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Baroness Rawlings: My Lords, I support my noble friend Lord Hodgson in welcoming the Bill in principle. I am encouraged, too, by the Minister's introduction and that the Government are still willing to listen to ideas, especially as we have all received voluminous, concerned communications from the charitable and voluntary sectors. I am also grateful to the Joint Committee for all its detailed and constructive work.
This has been an extremely interesting debate, with so many of your Lordships deeply involved in the voluntary and charitable sectors. I should at this stage declare some interests—I would feel quite bereft if I did not have any after all the impressive lists that we have heard—despite the fact that we all have to declare these annually in writing.
First, I am most honoured to be president of the NCVO, especially as it has been such a moving light in the preparation of the Bill. All my adult life I have been
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involved with the British Red Cross, now as an honorary vice-president and formerly as an active voluntary member since the 1960s, and last but not least as chairman of the council of King's College, London. Time prevents me listing all my other charitable involvements that are important to me. However, they can be seen in the register of interests.
The Bill has been described as the most dramatic reform to charity law since the 1601 statute of Queen Elizabeth I, and indeed there are many welcome improvements. As we have heard, it will provide a legal and regulatory framework that accurately reflects the reality of what the modern charity sector does and how it does it. It creates an independent Charity Appeal Tribunal and widens the number of situations in which decisions of the Charity Commission can be appealed. That is very welcome, provided the cost of using the tribunal does not become prohibitive.
Before I turn to the Bill itself, there is one point that I would like to clarify. The voluntary sector is not simply a collective term for non-governmental organisations (NGOs), even though they form part of it. Many are highly professional and are staffed by paid officials assisted by volunteers. The voluntary sector is staffed by volunteers—people who do a job of some sort for nothing. I am not seeking to make a moral judgment but simply to draw a distinction.
The noble Lord, Lord Phillips of Sudbury, told us that very nearly half the British adult population—about 25 million people—are volunteers. They do essential work which would otherwise have to be done, and paid for, by the public or private sectors. The value of this is about £50 million, and they do it for nothing. So they benefit the economy enormously.
Who are these people? They cover a wide spectrum of activities. Let me give a few examples, by no means a comprehensive list: ambulance crews, paramedic staff at big public and sporting events such as the Red Cross and St John Ambulance; wardens at wildlife sanctuaries, the RSPB and others; auxiliary teachers and other helpers in schools; school governors and chancellors of universities; youth group leaders, scouts, guides, and so on; helpers at health clinics; fundraisers for local amenities; lifeboat crews; domiciliary care for the sick and elderly; judges, members of non-stipendiary magistrates courts; choirs and bell-ringers in parish churches; Samaritans, prison visitors, hospital visitors, and so on. The list is endless and eclectic. I am sure many of your Lordships are in there too, as we heard from my noble friend Lady Byford.
I, too, have spent most of my working life in the voluntary sector. Naturally I believe passionately in the importance of the charitable and voluntary sector and the public benefit, as mentioned by my noble friend Lord MacGregor of Pulham Market.
As my right honourable friend the Leader of the Opposition said in a speech in November 2003,
"Just because the State pays for services, it doesn't always have to provide them. Involving the voluntary or private sectors helps to drive up standards—benefiting everyone. Voluntary organisations are often more flexible and more responsive than the State. They tailor their services to the communities they work in".
As we have seen recently with the terrible tsunami disaster in Asia, people are generous if there is a major disaster, but they are less so when they feel it is a government responsibility.
However, there is cause for concern and I would like to make two points at this stage. Some areas within education and health are receiving less and less government support. Universities, schools and hospitals will in future have to find new methods of serious funding.
Keeping in mind the enormous importance of the higher education sector to this country, which I know even Her Majesty's Government recognise, I fear that we will face ever-growing cutbacks in funds in five or 10 years' time. The only route for survival will be spending more and more on financing from the private and charitable sector, often through endowments. Some key services will soon be in a very bad way if this is not remedied.
I am aware that over the past decade many new schemes have been devised to help charitable donations in relation to tax advantages. If we really want to encourage big donations we might well look further to the American model. Philanthropy is taken far more seriously than in this country.
