HC Deb 20 December 1989 vol 164 cc575-85 6.42 am
Mr. Tim Boswell (Daventry)

It is always a pleasure to follow my hon. Friend the Member for Penrith and The Border (Mr. Maclean), who represents the Department to which I had the privilege of being special adviser. The last debate was initiated by the hon. Member for Linlithgow (Mr. Dalyell), a gentleman in every sense of the word, who raised a matter of considerable importance with which many of us have a great deal of sympathy. My role this morning is to move to a somewhat different subject, but one that is appropriate to the time of year, and I am delighted that my hon. Friend the Member for Oxford, West and Abingdon (Mr. Patten) has risen from his bed and come hotfoot to the Chamber to answer this debate on charities.

Christmas is a time of maximum indulgence for most of us, but it is also a time when the gap between those who cannot join in—not always for lack of funds—and those who enjoy Christmas is most clearly to be seen. One of the roles of charities is to bridge that gap. It is remarkable and to the credit of our people that so many of them muck in and help in charitable activities by giving money or time at Christmas. One of my early political mentors, Iain Macleod, was closely involved with the charity Crisis at Christmas, which does the kind of work that many of us will be doing in our constituencies this Christmas.

I speak as a member of, but not on behalf of, the all-party working party on charity law. The group spans both Houses and has been useful, I hope, to the Home Office in the deliberations leading up to the White Paper published in May. I trust, too, that it will continue to be useful as we move to legislation on this subject.

I should declare an interest as president of the Perry Foundation, a private and endowed agricultural trust working in agricultural research and organised, as so many charities now are, as a company limited by guarantee. It has a substantial income. Later, I shall advert to trends and changes in the pattern of charitable activity.

It is remarkable that this House pays little attention to charities unless there is a particular failure and something goes wrong. Even in respect of our work on the all-party group, the other place is livelier and more forthcoming. On 30 November, it had a most interesting and distinguished debate, which demonstrated the expertise that many noble Lords have in the subject. The other place often concerns itself with matters of law, which are of great importance but in which I have no professional qualification. Nevertheless, it is right for right hon. and hon. Members to turn their thoughts increasingly to the subject of charity as we move towards legislating on it in the year ahead.

The White Paper touches on the size of charitable activity in this country, but that aspect is insufficiently understood. The White Paper quotes a turnover of £13 billion per year, and charities have a number of implications for the public purse—in the form of commensurate tax relief on that income and the direct structure of Government grant aid. If one adds together the value of that grant aid and indirect Government support—such as employment training and personal social services—they total about £2 billion. Another £500 million comes from tax relief. That adds up to big business, and it supports an even bigger business—private charity.

Government assistance to the voluntary sector has been subject to separate scrutiny, which I welcome. I understand that that study is now in the hands of Ministers, and I trust that the House will have an opportunity to debate it and other charity matters when right hon. and hon. Members return from the Christmas Recess. The Government face a difficult task. If we are spending public money, we are entitled in this House to seek value. In our role as the protectors of the public interest, we are entitled also to establish arrangements to ensure that private moneys given for charitable purposes are also spent properly.

There will always be the hard cases, and when they arise there will always be calls for draconian legislation, still further controls, and a tightening up of the whole sector. Perhaps that is inevitable. However, there is an equal and opposite danger in the form of excessive control. My hon. Friend will be aware of the phrase "a light touch" in the context of his Department's regulatory responsibilities in broadcasting, and it is probably appropriate in respect of regulating charities too.

It is a matter of record that the Home Office takes a relatively low profile in the control function, and rightly. I shall comment on the Charity Commissioners later Before I do so, I may warn the House that whatever is done in this place, we must not muddy the wheels of charity. If someone feels that it is really important to donate money to the indigent children of left-handed taxidermists—and although you, Mr. Speaker, and I may not share that sentiment—it is extremely important that he should have the opportuniy to express his generosity in that way.

I recently found that my own charity, which I felt should be whiter than white, had slipped up on a technicality. Many trustees of smaller charities may not be as aware of their duties as they should be, but it is nevertheless unreasonable to impose on them huge burdens of regulatory competence with which they cannot deal. My charity is not the only one that has had to smarten itself up in certain technical respects; many of the greatest in the land have run into problems, as the National Council for Voluntary Organisations would no doubt readily admit.

