29 Jun 2015 : Column GC117

29 Jun 2015 : Column GC117

Grand Committee

Monday, 29 June 2015.

Charities (Protection and Social Investment) Bill [HL]

Charities (Protection and Social Investment) Bill [HL] 1st Report from the Delegated Powers Committee2nd Report from the Constitution Committee

Committee (2nd Day)

3.30 pm

Relevant documents: 1st Report from the Delegated Powers Committee, 2nd Report from the Constitution Committee.

The Deputy Chairman of Committees (Lord Bichard) (CB): My Lords, welcome to the Grand Committee on the Charities (Protection and Social Investment) Bill. If there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.

Clauses 6 and 7 agreed.

Clause 8: Power to direct property to be applied to another charity

Amendment 6

Moved by Lord Hope of Craighead

6: Clause 8, page 6, line 38, after “unwilling)” insert—

“(a) in subsection (1)(a) after “unwilling” insert “or unable”;

(b) ”

Lord Hope of Craighead (CB): My Lords, Amendment 6 is the sole amendment dealing with Clause 8 of the Bill, which is a comparatively short clause on the “Power to direct property to be applied to another charity”. As it appears in the Bill, Clause 8 makes one amendment to Section 85 of the Charities Act 2011, which is dealing with a different matter from the one that is of concern to me. Amendment 6 seeks to insert two words into Section 85(1)(a) of the 2011 Act so that the phrase,

“persons in possession or control of any property … unwilling to apply it … for the purposes of the charity”,

would also deal with those who say that they are willing to do so but are unable to do so.

The draft Bill, as it appeared before us in the Joint Committee, included the words that I am seeking to insert into Section 85. The description of the draft Bill can be seen in paragraph 141, read with paragraph 142, of the Joint Committee’s report. As paragraph 141 records,

“Clause 7”—

as it was in the draft Bill—

“would amend the 2011 Act to allow the Commission to direct the application of charity property in the event that the person is either ‘unwilling’ or ‘unable’ to do so, rather than just ‘unwilling’ as is currently the case. The explanatory notes to the Bill refer to ‘several cases in which financial institutions holding charity property were contractually unable to transfer it to secure its proper charitable application but would have been willing to do so.’”

29 Jun 2015 : Column GC118

In paragraph 142, we go on to say that,

“The evidence received by the Committee was supportive of this provision”,

and the footnote refers to Professor Gareth Morgan, the Charity Commission for Northern Ireland and the Joseph Rowntree Charitable Trust. Paragraph 142 continues:

“The Charity Law Association”—

which had made a number of very helpful comments on the wording of the draft Bill—

“did not oppose this change, but questioned whether the meaning of the term ‘unable’ was sufficiently clear and whether banks in such situations were really ‘unable’ to transfer charity money or just ‘unwilling’ to breach a contract to do so”.

Since the current Bill was published, I have had a meeting with William Shawcross of the Charity Commission, who has explained to me that he would much prefer that the words “unwilling or unable” were put in—in other words, that the words “or unable” were restored, as my amendment seeks. He explained that, from time to time, he encounters cases of this kind where a direction is proposed and the response is, “Yes, indeed, we are willing to do this, but for a variety of reasons we are simply not able to do so”. As he put it to me, it would be possible by sleight of hand to fudge the thing a little bit, as it were, and treat unwillingness on such a ground as being within the scope of the section, but he would rather that the section was really upfront about the fact that both situations that he encounters in practice were actually dealt with in the wording of Section 85, so that unwillingness, which certainly occurs and is a source of concern, was dealt with but inability—where the persons involved are perfectly willing to comply with the direction but for various reasons say that they cannot properly do so—was covered as well.

This is a very short point. I am a little puzzled as to why the draft Bill which survived scrutiny by the Joint Committee should have been altered in this way. I hope that the Minister will pay attention to the wishes of the Charity Commission, which would find it useful if the amendment were accepted. I beg to move.

Lord Watson of Invergowrie (Lab): My Lords, as one who was a member of the Joint Committee under the excellent chairmanship of the noble and learned Lord, Lord Hope, I share his puzzlement as to why this change has been made to the draft Bill. I have no wish to repeat the words of the noble and learned Lord, but those of us in opposition do not fully understand why such a change should have been made and we invite the Minister to explain that if he can, and to say why, after the Joint Committee recommended acceptance of the draft proposal, and given that, as we have heard, the Charity Commission wants this change, the original wording of the draft Bill should not be reinstated. There is little more to say than that. I look forward to the Minister’s response.

The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con): My Lords, I, too, will keep my remarks relatively brief, by reason of the conclusion that I have come to as a result of what the noble and learned Lord and the noble Lord have said.

29 Jun 2015 : Column GC119

The provision corresponding to Clause 8 in the Bill made reference to “unable” in the manner proposed by this amendment. The Charity Commission asked for the change following several cases where financial institutions holding charity property were contractually unable to transfer it to secure its proper charitable application but would have been willing to do so. As the noble and learned Lord said, the Joint Committee which considered the draft Bill supported the provision.

However, as is noted in the report, the Charity Law Association, while it did not oppose the change, questioned whether the meaning of the word “unable” was sufficiently clear and whether banks in such situations were really unable to transfer charity property, or simply unable to breach a contract to do so. Therefore the Joint Committee recommended that the Government consider the inclusion of some form of statutory protection for a financial institution in cases where compliance with a Charity Commission direction in these circumstances might constitute a breach of its contract with a charity. The Government therefore followed this recommendation and amended Clause 8 to provide for such statutory protection. Since the clause was aimed at dealing with financial institutions which are contractually unable to transfer property, this statutory protection was considered sufficient and the reference to “unable” was omitted.

The amendment tabled by the noble and learned Lord, Lord Hope, proposes to reinstate the reference to “unable”, as we have heard, and further examples have been provided as to when this would be needed beyond the contractual liabilities of banks. I also note what the noble and learned Lord said about his conversations with the Charity Commission. In light of this, I am happy to give further consideration to the amendment and to return to this on Report.

Lord Hope of Craighead: My Lords, I am grateful to the noble Lord for his remarks. It is worth adding that the wording of Clause 85(1) is quite general—it refers to,

“a person or persons in possession or control of any property”.

It does not confine the provision to banks alone. Although they may be the main aim of the provision, it is more widely cast, so whatever the banks may think is not the end of the story.

I hope that the noble Lord will bring forward something on Report without my finding it necessary to table another amendment to keep the matter alive. For the time being, however, in light of what the Minister has said, which I very much welcome, I beg leave to withdraw the amendment.

Amendment 6 withdrawn.

Clause 8 agreed.

Clause 9: Automatic disqualification from being a trustee

Amendment 7 not moved.

29 Jun 2015 : Column GC120

Amendment 8

Moved by Baroness Barker

8: Clause 9, page 8, leave out lines 26 and 27

Baroness Barker (LD): My Lords, Clause 9, which gives the power automatically to disqualify somebody from being a trustee, was the subject of perhaps one of the most contentious of the joint scrutiny committee’s discussions. It was certainly the point on which we received the greatest variety of opinion and which led to some of the most intense arguments from a range of witnesses.

I think that there was general agreement that there are some crimes which are of such seriousness that they should lead to automatic disqualification and that no charity would wish to have somebody who committed them serving as a trustee. We are talking about someone who had been found guilty of crimes of the order set out in Clause 9; for example, making false disclosures and false statements, and disobedience to a direction of the commission on an application to the High Court.

However, the discussion which really brought home the disquiet in the sector was on whether terrorism offences should be a cause for automatic disqualification. Part of the reason why many people in the sector have sought to question these provisions in the Bill, when you might have expected them simply to agree, is some of the past views of the Charity Commission and the way in which they have been expressed. In October 2013 and in early 2014, the current chair of the Charity Commission made statements about the biggest threat to British charities being terrorism. That was a major assertion to make. At that time and since then, there was and has been little evidence of abuse of British charities by terrorist organisations.

The particular problem with those statements was that the Charity Commission chose to make them during Ramadan, which is the biggest charitable fundraising period for Muslim charities. That caused needless and great offence, and the back-draught has coloured people’s vision or view of the power which is now to be given the Charity Commission in Clause 9. That said, there is agreement across the board that there needs to be a tightening up of the grounds on which people can be disbarred.

However, lying in the middle of the clause is the regulation-making power for the Minister—it is the Minister for the Cabinet Office, not the Home Secretary, I note—to add by regulation to the list of offences for which one can automatically be disqualified from being a trustee.

We heard a wide range of views from the witnesses to whom we talked, from the commission being of the view that the provision was necessary for its regulatory functions through to organisations such as ACEVO, which felt that, on balance, the power should be on the statute book but was not likely to feature large in the life of most charities. None the less, there was across the board a sense that charities were being unfairly targeted by the Government, without much evidence that they should be, and that the provisions which relate to terrorism offences are very wide.

29 Jun 2015 : Column GC121

3.45 pm

The Joint Committee’s discussion is neatly summed up in paragraphs 203 to 208 of its report. The committee said it was content that this order-making power be available but that the procedure, in particular, the requirement for the Minister to consult quite widely on whether it is appropriate and proportionate to include an offence in the list of qualifying offences, should be included in the Bill. It has not been. That has caused considerable concern around the voluntary sector.

I note that the Delegated Powers and Regulatory Reform Committee also looked at this power and said that it was content that the Minister should have this power, which is obviously to be used under the affirmative procedure. It also criticised the lack of detail, in particular in relation to commencement and the fact that someone currently serving as a trustee could suddenly find themselves automatically disqualified without much or any notice because that matter is not set out in the Bill or the Explanatory Notes.

The committee accepted, and we accept, that there is a case to ensure that charities are protected by knowing that, if somebody is convicted of any of the offences set out in Clause 9, they will automatically be barred. There are some charities in this country in particular which would find it useful to be able to cite this legislation to try to prevent some people becoming trustees of their organisation, but I wish to challenge the power in subsection (4) in new Section 178A for the Minister—the Minister in the Cabinet Office, not the Home Secretary, I note—to add to this list of offences. We need more detail on the face of the Bill to ensure that this power is used proportionately. I beg to move.