This leads me to my last point, so ably developed by my noble friend Lord Sainsbury of Preston Candover in his eloquent speech, with which I fully agree. The Charity Commission and the Bill do not appear to distinguish between "charitable foundations" which give away their own money—£2.2 billion of it at the last count—and charities, large and small, which raise money from the public.
Surely the foundations need to meet only two tests: are the recipients of their donations proper charities, and are their expenses reasonable and legitimate? To impose on foundations, whether trusts or charitable companies, the full rigours of the Companies Act, accounting regulations and so on must increase their expenses to little benefit and considerable cost. Can a way not be found to reduce the legal and accountancy expenses that reduce rather than increase the funds available for charitable purposes? I repeat what my noble friend Lord Sainsbury said about the vital necessity of anonymity.
The need for a strong and independent regulatory body is clear, and indeed public support for charities is encouraged by the perception that stable regulation and monitoring is in place to detect fraud and abuse. This is even more important at this time, as we heard from my noble friend Lady Byford, when billions have been raised for the tsunami disaster. However, we must avoid the tendency to overregulate.
The NCVO and others remain concerned that the Bill expands the advisory role of the Charity Commission beyond that required for a modern regulator. Equally, the Bill requires the Charity Commission to report annually to the Secretary of State on its work, but for true accountability, and to remain truly independent, it should report directly to Parliament.
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We have heard that the Bill does a lot to simplify and clarify legislation concerning the charity sector, and it is indeed long overdue. However, many important and legitimate issues raised by my noble friend Lord Hodgson and others on all sides of the House remain to be addressed. The noble Lord, Lord Dahrendorf, talked of a civil society. This reminded me of when I visited eastern and central Europe in the early 1990s, stressing exactly the thrust of what we have been discussing this afternoon.
A thriving voluntary sector is vital for the health of a nation and is the mortar that binds the building blocks of democracy. I look forward to going into further details at the next stages of the Bill.
Lord Dholakia: My Lords, we now come to the concluding part of this very important debate. I thank the Minister for a very detailed explanation of the Bill. I also add my thanks to the noble Lord, Lord Hodgson of Astley Abbotts; his contribution was very constructive and focused.
There is a consensus about the Bill, and we will ensure that it has our general support. We should all work to ensure that it is on the statute book before the general election.
We also agree that the reforms proposed are long overdue. The Bill has received thorough scrutiny from the Joint Committee, and it is to the Government's credit that they have accepted a substantial number of the committee's recommendations.
Like other noble Lords, I should like to declare my interests. I am a trustee of a number of charitable organisations, stretching from penal reform to museums and art galleries. The list is contained in the Register of Members' Interests.
We certainly welcome the emphasis on the modernisation of fundraising regulations and the reform of the regulatory body, the Charity Commission. Your Lordships' House is in a unique position to scrutinise the Bill further. The noble Lord, Lord Dahrendorf, made a very important point. This is because many noble Lords undertake a lot of charitable work. There is a strong relationship between the voluntary and community charitable sector and many noble Lords in the Chamber. The letterheads of almost any charitable organisation show Members of the House of Lords to be identified with it. Their unique experience is reflected by the contribution all noble Lords have made to this debate.
The charitable sector is vast. We are told that the voluntary or not-for-profit sector is estimated to include more than half a million organisations, and almost the same number of people work in it. But it has required legally qualified people to keep them on the straight and narrow path of our charity laws. The legal expertise these lawyers offer is unique. I single out my noble friend Lord Phillips of Sudbury, who has done so much in his professional capacity to advise charities in this country. I knew him as a good charity lawyer before I discovered that he was a Liberal Democrat. I was not surprised—being good and being a Liberal Democrat go hand in hand. For that reason, we should
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listen carefully to what he and others have to say and see, even at this late hour, if amendments would improve the Bill. The Minister should not be surprised if we table probing amendments to ensure that we do not miss out on the opportunity of making the Bill even better.
Charity laws have been very difficult to interpret. My first experience of the Charity Commission and charity laws came in 1965, when I was instrumental in setting up race relations structures across the country. Working to promote good race relations at that time was not charitable. We had to disguise our objective; we had to revamp the constitution so that such activities were carried out under the guise of advancement of education. This was the time when Enoch Powell reigned supreme in the field of race relations. Can you imagine me, an Indo-Saxon, addressing a predominantly white meeting and telling them that I was there to advance their education?
