Charities: Supervision

HL Deb 27 January 1988 vol 492 cc666-96

5.28 p.m.

Lord Allen of Abbeydale rose to call attention to the report of Sir Philip Woodfield and his team on the supervision of charities; and to move for Papers.

The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper.

I should like to begin by thanking those who put down their names to speak in this debate. I had hoped to be able to welcome the noble Earl, Lord Ferrers, in his new capacity in a debate which happily has no party political controversy. But, no doubt, he will join us shortly.

This is also the occasion to note the appointment of Mr. Robin Guthrie as Chief Charity Commissioner and also to pay tribute to what Mr. Denis Peach has achieved during his period of office. The Times, in discussing Mr. Guthrie's appointment, referred to his predecessors as "grey civil servants". Anyone who knows Mr. Peach is aware that this description of him at any rate could hardly be less appropriate.

We have had debates on this topic in the past in which some of us have ventured to suggest that the Government were not doing quite as much as they should. This time, things are different. In a debate here on 28th January last year the noble Earl, Lord Caithness, announced the setting up of a scrutiny team headed by Sir Philip Woodfield. Here we are a year later with not only the report of that scrutiny but also with an announcement by the Home Secretary last week in another place of the decisions taken on that report. If only that could happen more often.

The Home Secretary's Statement welcomed the conclusions of the scrutiny team, and they did a remarkable job. The Statement explained that some of the recommendations governing the procedures and internal management of the commission were already being put into effect, and a press statement added that a top management team or top management board had been established and that adjustments of staff had increased the numbers available for investigation work. However, more than half the 46 Woodfield recommendations involve legislation and further examination of some of them, such as the future of the doctrine of cy-près, could add to that number. So it was good that the Statement went on to say that it was hoped to legislate later in the life of this Parliament.

I know that the Home Secretary is well aware that when we get to a Bill it is likely to cover a rather wider field than that traversed by Woodfield. Perhaps I may take this opportunity of saying that as legislation is clearly some way off, the Government might wish to consider issuing a White Paper, in due course, giving the possible matters to be covered by any forthcoming Bill. But—as the noble Earl, Lord Ferrers, knows, there is always a "but"—welcome though the Home Secretary's announcement is, it leaves quite a large number of questions unanswered. For example, to pick out just a few points on what can be achieved without legislation, is it intended to appoint two non-executive part-time commissioners? Has a project manager been appointed? Can a graded system for the submission of accounts be introduced under existing powers? Is the Charity Commission busily re-writing its leaflets in terms which we can all understand? Is anything being done about the register of charities which is still uncomputerised, still cluttered up, and to put it mildly is still incomplete and out of date?

In addition to problems of equipment—and these problems involve considerable sums of money—what is contemplated about staff? Over a 10-year period, the number of charities has gone up by about a quarter, whereas the size of the commission's staff has gone down by nearly a tenth. The Woodfield Report suggests that the full implementation of the proposals in it would not involve more staff; but I think that this assumes the abolition of the official custodian, a difficult issue on which I shall be touching shortly.

The trouble is that clearly we are some way away from legislation and I cannot quite see how the Charity Commissioners can do what is now expected of them in the interim period without some strengthening, in particular, of the managerial grades. This is a very important issue on which I hope the noble Earl Lord Ferrers, will be able to enlighten us. Perhaps in doing so, he could tell us whether it has been possible to devote adequate resources to enable the Charity Commission to work with the Inland Revenue, now that the Inland Revenue is authorised to disclose information to the commission, if it smells the possibility of fraud.

Turning now for a moment to the recommendations involving legislation, a good many are not very controversial, in particular those intended to give the commission more effective powers of control and those dealing with malpractices. However, it will be necessary to watch that increased controls do not degenerate into excessive detailed meddling from the centre. But some of the recommendations are not so straightforward, and I should like to pick out just three. The first is the proposal to repeal the provisions requiring charities to obtain the commission's consent before acquiring or disposing of land. Regrettably, dealing in real property is especially liable to mismanagement or breach of trust, and certainly in the past this requirement to go to the commission has saved charities large sums of money and has avoided some inadvertent breaches of the law.