We cannot have a system in which the best is the enemy of the good, and trustees find themselves harassed by onerous and unreasonable prescriptions and requirements. Whatever we do must be realistic, and I welcome the White Paper's proposal for certain bands of compliance in relation to the size of the charity. We need regulation, but we must not scare off those who wish to give.

I pay tribute to the assistance that my group has received from Robin Guthrie and the Charity Commission. The commission has not always had a good press in this place, although that has not always been the fault of its members. For a start, it is an unusual body—it could almost have been said to be the first next steps agency when it was set up many years ago, in that it has a regulatory function but is also an arm of the High Court. It is both a compromise and, in a sense, ahead of the field. It is well known and, I think, hardly controversial that the commission operated with extremely limited resources in the past, and was therefore unable to do the job as it should. We need proper regulation or no regulation at all—there is no case for semi-regulation or inadequate regulation of charities.

The new arrangements are exemplified by the move of some of the London activities out to Taunton, and by the new team which includes part-time commissioners to supplement the work of the full-timers. Given those arrangements, I see a good prospect of improvement in the present position. In a single step we are moving from the danger of being wrapped in some Victorian cocoon—the sad world of Jarndyce v. Jarndyce—to the use of information technology and the most modern systems to keep abreast. This is a major task for the commission. The White Paper makes the reasonable point that some 4,000 charities a year—or one for every half-hour of the working day—are added to the register. It is rather like the correspondence with which Members of Parliament have to deal—it never seems to diminish very much, and the problems that it involves are constantly increasing.

We should, I think, consider a charge for registration, as recommended by the White Paper. I have reservations about whether we should also charge an annual fee for the filing of accounts, because I am not sure that it would be cost-effective. The registration arrangement for new charities, however, would at least give the commissioners an opportunity to discuss whether the introduction of a new charity was absolutely necessary or desirable, or whether it would be possible to achieve the relevant objectives through association with an existing charity.

Again, our maxim must be that, if people want to give, they should be encouraged to do so, and in the way that they choose; clearly, however, it is a good idea to provide a hoop through which they must go, to engage in serious examination of their motives and the machinery that they are setting up. There is great scope for model clauses, codes of practice and accounts to try to simplify the task and to make trustees' lives easier.

It is remarkable, although perhaps it is not so remarkable in the middle of this somewhat archaically structured debate, that the source of this business lies in the preamble to the Elizabethan Act of 1601, where we still find definitions, as glossed by Lord Macnaghten in a judgment in the last century, that are applicable today. It describes the four basic heads of charity as the advancement of religion, education, the relief of poverty and any other public purpose. It is interesting to note that, although the White Paper says that the statute of 1601 is being repealed, some of the purposes and how they are set out—the relief of aged, impotent and poor people, the maintenance of sick and maimed soldiers and mariners, schools of learning, free schools and scholars in universities, the repair of bridges, ports, havens, causeways and churches and others—still continue to be referred to.

We have new motorway construction work in my area. The Department of Transport is unwilling to pay for some bridge guarding on a side road because, it says, that is outside its specification. The provisions that I have just mentioned struck a chord with me in that context. I have not entirely abandoned the possibility of public funding, but at least there is a possibility of telling local people, "If you really believe that it is as important as you think it is, why do you not get together and raise the money to do it?"

We have perhaps forgotten the great tradition of charity. People and communities were bound together for public purposes such as the maintenance of roads and the turnpikes. That may be an area in which more happens in the future. There is clearly a shift in the charitable world, which I welcome, from the more traditional endowed charities, which were set up by the Victorian industrialist who felt that he should give something back to his community, and the old, poor and bread charities, to new charities often with no capital at all, which depend entirely on current fund raising from the public. I think that that is a good thing, because no institution can flourish when it depends solely on the generosity of the dead. It must depend on the enthusiasm of the living as well.

That change has been accompanied by a democratic or demotic shift towards much wider involvement with charity. I welcome that, as many have been put off because they regard charity as the dowager launching some great activity. God bless the dowagers in what they can do and continue to do, but activity should go wider than that. People's generosity is not confined by their social background or by their income. I welcome the way in which Telethon, Children in Need and the rest are opening up the possibilities of charity to the general public.