Lord Hodgson of Astley Abbotts (Con): My Lords, I understand the noble Baroness’s concerns on this point and why she feels this may be a loophole which may be abused by the Charity Commission. Nevertheless, we need to give the Charity Commission additional powers, as the noble Baroness said. It has produced quite extensive guidance on how it proposes to use the power, and I cannot imagine that if the Minister, whoever it was, was to propose a change under subsection (4), the sector would allow it to go by unchallenged. The sector would surely be up in arms if it felt that its independence or its freedom to appoint trustees was being infringed. I accept what the Joint Committee on the legislation said, but we are in danger of unnecessarily trammelling the hands of the Minister. These things will need to be looked at from time to time—for example, who would have thought about terrorist fundraising five or six years ago?—and no doubt there may be other issues in the future that will need to be dealt with.

Will the Minister say whether this is subject to the affirmative resolution procedure or the negative procedure? My ability to support the noble Baroness will depend slightly on his answer to that question.

Lord Hope of Craighead: My Lords, I shall add a few words based on the Joint Committee’s report. The noble Baroness, Lady Barker, is right that this is the clause which caused the committee most concern.

29 Jun 2015 : Column GC122

We have before us, among other things, a very carefully worded memorandum from the House of Lords Delegated Powers and Regulatory Reform Committee, the meat of which is set out at pages 96 to 97 of the Joint Committee’s report. That Delegated Powers Committee draws attention to a number of problems that subsection (4) of new Section 178A gives rise to, including the risk of retrospective legislation bringing in offences that were not in the purview of the section when they were committed, without any provision for what would happen to people who were unaware that this might cause them to be disqualified. The committee considered various other aspects, but overall its conclusion was that subsection (4) of the new section should remain in the Bill.

Although the Joint Committee discussed this very fully, we reached the same conclusion, which was put in the report. We were content that the order-making power should be available in the form and subject of the procedures that were proposed, but I draw attention to paragraph 208, which contains the recommendation, that,

“when using the power, the Minister should be required to consult fully on whether it is appropriate and proportionate to include an offence within the list of disqualifying offences”.

The process of consultation would be directed to the variety of problems discussed by the Delegated Powers and Regulatory Reform Committee in its report. There is a question as to whether that requirement should be statutory, or whether it is enough that the Minister would be prepared to say that he would be content to follow what the Joint Committee recommended: that he would consult fully on whether it was appropriate and proportionate to include an offence within the list of qualifying offences. I speak only for myself, but if the Minister was prepared to give an assurance of that kind, that would go some way at least to meeting the noble Baroness’s concerns.

Baroness Hayter of Kentish Town (Lab): My Lords, it is a sobering day even to discuss something with the word “terrorism” in it. I note that the House of Commons had a moment of silence at 3.30 pm, which maybe is a lesson for all of us.

On the amendment before us, the Committee will know that we have always been a bit jumpy about Henry VIII powers. However, it is very important to have this provision in the Bill because I did not move Amendment 7, which we dealt with on the first day of Committee last week, when we dealt with our attempt to include people on the sex offenders register on the list of those who are precluded—which, frankly, I take more seriously than someone who has got into a bit of debt and has an IVA. The Minister did not think that that was appropriate, and I hope very much that he is right and that we will not have a trustee who is on the sexual offenders register and then abuses someone, which would show that I was right and he was wrong. I do not want to be in that position, for fairly obvious reasons. However, if we find that the evidence is that we should have added those on the sex offenders register to those who are precluded from being a trustee, unless there is a waiver, this provision would allow the Minister, at that stage, to put right—unless we win the vote on Report—what would be an omission from the Bill.

29 Jun 2015 : Column GC123

There is always a problem with retrospective legislation, which would be the same now for people convicted for other things. Therefore, it will be important that the implementation date of any regulation is in good time to notify people so that they do not suddenly find themselves acting as a trustee and putting a charity at risk because of some new provision that then comes in. However, if it was something such as someone being on the sex offenders register, that is a known register and they would be able to be notified pretty easily that they could no longer act as a trustee. As a failsafe, albeit that any new measure should be by the affirmative procedure, we are content to see this power in the Bill.

Lord Bridges of Headley: My Lords, I am grateful to the noble Baroness, Lady Barker, for her explanation of this amendment, which was typically reasonable and eloquent. Subsection (4) of new Section 178A, inserted by Clause 9, would enable the Minister by affirmative procedure to make regulations to amend the list of criteria for automatic disqualification by adding or removing an offence.

The Joint Committee that undertook pre-legislative scrutiny of the draft Bill recommended that there be a requirement for any such regulations to be consulted on. The Government agreed and made provision, in subsection (21) of Clause 9, for there to be a requirement to consult on draft regulations where they add an offence.

The Delegated Powers and Regulatory Reform Committee’s first report of this Session stated that the committee was satisfied with the delegation and level of scrutiny in relation to this power when it had advised the Joint Committee on the Draft Protection of Charities Bill. It recognised that the Cabinet Office may in future need to take urgent steps to specify offences that should result in automatic disqualification, and considered that the affirmative resolution procedure would provide an appropriate safeguard.

The DPRRC, however, has raised a question about the commencement of new Section 178A and any regulations made under it. The last Government’s response to the Joint Committee’s report on the draft protection of charities Bill stated that we,

“commit to ensuring that sufficient time would be allowed before the commencement of such provisions”.

I will, therefore, happily provide a commitment to your Lordships that a disqualification would not take place under new Section 178A in relation to a person previously convicted of a specified offence until at least two months after enactment of the section and, in all but exceptional circumstances, until at least two months after the date that any regulations are made under subsection (4). We would want to ensure there was sufficient time to notify charities of the new offences.

When the Bill becomes law, we will publish an implementation plan that will set out when the different provisions of the Bill will be commenced. This will include the timetable for commencement of the automatic disqualification provisions under new Section 178A. The Charity Commission has said that it is planning a wide-ranging communications strategy in order to give those affected by automatic disqualification a

29 Jun 2015 : Column GC124

fair opportunity to learn of the relevant changes before they come into force. Where we undertake any consultation, we will ensure that it is compliant with the compact.

I know that the Lords Constitution Committee has also considered the power to add offences. Its second report of this current Session states that this power to add new offences is not explicitly constrained in its scope, so perhaps I can provide some assurances to your Lordships on how the power would be used, and address a number of the points made.

First, while it may be considered unnecessary, I should nevertheless point out that there are no plans to exercise the power. Its purpose is to enable Ministers in future to amend the list of offences as new criminal offences are created which may be identified as appropriate for automatic disqualification, or criminal offences currently listed may no longer be appropriate, meaning the list needs to be updated. The prospect of a power to amend the list of offences was raised in consultation last year and was generally well supported by respondents, provided the power is subject to the affirmative procedure.

It should go without saying that, in considering any new offence to add to the list, there would need to be a clear rationale for adding that particular offence. The offence would have to be relevant to a person’s fitness to act as a trustee. We would set that out in consulting on the addition of any new offence. That consultation is a statutory requirement. Of course, the safeguards of the public consultation and the affirmative resolution procedure in Parliament—a point my noble friend Lord Hodgson of Astley Abbotts raised—should also provide a significant measure of assurance.

I hope that I have been able to give sufficient assurances to your Lordships on how this power would be used, and invite the noble Baroness to withdraw her amendment.

Baroness Barker: My Lords, I thank the Minister for that characteristically considered answer. It was helpful to have this fleshed out and to have statements on the record from the Dispatch Box.

As I tried to indicate in my opening remarks, and as the noble and learned Lord, Lord Hope of Craighead, indicated on behalf of the committee, there is a widespread understanding in the sector that this is necessary. There is not such a widespread understanding, but perhaps some relief, that some charities may be able to use the provisions of this clause to deter unsuitable people from becoming trustees. That may well be a good thing. It is simply that, within the current climate and context of the debate about the nature of terrorism legislation and its ever-widening grip on our lives, those of us in opposition are beholden to pressure the Government on these matters to make sure that we are not being unduly punitive towards individuals for all the wrong reasons.

I therefore take the Minister’s explanations and I listened to what he said about the extent to which there will be public consultation. With that in mind, I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

Debate on whether Clause 9 should stand part of the Bill.

29 Jun 2015 : Column GC125

4 pm

Lord Watson of Invergowrie: My Lords, I argue that Clause 9 should not stand part of the Bill. I do so not because we do not wish this clause to stand part of the Bill but because we want to raise issues that have not had an airing through another amendment, and we have particular concerns over issues surrounding charities working in areas of conflict.

The Minister will remember that I raised that issue at Second Reading when I asked if he would speak with his ministerial colleague at the Home Office. I hope that he has now done so and will be able to make noble Lords aware of what that discussion produced. Again, I draw attention to the difficulties posed by current counterterrorism legislation to the protection of charities working overseas to deliver humanitarian aid. I accept that changes to the various laws that cover counterterrorism are not capable of being dealt with within the confines of the Bill. However, concerns were raised with the pre-legislative Joint Committee on these matters by several of those who gave evidence, in particular two umbrella organisations that cover NGOs that work abroad: Bond and the Muslim Charities Forum. They would welcome greater clarity from the Government, which would be helpful for all of us.

In response to the Joint Committee’s report the previous Government stated:

“Terrorism legislation is in no way designed to prevent the legitimate humanitarian work of charities, but it needs to be widely drawn to ensure that it captures the ever diversifying nature of the terrorist threat”.

That is understandable, not least in light of the unspeakably appalling events in Tunisia, Kuwait and France three days ago. However, in his evidence, the Government’s Independent Reviewer of Terrorism Legislation, David Anderson QC, told the Joint Committee that the use or suspected use of property for the purposes of terrorism was “monstrously” broadly defined in legislation. Coming from that source, such a comment carries significant weight, and you do not leave yourself open to charges of being weak or soft on terrorism—which we in the Labour Party most certainly are not—by seeking comment on a matter previously highlighted by the Government’s own Independent Reviewer of Terrorism Legislation.

Indeed, Mr Anderson pointed the Joint Committee in the direction of Australia and New Zealand, where specific exceptions exist in terrorism law to cover charities involved in the delivery of humanitarian aid. I am not comparing the UK to either of those countries with regard either to their size or the level of terrorist threat they face. However, given the similarities of the legal systems of all three countries, the possibility that such legislation might prove of value means that it should at least be examined. Again, I mention that the man who drew it to the attention of the Joint Committee can hardly be characterised as being other than committed to ensuring that the UK’s counterterrorism measures are as tight and effective as they possibly can be.

We acknowledge that the Charity Commission has been proactive on this subject and has meet with some of those NGOs faced with the kind of difficult circumstances to which I have referred, and the commission issues alerts and seeks to make charities

29 Jun 2015 : Column GC126

as aware as possible of the risks involved. However, the current counterterrorism legislation, despite the fact that no prosecutions have been brought against UK NGOs that operate in conflict zones, is having a chilling effect on them, and undoubtedly makes it more difficult for those NGOs to deliver humanitarian aid.

