rolfe: I entirely agree with my noble friend.
Lord Young of Norwood Green (Lab): My Lords, while I welcome the Government’s commitment to expanding apprenticeships, including the personal commitment from the Minister, it would help if, instead of referring to 3 million, we recognised that of that 3 million at least 50% are accounted for by the re-skilling of over-25s—not that I deplore that. The real challenge, as the Minister well knows, is to expand the number of apprenticeships in the 16 to 18, and indeed the 16 to 24, age range. What can be done about that when significant numbers of employers still do not participate in apprenticeships? I think it is still less than one in five; that is the statistic.
I therefore have a couple of recommendations. First, does the Minister agree that the Government should consider making apprenticeships a statutory requirement in all public sector contracts? Secondly, will she consider looking at the local enterprise
partnerships and local authorities that have the best track record so that best practice can be identified around the country?
Baroness Neville-Rolfe: My Lords, that is a subject for a debate. However, I can say that on the public sector side we will be taking steps to have more apprenticeships where procurement contracts are involved. On the point about the local enterprise partnerships, some of them are doing some brilliant stuff on skills and apprenticeships, which we should publicise much more fully.
Personal Independence Payment
Question
3.30 pm
Asked by Baroness Thomas of Winchester
To ask Her Majesty’s Government what action they intend to take in response to the High Court judgment in R (on the application of Ms C and Mr W) v Secretary of State for Work and Pensions and others [2015] EWHC 1607 (Admin) that long delays in Personal Independence Payments are unlawful.
The Minister of State, Department for Work and Pensions (Lord Freud) (Con): We are considering the terms of the judgment. We have achieved further reductions in average waiting times for an assessment, and they are now well within the Secretary of State’s target of 16 weeks.
Baroness Thomas of Winchester (LD): I thank the Minister for that reply. I accept that waiting times have gone right down, but the judge’s comments were pretty scathing about the introduction of PIP before all the systems were fully in place, which, she said, led to the implementation being “inefficient”. Is he confident that the full rollout of PIP to the bulk of DLA recipients, currently scheduled for October, is entirely safe?
Lord Freud: The judge found significant shortfalls in the introduction, as the noble Baroness said, and we agreed at the time that that was simply unacceptable. Noble Lords will probably remember that at the peak of the backlogs we were looking at waiting times of 30 weeks. That was in June; we set a target of less than 16 weeks, and we have now gone down to seven. On that basis we are confident about the full rollout, although we will and are doing it on a safe and controlled basis.
Baroness Campbell of Surbiton (CB): My Lords, during the general election campaign the Prime Minister stated his desire to “enhance” and “safeguard” PIP. Will the Minister say how the Government plan to fulfil that election promise to disabled people and reassure them that their payments will be protected in the Chancellor’s up-and-coming Budget?
Lord Freud: We will continue to support the disabled and the vulnerable in months to come.
Baroness Sherlock (Lab): My Lords, maybe I can follow that up a little more. The noble Baroness, Lady Campbell of Surbiton, specifically asked for an assurance of the Prime Minister’s guarantee that he would continue to support disabled people and that their benefits would be protected. Let me give the Minister the opportunity to give that. The Government want to make £12 billion of welfare cuts. Will he say today that none of those will fall on disabled people?
Lord Freud: I repeat what I said: we will continue to support disabled people and the vulnerable through that process.
Lord Phillips of Worth Matravers (CB): My Lords, at the end of her judgment, the judge commented that the Secretary of State appeared to be grappling with the situation in a way which was “entirely appropriate”. Does the Minister believe that was a fair comment?
Lord Freud: I think the judge very much took on board the fact that the Secretary of State realised that something that was simply unacceptable was going on and that we took very large measures to deal with it. Those measures included ramping up the numbers—we ramped up the number of health officials by a factor of four—and we had many more places to do the assessments, and so on. That is what has got the situation under control.
Baroness Gardner of Parkes (Con): My Lords, is the Minister aware that a great deal of time is taken to reassess the cases of people who have incurable and irreversible conditions? Would it not be of great benefit to the department for those people not to be reviewed so often?
Lord Freud: My noble friend makes a fair point. Indeed, one of the ways in which we have speeded up the process since last June is by making more paper assessments, and it is precisely that group of people for whom we are able to do that.
Lord German (LD): My Lords, what assessment has the Minister made of people with Motability cars who may be waiting for a decision or who are seeking an appeal? While you can back-date cash requirements for people who make appeals and are successful, you cannot back-date a motor car.
Lord Freud: My Lords, of course, the people who are being reassessed, whether through a natural reassessment or through the full rollout, will continue to receive their DLA rates, as they were, until they get the conclusion of the PIP assessment. Therefore, there is no question of them losing a car in that period.
Baroness Farrington of Ribbleton (Lab): My Lords, I did not quite understand the Minister’s reply to my noble friend. Did he say that the Government will
protect disabled and vulnerable people during the forthcoming cuts, as the Prime Minister said they would, or did he say that they will not protect them?
Lord Freud: To clarify matters, I said that this Government would support disabled and vulnerable people through this process.
Baroness Campbell of Surbiton: Protect!
Lord Alton of Liverpool (CB): My Lords, the Minister will recall that, during the debates on personal independence payments, warnings were expressed from all sides of your Lordships’ House about the dangers of rolling out this programme too rapidly, with some people possibly left exposed. He has told the House how long the average waiting time will be. Can he now tell the House the average amount of money involved for disabled people who have not received the funds that they are entitled to? What emergency provision is made for people who are, after all, some of the most vulnerable in our midst?
Lord Freud: The delay is of course unfortunate for people and we have said that that is unacceptable. The money is back-dated to the point of claim. Where people have a serious problem, we have a complaints process which they can use and we can try to make redress through that.
Veterinary Nurses (Protection of Title) Bill [HL]
First Reading
3.37 pm
A Bill to amend the Veterinary Surgeons Act 1966 to prevent misuse of the title of veterinary nurse; and for connected purposes.
The Bill was introduced by Lord Trees, read a first time and ordered to be printed.
International Development (Official Development Assistance Target) (Amendment) Bill [HL]
First Reading
3.37 pm
A Bill to amend the International Development (Official Development Assistance Target) Act 2015 in order to provide for a five-year reporting period instead of an annual reporting period.
The Bill was introduced by Lord Lipsey, read a first time and ordered to be printed.
Welfare of Women (Fertility Treatments) Bill [HL]
First Reading
3.38 pm
A Bill to make provision about the welfare of women undergoing fertility treatment.
The Bill was introduced by Lord Alton of Liverpool (on behalf of Baroness Grey-Thompson), read a first time and ordered to be printed.
Carers (Leave Entitlement) Bill [HL]
First Reading
3.38 pm
A Bill to entitle employees to take a period of leave to fulfil certain caring responsibilities in respect of dependants; and for connected purposes.
The Bill was introduced by Baroness Walmsley (on behalf of Baroness Tyler of Enfield), read a first time and ordered to be printed.
Duchy of Cornwall Bill [HL]
First Reading
3.39 pm
A Bill to amend the succession to the title of Duke of Cornwall; to remove the presumption of Crown immunity applying to the Duchy of Cornwall; to remove various powers, exemptions and immunities from the Duchy of Cornwall; to confirm the right to royal mines within Cornwall and the Isles of Scilly vests in the Crown; to provide the right to treasure trove, bona vacantia and escheat within Cornwall and the Isles of Scilly lies with the Crown; and to provide that any attorney or solicitor appointed in the affairs of the Duchy of Cornwall shall be called to the Bar or hold a practising certificate as appropriate; and for connected purposes.
The Bill was introduced by Lord Berkeley, read a first time and ordered to be printed.
Charities (Protection and Social Investment) Bill [HL]
Second Reading
3.40 pm
Moved by Lord Bridges of Headley
That the Bill be read a second time.
The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con) (Maiden Speech): My Lords, the House will be aware that I am now the Minister in charge of this Bill, rather than my noble friend the right honourable Lord Taylor of Holbeach. I am grateful to him for introducing the Bill when I was
unable to. I am happy to assure the House that I, too, believe that the provisions of this Bill are compatible with the convention rights and would have been content to sign the necessary statement had I been in a position to do so when the Bill was introduced.
It is with the greatest sense of honour and humility that I stand before your Lordships today, and I also put my arguments to the House with some trepidation. Some 22 years ago, I was sitting in the Gallery of your Lordships’ House watching a debate on which I had written a brief for Conservative Peers. The noble Lord, Lord Williams of Elvel, had been passed a copy of my brief and proceeded to dismantle and shred its arguments one by one, with grace and charm, paying tribute to the brief’s author along the way. As they say in Sicily, it was nothing personal, just business. It made me realise the great contribution that this House makes to public debate by scrutinising policies and testing the arguments that underpin them. In our fast-moving world, where the digital revolution is accelerating the pace of change, the temptation to act quickly is greater than ever. Now, more than ever, we need the chance to deliberate, review and kick the tyres of policy—and that brings me to the Bill before your Lordships today.
Like so many of your Lordships, I am a trustee of a charity, the Foundation Years Trust. Set up by Frank Field, its purpose is to understand what more can be done to help disadvantaged children in the first, all-important years of their lives. Among my fellow trustees is the noble Lord, Lord Hall of Birkenhead. I mention that not simply to declare my interest but to observe that charities are organisations in which a sense of shared purpose overrides political allegiances.
Down the generations, long before Lord Beveridge and the foundation of the welfare state, people have formed little platoons to battle against the five giants of want, disease, ignorance, squalor and idleness, at home and abroad, overcoming great challenges, sometimes at risk to life and limb. Only today, I read that the readers of the Sun knitted, for the charity Loving Hands, an amazing 500,000 items of clothing for children in need around the world. Quiet acts of generosity like this show that charities still have a very special place in people’s hearts, at a time when the public’s trust in so many other institutions and professions has plummeted. A recent opinion poll revealed that charity workers are among the most trusted and respected in society today. I am sorry to add that, according to this poll, the least trusted in our society are government Ministers, narrowly beating journalists and bankers. Having worked in banking, in journalism and now in government, I am somewhat concerned about what this says about me.
Charities must earn the public’s trust and generosity. They must never take it for granted. The vast majority of charities know this full well and are run responsibly and competently. It is in their interests, and the interests of society as a whole, that the charitable sector is properly regulated. Furthermore, charities must have the freedom to innovate and find new ways of fulfilling their mission. That is the purpose of the Bill before your Lordships today: to strengthen the public’s trust in charities, and help charities to do more.
Before I outline the measures in the Bill, I would like to pay particular tribute to my noble friend Lord Hodgson of Astley Abbots. He has laboured hard, over a number of years, to help charities flourish. This Bill implements some of the recommendations from his thorough review of the Charities Act 2006. His insight and advice have proved invaluable, and long may his wise contributions continue. Likewise, I would like to thank the noble and learned Lord, Lord Hope of Craighead, for ably chairing the Joint Committee on the Draft Protection of Charities Bill, and other noble Lords on that committee for their helpful pre-legislative scrutiny. Many others in your Lordships’ House have also helped to shape this Bill today, and I am sure that it will provoke further debate. My door is always open to meet and discuss its measures.
The bulk of the proposals in the Bill relate to the Charity Commission’s powers. As I am sure noble Lords will know, the Charity Commission registers and regulates more than 164,000 charities in England and Wales. In 2013, following a high-profile regulatory failure, the National Audit Office reviewed the commission’s regulatory effectiveness. Its report found that,
“the Commission does not do enough to identify and tackle abuse of charitable status”,
“is not regulating charities effectively”.