Anyone who has anything to do with young people or young electors knows that they are extremely generous. They have powerful concerns for the public good. We may not always agree with them, but surely it is right that they should be brought in and should organise events such as the red-nose day. They also take an interest in how the money is spent. That is a positive change, although, as the Minister will know it has some regulatory implications as the provisions of the Charities Act 1960 are basically relevant to the old endowed charities.

It should not be thought that because I introduced the notion of the democratisation of charity I wanted to underplay or diminish the role of the traditional endowed charities, as they have a great deal to offer. We first need to find out who they are, so the restructuring of charitable registration and the White Paper will be relevant. I do not criticise the White Paper, but the experience of the working panel reveals the need to put greater emphasis on local reviews of charities.

We heard evidence from two counties—Wiltshire and Devon—and discussed their attitude to local reviews. Money has to be spent on that—it has to come either from the local authority or from the commission—but it is extremely well spent. I understand that the review of local charities in Devon unearthed some 4,000 local charities, of which 30 per cent. had not previously been registered, with an annual income exceeding £10 million.

In addition, I would emphasise the importance of keeping a local register. Devon has a database up and running which I hope it will develop wider in conjunction with the Charity Commissioners, but it must be extremely useful in dealing with the traditional relief of poverty through the county's social services as help is immediately accessible and available through the county computer network in public libraries and sub-post offices. I hope that such schemes will be set up in every county. When that has been developed in conjunction with the central register of the Charity Commission, we shall maintain it so that there is an effective local point of access and reference.

My next point is very close to the heart of my hon. Friend the Member for Stockport (Mr. Favell) who has been in and out of the Chamber during the debate but, sadly, is not here now. He is concerned that moneys raised for public purposes are left in small sums—in penny packets—in various bank accounts and are eventually centralised by the bank but are not really applied to charitable purposes because the charities have failed or are no longer active. Perhaps my hon. Friend the Minister will have discussions with banks about whether some of those moneys can be applied to effective purposes.

That brings me to what is essentially a legal point—the so-called cy-pres doctrine. If one charity is no longer applicable or appropriate, the activity can be transferred to another. It is important that we interpret that widely and make the very best use of those funds. Just as over-regulation is a danger, slack money that is not being used is an insult to the donors and the rest of society.

There are certain philosophical points in relation to charities. In the experience of our all-party group, and more generally, interest in charities cuts across party lines and is in no sense a matter of ideology between us. There might be few occasions on which I would wish to share a platform with the hon. Member for Bradford, South (Mr. Cryer), but a charitable occasion might bring us together. We have many things in common in the House, and charities are among the strongest. We pay into and encourage our local charities, and that is an important part of our role as parliamentarians.

Equally, we share an interest in avoiding fraud on private funds that are given, or public funds that are added, to charity. Part of the area of fraud is street collections, but it is unfair to use that as a stick to beat the commissioners because local authorities often authorise collections, and the police should deal with local offences of people collecting money. It is particularly offensive when money is given by the generosity of ordinary people and is then pinched. It is important for us to take steps to regulate that area.

I could have discussed other aspects of abuse in relation to the structure of charities, but I will mention only two points of concern. The first is political activities. That area is well set out in the White Paper, and there is a reasonably acceptable balance. There will be areas of controversy, and they will appear when we see the scrutiny report. I regard the structure and approach that is set out—it is also included by the commissioners in their notes of guidance —as sensible.

The second aspect is that of certain kinds of religious cults. That is better treated by administrative means than by up-ending the whole system of the definition of charities. We could have done more in the past, in effect by saying that they are breaking the trusts for which they have been established. That should be explored before we use the sledgehammer of defining the unacceptable in legislation. The danger of defining the unacceptable is that we may also exclude some of the acceptable.

In terms of the role of charities, which is strictly the subject of this debate, it is clear that, however generous Government provision is and however important is the welfare state and the social budget, charities still have a role. There are few voices, even on the Left of politics, who now say that charities are in some sense a blot on the welfare state or are inappropriate in a modern society.

Charities score by their greater flexibility. Anything we do and anything that is set out in legislation for implementation by officials must be done by defined rules, and that is now increasingly subject to judicial review. A Minister's decision, even if made with the best of intentions, which tends to favour one citizen over another, is almost bound to be flawed. It is better in cases of discretion to use the charitable vehicle, where the trustees can make their decisions quietly and responsibly on the basis of their judgment.