The pre-legislative scrutiny Joint Committee highlighted this matter to the previous Government, who said in their response that they would,

“draw the Committee’s recommendation to publish guidance relating to prosecutions under counter-terrorism legislation … to the attention of the Director of Public Prosecutions”.

Given that three months have now elapsed and that—I think I can say this to the Minister—a clear line exists between the previous Government and the current one, will the Minister tell the Committee whether that has been done and, if so, what conclusions have emerged?

Finally, we believe that the commission and those charities which presently fear to tread in certain situations would welcome a form of words which went some way to providing more clarity—perhaps even legal certainty —on this important matter.

Baroness Warwick of Undercliffe (Lab): My Lords, I support the probing questions of my noble friend Lord Watson of Invergowrie. At several stages in our pre-legislative scrutiny of the Bill, we became anxious about the breadth and vagueness of the powers which it bestows on the Charity Commission. These concerns were reinforced by a letter from the chairman of the Joint Committee on Human Rights, Dr Hywel Francis MP, in which he said:

“In the absence of further definition in the Bill itself, or other guidance, such broad and vague language significantly increases the power of the Commission and provides insufficient certainty to both individual trustees and charities about the possible consequences of their conduct”.

At each stage, when we had these concerns, we looked carefully at the evidence and concluded, as noble Lords will see from the report, that the powers were indeed justified in that they were likely to help to increase public trust and confidence in charities.

However, when it came to the inclusion of terrorism offences, as my noble friend has indicated, we received evidence that disturbed us. As noble Lords will know from our report, a number of witnesses expressed concerns over the difficulties presented by terrorism legislation in relation to the operational requirements of NGOs in challenging circumstances overseas. They were particularly concerned about charities operating in dangerous parts of the world for humanitarian purposes. My noble friend referred to the chairman of the Muslim Charities Forum, Dr Hany El-Banna, who told us that he thought counterterrorism legislation was,

“preventing us from having access to the neediest people”.

David Anderson QC, the Government’s Independent Reviewer of Terrorism Legislation, who has already been referred to, said concepts such as the provision of “indirect support” to terrorist organisations had,

“an impact on humanitarian charities, particularly when working abroad and when working in areas that are under the de facto control of a proscribed or designated group”.

29 Jun 2015 : Column GC127

He went on to say that charities operating in these areas ran the risk of falling foul of terrorism law by, for example, delivering relief to a general population which might include individuals or groups designated as terrorists. He suggested that an increased risk could deter charities and their trustees from delivering humanitarian support. Bond, the umbrella group, went on to suggest, in our words, that,

“the withdrawal of banking services exposed donor assets to greater risk because international NGOs had no option other than to use less secure money service bureaux or to carry sums of cash across borders”.

Nothing in what I have said undermines the need to deal with terrorism offences and to address legitimate concerns about the abuse of charitable funds in connection with terrorism. It does, however, raise questions about the uncertainty surrounding the application of terrorism legislation when it comes to charities operating in dangerous circumstances overseas. The pre-legislative scrutiny committee was offered the examples of Australia and New Zealand as places where Governments had addressed this issue and where specific exceptions in law existed to meet this point. We thought that this was worth pursuing, but when we raised it with the Minister for Civil Society, he said it fell outside his remit and was essentially a matter for the Home Office. He went on to say that it could be,

“chasing a problem that does not exist”,

since,

“no one has been prosecuted”.

I do not think that that is good enough. Clearly these charities are expressing real anxieties about the risks they might face and about the chilling effect of this legislation. The difficulties facing these charities are already enormous in Afghanistan, Iraq, Chechnya and Somalia, among other places. If it is possible to provide them with greater certainty in pursuing their important work and overcome this worrying and chilling effect, then we should try to do that.

Like my noble friend, I was disappointed with the Government’s response. The Government recognise that there are concerns, but points only to the problems of creating loopholes without even addressing the suggestion that they might look at the examples of Australia and New Zealand to see whether and how those countries have overcome this danger. I ask the Minister to think again and at least to consider whether other countries can provide some inspiration about whether there are ways to provide greater legal certainty.

Finally, the Government have said they will draw to the attention of the Director of Public Prosecutions our recommendation to publish guidance. I hope they will agree to do rather more than that and to put their weight behind the need for guidance to address the current uncertainty, which was revealed in our evidence and which the Government acknowledge.

Lord Hope of Craighead: My Lords, I draw attention to the last two sentences of paragraph 183 of the Joint Committee’s report, at pages 53 and 54. They refer to an exchange between me and the Minister speaking for the Home Office, the noble Lord, Lord Ashton of Hyde. I pointed out to him the difficulty faced, according to the evidence we received, by people who are trying

29 Jun 2015 : Column GC128

to gain access to areas where people are in dire need of food, warm clothing or whatever else when somebody there is, in effect, a gatekeeper and refuses any transit to the areas where these people are without some form of payment.

One would of course support what the noble Lord, Lord Ashton, said as a general rule—one does not want people to pay money to terrorists for any reason—but the New Zealand legislation has addressed the problem by putting in the phrase “without reasonable excuse”. Something of that kind would go some way to addressing this problem, because a hard-edged refusal to contemplate any situation where money is paid by somebody—not to assist terrorist activity but simply to get access for a humanitarian purpose—would seem to be too severe. I would have thought that there is a need for some degree of flexibility, although like everyone else I recognise that this is a very sensitive issue and the last thing one wants to do is encourage terrorism. There is a conflict of two diametrically opposed interests here, and the hard-edged and uncompromising line, as described in the noble Lord’s reply when I put forward my suggestion, is prejudicing those who are in need of humanitarian assistance.

Lord Hodgson of Astley Abbotts: My Lords, having also been a member of the Joint Committee, I support the need for flexibility on this. I used the example at Second Reading of the Yazidi women who have been enslaved by ISIS and whom it is allegedly possible to ransom for $10,000. Clearly that money is going if not directly then indirectly to ISIS and these charities are faced with an incredibly difficult decision. On the one hand, morality drives you towards wishing to rescue these wretched women who are in a state of sexual slavery. On the other, there is the danger that if you do it, you may end up being prosecuted for the reasons that we have been discussing. I support the need to find some way through this thicket. Whether it is a DPP statement of guidelines or whatever else, I do not know, but we should not let it just ride through our Committee without having a real go at getting clarity as to how charities can operate, not only for the benefit of the individuals concerned but for the reputation of this country. Our soft-power reputation for making an important contribution to providing humanitarian aid in various parts of the world is important to us, and we need to spend time making sure that we maintain it.

Baroness Barker: My Lords, it is worth noting that this issue is not new. Anybody who can remember the 1970s knows that similar decisions had to be made then about whether charities raising money for organisations in Ireland were legitimate charities. I go back to the point raised by the noble and learned Lord, Lord Hope of Craighead, when he talked about reasonable excuse. If a charity is raising money in pursuit of its charitable objects, the question becomes how it pursues its charitable objects, not whether it is therefore deemed to be supporting terrorism. The Charity Commission, having raised the temperature around this issue, is under an obligation to work with the sector to come up with the guidance for charities, which is obviously necessary, on how they can pursue

29 Jun 2015 : Column GC129

their legitimate charitable objects in the difficult parts of the world in which they have to work. This is not new, and it is not beyond the Charity Commission to facilitate an answer.

4.15 pm

Lord Bridges of Headley: My Lords, this debate is clearly overshadowed by the horrific and terrible events in Tunisia, France and Kuwait last week. I, too, express my condolences to those who lost loved ones. I would certainly not wish to imply that anyone who raises the issues that we have been discussing is in any way soft on terrorists.

Rather than rehearse all the arguments about this clause, let me address directly the point about the so-called chilling effect that some have spoken of. I recognise fully that this is a concern for some charities operating in some of the most difficult parts of the world. I will come on to explain why I disagree with the need for carve-outs. My belief is that we need to develop a clear understanding of NGOs’ concerns and see examples of where difficulties occur. We also need to avoid seeing the Bill as a means to tamper with or revise counterterrorist legislation itself—not that any of your Lordships have suggested that, but it is worth bearing in mind.

The noble Lord, Lord Watson, asked what I have been doing about this since Second Reading. I assure him that I have not been totally idle. I have been turning over the stones and seeing what is going on, and it is clear that there is a considerable amount of activity within government. I will not bore the noble Lord with a long laundry list but several government departments and other bodies, including the Home Office, the Treasury, DfID, the Charity Commission and the Cabinet Office, have been engaging with NGOs to understand their concerns and to ensure wherever possible that their concerns are properly covered by and in guidance. In 2014-15, for example, the commission engaged with more than 100 charities that operate internationally, and it regularly meets the Disasters Emergency Committee.

In many cases, there is already detailed guidance dealing with the points that have been raised, although I fully accept it may well be the case that better signposting, better explanation and more discussion are needed. The Charity Commission has produced and published a range of specific guidance for charities on managing the risks of operating overseas and on the abuse of charities for terrorist purposes. This includes the risks of links to or association with terrorist activity or abuse. This guidance is published on the commission’s website and includes the requirements for charities under UK counterterrorism legislation and charity law.

What I am taking from this debate is that we need to have more communication with these charities in a more targeted way. The Government’s assessment is that neither existing terrorism legislation nor other legislation prevents organisations, including charities and NGOs, operating in the UK or overseas. The legislative framework is deliberately drawn widely to capture the ever-diversifying nature of the terrorist threat faced. The chances of prosecution of an individual for a terrorism-related offence as a result of their

29 Jun 2015 : Column GC130

involvement in legitimate humanitarian efforts are considered to be low, as was referred to a moment ago, although this can be determined only on a case-by-case basis and on the particular circumstances of each case.

It is not possible to provide assurances to the charitable sector or to those engaged in humanitarian efforts about possible prosecutions, as doing so might obviously fetter the discretion of the Crown Prosecution Service. Equally, doing so could create a loophole that could be exploited by the unscrupulous. In the interests of fairness, every case must be treated on an individual basis by the independent prosecution authorities, subject to the evidence available and their judgment on whether it is in the public interest to proceed with a case.