The NAO made a number of recommendations to improve the commission’s regulation of charities and to strengthen its powers. Further calls for stronger powers were made by the Prime Minister’s extremism taskforce and the Home Affairs Select Committee. When the NAO published its report, the previous Government published proposals to give the commission new powers. After public consultation, these proposals were refined and a draft Bill was published. Following pre-legislative scrutiny, further changes were made. Thanks to all of this and the contributions of so many noble Lords, the proposals have been well scrutinised and the Bill before your Lordships today is much improved as a result.
The measures in the Bill are, of course, just one strand of a much-bigger strategy to improve the commission’s regulatory effectiveness. The commission now has strong leadership; it has set itself new priorities; and it has received an additional £9 million over three years. This will help it move more of its services online and, crucially, bolster its capacity to identify and tackle abuse and mismanagement in charities. The NAO has followed up its report and acknowledged that good, early progress has been made.
However, there is no point in the Charity Commission working harder to seek out abuse if the commission cannot act effectively when it finds abuse. So the bulk of the Bill is devoted to ensuring that the commission has new or extended powers, of which I would like briefly to highlight five. First, a new official warning power would enable the Charity Commission to take a more proportionate approach to low-level misconduct and mismanagement. The Charity Commission already can and does engage with charities when this happens, but it finds that up to 30% of charities contacted fail to respond adequately to its guidance.
Secondly, the existing criteria, which automatically disqualify a person from being a charity trustee, would be extended to include people with unspent convictions for money laundering, terrorism offences, bribery, misconduct in public office and perjury, and individuals subject to a terrorist asset-freezing designation. Disqualification would be extended to senior management positions as well.
Thirdly, the Bill would give the Charity Commission a power to disqualify individuals whose conduct makes them unfit to be a charity trustee. The commission would be able to act subject to three tests: criteria would have to be met relating to the person’s past or present conduct; the commission would have to consider the person unfit to serve as a charity trustee; and the commission would have to be satisfied that disqualification was expedient in the public interest. The power is accompanied by several safeguards, including for the tribunal to consider the matter afresh on appeal.
Fourthly, the Bill would give the Charity Commission a power to direct that a charity be wound up following a statutory inquiry; and fifthly; trustees have been known to resign from a charity before the commission removes them, and then to become trustees of another charity. The Bill would close this loophole.
I know that, like me, your Lordships will want to be satisfied that there are appropriate safeguards governing the use of all these powers, so it is worth reminding the House that, under the Charities Act 2011, the Charity Commission has a duty to act in a way which is proportionate, accountable, consistent, transparent and targeted only at cases in which action is needed. Furthermore, the exercise by the commission of all of the proposed powers in the bill regarding trustees is open to legal challenge, principally by a right of appeal to the Charity Tribunal.
The second purpose of the Bill is to help charities to make social investments so that they can fulfil their mission in new and innovative ways. Traditionally, charities with money to invest have either sought to maximise financial returns or made grants to further their charitable mission. Social investment is different because it involves investments that both further the charitable mission and expect to generate a financial return. At present, charities have over £60 billion of assets under management, but just £100 million of those are in social investments. By clarifying the law and trustees’ duties, the Bill aims to give charities the confidence and certainty to invest in this growing sector. I should express my thanks to the Law Commission for England and Wales for looking at this point and recommending the new social investment power, which the Bill would implement.
To conclude, the charities in this country deserve our heartfelt thanks and support. They embody all that is great about our nation and bring out the best in our society: a generosity of spirit and a willingness to make sacrifices to help those in need. The Bill will strengthen the public trust and confidence in our charities so that they can do better still. I look forward to hearing your Lordships’ views, and I beg to move.
3.51 pm
Baroness Hayter of Kentish Town (Lab): My Lords, it is a great privilege as well as a great pleasure to have heard the Minister’s maiden speech—I assume, in this case, written by himself—and to welcome him as a trustee of the Foundation Years Trust, a charity that aims, as he said, to develop and action the findings of Frank Field’s review of poverty, a review that was set up to prevent poor children becoming poor adults. The noble Lord’s work at Santander and Quiller Consultants, which advises multinational companies, may be slightly less relevant to this Bill, but we hope that it will be of use to him on his other portfolio. However, the experience that the House might appreciate most is indeed his time as a political secretary at No. 10, so if anyone can find his way around Whitehall, we trust that it is him. However, what my party would like is some of his political nous. Not only was he involved in the perhaps unexpected 1992 election victory, but a year ago he placed a bet on an overall Tory majority in 2015 of 12. So I congratulate him on his flutter and indeed on his assured maiden over at the crease. We wish him well in the tasks ahead.
Perhaps I may also pay tribute to the noble and learned Lord, Lord Hope of Craighead, on his pre-legislative Joint Committee report, and to the committee members, including my noble friend Lady Warwick of Undercliffe, who unfortunately cannot be with us today but I know will play an active role later in our proceedings, and my noble friend Lord Watson of Invergowrie, who joins me on the Front Bench for this Bill, along with my noble friend Lord Kennedy of Southwark.
I turn now to my own declaration of interests. I have been the chief executive of two charities and the director of corporate affairs of the country’s largest one. I have been the chair of a small charity and I remain a trustee of two. It will therefore be no surprise that we support independent charities, harnessing as they do philanthropy, volunteering and social commitment. We celebrate the million trustees who give of their time, expertise and dedication to help make Britain a kinder, more interesting and caring society.
I hope that the Minister will be relieved to know that the Bill poses us no problems, and we are content to support its Second Reading. But there are some additional powers for the Charity Commission, and responsibilities for charities that should be added.
Let me start with a concern arising from the recent lobbying Act—it is before the Minister’s time, so he does not have to take the pain for this—which undermines the freedom of charities to speak out on behalf of beneficiaries. I was moved by the maiden speech of the right reverend Prelate the Bishop of Leeds last week, when he quoted from the Book of Proverbs:
“Open thy mouth for the dumb”,
“give a voice to the experience of those who otherwise are silenced”.—[
Official Report
, 1/6/15; col. 209.]
That is what charities have long done, but the Government sought to curtail that in the lobbying Act. We will seek to spell out in the Bill the common-law position permitting charities to speak out on issues in line with their objectives. This will give confidence to trustees that they are free to further their objectives in this way.
We are not against the right to buy, but we query the Government’s plan to force housing associations to sell their assets, against their will, regardless of their trust deed, their source of funds or the decision of their trustees. Ninety per cent of housing associations are charities and their property is not state property, so it is not the Government’s to dispose of. It is private property; it may have been donated for a particular cause, such as providing homes for autistic or disabled people, the retired, the homeless, recovering substance abusers or, indeed, a religious community; or the property might be built on rural exception sites in the National Planning Policy Framework, intended for affordable housing in perpetuity. Not only might it be a breach of covenant to use these assets for other purposes, but once sold and resold a sheltered block or a therapeutic or supportive community could be broken up as new private owners or tenants of buy to let with different lifestyles move in.
Charity assets are preserved by legislation for public benefit and may be used only for the purposes defined in the charity’s trust deed. Furthermore, charity law requires a charity to dispose of its assets in furtherance of its charitable objectives, and that does not mean simply for money. Indeed, the second part of the Bill, which the Minister has outlined, allows charities to use their funds as social investment, and we welcome this. Funds will also be used in the provision of homes for the homeless. But that will be completely undone if such homes have to be sold off, and then no doubt resold, as the owner can cash in on the Government’s subsidy.
There are small almshouses, there are “supporting people” charities, and there are large charities such as Peabody—150 years old, with 27,000 homes and its own Act of Parliament. Its chair has said:
“Peabody’s assets belong to us. They are not the government’s to sell”.
All are governed by charity law, based on principles dating from Elizabethan times to preserve charitable assets. Do the Government propose to amend charity law so as to override the trust deed or trustees’ wishes in order to implement their policy?
The Bill will rightly exclude people who have supported terrorism from being trustees, as well as people involved in money laundering or just subject to an IVA. But the Bill does not exclude people convicted of serious sexual offences; they would be debarred only after a complaint to the Charity Commission, leaving the responsibility for checking with other trustees, who may themselves have been involved in such activity or, if completely innocent, be unaware of the background of a new trustee. This cannot be right when charities have access to children or others with vulnerabilities. We want the Bill to add being on the sexual offences register to the automatic exclusions, which will still be subject to the normal waiver provisions.
We will also look to strengthen the Bill so that vulnerable people and children are properly protected. There are some worrying cases where charities become closed shops when abuse is uncovered. The Charity Commission should be able to investigate the fitness of trustees and consider replacing them where the charity fails to deal with abuse allegations. It is surely right for the commission, in regulating trustees, to
have a duty to safeguard and protect children and vulnerable adults. Suspected child abuse should be as big a red flag as suspected financial misconduct. Could the Minister let us know the Government’s thinking on this issue?
Your Lordships will be aware of the tragic suicide of Olive Cooke, a 92 year-old poppy seller.
Baroness Corston (Lab): My noble friend will be interested to know that one of the best experiences of my 13 years as Member of Parliament for Bristol East was my friendship with Olive Cooke. She had a face that could light up a room. She was one of the kindest people I knew. I always looked forward to her letters, giving me general and continual advice. Her outstanding contribution—selling more poppies for Remembrance Sunday than any other person in this country—is well documented. But the fact that a person who was, on the face of it, such a strong woman should feel driven in part to her death by being, in a way, prejudiced by her commitment to charitable giving, which was legendary, is quite a stain on our charitable sector.
Baroness Hayter of Kentish Town: We have, indeed, heard many tributes to Olive Cooke from her family, from her friends and from the successor to my noble friend in Bristol for all the work that she did not just in selling poppies but in her charitable work. While her family do not think that the action of charities and their fundraising were responsible for her death, it is clear that Olive was persistently contacted by many charities and, being the generous and caring person of whom we have just heard, found it hard to say no.
Since the media coverage of her death, hundreds have come forward to say that they too have come under pressure. A major concern is where elderly relatives, sometimes suffering from dementia, have been targeted. Meanwhile, Croydon has become the 100th authority to have to crack down on chuggers, and at the weekend the Mail on Sunday reported some underhand methods of a private company working for Oxfam, the RSPCA and Cancer Research UK that broke every rule in the book to make money for itself as well as for the charities.
Many, including the vulnerable, feel hassled and harangued by charities, including by cold calling. I have my doubts whether cold calling is ever acceptable. Indeed, we strengthened the Consumer Rights Bill in an attempt to stamp it out. I regret the Government’s failure to live up to their promise to provide call-barring facilities to the particularly vulnerable, but while cold calling from a charity might elicit a donation, it could be at the expense of the trust that people have in charities, as the Minister just described. Furthermore, securing one donation can lead to a ratcheting up of demands, as many stories, including that in the Mail, have demonstrated. Indeed, the UK Giving report showed that a majority of donors agreed:
“I am worried that if I give I will just be asked for more”.
The sad case of Olive Cooke and the Mail’s exposé show that existing self-regulation is not working. A third of fundraising charities are not even members of the Fundraising Standards Board. We will investigate how we might use the Bill to strengthen the commission’s
role in ensuring that charity fundraising is properly regulated, possibly by requiring charities to sign up to the industry’s code and to belong to the standards board, or by giving the Charity Commission stronger reserve powers. Olive’s law, or at least getting all charities to be regulated by the FRSB, would be a lasting testimony to this woman’s lifetime of work for charity.