It is significant, although there are no external charitable funds available to the trust, to record that in the aid to haemophiliacs, which I welcome, the Government have chosen the discretionary vehicle of the independent Macfarlane Trust rather than trying to hold it within the decisions of Government.

The most important point about charity is that it taps generosity well beyond taxpayer funding. Taxpayers may resent paying more, but few citizens are not prepared to put their hands in their pockets to some extent. Although it will be a matter for debate later, perhaps after the Budget, the more that the Government can be seen to encourage this the better. If the Government put in a bit by various means and if that is added to by the private citizen, the available resources will be increased.

It should be remembered that the contribution of the individual citizen is not restricted to cash. Anyone with experience of charities of all sorts realised that. To use the words of Christian stewardship, we are talking about time, talents and abilities. People are contributing the sweat of their brow for nothing, and that is extremely important.

That brings me to the final argument for charity, which is that it is as good for the donor as it is for the donee. It is good for people not to think that they have discharged their obligations when they have paid their taxes and kept the law, but to see what else they can do for the public good. As a Conservative, I believe that there is no clash between private enterprise, the coming together of individuals for their own profit but, because of the market system, serving the public, and what they do by means of private enterprise for the public good through charitable and public activities. I believe that people can identify much more readily with something in which they participate as volunteers and in which they have played a part rather than by being pressed men through the tax system or Government regulation.

An area of controversy—I have the privilege of being a member of the Committee that is considering the National Health Service and Community Care Bill, and I shall raise the matter in the Committee when it is appropriate to do so—is that we are bringing back to the Health Service the support of charitable fund raising and charitable activities generally. In my locality we have seen the acceleration of an accident and emergency department, which has been paid for by local fund raising. The cost has been about £600,000. In Northampton, which is on another edge of my constituency, a scanner has been provided at a slightly higher cost. These efforts have very much involved the local communities. My only concern is that in some sense NHS activities of this sort displace other funding. All of us with experience of these matters know that from time to time charities over-harvest the ground and there is no more. It is sometimes better to wait until another time or for another purpose.

In charity, we define our own view of humanity. We say something about ourselves as well as the people who we are trying to help. I do not think that it is appropriate for us in this Chamber to examine the motives of individual donors or to be sure what they could have been many centuries before. We all have mixed motives. Perhaps we are all uncertain about where we are going. It would seem that, in the activity of charity, which is of central importance, and growing importance, we bring together two great factors. There is human need, which continues, and human potential, which is great. We can fuse them and meet the need through the potential that then exists. That is the true message of charity, and I think that it goes somewhere towards being the true message of Christmas.

7.9 am

The Minister of State, Home Office (Mr. John Patten)

With the leave of the House, I shall respond.

I greatly enjoyed listening to the wide-ranging and thought-provoking speech of my hon. Friend the Member for Daventry (Mr. Boswell). He has a distinguished interest in charity matters, and as chairman of the all-party group on charity law he, with other members of the group, has given considerable advice and help to the Home Office and to others who are interested in charity law and its reform. My hon. Friend has ranged over the nature of charity, value for money and new forms of charity, and I intend to deal with as many of these as I can.

Whatever Government are in power, I see their role not as trying to control or direct charitable endeavour but as providing a framework for it and, by the giving of taxpayers' money, helping the voluntary sector.

The Government recognise the diversity and spontaneity of the charitable and voluntary sectors. We greatly welcome their ability to respond in a flexible and innovative way. We are certainly committed to encouraging the good work of charities in this country.

It is my firm belief, which is hardening quite quickly, that entrepreneurship should not be confined to business and commerce and that it is extremely important to the charitable sector. It is vital in giving help to the community generally.

Although there certainly are services that only the statutory agencies can provide, the state cannot be expected to provide everything. It is extremely important that the different sectors work together in an effective partnership in which each complements the other's skills and experience.

My hon. Friend the Member for Daventry referred to the scrutiny of the voluntary sector. It will be published —in the immortal ministerial phrase—in due course. I am sure that in due course there will be a debate on it in the House, but that is a matter for the business managers. My hon. Friend's interest is noted, and I know that his voice will be heard when the scrutiny is published.