There has been one recent case involving a charity and connected individuals being investigated on suspicion of breaching UK counterterrorism legislation. The alleged offence related to the charity’s humanitarian efforts in Somalia. The normal police and prosecution decision-making processes were followed, and the Attorney-General accepted the CPS’s recommendation that prosecution in this instance was not in the public interest. Therefore it did not proceed. Furthermore, the Government do not consider it necessary for there to be a carve-out or exemption for charities because there is no evidence of a significant number of prosecutions against them, which suggests that the protections already in place are adequate. For example, the public interest test, as set out in the Code for Crown Prosecutors, sets out the factors considered when prosecution is appropriate.

Some have argued that the disqualification provision should not apply to people designated under terrorist asset-freezing legislation, as this is not a criminal offence and is not subject to the same standard of proof. I disagree. The Terrorist Asset-Freezing etc. Act provides the Treasury with powers to freeze the funds and economic resources of those suspected of, or believed to be involved in, terrorist activities and restricts the making available of funds, financial services and economic resources to or for the benefit of such persons. These are highly targeted measures. The latest consolidated list of those designated under the UK’s terrorist asset-freezing legislation contains 23 individuals. Furthermore, if the case is serious enough to designate an individual under this legislation, it is impossible to see how such a person could be considered fit to serve as a charity trustee or manager. It would be an absurd position for an individual to have their own funds frozen but to be in a position to fundraise for a charity or to control a charity’s funds or activities. Nevertheless, as a safeguard, a person who was disqualified by virtue of designation would be entitled to apply to the Charity Commission for a waiver from disqualification, and the commission’s decision would be appealable to the Charity Tribunal.

Clause 9 agreed.

Clause 10: Power to disqualify from being a trustee

Amendments 9 to 11 not moved.

Clause 10 agreed.

Clauses 11 and 12 agreed.

29 Jun 2015 : Column GC131

Amendment 12

Moved by Baroness Hayter of Kentish Town

12: After Clause 12, insert the following new Clause—

“Disposal of assets

Charities may not, and may not be compelled to, use or dispose of their assets in a way which is inconsistent with their charitable purposes.”

Baroness Hayter of Kentish Town: My Lords, Amendment 12 stands in my name and that of my noble friend Lord Watson. It effectively just states the existing legal position. It is here to remind trustees of their existing duties for when the Government later mandate them to sell their charitable property under right to buy. As the Minister knows, the Opposition are not against right to buy. Indeed, we want those who desire to be home owners to achieve that. Likewise, the National Housing Federation and housing associations want to help tackle the housing crisis, but in their view a compulsory right to buy would make it more difficult. It is not the right way to achieve it.

In his maiden speech, the noble Lord, Lord Kerslake, said that forcing charities to sell off their property is wrong in principle and in practice. At a subsequent event, he said it would work entirely counter to the overwhelming priority of promoting new supply. The debate in the Chamber on Thursday saw Tories, Lib Dems and Cross-Benchers line up to condemn the proposal, and surely that will make the Government think again. Housing associations, which are mostly charities, provide 2.5 million homes for some 5 million people on affordable rents. They are rented privately, and many enable people with disabilities or care needs to live independent lives. Others are for shared ownership to help those on lower incomes to buy their homes. Housing associations build 45,000 homes a year and would like to build 120,000, matching what private builders are able to do. This aim could be undermined by them being forced to sell off their stock.

We know that civil servants warned Downing Street about the cost, which I think is at least £5 billion but could be more, and about the difficulties of replacing those sold, leading to a shortage of affordable homes. We know that in local government terms only one in 10 homes sold under RTB were replaced. Furthermore, any diminution of housing stock can harm housing associations’ borrowing powers. As the NHF has said:

“With a nation in the throes of a housing crisis, it is key that housing associations are in full control of the assets against which they borrow to build homes”.

The NHF obviously wants to increase home ownership, but it is concerned that the right to buy will make it more difficult to tackle the housing crisis. Right to buy could make it harder for the housing associations to deliver their charitable objective, which is, of course, providing for people in greatest housing need.

We know that housing associations lever in private finance in order to meet their charitable objectives and to manage their assets effectively. Forcing them to sell properties would give them less control over these decisions and, importantly for this Bill, would make it more difficult for them to meet their charitable purpose.

29 Jun 2015 : Column GC132

The National Housing Federation also worries that such interference sets a dangerous precedent for government intervention in independent charities. It cannot support giving government a role which should be the preserve of housing associations’ own charitable trustees. The NCVO similarly fears that the compulsory sale of charity assets through right to buy sets a worrying precedent of government interference in the running of independent charities. It would also, says the NCVO, contradict the rule that charities cannot dispose of assets other than in pursuit of their charitable objectives—in other words, using such assets for charitable rather than for political or private benefit. Hence, the NCVO supports Amendment 12.

There are other concerns about the policy, such as whether any bequests could be invalidated in the circumstances of a forced sale. We should remember the history of major providers of social housing. Peabody, close by here, was founded in 1862 by an American banker, diplomat and philanthropist, George Peabody, to,

“ameliorate the condition of the poor and needy in this great metropolis”.

Peabody’s mission remains much today as it was in 1862: to help make London,

“a city of opportunity for all”,

by helping people have a good home with a feeling of belonging which grows from involvement in the neighbourhood and the spirit of togetherness. Furthermore, Peabody strives to ensure that the landlord service is tailored to the individual, and residents are supported in their daily lives and in their aspirations. So not only would the forced sale of this property counter the bequest’s terms but, as those houses were sold on—perhaps let to the private sector—the charity’s aims could not be met.

During Second Reading, the Minister said that there was a precedent for housing association tenants accessing discounts to buy their own home. However, the preserved right to buy, which I assume he was referring to, applies to homes transferred from a local authority—and which thus have been built with public money—to a housing association. Charitable law is overruled in that case only because the charity was aware when it acquired these homes that right to buy applied. It is therefore a little misleading to suggest that this is similar to what is now being proposed, which will cover all housing association homes, whether donated to the charity, perhaps by special deeds setting out the purpose of the gift, or funded by money raised to house a particular client group.

The policy would reduce the supply of affordable homes. Given that such right to buy for housing associations would be funded through the forced sale of council properties, this would itself reduce the number of affordable homes. There are 2 million people on waiting lists due to the dearth of homes at affordable rents for low earners. Expecting the sale of a council home to both fund its replacement and reimburse the housing associations sounds to me like double-counting, and in London, of course, a complete impossibility.

The National Housing Federation, which is, of course, the expert in this field, calculates that the taxpayer’s money could be much better targeted at ending the

29 Jun 2015 : Column GC133

housing crisis. On its assumption that there will be about 220,000 eligible tenants who could afford to take up the right to buy, the discount would be £11.6 billion—for 220,000 people. That amount could provide 660,000 homes for shared ownership, which would give three times as many people a foot on the ladder.

Housing associations already help people to buy their own homes, with some 250,000 now in shared-ownership homes.

4.30 pm

Rent to own is a good idea, so long as it is clear from the start what is meant and it is not taking charitable assets away from their original purpose. Housing associations want to fulfil their charitable purpose and deliver more homes for people on all incomes. They also want to continue their long-standing successful relationship with the public sector, where each £1 of public investment in housing associations is matched with £6 of their own money, which gives value to the taxpayer and affordable homes to rent and buy. To ensure that charities can continue their work, will the Government commit to consulting with the sector on plans to extend right to buy before publishing legislation?

I shall raise a couple of questions regarding forcing a charity to sell. First, some tenants might be connected persons—someone, or their partner or relative, closely associated with a charity, the trustees or donors. Any sale to a connected person has to be authorised by an order. Will the Minister confirm that all such charitable requirements would be fully met?

As the Minister knows, trustees can sell property only in a way that is: compatible with their trust deed; in compliance with Sections 117 to 121 of the Charities Act; and in compliance with the standard of care set out in the Trustee Act 2000. Will the Minister confirm that no trustee will be expected to act in contradiction to any such requirement? Some charities’ governing documents might expressly prohibit trustees from selling. This would probably require an order or scheme to give them power to sell. Have the Government considered such cases?

Where a trustee holds designated land—that is, required by the terms of the gift to be used to carry out the charity’s purposes—and where such land cannot be replaced by other relevant property or land, will the charity be excused the demands of the right-to-buy provisions? This might be the case where a charity holds a house once owned by a particular local figure, or associated with a former convent or almshouse sponsor. Those types of charities might need a scheme to change their objects, should they be compelled to relinquish the land, because they can no longer carry out the purpose for which the land is held. This also means giving the public notice of the proposed sale. Can I assume that all those considerations will be carefully weighed by the Government?

It is clear that trustees can sell property only where it would be in the best interest of the charity. Will the Minister outline the Government’s thinking as to when such “best interests” are in conflict with the aims of the new policy? How, then, will the Government deal with that?

29 Jun 2015 : Column GC134

Charities also have to consider who else could be affected by the disposal. This might be the generality of the beneficiaries, or, indeed, public support for the charity. In particular, if the home forms part of a supported community—for example, for the elderly or the infirm, or for those with learning difficulties—where the whole is much more than a collection of residences, the sale of one or more of those units, where, obviously, later on other non-affected owners could move in, could have a considerable impact on the viability of the community and on its shared values and resources. Will such supported properties be excluded from right to buy?

We support helping families to own their own home, but too often right-to-buy homes then just get resold, especially as the subsidy offers the former tenants a nice big bonus to be realised. Many rapidly become rented out by private landlords at full market rent. They sometimes, of course, then attract housing benefit. Our concern with the Bill is that the Government want to interfere with the duties of charitable trustees to put their beneficiaries first and to comply with the trust deed. Housing associations can delight in the right-to-buy option for their tenants where that accords with their charitable objects. The problem arises where it conflicts: where trustees’ duties risk being overridden by the Government. The amendment therefore seeks to prevent them being compelled to do something that is not in the charity’s best interests. I beg to move.

Lord Campbell-Savours (Lab): My Lords, my noble friend has put a powerful case before the Committee. I have to say to the Minister that what he has to say will be circulated throughout the country and will be read by thousands of people and by many involved in the churches. Many would have been here to witness what he has to say if they had known this debate was to take place.

We had an early canter round the course last Thursday during a housing debate. Even on that occasion, with very little notice of the debate having been given, the speeches were circulated widely because everyone is waiting for the Government to take a decision to exempt at least certain categories. I am not going to refer specifically to the contribution that I made in that debate other than to say that I read out a letter from Mr Bill Bewley. I do not know whether the Minister has been given a copy of Mr Bewley’s correspondence. He shakes his head to indicate that he has not seen it. I hope that he or his civil servants have time to read col. 1758 of Hansard of 25 June on the debate on affordable housing. A number of contributions were made on this issue.