It may be right to depend more on the competence of trustees, if this means that staff can be diverted to even more pressing needs. But I think we should want to see just what safeguards were proposed and what steps would be taken to guide charity trustees, not all of whom are particularly well qualified to deal in real estate.

The second point is the one that I have just touched on earlier and it is rather more difficult. The Woodfield Report proposes in its opening passages that the official custodian for charities should be abolished, although the more detailed discussion later in the report seems to me to resile somewhat from this absolute conclusion. The official custodian, whose services are computerised, has hitherto been available as a "corporation sole" (whatever that might mean) to hold charities' real property and Stock Exchange investments and to obtain payment of their dividends gross. I have had more letters about the suggested withdrawal of this facility (and the official custodian is already refusing to take on new customers) than on any other topic. It is an exceedingly complicated matter, and I think I must content myself with expressing the hope that a service of some kind could be retained for at any rate the smaller charities. I imagine that is a hope which the Inland Revenue might share, given the avalanche of claims for repayment of tax which could otherwise engulf them.

The third point is the recommendation that there should be a charge for the first registration of a charity and for any residual services for property transactions and the work of the official custodian. There is certainly a case for the last two; but I confess that I feel pretty dubious about the first. The sums raised would on any practical basis be quite inconsiderable, and given the traditional objections to hypothecation, the commission would be unlikely to be allowed to keep the money for themselves. It is a solution to raising funds which is rather less attractive than it might appear at first sight.

There are one or two Woodfield recommendations about which I feel something falling rather short of enthusiasm. I am not completely persuaded, for example, by the objections to setting up some kind of suitors' fund to enable test cases to be taken to the courts on the analogy, as I recall, of the race and sex discrimination legislation. There has been a remarkable paucity of decisions by the courts in recent years about the objects which may be legitimately pursued by charities, although I am bound to add the comment that the one case that I am aware of which is before the courts seems to have been there for a very long time and seems likely to remain there for a long time to come.

There are one or two gaps to be thought about as well such as the restrictions on TV advertising by charities. It would also be interesting to know what the Government's thinking is about tightening up controls in Scotland where the writ of the Charity Commission does not run. But my real difficulty is that it is not possible to do justice to so complicated and wide-ranging a topic in 15 minutes.

But that the topic is important is undeniable. Some 4,000 new charities register each year. Charitable trustees handle other people's money to the tune of £10 billion a year and more. They hold assets calculated at some £2.5 billion and they receive a similar figure each year from central and local government by way of grants, fees and fiscal privileges. Therefore it is not surprising that there are those who use fraudulent means to get after some of that money. Although the scale of misdoing is easily exaggerated, the public is entitled to believe that there are safeguards against misuse both in fund-raising and in actually running charities. There is, I fear, a pretty widespread ignorance of how limited at present are the powers and resources of those in authority.

All of us who welcome increased giving, and appreciate the fiscal concessions which this Government have made to this end, are equally anxious that the money raised for charity should be properly used for its proper purpose. We welcome the shift from advisory to supervisory action which the Woodfield package of reforms involves.

I end as I began by welcoming what the Government have done so far and by expressing the hope that this evening and as the weeks go by we shall see some of the fine print which will indicate just how the Government propose to implement the welcome which they have given to the Woodfield recommendations in general terms. If I may say so, they will not be lacking in questions asking how they are getting on. My Lords, I beg to move for Papers.

5.43 p.m.

Lord Wolfson

My Lords, I am grateful to the noble Lord, Lord Allen of Abbeydale, for initiating this very useful debate and for giving us the benefit of his expert views to which I have listened carefully.

As this is a short debate I should like to speak briefly as one who has been engaged in the work of charitable trusts and related activities for many years. As a result of that experience I welcome the proposals contained in the well-reasoned and comprehensive report of Sir Philip Woodfield and his colleagues. Their recommendations strike the right balance—a skilful blend of tightening up where it is needed while maintaining flexibility with minimum bureaucratic cost so that trustees can operate in accordance with the wishes of the donors.