We support the Bill and its protections, but they will never work if there is no one to answer the phone or investigate concerns. ACEVO, the Charities Aid Foundation and the Charity Finance Group all question the feasibility of increasing the Charity Commission’s case load without a commensurate increase in its budget—a budget halved since 2007-08. We recognise the need for savings and for the effective use of resources, but does the Minister think it is realistic for government to give more work to the commission while drastically reducing its resources? We support an effective, robust regulator for the healthy development and growth of the charity sector. I look forward to working with the Minister on his first Bill to enable it really to contribute to the aim that I think we both share.
4.06 pm
Baroness Barker (LD): My Lords, I declare an interest as the owner of a consultancy third-sector business. I am also an honorary officer of the All-Party Parliamentary Group on Social Enterprise.
I commend the noble Lord, Lord Bridges of Headley, on his excellent maiden speech. He introduced the Bill with great style and great knowledge. It is normal to be nervous when making one’s maiden speech but he need have no fear of being shredded today. I look forward to working with him on the Bill.
Reform of charity legislation usually happens at a pace which is somewhere between slow and glacial, so it was a great privilege to be a member of the committee that scrutinised the draft Protection of Charities Bill. The committee was chaired by the noble and learned Lord, Lord Hope of Craighead. Such was his skill, and the diligence of our advisers, that, starting in the first week of November 2014, we held 13 evidence sessions, heard from more than 35 witnesses and concluded our report by 28 February 2015. As a result, I see the noble and learned Lord as the Usain Bolt of charity legislation, and I shall continue to think of him as such in the days ahead.
The Charity Commission was established in its present form under the Charitable Trusts Act 1853, and I suspect that the first debate on the subject of its effectiveness probably took place in around 1854. Every regulator is subject from time to time to criticism from the bodies that it regulates. The CQC and the FSA have their critics, but none draws fire like the Charity Commission.
There are those who find the commission immensely helpful and who value its reports and guidance. There are also those who find the commission so defensive, distant and legalistic that dealing with it is a bit like having your family solicitors tied up in Jarndyce v Jarndyce. Then there are people like me, frequent users of the Charity Commission’s services, who are at times very much supported by what it does but at other times frustrated by its slowness to change.
The leadership of the commission changes periodically, and relationships between the commission and the sector change as a consequence. However, the underlying lack of a clear consensus about what sort of regulator the commission should be means that the relationship between the commission and the sector is never as good as it should be. There is now general agreement with the recommendation of the noble Lord, Lord Hodgson, that, if the commission had to prioritise one area of work, it should be that of its unique role as regulator. However, the commission’s reluctance to signpost charities to other sources of advice or to develop relationships with other sector bodies which could give advice that would not have the same statutory standing as its own but would help poor trustees who are seeking help to get it much more quickly, still generates great frustration. I make these remarks in order to explain why some voluntary organisations have reacted as they have to the Bill, in its present form and its draft form.
The Minister eloquently set out for us the antecedents of the Bill: the review of the 2006 Act by the noble Lord, Lord Hodgson; the National Audit Office report into the handling of the Cup Trust; and the Public Accounts Committee report on the same subject. We also know from the available data that there are approximately 350,000 charities in this country, including excepted and exempt charities, and about 800 small charitable industrial and provident societies. They have an annual income of £64 billion. Yet there is very little evidence of abuse in the charitable sector. Over the period 2007 to 2014 there were only 526 investigations into charities.
As we look at the provisions of the Bill, we have to answer two questions. First, are the provisions of the Bill necessary to retain and improve public trust and confidence in charities? Secondly, does the Bill pass what I call “the Lord Hodgson test”—because it was set out in his report—that:
“Regulation needs to be proportionate, transparent and comprehensible”?
On the whole, I think it does. A number of provisions are welcome. Giving the Charity Commission a new power to issue warnings as a lighter-touch form of regulation of charities is a good thing. Giving the commission the power to remove trustees following an inquiry and to do so within a time period that means that trustees will no longer be able to avoid being subject to the commission’s powers by resigning will strengthen trustees’ responsibilities in this regard. It is important to be able to close that loophole.
It is also important that, as in Clause 6, once the commission has opened a statutory inquiry, it should have the power to direct a charity not to take a particular course of action. It is a bit odd that it has an existing power to direct that something be done but does not have a power to direct that something not be done, when we could be talking about charitable assets.
All those powers are welcome. In particular, the power in Clause 13 to enable charities to make investments in social enterprises that are consistent with their charitable objectives is fine. Much more needs to be done in order to build the social investment market in this country. It is still extremely difficult to find venture
capital, for want of a better term, for activities that have a social element as well as a profit element. But it is really important that we give charities this power to put their money where their mouth is.
However, as the noble Baroness, Lady Hayter, has already suggested, there are three key areas in which the Bill needs to be strengthened. The first is the power under Clause 3 that the commission will have to consider any other evidence of a person’s conduct—not just their conduct within a charity—when it has opened a statutory inquiry. In addition, the power is not limited in time, so it could mean that a charity trustee is hauled over the coals for something that they did when they were a very young person. That clause is drawn too widely.
I can see the sense behind the new power that the commission will have under Clause 7 to direct the winding-up of a charity. At the moment the commission cannot do that. It seems to be a sensible step but the basis on which the commission would exercise that power—the criteria it would use—should be open to considerable discussion before the power becomes finalised.
Finally, on Clause 9, “Automatic disqualification from being a trustee”, the noble Baroness, Lady Hayter, is right. It is in some ways desirable that the reasons for automatic disqualification should not be, as they largely are now, financial. It is possible that somebody could be guilty of conduct which was undesirable and harmful to a particular charity, or to charities in general, but which was not of a financial nature. However, as the power is drawn at the moment, and given the references to the counterterrorism legislation and the potential chilling effect that it may have on people who work within Islamic charities and are perfectly upright individuals, we need to exercise real caution and give that great consideration. One of the most impressive witnesses to come before the committee was Christopher Stacey, the director of Unlock, a charity that works with people who have criminal convictions. He gave compelling evidence to the committee that stopping people who have criminal convictions from having anything to do with a charity could be wholly counterproductive. We need to take great care before we make any such blanket disqualification.
On the whole, the Bill is reasonable. Given the historic and ongoing tensions in the relationship between the commission and the sector, it would be right and wise for us to have a thorough and full discussion of those three or four points which need further attention.
4.16 pm
Lord Hope of Craighead (CB): My Lords, I, too, wish to congratulate the Minister on his excellent maiden speech and to say how very much I look forward to working with him, along with others who have participated in this Bill so far, as it goes through the House.
As has been mentioned, I have a particular interest in the Bill, as I had the privilege of chairing the Joint Committee which carried out the process of pre-legislative scrutiny during the last few months of the last Parliament. It was plain to us all from the outset that we would have to operate within an unusually tight timescale.
I am not sure whether it was necessary to go quite as fast as Usain Bolt but we necessarily had to put our skates on to get through the business in time. The draft Bill was not published until 22 October last year and our committee was not fully constituted until the beginning of November. Nevertheless, we were able to complete our work and submit our report by the end of February.
I wish to pay tribute to the various people from each House, both Members and supporting staff, who made this possible. Every member of my committee played a full part in its work, in our taking of evidence and in our deliberations afterwards. I had particular reason to value the insight and knowledge that some of them brought to bear on our discussions. We took evidence in each of the six weeks that elapsed between our starting work in mid-November and the start of the Recess. There was a further week in January when Parliament resumed, and we completed our deliberations in the middle of the following month. I think we all felt, by the end, that we had achieved what was asked of us. I am by no means saying that we answered every point; wider debate in this House will obviously give rise to much more informed discussion than we were able to bring to bear. But as we said in our report, pre-legislative scrutiny of the kind that we were carrying out, which brings interested parties into the legislative process at an early stage, is a wholly welcome development. It is hard to think of a sector better suited for that kind of exercise than the charity sector, which has so many people all round the country interested in it.
I hope that by our work we have shown what can be achieved, even at relatively short notice, and that we will see more of this kind of process being used in future. Of course, all this would not have been possible without the outstanding support that we received throughout from our clerk, Duncan Sagar, ably supported in his turn by Matthew Korris and Claire Morley. I should mention also Nicole Mason and Jessica Mulley, and Stephanie Biden, who was our special adviser. It was on the shoulders of Duncan Sagar and his team that much of the heavy work rested and we could not have been better looked after or better served.
We appreciated also from the outset the importance of giving as many people and as wide a range of bodies within the sector as possible an opportunity to be heard. I am grateful to all the witnesses who came to give evidence to us orally and to the many more who gave evidence to us in writing. Among the bodies on whose behalf evidence was given were the Charity Commission itself, the National Council for Voluntary Organisations, the Charity Law Association, the Wales Council for Voluntary Action, the Muslim Charities Forum, Unlock, and Bond. The full list of all witnesses is set out at the end of our report. It was a very wide-ranging exercise and, by the end, we were very well informed.
The purpose of the Bill, as the noble Lord has explained, is to improve the powers that are given by statute to the Charity Commission as regulator. The aim is to strengthen the public’s trust in that process, and to enable the commission itself to root out abuse where it can be found and to protect charities from those deemed unfit to be charity trustees or senior managers. As the noble Lord made clear, the process
of drafting the legislation did not come out of the blue. It was prompted in part by a series of requests from the Charity Commission itself for new powers to enable it to perform its functions more effectively, and by some well-directed criticism of its operations by the National Audit Office and others. Then there were several reviews, including the notable review carried out under the outstandingly able chairmanship of the noble Lord, Lord Hodgson of Astley Abbots, which drew attention to the need for new and strengthened powers. Our task as a committee was to scrutinise the Bill’s proposals in the light of the evidence which we received—it was an evidence-based exercise—to see that these proposals measured up to the challenges and, if they did not, to consider the respects in which they might be improved. We did the task we were asked to do and made a number of recommendations. We were, broadly speaking, encouraged by the way the last Government responded to them in March just before they went out of office.
However, for many of us, there was a very big question mark at that point as to what was going to happen and what was going to be done to the work that we had done. Our hope was that the draft Bill would not be forgotten when a new Government returned after the general election. The Charity Commission also made it clear that it was keen that these new and strengthened powers should be given to it as early as possible. So the fact that the Bill has been brought forward as quickly in the legislative programme as it has been is especially welcome, and I thank all those behind the scenes who have made this possible.
As William Shawcross, the chairman of the Charity Commission, said in his response to the Bill’s mention in the Queen’s Speech, it is a vital piece of legislation from the commission’s perspective if it is to have the powers that it needs to stop individuals from abusing charities. His enthusiasm for the Bill is beyond question, as is the commission’s desire to make best use of these powers alongside those that it already has to police the sector. I think I can say that it is plain, from the evidence which we received, that the commission has turned a corner since he took over the chairmanship. Under his leadership, the performance of the commission has improved significantly. It is in that encouraging context that this Bill should be viewed.
The inclusion of a power to make social investments, which was not before us when we looked at the draft Bill, is much to be welcomed too. As it stands, the Bill is not just about regulating; it is about enabling, too. It is no doubt particularly encouraging to the Law Commission, which does so much valuable work in seeking to find ways of improving our legislation, to see one of its proposals brought forward so quickly.