The amendment says:

“Charities may not, and may not be compelled to, use or dispose of their assets in a way which is inconsistent with their charitable purposes”.

I speak to this amendment on behalf of a charity whose function is mirrored by hundreds of charities nationally. The Government’s objective, as set out, would require that charity to dispose of its housing assets. These assets have been built up by volunteers working in small communities without remuneration. They have built houses in Keswick in the Lake District, where I was once the Member of Parliament, and

29 Jun 2015 : Column GC135

where, until recently, I had a home. They are but one of 175 community land trusts across England. In this case, I am referring to the Keswick Community Housing Trust. By 2020, those community land trusts will build some 3,000 homes. Most of them are charities and they do not want to be forced to sell off their assets. They are not going to solve the nation’s housing supply problem but they will certainly make a meaningful contribution to resolving the crisis.

These community land trusts are local organisations, set up and run by local people unpaid to develop and manage homes as well as other assets important to a community, such as community shops, pubs or work spaces. Their primary objective is to develop homes that are genuinely affordable, not this nonsense that we hear in London in particular, where they talk about affordable rents being £1,600 a month or whatever. It is just ludicrous what is going on in London; what is described as affordable there makes a nonsense of the whole principle.

As I said, these community land trusts’ primary objective is to develop homes that are genuinely affordable based on what people earn in an area and to ensure that those homes remain affordable in perpetuity. I set out in last week’s debate the wages paid in Keswick over recent times and they bear no resemblance whatever to the so-called affordable rents that are being paid in many parts of the country. This housing trust in Keswick set out to provide affordable rents that people could actually afford—people who earn not £30,000, £40,000 or £50,000 a year but maybe £15,000, £18,000 or £20,000: a completely different market. That is where its concern is focused, but it is worried that the properties it has built will have to be sold off.

Last week I gave the House a description of what is going on in the Keswick community land trust in the Lake District. However, there are CLTs—community land trusts—in towns and cities around the country where the lack of affordable housing is just as much an issue as it is for popular rural communities such as Keswick. I am trying to make the point that the very purpose of CLTs like Keswick Community Housing Trust is to develop homes that are affordable for local people in perpetuity. These CLT homes are supposed to benefit not just one generation but every future occupier. That very purpose of a CLT motivates local people such as Mr Bill Bewley of Keswick CLT, whom I spoke of on Thursday, to spend thousands of hours volunteering their time to bring forward new homes.

Mr Bill Bewley is an active Quaker, and the Quakers are involved nationally in this kind of work, as are many other religious groups, which very often give of their time and form part of the membership of those trusts. In the case of the Keswick trust, it involved two people from the Church of England, one Methodist, one person from the Kings Church, a couple of Quakers, an Orthodox Christian and Catholics—in other words, a body of people who are committed by their religious beliefs and who get together and act in the public interest to produce houses that people can afford. Now they are fearful that their right to carry

29 Jun 2015 : Column GC136

on with the brilliant work they do will effectively be removed because of a policy which they believe is ill-conceived.

Many community land trusts have developed homes for rent or are currently in the process of doing so. That work is going on all over the country. They are now vulnerable to the right to buy, either because they have had to register as a registered provider with the Homes and Communities Agency to receive an affordable homes programme grant or because they own the freehold of a site and have leased the properties to a registered provider; that is, a housing association. The right to buy will not only affect those homes because it goes against the ability of a CLT to ensure that the homes remain affordable, but it could have a chilling effect on the whole sector.

If this measure is introduced for CLTs we will not see landowners being willing to dispose of land on favourable terms. I will explain what that means. The churches in Keswick—in this particular case it was the diocese in Carlisle—said to the trust, “You can have this piece of land, and we will charge you only £10,000 a plot”. Therefore they took it, and spent £110,000 on 11 plots. If that land had gone on the open market—in Keswick, in the Lake District, where there are very strict planning rules and where land is at a premium—it would have fetched a much higher price. In the event that those properties will be sold off, the beneficiaries of that charity will be individuals. I think that is completely wrong, as do probably many Conservative Members of Parliament in the other place, who I understand have privately indicated their concerns to Ministers, because they are under pressure from the lobbyists.

A family in Keswick called the Speddings—a local family, well known in the area for their charitable work—have sold a piece of land to the local housing trust for £12,500 per plot. Again, they are effectively giving that land away. Why should the benefit of that charity be passed to individuals? It is staggering madness that the Government are embarking on by going down this route.

4.45 pm

We certainly will not see people such as Bill Bewley being so willing to spend their evenings and weekends developing much-needed affordable housing if it is only to be lost to the open market. Why should an individual who is motivated by his Christian beliefs, who spends his time, his life, involved in public works, go to all that effort, spending hundreds, perhaps thousands, of hours building up and motivating the community to get together to produce such housing stock if suddenly the Government decide that they effectively want to give it away because of some political advantage that they think they may gain? Again, it is staggering madness.

The CLT sector has seen significant growth in the past four years, rising from 40 community land trusts in 2010 to now more than 170. As I said, they will not resolve the housing crisis in isolation, but they can make a very big contribution. I appeal to Ministers: do not take away the motivation. Those people must remain motivated. If the stock is sold off, they will be demotivated, and none of us wants that.

29 Jun 2015 : Column GC137

I therefore urge the Government to ensure that all CLTs, whether small or large, rural or urban, are made exempt from the right to buy. There must be exemptions. I know that the Minister cannot just say today that that is going to happen—or perhaps he has been briefed to say that; I should like to think so, but I do not suppose that he will say that—but I want him and his department, with his civil servants, to go back to talk to people in other departments to see whether they can knock this policy on the head early on before it gets off the ground.

The Minister in the Commons spoke of engaging with the community land trust sector on the development of the right-to-buy policy. I put it to this Minister, responsible for charities, speaking here in the House of Lords, that he, along with the noble Baroness, Lady Williams of Trafford, who has responsibility in another department, might call in people from the community land trusts to talk to them about their problems and see whether a way around this can be found. I ask whether Ministers are making contact with the National CLT Network as the national charity for CLTs to discuss the implications of the right to buy for those organisations, and whether the Government might look sympathetically on an amendment, or even table their own amendment, to ensure that this particular sector of the housing association movement is exempt from what I can only refer to once again as this staggering nonsense which should be stopped at birth.

Baroness Warwick of Undercliffe: My Lords, I support my noble friend Lady Hayter in her amendment to reaffirm the independence of charities and of charity trustees. I declare an interest, in addition to others I have previously declared, as the chair-designate of the National Housing Federation.

The purpose of the Bill is to strengthen public trust and confidence in charities. The public will have that confidence only if charities are well run, live their values, fulfil their stated aims, deliver what they were set up to do and achieve value for the money entrusted to them to deliver services. Charity trustees have an obligation to act in accordance with their trust deed or governing document and to deliver their charitable outcomes for the benefit of the public. They are independent bodies, set up under a range of legal arrangements: they might be trusts, as we have learnt, companies limited by guarantee, incorporated by royal charter, or charitable incorporated organisations, all of which have different legal personalities.

Like my noble friend, I am concerned about one group of charities, housing associations, whose governance requirements might fall into any of the categories I just mentioned. However, they have one characteristic in common: all of them are independent of government at either local or national level, but they will be affected by a government policy, the right to buy, which could make them unable to deliver their stated aims, because they will be constrained in their freedom to make independent decisions about the use of their assets. As I have said, trustees have a fiduciary duty to use their charitable funds and assets reasonably and only in furtherance of the charity’s objects. They must avoid activities that might place the charity’s endowment, funds, assets or reputation at undue risk. However,

29 Jun 2015 : Column GC138

the right to buy will ride roughshod over trustees’ responsibilities to take strategic responsibility for the disposal of their property assets.

I will not repeat the points I made in the debate about affordable housing on Thursday or the statistics highlighted so strongly by my noble friend, but I do want to emphasise the wide range of tenants and communities with which these housing associations work: those paying social and affordable rents, private renters, those with disabilities, those who need care and those in properties for shared ownership or outright sale. Housing associations are extremely flexible in response to tenants’ needs and, as has been said, are hugely ambitious to build more homes. It is clear that they will be critical to delivering the national response to the current housing crisis, yet they may be hobbled in trying to do so.

Trustees have to balance their charitable goals of building homes for those in greatest need with delivering homes right across the market. They have become extraordinarily adept at leveraging in private finance because finance companies have confidence in the trustees’ effective management of assets. If trustees’ control over their assets were to be undermined, that would make investors nervous and therefore less inclined to invest. Housing associations’ ability to build enough houses to meet national need will then be undermined.

To add to that downturn, there are nearly 2 million people on housing waiting lists and there is a real shortage of homes at affordable and social rent. While replacing homes sold, housing associations will have less capacity to build the new affordable homes needed. Meanwhile, local councils will be selling their high-value homes to fund the process and ostensibly replacing them one for one. But this has proved a challenging target in the past and there is every expectation it will be so in the future.

The charities Bill is not the place to sort out these policy problems, nor is it the place to decide whether historic charity law in all its variety might need to be tested. But it is the place to reaffirm the centuries-old principle of the independence of charities and the overarching duty of trustees to act only to fulfil the charity’s purpose. I urge the Minister to let that ring out loud and clear by agreeing to include the proposed new clause in the Bill.

Lord Bridges of Headley: My Lords, I thank all noble Lords for their contributions, which were clearly eloquent and heartfelt. I note your Lordships’ concerns and will ensure that they are brought to the attention of my honourable friend the Minister for Housing. I say that because the extension of the right to buy is being taken forward, as the noble Baroness just said, in another Bill, which is yet to be presented to the House. That Bill is the right place to have the debate on these issues. My noble friend Lady Williams of Trafford, the Parliamentary Under-Secretary of State for Communities and Local Government, explained to the House that our honourable friend in the other place—the Minister, Brandon Lewis—is already leading the engagement with the sector on our housing commitments as set out in our manifesto and is happy to meet Members of this House and others.

29 Jun 2015 : Column GC139

I turn specifically to the noble Baroness’s amendment. Under charity law, charities are already required to obtain the best price available when an asset is sold in most cases and the proceeds of the sale must be used to further the charity’s purposes. Amendment 12 seeks to prevent charities from using or disposing of assets in a way that is inconsistent with their charitable purposes. That would cause problems. Many charities hold property investments that are not directly used to further the charity’s purposes, some of which may not be consistent with the charity’s purpose. Instead, the investments are used to generate an income which is then used to further the charity’s purposes. What is relevant in this context is the income the charity can obtain, not whether its property is being used in a manner consistent with the charity’s purposes. Of course, many charities can and do use property assets directly or indirectly to further their purposes—but the point is that there are many that do not and which instead view property solely as a financial investment.