The voluntary sector can extend the scope of existing provision. It can spot gaps that had not been seen previously and it certainly can improve standards, in not only the charitable but in the state sector—in local government and central Government—by experimenting, innovating and introducing new techniques that sometimes those in the bureaucracies had not thought about. We learn much from the voluntary sector, and it learns from us.

The voluntary sector and the charitable world can move quickly to meet new needs or problems that escalate too quickly for bureaucracies to respond. That is particularly so with the close contact that charities have with the local communities which they serve. What closer contact could there be than that illustrated by my hon. Friend the Member for Daventry, who spoke of the need to guard a new bridge a little way away from new development by the M40, which I hope in my lifetime will reach Oxford and complete the link to London? My hon. Friend suggested that his community may be able to help with that. That is a very good example of the obviously close link between my hon. Friend and his constituents.

The Government do not regard the charitable world and voluntary services as an opportunity for providing a cheap alternative to public services. I said earlier that I felt that sometimes charities are good at spotting gaps, but there is a world of difference between that and their being used for gap-filling. I see the role of charities as adding value to the community by giving and volunteering and endlessly extending in ways that perhaps even a few years ago we should not have thought possible.

The charities White Paper formed some part of my hon. Friend's speech. He referred to it in a number of ways. The approach of the charities White Paper and, I guess, the overall approach of Government, is to modernise the existing machinery, to make greater efforts to curb abuse for the sector as a whole and to return a measure of responsibility to trustees, which is very important.

We certainly want to protect funds and property given and held in this country for charitable purposes. We recognise that charities need the freedom to move with the times. We want to weed out the fraudulent and the ill-intentioned who feed off or betray the public's generosity and make life difficult for the charitable sector as a whole. We must also ensure that the charitable impulse is not suffocated by rules and regulations. That is very important. The Government's proposals in the White Paper attempt to balance those concerns; they are particularly important for smaller charities, which may become bigger charities in the fulness of time. The hope is that graduated requirements, for example concerning smaller charities, will minimise unnecessary burdens. Graduated requirements for charity accounts would make it very much easier for smaller charities to develop and grow.

The British are terrific at disaster giving. Whenever there is a charitable apeal, no country in western Europe is more generous than this. However, we need revised public collection legislation which should be easier to understand and simpler to operate. At the same time, we must respond to new forms of fund raising which, a decade ago, were unknown in this country or were only developing. In that respect I can think of telephone campaigns and telethons.

We should be looking towards self-regulation. The charitable world, above all else, is concerned with helping people to help other people and self-regulation is the best way to provide a framework for those helping other people. If legislation is necessary, the Government will respond.

The White Paper has been generally welcomed by hon. Members on both sides of the House and that is good. Many of the proposals are, to put it mildly, technical. The cognoscenti, like my hon. Friend the Member for Daventry, will be able to appreciate some of the nuances which perhaps the generality of those concerned with charities—the foot soldiers of the charitable world, those who stick their hands in their pockets—will not be able to understand. None the less, it is critical that the technicalities are dealt with so that we can get things right in the 1990s.

I will bear in mind my hon. Friend's injunction to the Home Office to use a light touch. From time to time, Home Office Ministers have to encourage, exhort or provide a framework for others in society, like the police, to use a necessarily heavy touch. Using a light touch is perhaps something which the Home Ofice cannot do very often and for which it is not widely known. Any opportunities that Home Ofice Ministers can find to use a light touch should be grasped gratefully. I shall bear in mind my hon. Friend's injunction to copy the light touch model of the Government's broadcasting proposals.

With regard to the resources for the Charity Commission, I had never thoght of the commission as a next steps agency, but perhaps it may be one in its overall form. It is rather a good model for us to follow in many ways. We are certainly helping the commission with more resources. It was given £7 million last year, and it will receive £11 million this year and £16 million next year. Those considerable increases in resources are, rightly, devoted to the Charity Commission because it needs the extra cash to move towards new technology. For example, a computerised register is very important.

As the Charity Commission expands monitoring and carries out investigations, we hope that the service offered to charities and to the public will be improved. Although resources are an important element, the commission also needs new powers. I assume that it would be very happy to get rid of some of its present tasks and our new legislation should achieve that.

In passing, I should refer to the need to re-appraise and relaunch ancient charities. My hon. Friend the Member for Daventry properly referred to the small sums of money which sometimes languish in hank accounts for small charities and which could be put to better use. I shall take into account what he says about the need to talk to the banks about that.