There are a few points arising from our report that, as chairman, I should mention. First, there is a need for a balance to be struck between too little and too much. It is tempting for legislators, when giving powers to regulators, to set those powers about with condition after condition in an attempt to eliminate any risk that they might not be properly and fairly exercised—yes, there should of course be safeguards, but there must be a balance. There may come a point where the restrictions on the exercise of the power and the hoops
that must be jumped through before they can be exercised are so many as to make it impracticable or too cumbersome for those powers to be used at all when they are most needed. As the Bill now stands, the balance has been struck in the right place. I hope that the Minister will bear this in mind as we move through the remaining stages of its passage through this House. I was encouraged by what he said in this respect in his opening speech.
It is worth mentioning, too, that the commission itself has to balance the way it performs its regulatory functions against the need to increase public trust and confidence in charities generally. The Bill does not say anything about the pastoral element of its work, which enables it to encourage and assist charities in what they do. However, the fact is that these two objectives—the one I just mentioned and the regulatory function—are linked to each other. The best way to increase public trust in charities is to ensure that they are properly and scrupulously regulated by an efficient and properly funded regulator. Exercise of the powers that are dealt with in this Bill are likely to affect only a very few charities, but the fact that they are designed so that they are capable of being used when needed should serve to increase public confidence in the sector generally.
Secondly, there is a need to think very carefully about the way that legislation designed to counter terrorism may inhibit the work of charities operating abroad in areas controlled by organisations that are on the proscribed list. We heard evidence—I found it very compelling, as did others on my committee—from the Muslim Charities Forum about the problems these charities face in getting aid through in view of the risk of arrest and prosecution that their workers face when they return home. We recognised that a lot of arguments must be gone through in dealing with this problem. We say in our report that we realise that this Bill is not the right vehicle for revisiting legislation about combating terrorism generally. However, here is a very serious issue that we should not lose sight of if we are to retain the support in the battle against terrorism of all sections of our community, including those charities I mentioned whose work is much to be commended in the field of dealing with Muslim people in our country.
Lastly, there are some matters that we hoped might be addressed in the Explanatory Notes but are not there and some points of detailed drafting where our recommendations have not been entirely reflected in the Bill as it now stands. The speeches so far have made it clear that we are now at a stage where there can be a wider debate about the way the Bill is drafted and the points that are in it and are not, which we could not engage in during our work as a Joint Committee. This is not the time to go into detail, particularly as, from the committee, there are no issues of principle with the Bill. However, there are some points where we feel greater clarity is needed.
On the drafting, our concern was simply to find the best way of expressing things in language that is fit for purpose and that everyone can understand. We drew attention to the use of the word “privy”, which is still there in the Bill. That word, apart from use in jest, has largely dropped out of common use and surely it is possible to find a more modern way of making the
same point. Then “unwilling” appears in one clause. That does not easily accommodate people who, when asked by the commission to do something, say, “Yes, we are entirely willing to do that but do not have the power to do so and therefore are unable to do it”. “Unwilling” does not entirely encompass inability and it may be right to look again at that use of language as well.
Of course, we can return to these and other points in Committee. For the time being, it is sufficient to say that I am happy to welcome this Bill and support the Motion that it be given a Second Reading.
G7
Statement
4.29 pm
The Lord Privy Seal (Baroness Stowell of Beeston) (Con): My Lords, with the leave of the House, I will now repeat a Statement made by my right honourable friend the Prime Minister in another place. The Statement is as follows:
“With permission, Mr Speaker, I would like to make a Statement on the G7 in Germany earlier this week. I went to this summit with two clear aims: to advance our economic security and to protect our national security. The two are, of course, interlinked, because you cannot have one without the other and, at this summit, we made some progress on both.
First, on economic security, we reached important agreements on trade, global poverty, green growth and corruption. On trade, I was determined to progress the EU’s trade deals with G7 countries, which could together be worth around £20 billion to our economy every year. The G7 agreed to step up efforts on the EU-Japan deal, and to accelerate immediately all work on the EU-US trade deal. It is over 700 days since we launched negotiations at the G8 in Lough Erne, and every day without a deal is costing the global economy £630 million. So we agreed to finalise the outline of an agreement by the end of this year.
We want all countries to grow, including the poorest, for their benefit and because we all benefit from the wider increase in global growth. So we should never forget what has been called the ‘bottom billion’. We agreed the importance of setting ambitious goals at the UN in September that can eradicate extreme poverty by 2030, and we also reaffirmed our previous commitments on aid. Britain is keeping its promises to the poorest in the world, and we encouraged others to do the same.
I turn to green growth, where there were important agreements about the global deal that we hope to reach in Paris at the end of the year. It needs sufficiently ambitious emission targets to keep the goal of limiting global warming to 2 degrees within reach. It needs binding rules with real transparency and accountability so countries have to follow through on their commitments, and it needs a long-term goal for emission cuts at the upper end of the IPCC recommendations, so that businesses have the confidence to invest in low-carbon technology. We also reaffirmed our strong commitment
to mobilise the climate finance that is so essential for developing nations and making sure they sign up to an agreement.
There was a new element that I added to this G7, and that was fighting corruption. We met just after the FIFA scandal, but the point that I made was that corruption is not just wrecking an institution that is vital for football; it is also sitting at the heart of so many of the problems we face around the world today. Cutting corruption by just 10% could benefit the global economy by $380 billion every year. Corruption does not just threaten our prosperity; it undermines our security too. So at this summit I was determined that we should do more to confront this issue. In Britain, we have passed the Bribery Act, with a 40-strong team of criminal investigators to enforce it, and we have ensured that all our 28 country aid programmes include anti-corruption measures, but we need the full support of our international partners, and we made some progress in Germany.
We reaffirmed our commitment to the issues around tax and transparency that I first put on the table in Lough Erne two years ago, and we will work with the OECD and the G20 to finalise an international plan to stop companies from artificially shifting their profits across borders to avoid taxes. The G7 will push for a targeted monitoring process to ensure its implementation. Over 90 countries have agreed to share their tax information automatically by the end of 2018, and the G7 urged others to follow suit so more people pay the tax that is due.
Britain has become the first major country to establish a public central registry of who really owns companies, and now other countries have to follow with the implementation of their own national action plans, a key step in countering money laundering and corruption. We also agreed that leaders would give special focus to corruption in the run-up to the UN in September and the G20 in Turkey, culminating with a major anti-corruption summit in London next year.
On national security, there were a number of issues discussed, beginning with ISIL in Iraq and Syria. We have a three-pronged strategy. First, we are helping to train Iraqi security forces so they can defeat ISIL on the ground. We have already trained over 1,200 Kurdish troops in Irbil, and at the summit I announced that we will now deploy an additional 125 military personnel to expand this training effort across Iraq. Secondly, I met Prime Minister Abadi and reiterated our support for his efforts to build an inclusive Government that brings the country together against the common enemy that is ISIL. Thirdly, we need to do more to tackle the causes, not just the consequences, of this terrorist threat, and that means defeating the poisonous ideology of extremism at home and abroad.
In Syria, there is no greater recruiting sergeant for ISIL than President Assad’s war against his own people, so the G7 called for a genuine UN-led political transition as the only way to bring peace and defeat terrorism in Syria.
In Libya, there is a real danger of ISIL terrorists exploiting ungoverned spaces to establish a new base from which to plot attacks against European countries, while criminal gangs are exploiting an open corridor
to make Libya the new gateway to Europe for people-smuggling. So we agreed to give our full backing to the UN-led effort to put in place a national unity Government in Libya and we agreed a comprehensive approach going after the gangs that are trafficking people, stabilising the countries from which these people are coming and continuing to play our full part in the humanitarian rescue mission. Britain is playing its part in all of these things, with HMS ‘Bulwark’ picking up another 2,500 people at the weekend.
We are also stepping up our efforts to support Nigeria. I met President Buhari during the summit and also discussed with President Obama how we could best help Nigeria to tackle corruption and win the fight against Boko Haram. The National Security Council has agreed that this will be a specific priority. We are setting up a new cross-government unit dedicated to this task, and we will be offering significant help, including training the Nigerian army to help in its work to defeat Boko Haram.
I turn to global health. Playing our part in fighting disease overseas is not just a moral obligation; it is the single most effective way of preventing diseases infecting people here in the UK. So, following the Ebola outbreak, it was right that the G7 devoted significant time to how best to try to prevent a future global pandemic. At the summit, I announced that we would create a new £20 million UK research and development fund focused on breakthrough medicines. We are also leading by example in promoting greater transparency over clinical trials and forming our own crack team of medics that can deploy rapidly to tackle infection outbreaks anywhere in the world, learning the lessons of the slow response to the Ebola outbreak, chiefly by the World Health Organization.
Finally, this was, of course, the second year running that we have met as a G7 rather than a G8. President Obama summed up the choice facing President Putin: he can either continue to wreck his country’s economy and continue Russia’s isolation, or he can recognise that Russia’s greatness does not depend on violating the territorial integrity and sovereignty of other countries. The G7 was clear and unambiguous about its position. Diplomatic efforts must succeed in restoring Ukraine’s sovereignty and territorial integrity, and existing sanctions must remain in place until the Minsk agreements are fully implemented. We expect Russia to stop transborder support of separatist forces and use its influence on them to bring the violence to an end. We were clear that we,
‘stand ready to take further restrictive measures in order to increase cost on Russia should its actions so require’.
Fully implementing Minsk also requires action from Ukraine, so it is vital that President Poroshenko’s Government have the support needed to deliver the necessary political and economic reforms. The UK is already helping through our good governance fund, and we will continue to look at what more we can do, but we must not forget that the Ukrainians are the victims and not the aggressors.
Following the general election, with our economy growing, deficit falling and unemployment tumbling, people can see that Britain is back. We are working for trade deals, fighting corruption and leading the battle
against poverty, disease and climate change. We are fighting ISIL over the skies of Iraq, saving lives in the Mediterranean and standing firm with sanctions against Russia’s actions in Ukraine. On every front we are playing a leading role in advancing prosperity and security around the world and, in doing so, delivering both the economic security and the national security on which our future depends. I commend this Statement to the House”.
My Lords, that concludes the Statement.
4.39 pm
Baroness Smith of Basildon (Lab): My Lords, I am grateful to the noble Baroness the Leader for repeating the Prime Minister’s Statement. We welcome the conclusions of the summit, including the reaffirmation of the G7’s aid commitment and the commitments to fighting corruption and to fighting disease overseas. As the noble Baroness made clear, this is the second G7 summit from which, rightly, Russia has been excluded. There should be consequences for what it is doing in Ukraine. Russia should continue to be excluded until President Putin changes course, and sanctions must remain. EU sanctions will expire at the end of July. The Statement says that they should be rolled over and that the G7 stand ready to take further restrictive measures. Is the noble Baroness able to tell the House whether the Prime Minister will be arguing at the next EU Council for those sanctions to be strengthened?
At this summit, the Prime Minister acknowledged that sanctions are also having an impact on those who are opposing them, so we welcome the fact that G7 leaders agree that more must be done to support EU member states that are being particularly affected. Can the noble Baroness provide any information on what that means in practice—the practical measures that might be taken?
In the Statement, the noble Baroness referred to the fight against ISIL. We have all seen the absolute horrors of what is happening in Mosul. It is extremely worrying and indeed distressing to see ISIL’s advances in recent weeks, particularly into Ramadi. That strong and united approach to tackling ISIL therefore continues to be vital. We back the UK’s contribution to that effort, and we welcome the extra 125 military trainers being sent to Iraq at the request of the Iraqi Prime Minister. As the Statement says, the Iraqi Government must be supported in their efforts to push back ISIL’s advance and restore stability and security across the country. So is there now a further need to accelerate the recruitment, training and equipping of Iraqi forces? As the noble Baroness will recognise, an inclusive and enduring political settlement is vital. It would be helpful if she could tell the House if our Government are continuing to press the Iraqi Government to do more to reach out to Sunni tribes, and how this is being acted on. After all, those tribes are key to this.