There is another problem with the noble Baroness’s amendment: it seeks to prevent charities being compelled to dispose of assets. There are already circumstances where charities can be compelled to sell an asset. They can be subject to compulsory purchase orders like any property owner. The Charity Commission and courts have powers to require charities to dispose of assets in certain circumstances and for the proceeds to be applied for the same or similar charitable purposes, although not necessarily in the same charity.

As the noble Baroness mentioned, there is also the preserved right to buy in relation to housing associations, which 630,000 tenants enjoy, and the right to acquire, which 800,000 tenants already have and which, when exercised, would compel the charity to sell assets. These existing rights would be undermined by the noble Baroness’s amendment.

I am sure that it was not the noble Baroness’s intention to frustrate with this amendment the existing right to buy, planning laws, or the powers of the court or the Charity Commission. I hope that she will accept that the proper time and place to debate the right-to-buy policy will be when the legislation on that subject is brought before the House.

Lord Campbell-Savours: On that matter, the Minister invited Members of this House and others to meet the Ministers involved in this whole debate regarding housing associations. Could he give us an assurance that he will approach the noble Baroness, Lady Williams of Trafford, to ask her to invite representatives of the community land trust network nationally to discuss this matter? All we need is an assurance that they will be invited to the department to meet Ministers before that Bill reaches the Commons.

Lord Bridges of Headley: My Lords, I am happy to give the noble Lord an assurance that I will raise this matter with the noble Baroness, Lady Williams of Trafford, and will draw her attention to his clearly heartfelt views. I repeat that I will pass on to my honourable friend the Housing Minister all the points that have been made to ensure that he considers them when developing the policy further.

29 Jun 2015 : Column GC140

Baroness Hayter of Kentish Town: My Lords, I thank noble Lords who have contributed to this debate. The Minister should really thank us for doing this now. If he has not picked up that this measure is going to be one of those things that will be extremely hard to get through this House, then he has heard nothing. I realise that he is new to the House, but if he listened to what was said on Thursday, including from his own party, he will know that this one ain’t going to happen. Therefore, I think that he will in the long term be grateful to us for having given due warning and enabled him to steer his colleagues off a track which will be highly bumpy for them.

If the Minister hears nothing else from today, he should listen to what my noble friend Lord Campbell-Savours said. These homes were built not just for one lot of lucky people; they were built not just for one generation but in perpetuity. He has given no answer on that point, because once you sell them off, they are gone. I was disappointed that the Minister said that it was all about income. No, this is not about income; it is about communities. They could be homes rented out, for example, to a community of retired actors or retired nurses—I think that there is a housing association near Bournemouth where all its residents were in nursing and worked in that community together. If you sell that off, you do not just sell off a house and have the money back; you no longer have that shared understanding of the people who have been given a stake in that way. No, it is not just about money and I am sorry that the Minister used that phrase.

This issue is not just about charities; it goes wider. Loan sharks are already circulating. Most of the people who can take advantage of this measure have to be fairly rich, because, even with the £100,000 that the Government are going to give you from local government, you still have to get the other £100,000. On the whole, you have to be fairly rich; it is not the £15,000-a-year earners that my noble friend referred to. So it is already the top end of that market who can use it. For the ones below who cannot, the loan sharks are there saying, “You’re going to get £100,000 if you get this, so how about this? I give you the money, you get the mortgage for the other £100,000, you take the £100,000 that is coming, and in three years’ time I’ll be back and we’ll share it out. I’ll get £50,000 and you’ll get £50,000”. We know those people are there. That is not particularly about the charity aspect, but if the Government do not understand that that is what happens, they have learnt very little.

5 pm

There are issues about land being given free, and a Bishop—not the right reverend Prelate who is here today—mentioned rural land which has been given specifically to help the provision of affordable housing in rural areas. There is an iceberg about London, but there are enormous shortages of land in London. The issues are partly about this being for more than one generation, and partly that charity should go not just to one group of beneficiaries, including loan sharks. Partly there is the issue of the independence of charities, which my noble friend Lady Warwick spoke about, and partly I think the Minister misunderstood or did not read my amendment correctly. I said that charities should not be compelled to sell. They may well want

29 Jun 2015 : Column GC141

to sell, and that is fine, but they should not be compelled to sell. He said they already can be. Normally, if there is a compulsory sale, it is to the state because the state is about to put in a railway or a new sewage works. What is being suggested here is that properties should effectively be nationalised and then reprivatised, so the state is going to nationalise the private asset of a charity and then give it away at a reduced price to a tenant. That is quite new.

I am possibly taking the biggest decision I have taken in 30 years; I might be moving house, which is very scary, and I am looking at a flat in a shared development. There is some social housing, some shared ownership, and the stuff for the filthy rich, which is what I am going to buy—I may not be filthy rich—and the attraction is that I will not be living simply with the filthy rich group who can afford to buy, but it will be a shared community. It will have social housing, shared ownership and us lot. The thought that in 10 years’ time it will all be people like me and there will be nobody in social housing or shared ownership because the Government will have forced a sell off makes me ask whether that is what I want. I might just go and live somewhere else.

This policy has big implications, and I hope that the Minister will take this amendment very seriously, partly to save his Government getting defeated on this, and partly because this is right for charities. I beg leave to withdraw the amendment.

Amendment 12 withdrawn.

Amendment 13

Moved by Baroness Hayter of Kentish Town

13: After Clause 12, insert the following new Clause—

“Regulation of fundraising

(1) All fundraising charities must be members of the Fundraising Standards Board and abide by their Code of Fundraising Practice.

(2) In section 64A of the Charities Act 1992, as inserted by section 69 of the Charities Act 2006 (reserve power to control fund-raising by charitable institutions)—

(a) in the title omit “Reserve”;

(b) in subsection (1) for “may” substitute “must”.”

Baroness Hayter of Kentish Town: My Lords, this amendment is also in my name and that of my noble friend Lord Watson of Invergowrie. When we are discussing it, we refer to it by the shorthand “Olive’s Law” as it arises from the complaints about somewhat overpushy fundraisers in the wake of the tragic suicide of 92 year-old poppy seller, Olive Cooke.

As the Minister knows, hundreds have since reported how they, too, came under pressure, with particular concerns about the elderly, some with dementia, being targeted. At Second Reading, I referred to the Mail on Sunday story of the underhand methods of a private company which appeared to break every rule in the book to make money for itself as well as for charities that were employing it. Cold calling is a particular curse of the housebound and risks damaging trust in charities. We also see charities, having secured one donation, ratcheting-up demands, leading people to fear that if they give they will just be asked for more.

29 Jun 2015 : Column GC142

The issue is whether the existing self-regulation is working. Our view is that it is not. A third of fundraising charities are not even members of the Fundraising Standards Board, and charities or the private companies they use can continue to fundraise even if expelled from the board.

The Fundraising Standards Board self-regulation system, which is effectively funded and run by and on behalf of those it seeks to regulate, has, we say, failed to work. It has not done the monitoring to check up on its members. Indeed, without the tragic case of Olive Cooke and the exposé by the Mail, we might know nothing of these practices other than from the anecdotal complaints we all hear about in our personal lives. I was with some elderly friends last night, and without me even raising the question it was one of the things that kept coming up in conversation. However, it was not coming to us from the board that should have monitored this.

The Fundraising Standards Board has not publicised its existence, meaning that those with complaints never took them to it, and it has not outlawed unacceptable practices. This, of course, is not just my view. The Minister for Civil Society, Rob Wilson, calls this,

“a critical time for charity fundraising”.

He concludes:

“Charities’ hard won reputation is at serious risk”.

His “last chance saloon” warning was for charities to show that their fundraising was “beyond reproach” quickly, as they,

“do not have the luxury of time”.

He called on the sector to respect the wishes of householders who do not want to be disturbed at home and to respect “no cold caller” stickers on doors. He also acknowledged that many of us question the self-regulation model. Although it appeared that he favoured one last period of grace, he warned that the,

“window of opportunity … may not remain open for much longer”,

and advised the sector to change rather than,

“allow others to do it for you”.

I do not think that Minister had it quite right with that final warning, but I think he may have moved on since then.

We have concluded that the time has passed for charities to be able to choose whether they want to join the Fundraising Standards Board, or to abide by the code of conduct set by the Institute of Fundraising, by which the FRSB adjudicates complaints, and to put their own house in order—hence, the first part of Amendment 13, which would oblige large charities to belong, thus making their expulsion a matter for Charity Commission intervention. We do not have all charities in mind, but those raising more than, say, £1 million a year. On Report, we will find a form of words to either include a specific figure, or to have the figure set out in regulations, but the principle is clear.

The NCVO, which obviously speaks for many charities, usually prefers effective self-regulation to statutory regulation, as, normally, do we, because it is flexible, responsive, and cost-effective. However, it accepts that the regulatory regime must secure public trust and

29 Jun 2015 : Column GC143

agrees that there is clear public concern over fundraising. It therefore agrees that self-regulation should be strengthened,

“to a point where an objective observer would say beyond doubt that the interests of the public are sufficiently represented”.

Sir Stuart Etherington of the NCVO said that,

“the correct regulatory regime is not one that is convenient for those who are being regulated, but one that … balances the interests of the public and the regulated … fundraising self-regulation can be successful … but … only … when it is … sufficiently robust and seen to be sufficiently robust”.

The NCVO concludes that change is required, including giving the Fundraising Standards Board a remit over large fundraising charities. It therefore supports Amendment 13, which would require charities to be members of the Fundraising Standards Board, and to abide by the code of fundraising practice. Crisis—which I think of as Crisis at Christmas, although it is a long time since it was called that—one of the charities which would be covered, favours a greater investigative role for the fundraising regulator, with action taken on identifying and dealing with bad practice. It would therefore favour the institute’s code of conduct applying to all large fundraising charities.

The public are with us. More than two-thirds agree that charities should be regulated more. That was before Olive’s case was publicised, so they already had concerns. We are not the first to identify the need to strengthen the regime. There is already a reserve power ready and waiting that allows the Charity Commission to regulate fundraising. It is time to implement this, hence the second part of the amendment, on which we have reason to believe the Government have now reached the same conclusion. Yesterday’s Sunday Telegraph reported that:

“Charities have been given until the middle of this week”—

tomorrow, 30 June—

“to curb their pressure selling techniques to raise money or face action from the charity regulator … Section 64A of the Charities Act 2006 gives”,

the Minister,

“a ‘reserve power to control fund raising’, including imposing ‘good practice requirement’ on charities”.