I note my hon. Friend's point about registration. I was particularly interested in his theme—I had not thought of it in that way before—about the shift to new forms of giving being a way of democratising charity in a way that, perhaps, charity had not been democratised 100 years ago.

Which groups of people give money in this country? Such data as exist, from the charities household survey and the charities aid fund—I praise the work of some of the bodies involved in collating those data—show a close link between charitable giving, socio-economic position, level of disposable income, and age. It is sad but true that young people contribute less than older people. That is a pity. They also offer less time to charitable and voluntary activity.

One estimate shows that nearly 80 per cent. of the adult population gives something to charity. However, although some people are very generous, on average, individual donations are about £2 a month. There seems to be a big difference between the British people's generosity in disaster giving—a famine revealed on the television screen or a lifeboat which turns over tragically at sea while trying to rescue people in trouble—and regular giving: that drip, drip from individuals of small sums of money which compound into large sums. We are better at the first than at the second.

People cannot be told to give more to charity, and it would be wrong for Ministers to exhort people to do so. We can create the right climate and encourage people to think about whether they can afford to give more, and provide tax-efficient and appealing mechanisms through which more money can be given. Payroll giving is an example of the mechanism through which sums up to £480 a year can be donated with tax reliefs.

At the end of the day, it is for charities to promote their own causes. I have already referred to entrepreneurship. It is very important that charities enter into a form of coalition with employers and the Government to promote payroll giving. That is critical. I am not one of those people who look at the accounts of a charitable body and then say, "Oh, between 6 per cent. and 9 per cent. is given over to administration. Surely all the money should go to those in need." I entirely agree that money should not be spent on unnecessary bureaucracy in charity, any more than in local or national government. I would not mind charities spending quite a bit of money for a few years trying to promote their activities and on advertising to get more money to make the charitable giving cake grow larger. That is a perfectly proper use of charitable receipts, provided that the advertising and promotional activity produces, substantially greater sums than have been expended. That must be carefully considered, but charities need to be just as entrepreneurial as business men or anyone involved in commerce.

My hon. Friend had an excellent maxim, which I believe I took down correctly. No doubt Hansard will correct me tomorrow with its commendable accuracy if I got it wrong. He said that, if they want to give, people must be encouraged to do so. I entirely agree with that maxim.

The new forms of charitable giving concern advertising, telethons and other forms of promotional activity. Charities have been able to advertise on television and radio since September this year as a result of changes in the code of the Independent Broadcasting Authority, about which the Government were consulted. It is right that charities should themselves decide whether to advertise. This is not something that any charity will undertake lightly, given the substantial resources needed in terms of planning and costs. The content, tone and style of the advertising will be governed by IBA rules. There are safeguards against abuse, and the IBA is monitoring developments.

This is an interesting area. I understand and appreciate the fears in the charitable sector that the big charities with the financial muscle will be able to expend the money and thus generate more money. It will be easier to raise money for children than for confused elderly people. Those arguments are well made and we must bear such fears in mind at the same time as recognising that any techniques which increase the amount of charitable giving in this country should be considered and promoted.

Telethons have caused some concern as well as gaining a broad welcome. We agree that telethons and other public appeals should be more publicly accountable. It is especially important to find out what happens to the money that is donated to telethons. We need much more information to be made available by the broadcasting authorities about exactly what happens to the money coming from telethons, where it goes, in what sums and how quickly. We need to be able to question, "Has it been spent?" Those points have to be closely considered on behalf of the generous people who have raised phenomenal sums of money, watching television through the night. I am glad that I have the agreement of my hon. Friend the Member for Daventry on this point.

Having said that, we shall look first to self-regulation as the best and most flexible way of dealing with this and other new forms of fundraising. I am encouraged to learn that the organisations involved in television appeals are already looking to set common standards. I encourage them to do so as quickly as possible.

My hon. Friend the Member for Daventry has put his finger on an important point. The face of charitable giving and volunteering is changing fast. We have seen in the past decade, and I guess that we shall see in the next decade, more rapid changes in the charitable world than have been seen since probably the 16th and 17th centuries. It is a time of substantial change. The directions that the change will take were more than sketched out in my hon. Friend's admirable speech. I congratulate him on his fortune in obtaining the debate and on the admirable and succinct way in which he made his contribution.

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