Moving on to other issues, the summit also reached important conclusions on the global economy and on climate change. Regarding the discussions on TTIP, can the noble Baroness confirm whether the Prime Minister sought specific assurances from President Obama that our National Health Service will be protected and, if he did, what was the response?
On climate change, we welcome long-term goals but they are of value only if they are taken seriously and if they change short-term behaviour to ensure that they are actually achieved. In December, the UN climate change negotiations will take place in Paris. What is the UK doing to ensure that the EU negotiates on the more ambitious targets that we have already called for?
Obviously we welcome serious action to tackle fraud, whenever and wherever. In his Statement, the Prime Minister specifically referred to FIFA. Last week my noble friend Lord Bach, as shadow Attorney-General, raised in your Lordships’ House the question of whether there is any UK investigation into British involvement in the allegations regarding FIFA. In response, the noble Lord, Lord Faulks, said:
“The SFO has been aware of allegations relating to FIFA for some years. It is keeping the situation under review and is ready to assist”—
not to get involved or take action—
“in any way it can. We do not think there is a lack of resources”.—[
Official Report
, 4/6/15; col. 521.]
That was rather a strange response, but can the noble Baroness update the House on what has happened regarding that investigation—if there is one—since 4 June?
It is somewhat embarrassing, though, that yet again during important international negotiation discussions, so much of the press coverage around the G7 summit was not about the global economy, climate change or ISIL, but about the internal row in the Conservative Party over Europe. Even the Conservatives’ most loyal and supportive newspapers, and there are quite a few of them, described Mr Cameron’s attempts to have a clear line as “a shambles”. Many of us here remain unclear about the Prime Minister’s position. It would be genuinely helpful to your Lordships’ House if the noble Baroness could take the opportunity today to clarify the Government’s position. Can she tell us what the Government’s reform proposals are and what the red lines are? Can she say clearly now whether, when the Prime Minister has finished negotiating and comes back asking for a yes vote, he will insist that Ministers who do not agree with him will have to resign or be sacked?
I appreciate that the noble Baroness may personally prefer the approach of the Mayor of London, who is also the MP for Uxbridge and South Ruislip and a renowned Daily Telegraph columnist—not a Minister, although he attends Cabinet. He said that Ministers should be able to vote whichever way they want. That will make for an interesting Cabinet meeting next week. If the noble Baroness could clarify the Government’s position I would be grateful, and it would be helpful.
A number of very important issues were discussed during the summit, and there were some useful and helpful responses, many of which we support. However, it is disappointing that another international summit which is vital to our national interest has ended, yet again, in the usual place, with a Conservative Prime Minister fighting his own party on Europe. In any such negotiations national interest must always come first. I look forward to the noble Baroness’s response.
Lord Wallace of Tankerness (LD): My Lords, I, too, thank the noble Baroness the Leader of the House for repeating the Prime Minister’s Statement on the G7 summit. As the noble Baroness, Lady Smith, indicated, there is much in the summit and in the Statement which can be welcomed: the further steps to promote trade deals; the ambition to set goals at the United Nations in September to eradicate extreme poverty by 2030; the steps being taken to tackle corruption; specific support for Nigeria; initiatives to fight disease overseas; support for the efforts of Prime Minister al-Abadi in Iraq to build a more inclusive Government to bring his country together in challenging ISIL. However, I remember that when the House was recalled to debate Iraq last September, there was an expectation that the new Iraqi Government would reach out to include the Sunni community. It would therefore be useful to know what encouragement and support has been given to Prime Minister al-Abadi in these intervening months to achieve that goal.
I will not follow the noble Baroness, Lady Smith, and will resist the temptation to ask the Leader of the House what her immediate thoughts were when she heard the “Back Me Or Resign” headlines on Monday morning. However, if she chooses to share that with the House, I am sure that we will all be quite interested. However, does not the very fact that Downing Street had to spend time and energy throughout Monday to correct a so-called “misinterpretation” by the entire travelling media pack just illustrate the fault-line at the heart of Britain’s foreign policy? While the Government and government-led public debate at home obsess about a referendum on European Union membership, our voice is, inevitably, diminished on the profoundly serious global issues which are the focus of such summits: the Middle East, Ukraine, global climate change and the plight of refugees in the Mediterranean.
While the Prime Minister may have tried to make a robust rebuttal of claims by some US envoys that we are becoming “Great Shrinking Britain”, should it not concern all of us who believe that as a nation we can and should be a positive force in the world, punching above our weight, that the perception of some of our closest allies is that our contribution and influence are waning? It would therefore be very welcome if in answering some specific questions, the Leader of the House could give answers which, by their substance, show that we are not a shrinking Britain.
The Statement refers to Russia, Ukraine, and implementing Minsk, and to welcome commitments by the G7 which state that diplomatic efforts must succeed in restoring Ukraine’s sovereignty and territorial integrity. In any future developments or negotiations, will the UK, as a signatory to the Budapest memorandum, play a full part, or, as in Minsk earlier in the year, will we leave it to France and Germany?
We welcome the long-term goals for climate change, but with regard to the bold but very welcome commitment by the G7 to decarbonise the global economy by the end of the century, how do the Government expect the UK’s commitment to be taken seriously if persistent rumours materialise that the Energy and Climate Change Secretary will announce restrictions of the renewables
obligation for onshore wind developments currently in the planning stage? The Prime Minister’s Statement referred to businesses having the confidence to invest in low-carbon technology, but what signals will be sent to potential investors in new renewables projects such as wave or tidal power if the Government can change the support regime at such short notice?
Finally, it is right to pay tribute to those, including those on HMS “Bulwark”, who are engaged in humanitarian rescue missions in the Mediterranean, and right to acknowledge the measures agreed at the G7 which address that issue, including the backing for UN-led efforts to put in place a national unity Government in Libya. However, surely a far more fundamental approach will be required to address the underlying causes of why people are fleeing their homes. Can we look to the United Kingdom Government to give leadership in the G7 and other forums to pursue initiatives which, in their magnitude, match the scale of the problem?
Baroness Stowell of Beeston: I start by congratulating the noble Baroness, Lady Smith, on her election as Leader of the Opposition in this House. This is the first opportunity that I have had to do so from the Dispatch Box. Regarding both her comments and those of the noble and learned Lord, Lord Wallace, on Europe and their questions about the European referendum—to which my party has been committed for a long time and in which it is pleased that, following yesterday’s historic vote in the House of Commons, there will now be an opportunity for all the people of this country to participate—I say to them that it is ironic that they are now asking me questions about that when only about a month ago they did not wish to support that opportunity for everybody. They know very well that our manifesto commitment is that the Prime Minister will negotiate for reforms in Europe that are in the interests of the UK and, indeed, of Europe. All of us in government are signed up to that commitment, and when the Prime Minister has concluded his negotiations he will put a question to the United Kingdom for the people to decide in the in/out referendum. We very much support that process, which has now started.
I should correct the noble Baroness. Boris Johnson attends the political Cabinet; he does not attend the Cabinet in the normal sense of the word.
Moving on to the point that the noble and learned Lord, Lord Wallace, made about Europe distracting the Prime Minister in some way in his contribution to the discussions at the G7, I would say: far from it. In all the discussions over the two days in Germany, the Prime Minister was very much able to show that the UK is both setting the agenda and leading the way on some of these very important issues.
I am grateful for the support that I heard from both opposition Benches for what we are doing to ensure that sanctions against Russia are very much in place. The noble Baroness asked me about the European Council in June. We will most definitely be seeking the full rollover of those sanctions. The Minsk agreement is not fully implemented and the sanctions will remain in place until it is. If Russia were to extend its aggression,
we would certainly consider the extension of sanctions, but the first aim is to make sure that we get them rolled over while Minsk is not being implemented.
The noble Baroness asked about the effect on some of the countries that are imposing sanctions and what actions might be taken to support them. We need to be quite careful about singling out individual countries in that way, because the whole purpose of imposing these sanctions is to show that the rest of us want to abide by the collective rules that apply across the world. If we impose sanctions on somebody who has broken those rules, we do so knowing that there is a cost to us but it is one that we are willing to bear. The principle of maintaining the fundamental international rules is so important that when somebody breaks them we are willing to take some cost. However, the bigger cost is on Russia with the sanctions that it is now having to cope with.
I am grateful to the noble Baroness and the noble and learned Lord, Lord Wallace, for the support that they offered today for what the UK is doing in our campaign regarding ISIL in Iraq. In that context, there were certainly questions from both about what more we are doing to encourage and ensure that Prime Minister al-Abadi moves his Government towards becoming more inclusive. That is something that we pursue at all levels, and the signs are clearly that he is seeking to achieve that himself. We are giving support to Iraq so that the Iraq armed forces are in a strong position to be deployed against ISIL. We are training them up to do the necessary work in their own sovereign territory.
The noble Baroness, Lady Smith, asked about TTIP, the EU and US trade deal, and specifically whether the National Health Service would be protected. I can give her an absolute guarantee on that. Over the last few months, there have been commitments, guarantees and clarifications from both the current relevant European Commissioner and his predecessor. Given that this trade deal is so important to the prosperity of this country and so many others, I would urge that, rather than focusing on the potential risks associated with TTIP, which do not exist, a better approach would be for us to unite in support of applying some pressure to America to sign up to the deal.
There were questions on climate change. Our view is that the terms of the climate change agreement that we are seeking to achieve in Paris will be legally binding and we will continue to press for that. We very much believe that there are real benefits to the economy from making sure that we take a leading role in this area and that there are real threats from climate change that need to be properly dealt with.
The noble Baroness, Lady Smith, asked me specifically about an Oral Question and Answer between the noble Lord, Lord Bach, and my noble friend Lord Faulks. I do not have the specific detail to hand, so, if I may, I will have to come back to her on that. However, the point I was making by referring to FIFA in repeating the Prime Minister’s Statement is that FIFA is an illustration of how corruption needs to be tackled. It was the Prime Minister who put this on the agenda in Germany and the House might like to know that in the light of the discussions at the G7 at
the start of the week, the Japanese Prime Minister has agreed to take that forward into his presidency next year.
As I say, this is something on which we are setting the agenda and leading the way. We are making good progress in all these important areas.
Lord Ashton of Hyde (Con): My Lords, as this is the first ministerial Statement in this Parliament, I thought it might be useful if I remind the House of what the rules for the 20 minutes of Back-Bench questions are and what the Companion says. It says:
“Ministerial statements are made for the information of the House, and although brief questions from all quarters of the House are allowed, statements should not be made the occasion for an immediate debate”.
“As a matter of courtesy, members who wish to ask questions on an oral statement should be present to hear the whole of the statement read out”.
4.58 pm
Lord Howell of Guildford (Con): My Lords, there were reports from the margins of the talks at Garmisch-Partenkirchen that Moscow and Tehran might now be more willing to assist with the removal and replacement of President Assad. If that is so, that is extremely significant. I wonder whether the Minister has any more information on those reports and the related issues.