I am delighted that Clause 2(2) includes a list referring to,
"the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity".
It would be helpful to include the definition of a religion, strongly advocated by my noble friend Lord Lester of Herne Hill. If the Minister were to respond to my noble friend's contribution, that would assist the debate in Committee.
We need to examine the Charity Commission in the context of its responsibilities and whether it has adequate staffing resources at appropriate levels to carry out its tasks. The point was made by the noble Lord, Lord Sainsbury of Preston Candover, and well advanced by the noble Lord, Lord Bhatia. We need to ask if the objective of public benefit and the need to promote awareness and understanding of this objective is attainable within the existing resources of the Charity Commission. We need to ask if the existing procedures of the Charity Commission are fair. We need to ensure that there is greater independence and appropriate scrutiny by Parliament in the work of the Charity Commission.
In essence, I very much subscribe to the view expressed by RNID:
"It is essential that charities law is modernised to create a clear and effective framework. It is vital to build public confidence and trust in charities and to ensure openness and accountability through effective regulation".
A number of noble Lords have asked what is public benefit. The Bill does not define what is meant by public benefit. That is governed by existing case law. Each case has to be considered on its own merits. However, I understand that benefit is assessed in the light of modern conditions. Do these modern conditions take into account the political upheaval in various parts of the world? I understand that a charity ought not to be furthering the interest of any political party or securing or opposing any change in the law or in the policy decisions of central government or local authorities, whether in this country or abroad.
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I do not believe that political purposes take into account the work of organisations in this country which confront dictatorial regimes abroad that cause poverty and damage to their own communities. That point was well made by the noble Lord, Lord Dubs, and supported by an example from my noble friend Lord Phillips of Sudbury.
I would have thought that it would have been a supreme charitable act to have a political strategy that could overthrow such regimes as that of Mugabe in Zimbabwe. I shall not pursue this point further, but suffice to say, each situation demands appropriate consideration about the charity status of such organisations. I very much hope that organisations such as Amnesty International, Justice and Liberty will now be able to claim charitable status, which was previously denied to them. In essence, human rights should now be included in the wider public interest.
Charities demonstrate the civilised values that we hold. The points on public collections have been partially addressed. However, we will have to wait for some time to evaluate the effectiveness of that position. My concern is that costs and practicalities may place a fair burden and that the situation ought to be monitored very carefully.
However, the position of the trading subsidiaries has not been adequately resolved. Its advantage over the private sector is not an issue because the trading subsidiaries effectively pass their profit to the main charity. I suspect that the Government have failed to grasp the unnecessary complexities involved with running trading subsidiaries.
This question was posed by the Joint Committee. Is it right that the Bill does not include the recommendation in the Strategy Unit consultation paper that charities should be allowed to trade as part of their normal activities without the need to set up a trading company? I am afraid that the Government have ducked that issue.
I was a trustee of the Save the Children Fund for some years. The current rules and guidance governing which transactions should be routed via trading subsidiaries are complex, inconsistent and very difficult for charities to get right. This is not the appropriate time to go into details, but perhaps I may write to the Minister so that adequate consideration can be given at further stages of the Bill.
Let me stress that the response to the Strategy Unit report stated that conducting trading activities within the text-exempt structure of charities would offend the principle of a level playing field with private sector business. The reality is that charity trustees ensure that charities maximise their incoming resources by arranging for trading subsidiaries to covenant or gift aid their profits to the charity to maximise totally the tax effectiveness. In reality, no extra tax benefit would be achieved by routing the transactions through the parent charity.
It should be no surprise that I disagree with the Minister on that point. However, I agree that this provision should be dealt with in the Finance Bill and
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not in this Bill. I do not believe that there are any compelling reasons to reject the Strategy Unit's recommendations.
Over the years, we have laid much emphasis on what good citizenship is all about. It is not what we take out for ourselves but what we put in to make things better for all our citizens. Charities perform that task usefully. The concept of giving to charitable organisations is deeply enshrined in our culture. The Bill will go a long way to improve existing law, based on a 400 year-old Elizabethan statute. This is one Bill where the voluntary sector has been at the forefront of reform. Let us ensure that we do not fail it.
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