Charities (Protection and Social Investment) Bill [Lords] — House of Commons, 2016-01-26
Topic: Mixed Topics
Anna Catherine Turley (Labour, Centre-left): My hon. Friend makes an extremely important point. It is clear that when the Charity Commission works in terms of its role of supporting, encouraging and giving guidance to charities, it is extremely effective. Particularly given the pressures on its finances, expecting it to undertake a wide range of enforcement in this manner is potentially quite costly Alternatively, amendment 10 would allow the commission to make details of the warning public without referencing the charity, or a charity trustee, by name. This would allow the commission to publish a warning anonymously if it felt that it held important lessons for the wider charitable sector, but without the consequent impact on the charity Secondly, under amendment 11 the commission would be obliged to give the charity adequate notice of its intention to issue a warning. The Bill states that "the Commission must give notice", but there is no specified notice period. That means that there is nothing to stop the commission giving less than 24 hours’ notice of its intention to issue a warning, which would give the trustees, who are very often hard-pressed volunteers, and any charity staff almost no time to respond. This is a serious risk. In the High Court judgment that I mentioned, it is understood that charity trustees were given less than 24 hours to respond to the commission, prompting the Lord Chief Justice, as I said, to describe the time limits as "ludicrous" This concern has already been raised by the Joint Committee that reviewed an earlier draft of the Bill. It recommended that a reasonable minimum notice period to make representations on a draft warning should be made clear in the Bill. The Government’s response to the Joint Committee’s report accepted that a recipient should have the opportunity to make representations on the warning for the commission to consider before it is published. In our view, this requires the inclusion of a minimum notice period in the Bill, and that is what our amendment seeks to achieve. The Government may argue that there could be circumstances where the commission has such serious concerns that it must act swiftly and without notice. In such cases, the commission should exercise some of its other regulatory powers designed for more serious concerns, some of which may be used without advance notice. We have been told that the warning power is not intended for such serious cases We also propose a small amendment, amendment (a), to Government amendment 2 on the proposed power to withdraw or vary a warning. Our amendment is designed to help reduce any reputational damage to a charity that might result from the inappropriate issuing of a warning. It is absolutely right and fair that if the warning was subsequently found to have been incorrectly given, then it should be publicly revoked and any damage sought to be undone Thirdly, amendment 12 seeks to ensure that it is absolutely clear in the Bill that the commission will not be able to use its warning power to direct charities. It is not appropriate for the commission to be able to direct charity trustees on how to act. It is very clear from the Charities Act 2011 that the commission is not able to act as a charity trustee except for very limited exceptions. In a small range of circumstances, the commission can issue statutory directions to charities, but these are rightly subject to very strict safeguards. It seems that the Government agree with this principle. In responding to the consultation on the extension of the Charity Commission’s power that was a precursor to the Bill, the Government specifically decided not to extend the commission’s powers to make directions outside a formal statutory inquiry. If the commission could use the warning power as a way to direct charities, it would be able to give directions via the back door. This is a fundamental shift in the delicate balance of the relationship between the commission and charities, and it should not be allowed We would welcome some clarification from the Minister on this point, as there seems to be confusion in the sector about it. We understand that the commission does not regard the warning power as giving it the power to direct charities, yet the explanatory notes to the Bill imply the opposite, stating: "Where the Commission considers it disproportionate and unnecessary to open an inquiry purely for the purpose of making a direction, issuing an official warning could be an alternative way of making it clear to a charity that they should take action." Confusion over a similar issue gave rise to the High Court case that I mentioned, prompting the Lord Chief Justice’s comments about the commission’s actions. Our amendment makes it clear that while a warning can be used to give advice or guidance to a charity—which can often be very positive, as my hon. Friend the Member for Hove (Peter Kyle) said—in order to remedy the conduct that gave rise to it, it absolutely cannot be used to direct the trustees to take action New clause 1 would allow for the issuing of a warning to be appealed to the Charity Tribunal. I have already explained the potentially significant consequences that the issuing of a warning has for a charity. The Charity Tribunal is a low-cost forum that was established in the Charities Act 2006 especially for charities wishing to challenge the commission. In the absence of an express right of appeal, charities affected by a warning are able to challenge it only via judicial review. Judicial review is expensive, complicated, and time-consuming. It is a completely inappropriate option for a mechanism that is intended to address low-level non-compliance. The Charity Tribunal was introduced precisely so that charities would not have to rely on costly judicial review proceedings to challenge the commission’s decision making. There is no good reason, and I am afraid none was forthcoming in Committee, as to why it should not be possible to appeal an official warning to the Charity Tribunal. It is illogical that the exercise of the warning power should be more difficult to challenge than the exercise of the commission’s more extensive regulatory powers, which can be appealed to the Charity Tribunal.