Baroness Stowell of Beeston: On that matter, as I said, as far as Russia is concerned we are completely firm in our position on Ukraine. But it is right that the Prime Minister has had a conversation recently with President Putin, and in the course of that conversation President Putin and the Prime Minister agreed that our national security advisers should restart talks on the Syrian conflict. But the Prime Minister was clear with Putin, as ever, that Assad could not be part of the solution in Syria because, as I said in the Statement, he is a recruiting sergeant for ISIL and not part of the answer to it.
Lord Anderson of Swansea (Lab): I have two questions about Russia and Ukraine. We are told in the Statement that the G7 was clear and unambiguous about the position. It states:
“Diplomatic efforts must succeed in restoring Ukraine’s sovereignty and territorial integrity”.
Does that extend to Crimea, or have we written off Crimea effectively as a fait accompli?
Secondly, the Statement states that we stand ready to impose further sanctions if necessary. Clearly, that is important, and it is particularly important that Japan is now part of that consensus. But are the Government really confident that the EU sanctions will even be maintained, given the very strong pressures of President Putin and his inducements for a number of EU countries?
Baroness Stowell of Beeston: The Prime Minister and the other European leaders were absolutely united in their view on sanctions on Russia, certainly in the course of discussions at the G7 over the last few days. From the preliminary discussions leading into the next
European Council meeting, I gather that there is no question of any doubt on that, but it is something that we have to keep pressing. We have talked about this before. We all have to hold together on this, because it is so vital. Russia must not see any weakness in our agreement in the West and in Europe on sanctions remaining in place.
On the noble Lord’s question about Crimea and whether it has been written off, I would answer, “Absolutely nothing of the kind”. We remain very clear that what Russia did in that area was illegal and there is no question that this would in any way be ignored or forgotten.
Lord King of Bridgwater (Con): Looking at this Statement and the seriousness of some of the global issues that it mentions such as global health and climate change, is there any movement at all to suggest in discussions involving the major countries of the world that China might have a contribution to make? There are international global interests in so many of these very serious issues.
Baroness Stowell of Beeston: I do not think that my noble friend is suggesting that we are at the point where we might extend the G7 to include China. But he is right about China being so important to the future prosperity and security of the world at large. Again, this is an area where we have been very much in the forefront in recognising the growing importance of China. Before the general election, the UK was the first G7 country to join the AIIB, which is the new Chinese version of the World Bank. Because of our leadership there, other G7 countries have joined that bank.
Lord Wallace of Saltaire (LD): My Lords, I am sure the noble Baroness will be pleased to be reminded that the current EU Trade Commissioner is a woman, Cecilia Malmström, so she should therefore have said “her predecessor” when referring to the EU Trade Commissioner.
On TTIP, the transatlantic trade association, I hope the Government are well aware that there is an active campaign on social media and in the NGO community against this whole transatlantic free trade agreement as a capitalist ramp that will give multinational companies access to our markets at all sorts of cost. That is as irrational as much of the campaign for Britain to leave the European Union. Are the Government planning any major information campaign to combat that underlying distrust of the entire transatlantic trade agreement?
On the EU, are the Government also proposing to use the balance of competences exercise of the last coalition Government to inform the public, given that I read in the newspapers every day of major claims being made by members of the Conservative Party for the repatriation of substantial powers from the European Community, for which the balance of competences exercise produced no evidence?
Lastly, we all welcome the Government’s views on corruption, and we all see again from the FIFA example that the overseas territories and Crown dependencies
under British sovereignty form part of a network of transnational corruption. Are the Government planning to take powers to tighten controls over overseas financial centres under British sovereignty?
Baroness Stowell of Beeston: My Lords, there is quite a lot there, but first I must thank the noble Lord for correcting me on the current EU Trade Commissioner. He follows these issues far more closely than I do myself and, unfortunately, I had not spotted from the name in my brief that I had got the gender incorrect, so I am pleased to be told that the Trade Commissioner is a woman.
On TTIP, the noble Lord is absolutely right to say that there are a huge number of benefits in the agreement for small businesses because it will help them to export, as well as for consumers generally in terms of cheaper goods and increased trade. I will reflect on his comment about the promotion of the benefits of TTIP, but that leads me back to the point I made earlier, which is that because there is so much to be gained from this trade deal, I think there are some misplaced concerns about issues which are not relevant. They are not ones that we need to be concerned about because we have got the necessary assurances. I know that the noble Lord was very much involved in the balance of competences exercise. I will look at it again.
On corruption and the overseas territories, although I may not be able to find the specifics, I can make the general point that one of the things that we as a Government have done in terms of increasing transparency is to ensure that the Crown dependencies are part of the first wave of the new arrangements for ensuring that transactions are properly recorded as part of one of our new measures to increase transparency, so they are very much part of the effort to make progress in this area.
Lord Craig of Radley (CB): My Lords, in the discussions which the Prime Minister had with President Obama, did the President raise concerns about the reductions which have taken place in the Armed Forces in recent years, and about the lack of clarity on the future defence budget? If so, how did the Prime Minister reply?
Baroness Stowell of Beeston: Unfortunately, I do not get to be a fly on the wall in these meetings, but the point that I am sure the Prime Minister would have made on defence is the one that he makes continually: this year we are spending 2% of our GDP on defence, and future defence spending will be decided in the review. We must not forget that it is clear in the Government’s manifesto, and we are clear, that there will be no reduction in the regular forces, we will replace Trident, and we are committed and able to spend some £160 billion on defence equipment over the next 10 years.
Lord Soley (Lab): The Prime Minister has been claiming that Britain is going forwards, but in fact a number of US commentators have been saying that we are going backwards. What we want to know, and I think what has just been asked, is whether a clear
commitment was given to President Obama that Britain would retain or increase its defence expenditure to 2% of GDP, and maintain that forthwith. That is what we need to know.
Baroness Stowell of Beeston: I have nothing to add to what I have just said except to say two things to the noble Lord. The first is that we have the biggest defence budget in the EU and the second largest in NATO, and we are the US’s largest partner in terms of coalition air strikes against ISIL. I would also make the point that we are very much in play in ensuring that the defence of this country is secured, and we are playing our part in security and defence issues around the world.
Lord Hylton (CB): My Lords, the Statement says that there is a central register here of beneficial owners and companies. Will the Government do the same for valuable properties, and would that not be a very good way of reducing money laundering? Secondly, if it is right to fight ISIS in Iraq, surely the same must be true for Syria. Is there not something that needs reconsidering on that point?
Baroness Stowell of Beeston: On the noble Lord’s first point, I am not in a position to extend what we have already done in this area, but we are very much at the forefront of this agenda, which the Prime Minister started back in Lough Erne. However, I note the noble Lord’s proposal.
The situation in Syria is very concerning and continues to worsen. We are doing a great deal in terms of supporting the action by ensuring that we are providing reconnoitre-type services and supporting the humanitarian situation on the ground. However, we are not involved in military action.
Lord Lea of Crondall (Lab): My Lords, many of the issues covered by the Statement seem soluble, at least in principle. What worries some of us is that the refugee crisis in the Mediterranean is not in the same category—it looks insoluble. Is the difficulty about finding a more credible process involving north Africa and the Middle East with Europe to reduce the number of refugees that no one has thought intellectually, as it were, of what is needed, or is it that some of the countries where people are coming from do not want to co-operate? I find what is going on very shocking, as do people all around the country. It is absolutely dreadful. Is it for Europe or is it for our own Foreign Office to give a really big push to think of ways in which we can find a credible process?
Baroness Stowell of Beeston: The noble Lord gives a stark illustration of the seriousness of the desperate state of some countries, whether they are in north Africa or the Middle East. I will try to be brief while at the same time doing justice to this serious issue. We are doing everything we can to save lives, as one would expect from a moral and upstanding nation. I refer to what HMS “Bulwark” has been doing as part of the rescue operation. The misery of the people who are being rescued from the Mediterranean does not start
there; they need security and stability in the countries they are fleeing from. We have to tackle the cause of this problem, and whether it is through our aid programmes or the political agenda, we must make sure that there is no reason for people to flee in this way in the first place.
Lord Moynihan (Con): I strongly agree that corruption is endemic in FIFA. Can my noble friend the Leader of the House suggest to her ministerial colleagues that we should closely scrutinise the proposed legislation being introduced into the Swiss Parliament to address corruption in sport and increase accountability and transparency to see whether there are lessons to be learned from co-operating with the Swiss authorities, while stepping up our work with sponsors and reporting in due course to this House on the important work of the Serious Fraud Office—the issue rightly raised by the noble Baroness, Lady Smith—as well as co-operating with US judicial authorities to address corruption in international sports administration?
Baroness Stowell of Beeston: My noble friend covers a range of different recommendations for us to consider. I will certainly make sure that I report them back to the relevant departments which are responsible for this matter.
Lord Stoddart of Swindon (Ind Lab): My Lords, I will ask two questions. First, on overseas aid, I think it was the Defence Secretary who suggested that part of the overseas aid budget should be used to arm third-world countries and to provide other military assistance. Does the Minister agree that, if that were so, overseas aid, which is supported by most people, would lose some support?
Secondly, on Russia, I am part of the generation who lived through World War II and saw the contribution that the Russians made—26 million people dead—to the fighting and winning of that war. As far as Ukraine is concerned, there are two sides to the question. The EU, the United States and Russia have made mistakes relating to Ukraine. Instead of having discussions through foghorn diplomacy through the press and other media, would it really not be better, in the interests of peace and co-operation, for the Russians to be invited back into the G8 forthwith?
Baroness Stowell of Beeston: On the noble Lord’s last point, the G7 leaders are clear that that will not happen until Putin wants to adopt the values that he has decided no longer apply to him, which is the point that I tried to make when responding to the questions about sanctions. This is not just a group of people trying to ensure prosperity in the world; it is also an organisation that represents values that are important and that underpin how we achieve that prosperity. If somebody such as President Putin does not subscribe to those values, as he clearly does not, there is not a place for him at the G7, or for it to be extended.
On the noble Lord’s point about overseas aid and defence spending, my right honourable friend the Defence Secretary was making an important point: clearly, a lot of overseas aid contributes to our security and to
stability in other countries, whether that is by tackling something such as Ebola or by supporting people with humanitarian needs. In doing that, we hope to return a country to some sort of stability so that it can prosper. That is another way of protecting ourselves and our defences.
Charities (Protection and Social Investment) Bill [HL]
Second Reading (Continued)
5.18 pm
Lord Hodgson of Astley Abbotts (Con): My Lords, we descend from the rarefied atmosphere of world diplomacy to the rather more pragmatic matter of the Charities (Protection and Social Investment) Bill. I admit that my fingerprints are on a good many parts of this Bill and I therefore begin by pleading guilty as charged. It will come as no surprise to my noble friend on the Front Bench, or indeed the House as a whole, that I am very supportive of the principles behind this legislation.
My noble friend was kind enough to say some nice things about my review in his opening remarks. I reciprocate by congratulating him on his maiden speech. Maiden speeches are, for all of us, a moment of terror. If it is a maiden speech from the Front Bench the hurdle is commensurately higher. I have to say that he cleared the hurdle with aplomb and I congratulate him on that. Of course, he need not think that I will not probe him in Committee. I am a Back-Bencher and I will do my scrutinising work. However, as to the direction of travel, I have no doubt that the Government are on the right track.
My nearly year-long review of the Charities Act, from which a good many of these proposals flow, was fascinating but also humbling because one saw around the country groups of men and women, often with not much money or resources but with commitment, drive and enthusiasm, setting out to tackle some of the most difficult and deep-seated problems of our society, and doing so without expecting any reward or publicity, or to be noticed or praised. They are in many cases totally unsung heroes.