We want good charity fundraising to continue. We salute the British public, who give more than £12 billion a year—more than the Government’s aid budget. However, we owe it not just to Olive, but to all the many hundreds who have been hassled by charity fundraisers to stamp out malpractice. This amendment is the way forward. I beg to move.

Lord Hodgson of Astley Abbotts: My Lords, I have listened carefully to the noble Baroness, and I understand the frustration and disappointment that underlines much of her speech. Before I go any further, I remind the Committee of my tangential connection to Pell & Bales, which is involved in the charity fundraising sector.

My review had a whole chapter—15 pages or more—concerning fundraising. It is one of the areas which caused the most angst, difficulty and comment. The conclusions were that we need to drive forward ways to improve self-regulation because that is probably

29 Jun 2015 : Column GC144

the most flexible and cost-effective way of regulating the sector, that there needs to be changes in the way that public charitable elections take place and that there needs to be a clear programme for implementing change and monitoring progress towards it.

I shall be making some relatively disobliging remarks about the charitable fundraising sector in the next few minutes. However, before doing so, there is a case for the defence which ought to be put on the record this afternoon. The first point is that charities must have the right to ask. If they cannot ask, then the amount of fundraising that charities will be able to do will fall dramatically. That is balanced by the right of the public not to be unduly hassled. It is that nexus which we are seeking to find in any fundraising regulatory system.

Secondly, the public do not really like any money being spent on fundraising. They would like every pound that they give to go straight to the beneficiary of the charity, not even to be used by the administration of the charity—hence the concerns about the salaries of chief executives in the sector. That is an issue which the sector has not been able to address. There is an argument for explaining to the public that, in order to have effective fundraising, it is possible that you will need to pay someone money for it. The statistics are that a direct debit signed on the street—the so-called “chuggers”—on average lasts for four years or 48 months, and the charities expect to pay 10 to 18 months of that for the work that is done to get the donation in the first place, which amounts to between 20% and 33%. The public would say that it is outrageous that it costs that amount of money, but from the charity’s point of view, they are getting 67p to 80p in the pound that they would not be getting otherwise. There is a difficult philosophical balance to be established.

Thirdly, the legislation is very uneven. The cash collection—the tin-rattling, as we might call it—dates from 1916, and the charitable collections door-to-door regulation dates from 1939, but local authorities have entirely different standards. Some local authorities will give permission in a week or two, others want two years’ notice, and of course in London local authorities do not do it at all as the Metropolitan Police are the licensing authority. Meanwhile, while we are agonising, quite appropriately, about charitable collections, commercial collections have no regulation whatever. They are free to behave as they wish.

5.15 pm

Therefore there is a more complicated issue here than first appears. I will just explain how it looks. Essentially, four different types of collections and appeals take place. There are what we might call episodic national collections; that is to say, you have an earthquake in Nepal, or a tsunami, and you need to have a national appeal quickly; in six or eight weeks the need for the appeal is probably dying away. The public are interested at the time the disaster takes place, but it is a short-tail event. Then there are the national collections, which go on all the time—for example, cancer charities—or others which come round at a certain time of year, such as poppy day. Then there are regional collections, such as to save the local

29 Jun 2015 : Column GC145

hospice, which may cover two or three parliamentary constituencies, and perhaps four or five local authorities. Finally, there are local collections: Mrs Jones of 27 Acacia Avenue, who is raising money to repair the village hall roof. It is an excepted charity. Everybody knows and likes Mrs Jones—with the possible exception of Mrs Hunt who lives at 15 Acacia Avenue and who hates her beyond poison because they fell out many years ago—and she is well known in the community.

Therefore you have four different types of fundraising appeal, and then you have the ways you can raise the money. You can raise it door-to-door; by collecting on the street, either on public property—on the highway—or on private property, when there is tin-rattling in the local supermarket or in a railway station; by direct mail; by telephone; or by email and the internet. Therefore there are six ways you can raise the money, and we can see that there are 24 regulatory boxes to fill in. That is quite a complicated thing to do. With respect to the noble Baroness, when she says that all charities belong to the Fundraising Standards Board, Mrs Jones in Acacia Avenue can never join the Fundraising Standards Board and probably does not even know what it is. To try to find ways to get her to comply with some national arrangement would be almost impossible. She is fundraising for a charity—it will be an excepted charity, but certainly a charity. Therefore while I understand what the noble Baroness is driving at, she has a sledge-hammer here which is not hitting quite the right—

Baroness Hayter of Kentish Town: Will the noble Lord accept that when I moved the amendment, I said that I was talking about charities that raise £1 million a year? It would be very nice if Mrs—I’ve forgotten her name—does—

Lord Hodgson of Astley Abbotts: That is absolutely right. The noble Baroness did say that, but her amendment says, “All fundraising charities”. I know she slightly shifted the ground in the middle of her speech, and I accept that.

What, then, is the problem? There is reluctance in the sector to accept that every problem is everybody’s problem. There is a tendency to push the pea round the plate and to blame another sector, so the chuggers in the street blame the telephone collectors, who blame the direct mail people, and so on. They say, “It’s not our problem—it’s somebody else’s”. There is also reputational pride in individual charities: “We don’t do that sort of thing—other people do that”. Therefore there is a real need for the sector to understand that it is judged by the weakest link, and unless it takes steps to remedy it, the sorts of results the noble Baroness talked about will occur.

Secondly, there is a failure to see that the alphabet soup of regulatory bodies—the IoF, FRSB, the PFRA and the Charity Retail Association—is confusing to the public. They often appear to be acting quite separately; the FRSB’s report on Mrs Cooke said:

“Fundamentally, the FRSB Board believes that the IOF Code must be strengthened”,

29 Jun 2015 : Column GC146

as if they are completely separate organisations, way away from each other. It seems much neater to collaborate and work closely together.

There are three things that we should encourage the sector to do. The public need a single point of entry into the system—whether they wish to approach it by phone, by email or by letter—by which complaints or concerns can be addressed. All the bodies involved in charity fundraising regulation and all charities need to pool their sovereignty into a single charity self-regulating organisation, called, say, the charity fundraising authority. That would be tasked with producing national guidelines and model rules with which local authorities should comply. If they do not comply they should explain why they are not complying. They should also provide internal best practice rules for fundraising, in particular about things like passing on names of donors to other charities, because the Olive Cooke case was about the pressure built up by repeated approaches from charities. The Government need to oversee this, either directly or through the Charity Commission.

This will be a challenge to the sector, which has not found it easy to accept change and responsibility for one another. I accept and agree that the situation is not satisfactory and action needs to be taken, but I wish good luck to whoever takes it on and suggest that they pack a tin hat.

Baroness Barker: My Lords, I agree to a certain extent with what the noble Lord, Lord Hodgson, said. He has wrestled with this particular issue for the best part of six years now and he bears some of the scars accordingly. There is no doubt that the voluntary and charitable sector is acutely aware that this particular case has raised this matter to a point where it can no longer be ignored or shunted around between different bodies. Some noble Lords were present at a national event held by the NCVO two weeks ago, at which Sir Stuart Etherington stated in terms to the great and the good of the voluntary sector there assembled that they cannot dodge this issue anymore and that the voluntary sector has to come up with some strong self-regulation. If it does not, it will find itself on the receiving end of regulation from government.

It really is quite tough for the voluntary sector to do that, not least because the noble Lord, Lord Hodgson, is right: there are completely different types of organisations doing different things in different ways, which are all subsumed under the catch-all of “fundraising”. It is sometimes the bigger organisations—the multimillion pound organisations—that have the resources with which to emulate practice in the private sector, which is sometimes pressurised but which actually works. That is the problem: emotional appeals and pressure work.

Equally, very small charities that work locally and in a face-to-face way, raising small amounts, quite often have a higher level of ethical practice because they have to: they work in communities where, if they work even remotely unethically, they do not raise money. There are then those charities that operate in the middle, which sometimes are some of the most innovative organisations of all but which would be the ones that would fall foul of regulatory requirements,

29 Jun 2015 : Column GC147

just because they do not have vast teams of people overseeing their compliance.

A fundamental problem for charities is that when they are open and transparent about their fundraising costs, they put themselves in the firing line for all sorts of comment. It makes them incredibly reluctant to do that—not because they want to deceive anybody but because the very same people who have taken it upon themselves, quite rightly, to criticise in cases such as this take the charities to task for doing that. You cannot run a compliant, ethical and effective fundraising operation on thin air. You cannot do it.

The noble Baroness is right to do her bit to up the temperature on the voluntary sector at this moment, but I am not sure she is absolutely right with the amendment that she has put forward. I believe that the voluntary sector should be allowed one last chance in the last chance saloon to put itself right. The noble Lord, Lord Hodgson, is also right that there are too many different bodies all hovering around the same thing, clogging up the decision-making, and there needs to be a rationalisation of that. I would suggest that there should be a time limit, say of a year. If the voluntary sector does not come forward with a new code of conduct within that year, the Government would be absolutely right to step in at that point and exercise their powers.

Lord Bridges of Headley: My Lords, we are all understandably concerned about the reports of the fundraising activities used by a small number of charities. There is certainly no complacency on behalf of the Government on this issue; the debate and the possible disagreement are over what should be done. I hope, as the noble Baroness, Lady Barker, just said, that the self-regulatory bodies note the fact that everyone wants action to be taken and to be taken soon.

Last week my honourable friend from the other place, the Minister for Civil Society, Rob Wilson, addressed fundraisers and made it clear that the clock is ticking for them to get a grip on self-regulation. He said:

“I am giving self­regulation an opportunity to demonstrate it can work effectively and make the short term and long term reforms necessary. I urge you to take that window of opportunity seriously as the window may not remain open for much longer … Change is essential. You should embrace it and lead it, rather than wait and allow others to do it for you”.

The noble Baroness, Lady Hayter, cited a report in the Daily Telegraph. The Daily Telegraph is obviously a fantastic newspaper but I would not believe everything that I read in it. I am not sure where that particular date has come from, but I should stress that, as I have said, self-regulatory bodies have a relatively short opportunity to demonstrate that they are getting to grips with self-regulation.