When I began the review, I asked the charitable and voluntary sector to bring forward its ideas for change. It did so with a will—so much so that I ended up with 115 recommendations, only a minority of which required statutory effect, some of which we are considering today, while others required action by the Charity Commission and the sector or, indeed, by the professions or other parts of our society. However, the House can imagine that the volume of paper and submissions behind those ideas was very substantial. It all had to be read through, absorbed and integrated into the report.
This debate gives me the chance once again to put on record my thanks to the Cabinet Office team who supported and looked after me and prevented me going too far off-piste, at least one of whom is in the officials’ Box to the left of my shoulder. It also gives me the chance to inquire about the fate of some of the other more technical proposals. These have been taken
up by the Law Commission, which currently has a consultation out—a paper rather forbiddingly entitled
Technical Issues in Charity Law
. It is 279 pages long and will, I fear, never hit the bestseller list, nor can it be described as a ripping yarn. However, the Law Commission, with its normal forensic attention to legal detail, has laid out the pros and cons in the consultation paper. The consultation closes on 3 July. Today all I really seek from my noble friend is an assurance that, when the results of the consultation are absorbed, the Government will find time quickly to bring forward another Bill on charities—this time using the Law Commission procedure for non-controversial measures. I comfortably predict that the contents of that Bill will not have people dancing in the saloon bar of the Dog and Duck. However, there is an opportunity to greatly facilitate and bring up to date charity administration and procedures in a number of areas such as land transactions, permanent endowment, charity mergers and the operation of the Charity Tribunal. Therefore, I hope that at some point during the proceedings on the Bill, my noble friend will reassure me that the Government will give any such Bill proper priority.
I said in my earlier remarks that the report contained 115 recommendations and I was rather gratified that it was well received by the sector. However, in life, particularly in political life, if you have a moment of self-satisfaction, you can be quite certain that someone is going to smack you on the nose straightaway. My smack on the nose was given to me by a lady who, on being introduced to me, having just got involved in charities, said rather peremptorily, “Do you know anything about charities?”. I replied, “A little”, I hope in a duly modest tone. She said, “I have just joined the board of my hospice”. I said, “Splendid. How is it all going?”. She replied, “It’s going wonderfully except for one thing”. I said, “What is that?”, to which she replied, “Some idiot has produced a report with 115 recommendations that we are going to have to absorb”, so I went on my way duly chastened.
I turn to the Bill itself. My work on the review revealed the stupendous breadth of the Charity Commission’s work. The briefings state that there are more than 160,000 registered charities. However, as the noble Baroness, Lady Barker, pointed out, there are probably as many again which are unregistered, exempt or excepted. So, there are probably a third of a million charities, with more than 1 million trustees, the regulation of all of which ultimately ends up with the Charity Commission. To put it in context, if you take just the 160,000 registered charities and assume that they send their accounts in to the Charity Commission on a 250-day working year, that is 650 sets of accounts the Charity Commission would have to get every day. As everyone has pointed out, malfeasance is gratifyingly rare but, with the numbers of charities and trustees, there are bound to be occasions when people behave less well than we might like. If public trust and confidence in the sector are to be maintained, it is vital that the commission has the necessary powers.
My non-political life has been spent in industry, commerce and the City. The regulators of those sectors have draconian powers. By comparison, I found that the Charity Commission was rather underpowered.
Two simple examples have come up today. The fact that when you hear the heavy tread of the Charity Commission coming towards you, you can resign and get away without any censure at all seems extraordinary. The fact that, if I have behaved badly, the Charity Commission will remove me as the trustee of a charity but cannot prevent me from reappearing five minutes later as the trustee of another charity also seems unacceptable. Of course, the powers need to be used proportionately and we will no doubt discuss those checks and balances in Committee but public trust and confidence will be eroded if bad apples repeatedly turn up as trustees, directors or senior managers in the charity sector.
I will add a word on the inclusion of the terrorist funding offence, which, if the Bill is implemented, will lead to automatic banning as a trustee. I began my review thinking that this was an open-and-shut case which one could have no problem with. But I found—as those of us who served under the able chairmanship of the noble and learned Lord, Lord Hope of Craighead, on the pre-legislative scrutiny committee subsequently found—that it was more complex than it at first appeared. Charities that provide aid to dysfunctional and broken areas of the world—and I believe they should, for moral reasons and because it is part of our soft power and reputation building around the world—may have to make compromises.
What do I mean by compromises? I will give the House a brief example. I am sent these things quite a lot. The example concerns Iraq and Syria—both areas much in our minds when it comes to the funding of terrorism—and a very unfortunate people called the Yazidis. The Yazidis live—actually, lived—mostly in the Nineveh province of Iraq and they belong to a very ancient religion that I think is linked to Zoroastrianism. ISIL considers them to be devil worshippers and believes the state should be purified and purged of them. The House will appreciate what “purified and purged” means if you are an ISIL freedom fighter. For Yazidi men it often means brutality followed by death, and for Yazidi women it means sexual slavery and repeated rape by ISIL freedom fighters. Yet hope exists. There is a market for these luckless women. For about $10,000 the freedom of one Yazidi woman can be purchased. The legal and moral dilemma for a British charity seeking to buy the freedom of one of these unfortunate women—and who can blame it or criticise it for wishing to do that?—is that the $10,000 is almost certainly going to go straight to ISIL.
As the noble and learned Lord, Lord Hope of Craighead, pointed out, too inflexible an application of the terrorist provision will have a chilling effect on the provision of charitable aid of the sort that I have just described. We need at some point, either here or in other bits of Bills—and I take the stricture of the noble and learned Lord about this—some form of “safe harbour” provision so that charities that are doing responsible work in these ghastly areas of the world can do so without feeling that they are opening themselves up to criticism and legal threat.
I turn to the Bill’s provisions on social investment, which was another chapter in my review. This is a new development and one in which the United Kingdom is
a world leader. I hope that it can remain so, as it has fantastic possibilities to be achieved by combining charitable purposes with the opportunity to earn a modest financial return. Not only could it greatly increase the volume of charitable investment and spread the number of investors; it also opens the way for new approaches and ideas in the operation of individual charities. But—and I am afraid that it is a significant but—it is a very new movement and we need to be careful not to place on it a weight of expectation which it cannot sustain, so there is a need for incremental reform to the statutory framework as the social investment movement develops.
Research that I carried out for the review revealed that the provisions of the Trustee Act 2000 are a significant impediment to established charities becoming involved in social investment. This is because, first, it emphasises that the primary duty of a trustee is to preserve capital and, secondly, it makes no distinction between a charitable trust and a private trust. They have very different objectives. For a private trust such as a person’s pension fund, the preservation of capital is of course critical, otherwise the pension cannot be paid. However, for a charity it is a different matter because it has a public benefit requirement, so it could be perfectly proper for a charity concerned with, say, prisoner rehabilitation to spend some of its capital on those objectives—not to do so capriciously or without due care and attention, because in those circumstances the trustees would certainly be liable, but soberly, carefully and after due inquiry. I am sure that the noble and learned Lord will know better than I do that some lawyers argue that a distinction already exists in law, but the evidence I got suggested that there was a chilling effect. So I am glad that the Government are now proposing to put beyond doubt that the position of a charity trustee is different from that of a private trustee.
I referred a moment ago to the need for a gradualist approach in assisting the development of social investment. It is of course not just the Government who have to play a part; so do the regulators, the FCA and the Charity Commission, as well as myriad professional bodies including accountants, advisers, investment managers and financial advisers. At some point in proceedings on the Bill, it would be helpful if my noble friend could tell the House or the Committee what actions the Government are taking to chivvy up this group in their support of social investment, and what the present position is on those developments.
Finally, I turn to something which is not in the Bill as drafted. One of the issues which I expect we will explore in Committee is whether the commission’s new powers are proportionate or represent an inequality of arms, especially as regards smaller charities. When the Labour Government brought in what became the Charities Act 2006, they introduced the concept of the Charity Tribunal. This was to be a user-friendly, non-adversarial, quick and cheap means for charities—again, especially smaller charities—to get access to redress when they believed that they had been unfairly treated by the commission. Prior to this, the only method of redress was an appeal by the charity to the High Court. As we all know, Silks, like supermodels, do not get out of bed for less than a few thousand pounds
a day. The result was that charities mostly had no option but to submit automatically to the commission’s direction.
It is fair to say that the tribunal got off to a bit of a slow start and that early hopes were not entirely fulfilled, but progress towards the original idea is now being made. One inhibition is contained in Schedule 6 to the consolidated Charities Act 2011. This is a complex, 10-page schedule as to who may do what, how they may do it, what the timescales are and what the outcomes or redress may be. To the trustee of the smaller charity, it is a formidable bureaucratic list. If your Lordships look at line 22 on page 6 of the Bill, you will get a flavour as there is an amendment to that schedule. I argued in my review that this represented an inequality of arms and an unnecessary impediment to access to justice for charities. I recommended that the whole schedule should be replaced by two simple provisions: first, that any charity should have a right of appeal to the tribunal against any legal decision of the Charity Commission; and, secondly, that it should have the right of review against any other decision by the commission. In so far as the House may wish to explore proportionality in the commission’s new punitive powers, a reform to remove the existing Schedule 6 and have that simple replacement would represent a rebalancing. I hope that the Government will reflect on the advantages of such an approach between now and Committee.
Today, I conclude by saying that the principles of the Bill are doing the right things in the right way. The Bill has my support.
5.35 pm
Viscount Chandos (Lab): My Lords, I welcome the Bill. I thank the noble Lord, Lord Bridges of Headley, for introducing it with such an excellent maiden speech and congratulate him on his appointment as Minister. I also pay tribute to the work of the noble Lord, Lord Hodgson, and his review and to the noble and learned Lord, Lord Hope of Craighead, and the members of the Joint Committee on the predecessor, draft Bill. I start by declaring an interest as a trustee of a number of charities, as disclosed in the register, in particular as a trustee and past chair of the Esmée Fairbairn Foundation, one of the largest grant-making foundations in the country and also one of the most active social investors. For that reason, in speaking briefly, I will concentrate on the issues relating to social investment.
I thoroughly welcome the clarification of the powers of charities in that respect, reflecting the recommendations, among others, made by the Law Commission. As well as expressing my strong support for the excellent points made by my noble friend Lady Hayter, I will first make a brief comment about the role of charities and the implications of that for the main measures included in the Bill, which is another way of saying what both the noble Lord, Lord Hodgson, and the noble and learned Lord, Lord Hope, have already said.
A few years ago, Bill Gates, on one of his visits to London, was asked how the Bill and Melinda Gates Foundation saw its role and its relationship to Governments—not just its own Government but Governments around the world. Innovation, he said,
should lie at the heart of philanthropic activity. Philanthropy could never replace government funding for those in need, so its role had to be to lead the way. If that is true for a foundation with an endowment of over $40 billion, how much truer must it be for all other charities? With innovation, comes risk; and as in the corporate sector, charities must therefore be free to fail. Although I wholeheartedly support measures to ensure that the Charity Commission can act decisively to prevent abuse, this must not be at the cost of discouraging proper risk-taking or of the creation of a risk-averse environment that stifles the vital innovation about which Bill Gates has spoken. The noble and learned Lord, Lord Hope, spoke about the risk of the Bill’s provisions being too specifically restrictive. That is obviously something we should look at, but we should also be looking at and fostering the culture and environment around the third sector.