It has been less than two months since poor fundraising practices were thrust into the media spotlight following the sad and tragic death of Olive Cooke. The extent to which she was influenced by poor fundraising practices is not entirely clear, but the issue, as the noble Baroness so rightly said, has clearly struck a chord with the public. Since then there has been a steady stream of

29 Jun 2015 : Column GC148

media reports about unacceptable fundraising practices—whether direct mail, telephone fundraising or door-to-door fundraising.

As I said, I think almost everyone agrees that there needs to be change. The question is what change and who should lead it. It strikes me that there are three questions that need answering: first, whether the standards fundraisers have set themselves are high enough; secondly, whether the structures for self-regulation are the right ones; and thirdly, whether fundraisers and the charity trustees who oversee them accept the need for change to ensure that donors are treated with honesty, respect and decency.

On the first question, whether the standards for fundraisers are high enough, the answer is a clear no in relation to some fundraising practices. That is why the Minister for Civil Society met the regulators at the beginning of June and set them a challenge to improve standards in a number of areas. This work is continuing but it must bear fruit.

I welcome the announcement by the Institute of Fundraising, on 24 June, that it is strengthening its code of fundraising practice by requiring door-to-door fundraisers not to knock on doors that have a “no cold calling” sticker. However, that is something it should have done proactively some time ago. I know that several review groups have been established and are looking at various issues, including options for opt-in and opt-out, frequency of contact, and whether there can be a one-stop shop for people who want to come off all fundraising contact lists.

5.30 pm

The second issue is structures: is the current system of self-regulation fit for purpose? We cannot have any blame-shifting or buck-passing between the three self-regulatory bodies. They need to work together and show that they can do so in the public interest. A good start would be revisiting the many sensible recommendations put forward by my noble friend Lord Hodgson in his 2012 Charities Act review. That said, I welcome the announcement last week that an independent chair and new independent board members will be recruited to the institute’s standards committee—the body that sets practice in fundraising. That is a good start.

The final issue is perhaps the most important of all. Fundraising charities need to put the donor’s needs at the centre of fundraising and not treat donors and the donations simply as a line on a spreadsheet. How would a charity’s trustees feel if they were on the receiving end of their own charity’s fundraising practices where they fall below what is expected? Good fundraising charities already put their donors in control of the level of engagement they have with the charity and do not engage in high-pressure fundraising tactics.

We all accept that charities need to ask in order to raise funds for their vital work, as my noble friend Lord Hodgson said, but this must be done responsibly if it is to be sustainable. Otherwise, there is a real risk to public trust and confidence in charities. As the noble Baroness, Lady Barker, said, Sir Stuart Etherington, the chief executive of the NCVO, put it well last week when he said that fundraisers are “overfishing the waters”, and:

29 Jun 2015 : Column GC149

“If the public’s experience of fundraising is negative, it will over time erode trust in charities, our most precious commodity”.

Once again, this is an issue of balance. Clearly, charities need to raise funds, but they also must ensure that donors are treated with the same values and respect as they would treat their beneficiaries.

Those responsible for self-regulation of fundraising are taking steps to address the public’s concerns about unacceptable fundraising practices, but there is a long way to go. Others have a role to play here, too. Responsibility for fundraising, like all charities’ activities, ultimately sits with a charity’s trustees. Trustees need to take a much more active interest in their charity’s fundraising, not just in the income it brings in but in how it portrays their charity. Fundraising is often the public face of a charity, and hard-won trust can be quickly lost if a charity gets it wrong.

The Charity Commission, too, has an important role. Where there is deliberate abuse of fundraising, persistent poor practice or misleading of the public in a way that benefits the fundraising organisation disproportionately, and which could undermine public trust and confidence, the Charity Commission can and does take action against charities’ trustees for failing to fulfil their duties.

Indeed, only recently the commission intervened in a case of poor fundraising practice, where only a very small proportion of money raised by an external fundraising company went to the charity. The vast majority went to individual fundraisers, the fundraising company and on administration costs. The commission, concerned about damage to the charity’s reputation and to public trust and confidence more widely, sought an account for the fundraising practices employed, examined accounts and instructed it to provide the charity’s financial controls, among other documents, to determine what had happened. Ultimately, the charity terminated the contract with the fundraising company. This activity is now undertaken by volunteers. The commission has published a case to highlight the wider lessons for the sector.

Furthermore, the commission is revising and strengthening its own guidance on fundraising and trustees duties. A draft version of the revised guidance is expected to be published for consultation later this year. It will set out more clearly the expectations of how trustees of fundraising charities should meet their responsibilities, including to the care and protection of donors.

Therefore, we do not think the time has yet come for statutory regulation. There are difficult legal questions about the feasibility of using secondary legislation to mandate self-regulation against a standard set by a private body. My concern is that the amendment as it stands would trigger an irreversible slide to statutory regulation. Whether such a slide can ultimately be avoided depends upon the will and leadership in the charity sector to address this issue satisfactorily soon. I welcome the announcement today that new guidance will be produced by sector bodies for charities on the management and governance of fundraising to help strike the right balance in this area. This guidance will sit alongside and complement the commission’s.

As the noble Baroness, Lady Hayter, said, we have the reserve power which would enable Ministers to

29 Jun 2015 : Column GC150

introduce statutory regulation should the sector fail to rise to the challenge, but we do not believe that it should be exercised now. It is worth pointing out that most of the charities that have been in the media recently for poor practices are already members of the FRSB, so while there is a need to increase membership, it is just as important that bodies responsible for regulation must raise the standards themselves. I hope that on that basis the noble Baroness will withdraw the amendment.

Baroness Hayter of Kentish Town: I thank the Minister, the noble Baroness, Lady Barker, and the noble Lord, Lord Hodgson. Before I respond—I hope I will take only a couple of moments—I have a particular view that some of this forgets who are the people affected. They tend to be vulnerable. It is not just charities that treat them that way. I shall very briefly tell the Committee something that happened over the weekend. I have an aunt and an uncle aged 91 and 93. My uncle’s Alzheimer’s is quite bad, and seven weeks ago he had to move into a home. Two weeks after that, my aunt, who is 91, had a very bad stroke. The NHS was completely brilliant, and she is back home. They are highly vulnerable people. This is not a story about a charity. It is about Barclays Bank, which on Saturday wrote to them informing them that it was going to close their account. It had failed to contact them—actually it had not tried—and was going to close their account. It said that,

“we will not be prepared to offer you any new banking services”,

and would not give them a reference for any other bank. If a body such as Barclays, which is regulated by the FCA, can so mistreat elderly people, my concern is that it is not just charities that are affecting them. The vulnerable are getting this from everywhere. Therefore the standards have to be particularly high. They are not for you and me. I have talked to lots of people around the House since we raised this, and they have said, “I’ve cancelled my standing order. I just can’t do those phone calls any more”. We are robust enough to cancel standing orders, to say boo, or in this case to get on to Barclays, which is emailing me at this moment saying “Please don’t mention our name”, “We promise we’ll put it right shortly” and “We didn’t really mean to send the letter”. It is outrageous behaviour. Like the charitable stuff, it is particularly the vulnerable who we need to protect. I think the only difference between us is whether we are in the last chance saloon. My view is that we are already there, and we need to get out and do something about it. I think what the noble Lord, Lord Hodgson, said was actually close to me, although he may not have thought that. By saying that there should be a single point of entry and that the Government should oversee the process either directly or via the Charity Commission—if I have got his words down correctly—that is one stage further on than the last chance saloon. Perhaps he and I should get an amendment together for Report because we really need that extra little bit now.

Lord Hodgson of Astley Abbotts: The danger about moving as the noble Baroness says is that when in two years from now there is a charge from the Government for regulating the sector, there will be an enormous

29 Jun 2015 : Column GC151

outcry, so what looks attractive to begin with will be inflexible, expensive and even more unpopular than the present system. It would be better from every point of view, accepting all the points about vulnerable people, if the sector could be persuaded to take up the challenge, find the will, find the money and make it happen, because it will make it happen in an effective way. The problem at the moment is that it has not really accepted that there is a fundamental problem and thinks that if there is a problem, it is not its problem but somebody else’s.

Baroness Barker: My Lords, I would like to follow that up by saying that I think that the noble Baroness, Lady Hayter, is absolutely right that one of the big issues—in this field in particular, but it is a big issue right across our society that we have not got to grips with—is how we will include people with dementia in all sorts of aspects of our life. This is true in terms of the NHS, and social care, and here.

The voluntary sector ought to be the one place in our society where we can go and talk to the Alzheimer’s Society and ask what a proper code of conduct and practice might look like. It is self-evident from what the noble Baroness, Lady Hayter, said, that the commercial sector has not got this right yet. Organisations such as banks are the bodies in our society that should be at the forefront of dealing with transactions with individuals, even more than government. Banks have millions of transactions every day with millions of individuals, including older people. They clearly have not got it right. We should have one go in our sector at getting it right for everybody else. If that does not work, then by all means go down the route that the noble Baroness wants to go.

Baroness Hayter of Kentish Town: It is clear that the distance between us is very small. My worry concerns the idea that we will not have another charity Bill in

29 Jun 2015 : Column GC152

this Parliament. If I had an absolute commitment that we would have another Bill in two years’ time, so that if we had not done it we could do it then, that would be fine, but my fear is that this will be the only such Bill and this is the chance that we should take.

Having said that, I agree with a lot of what the Minister said. In terms of his plea—or threat; I do not know—to trustees to take a more active interest in this, his words were well chosen. The words from the noble Lord, Lord Hodgson, on a single point of entry were very good, too. However, there must be some way of overseeing that it happens. Even if the noble Lord, Lord Hodgson, does not want to come back with a suggestion on Report, we will try to see whether there is a way that puts an extra little voomph—sorry, Hansard—behind this, so that we do not have to wait. The real problem is that we had to wait for Olive to know that this was going on. That showed the Fundraising Standards Board that it was not just a matter of standards but a matter of enforcement. One disagreement that I have with the noble Lord, Lord Hodgson, is when he says that it will be very expensive. I think that some money must be spent on this, because the Fundraising Standards Board, even if it is still self-regulated, must do some monitoring, and that always costs money. If we do not do that, the long-term problem will be that we no longer have this very precious sector, which I think all of us agree is one of the great prides of this country.

Having said that, we will seek a way to come back that gets maximum support. For the moment, I beg leave to withdraw the amendment.

Amendment 13 withdrawn.

Viscount Younger of Leckie (Con): I believe that this may be a convenient moment for the Committee to adjourn until 3.45 pm on Wednesday 1 July.

Committee adjourned at 5.44 pm.