As the House has heard, the social investment provisions are essentially a clarification. The noble Lord, Lord Hodgson, has already described the UK as a world leader in this area. The Esmée Fairbairn Foundation and others have been able to pursue social investment prior to this clarification, but it is clearly welcome, across the board, that a wider range of trusts and foundations should be able to consider social investment. However, in clarifying this there is obviously the challenge of definition. In general parlance, “social investment” can cover—if I am allowed to use the phrase—a multitude of sins, ranging from quite lightly or negatively screened investment to take out tobacco or, fashionably, fossil fuels, all the way to mission-related investment. The Law Commission report has an excellent diagram showing the range of investments covered by the definition.
The Bill sets out a definition that there are two purposes of a social investment: both,
“furthering the charity’s purposes; and”,
“achieving a financial return for the charity”.
The very helpful notes provided by the Cabinet Office make the point that that return can be negative but cannot be wholly negative, otherwise a social investment is in reality a grind. It may be that in the later stages of the Bill we should look at whether the simple definition—that is the great benefit of its simplicity—needs to be clarified to make sure that it is not interpreted as requiring a financial return that is greater than zero.
It has always been easier to assess social investment where the financial return is low and the social impact high. Of course, it is difficult to measure social impact or impact in grant making. That is the holy grail of the charitable sector, and all the major foundations and trusts work hard to otherwise measure it. None the less, it is clear that if the financial return is 1% or 2%, there must be social impact to justify that sacrifice of financial return. There are those—including Sir Ronald Cohen, who has been one of the most important people in this area—who argue that you can make social investments without sacrificing financial return. While that may be true exceptionally, generally, if it is to be a meaningful definition there must be some sacrifice of financial return in exchange for the social impact. After all, almost everybody in this House
would agree that all forms of investment through the financial market can and should be productive in terms of the economy and society—contrary to scurrilous rumours, that is certainly a belief on these Benches. The risk that social investors face when presented with investments where there is a high financial return and relatively low impact is that it may be easy to make poor commercial investments on the grounds of a somewhat illusory impact.
It may be the cynicism of old age but I wonder why the Government have introduced this clarification with this enthusiasm. The smoke signals that seemed to come out of the Cabinet Office during the last Parliament suggested that there was an element of seeing the investments of trusts and foundations as a cow to be milked to try to cover the challenges resulting from the public expenditure cuts being made.
It is hugely important, as the noble Lord, Lord Hodgson, said, that we do not force the pace of social investment. There are two risks if the pace is forced. One is that charities will lose money and see little or no benefit in terms of their objectives or mission. At the other end of the extreme, with regard to instruments such as social investment bonds, based on payments by results, if you chase volume rather than cost efficiencies, it is too easy for it to become another expensive way to finance social welfare—something similar to what we saw with the worst of the PFI.
This is a complex area. The nearly 90 investments that the Esmée Fairbairn Foundation has made over eight years cover every sort of instrument that you can imagine. We are fortunate to have the scale—even though the social investment portfolio is only 3% of the total investments of the foundation, two full-time executives run that programme. That is clearly not a resource that most trusts and foundations can justify. Therefore, in promoting the growth of this market, we have to be realistic about what prudently smaller trusts and foundations can do. There are already a number of social investment funds, and there will be an increasing number. If you have heard the vigorous debate in the investment management world about the trade-off between returns and fees, you can imagine that there is an even more complex debate when trying to assess fees against some mixture of financial and social return.
Subject to those quibbles, I very much welcome the Bill and the facilitation and encouragement of social investment that it brings. I look forward to the further stages of the Bill and its ultimate enactment.
5.47 pm
Lord Borwick (Con): My Lords, I declare an interest in that I am active in five charities—the British Lung Foundation, the Royal Brompton and Harefield Hospitals Charity, the Ewing Foundation, the Federated Foundation and the Science Museum Foundation. I am also on the campaign board of Historic Royal Palaces. All of them are well-run charities, but this Bill is about badly run charities and bad trustees, and I very much support it.
We saw this weekend what happens when charities focus on aggressive fundraising rather than on their objectives. Many have outsourced these functions, and
they now give the impression that they are badly run charities. The
Mail on Sunday
videos showed cynical attempts to get every last penny from donors. Oxfam is one of the charities that outsourced fundraising in such a way. It aims to tackle poverty, but the company that it authorised to raise money clearly was not concerned about the financial situation of the 98 year- old pensioner whom they talked about getting money from in the video. If there was an equally aggressive focus on achieving the charity’s objectives, more might be done to actually alleviate poverty.
Charities such as Oxfam do not help themselves when they talk about things that do not seem to be in their remit. Oxfam, among others, produced lots of content during the last Parliament about austerity, including a mocked-up film poster of “The Perfect Storm”, featuring a list of coalition policies. The Charity Commission found that this,
“could be misconstrued as party political campaigning”.
We must also emphasise the number of great charities and good trustees. There are great things being done in smaller charities, and they are coming up with innovative ways to achieve their objectives and finance their activity. These things are usually being done voluntarily. Volunteers do what they do because they back the cause. They are paid only in pride, in thanks and in the satisfaction of a job well done. Every one of them is let down by bad apples, so such a scandal might tempt a volunteer to despair.
Bad faith in the charity sector is even more heinous for its effect on others, but can we do more than this? If it is pride that motivates the great volunteers, how can we increase the level of pride and the level of dedication that drives people to stand in the cold on street corners to sell poppies for remembrance? Recognition may be a good way. Two hundred and ninety-two people were given a British Empire Medal in the new year honours list, and they were largely people who undertake charity or community work. The great work done by honours committees to identify and locate these people should be applauded. The attention of the press may be on knighthoods for footballers, but a lot of valuable work is done much more quietly. As well as the main national awards, there are local ones, with mayors giving awards to people in their communities pulling our fractured society together with encouragement and faith that even more can be accomplished. I know that most volunteers are not doing their work for recognition, but all are encouraged by it.
At present there is no equivalent of a label such as “plc” for charities: no simple badge that they are registered and doing their job properly. I suggest that charities could put the letters “RC” after their name, standing for “registered charity”. There should, of course, be penalties for misuse of such a badge, and I do not know if “RC” is the right acronym. It certainly could be wrong for an Anglican Church charity. Others may have better ideas. Such a label would show the country that they are in the good category.
I do not want to stop government giving money to charities, as I feel that that kind of expenditure can often be better than other government expenditure. Indeed, there are very sensible arguments for the
Government to ask a charity to deliver certain public services. It will often do it more efficiently and with more knowledge and compassion than state employees.
There is one group of particularly problematic charities: the “sock puppets”. These are organisations that receive a large proportion of their budget from government and use that money to lobby for even more money. A report from the Institute of Economic Affairs found that 27,000 charities are now dependent on government for more than 75% of their income. The report also found that the voluntary sector receives more money from the state than it receives in voluntary donations. That is astonishing. It creates huge problems because many of these charities lobby for more state intervention, higher taxes and more regulation. Perhaps most perniciously of all, many of these charities use taxpayers’ money to call for even more of it for themselves, so it was right that the previous Government took some action on this.
Back in February, Sir Eric Pickles MP announced that the Department for Communities and Local Government was to become the first government department to insert an anti-sock puppet clause in grant agreements. It is important that further steps are taken to tackle the sock puppets. There is a suspicion that Governments of all parties have form in encouraging some charities to lobby for particular policies. We all know the argument: politicians want to implement a policy, but there appears to be no demand for it from the public—but the politicians know that it is the right thing to do and believe that there must be a hidden demand for it, so they make that demand apparent by encouraging charities to lobby for the policy.
There is a host of differences between a well-funded charity, funded by the Government, and an individual helping people themselves. Should this difference be made clear by refusing the right of government-funded charities to be called an RC or registered charity, as I suggested earlier? I propose that government-funded charities should use, if they want, an acronym such as “GFC”, but be refused the right to be called registered charities. How could we define GFCs? Perhaps as charities that have 50% or more of their income coming from government. After all, fundraising from government is different from fundraising from individuals, and it has significant implications for integrity and accountability. Just as companies must understand and react to the needs of their customers, GFCs surely become creatures of government—perhaps even unconsciously. This should be apparent to all but sometimes is not so. Therefore, a GFC acronym would be an idea with merit. Does the Minister agree?
I am concerned that Clause 13, which adds a new Clause 292A, is too focused on defining the financial return element of social investments. It does not clearly enough explain or define the social impact element of social investments. That section of the Bill is devoted to explaining what is meant by “financial return”, which is only one side of the coin. It is perhaps even more important to define what kind of social impact the section has in mind when it comes to social investments. The only text on this issue at the moment is set out in new Clause 292A(2)(a), which talks about,
“directly furthering the charity’s purposes”.
That seems to cover programme-related investment, where an investment is exclusively an advancement of a charity’s purposes. I thought that this area of the law was reasonably settled.
I argue that what is needed is a statutory power that enables charities to engage in what the Charity Commission described as mixed-motive investments. There are investments that are justified on the basis of expected financial return and the extent to which an investment is expected to advance one or more charitable purposes of a charity in whole or in part. It is this form of investment that needs a clear statutory basis. That was clear from the Law Commission’s report on the issues. Would the Minister consider again whether the wording would permit the flexibility to make mixed-motive investments?
Lastly, I ask the Minister whether there is room in the Bill to deal with the problem of charities and community interest companies being treated differently from co-operatives and community benefit societies in the financial promotion regulations when raising social finance. A change to the legislation would enable charities to raise social investment capital from local communities.
5.57 pm
Lord Low of Dalston (CB): My Lords, I join everybody else in welcoming the Minister to his new position and in congratulating him on a most accomplished and confident maiden speech. I do not think he has any need to feel trepidation. He has made an extremely auspicious start in the way he has lost no time in reaching out to stakeholders with an interest in the Bill, and that, too, I very much welcome.
As for my own interest, I have a long-standing interest in the charitable sector due to my 40-year involvement with the RNIB, of which I am now vice-president. Most recently, I have been asked to chair a commission on third-sector regulation by ACEVO, the Association of Chief Executives of Voluntary Organisations. These interests I now declare.
I think that I can speak quite briefly, especially given the authoritative contributions that we have heard already from the noble and learned Lord, Lord Hope of Craighead, and other members of the joint scrutiny committee, notably the noble Baroness, Lady Barker, and the noble Lord, Lord Hodgson of Astley Abbotts, who have laboured tirelessly in this particular vineyard for a considerable period.
The Bill has come forward with a remarkable degree of consensus. It confers powers to strengthen the hand of the Charity Commission in regulating charities, which the commission has itself been seeking, and as a result it has the commission’s strong support. It has been subject to pre-legislative scrutiny, which has led to the Bill being strengthened to include two further powers which the Charity Commission was asking for that were not in the original Bill but are now included as a result of the Joint Committee’s recommendations. It also enjoys a broad welcome from the two leading umbrella bodies in the sector, the NCVO—the National Council for Voluntary Organisations—and ACEVO, which acronym I have already deconstructed, so I do not think there is much that is contentious in the Bill.
Following consultation by the Law Commission, Clause 13 removes any doubt that charities may engage in social investment: that is to say, in investments that both further the charity’s purposes and achieve a financial return for the charity. Measuring social impact might be a little more subjective and problematic. From a charity’s point of view, that will make it easier to undertake such investment, so it is very welcome.