A vital role of private charities is to act as a catalyst by investing in people, in new ideas and in facilities. Perhaps the best known example of that was the modest grant made by the Rockefeller Foundation in the late 1930s which enabled Professors Florey and Chain successfully to complete their work on penicillin. Thus it is important to maintain both effective safeguards for donors and freedom for trustees and others to back innovative research work. This I believe the report has implicitly recognised.

There are current features which need attention in order to improve the performance of the charitable sector. In paragraph 2 of the summary, the report refers to some of the matters in question. It contrasts areas of strength and weakness and further on indicates the wide differentials that exist in administrative and overhead costs. The report also states that the Charity Commission's records are not computerised and recommends that they should be. That is a clear priority.

As a result of having an updated computer data bank the Charity Commission could then publish its own guidelines to charitable organisations advising them of average and best cost performance, cash flow and other relevant financial information.

The proposed management board and projects manager should monitor the outcome in terms of subsequent performance. They might also consider recommending cost-sharing between charitable bodies in appropriate cases where similar projects are involved. Paragraph 36 of the report refers to the possibility of the commission making staff exchanges with charitable organisations. That again is a useful suggestion.

There is also a need for recipients to have a more businesslike approach in obtaining better values for purchases of supplies, services, buildings and equipment. As has been mentioned on previous occasions, I should like to see a stronger measure of central buying, instituted on commercial lines, to ensure that that happens. I have had a number of experiences of meaningful savings having been secured as a result of such negotiations. In all cases, of course, specifications have to be laid down so that quality standards are maintained. Clearly cost savings on one project can help to make up a financial shortfall in others.

Charitable work as defined in law requires the essential combination of a good heart allied to a good head and integrity of purpose. Thus it is clearly incumbent upon fund raisers and trustees to operate efficiently and economically to ensure that the funds donated are employed for the purposes intended and to use their best endeavours to see that they are. Public bodies also have the same duty for they are the major providers of funds to the whole area designated in law as charitable. Both the interests of the recipient bodies and of the taxpayer need to be respected.

Pluralistic sources of finance are more helpful than sole reliance on the state, vitally important as is its contribution. Indeed, academic, cultural and medical independence as well as relief work must benefit from having an alternative or partnership approach to funding requirements.

The private charity sector, which the report states has an annual turnover of over £10 billion which represents some 2.5 per cent. of GNP, will continue to grow. All governments have encouraged that process and this Government in particular. In order to sustain the growing momentum of a well conducted charitable sector it is fundamental to stamp out malpractices by strengthening the requisite ground rules to give donors the maximum confidence.

The report's recommendations would reinforce the present law as would the publication by the Charity Commission of carefully drawn guidelines for administrative and overhead cost control together with a wider dissemination of relevant information. Central buying methods in the areas I have indicated would enable better values to be achieved to the benefit of all concerned.

Taken together these factors would raise standards all round. In the current national debate on funding and its application well-organised individual charities have an important role to play in helping to provide the additional resources for the many urgent purposes we all wish to see carried out. I am therefore confident that the Government and all sides of your Lordships' House will continue to give sympathetic support to their endeavours.

5.50 p.m.

Lord Houghton of Sowerby

My Lords, it is very pleasant on this occasion to have a few nice things to say. This is the third short debate on charities in which I have spoken. We are much more forward today than we were this time last year. We must be grateful indeed, not only to the Minister who inspired the appointment of Sir Philip Woodfield to conduct his investigation, but also to Sir Philip and his team for the speedy job and excellent work which they have done. It was a pity that he was given such a tight timetable. Something like 13 weeks for such a job seems to me to be a very good day's work for anyone to get through. However, we reap the benefit of that because the report before us is extremely valuable as a basis for this evening's debate.

The noble Lord, Lord Allen of Abbeydale, is far too modest to claim that it was probably his diligence on those occasions that has speeded up the work that the Government set on foot. I am sure that that diligence has encouraged the Government to bring forward the investigation and the report which is before us.

It is a good idea to leave aside for the time being the complex question of what a charity is. Had any committee in the last 12 months become involved in that question, it would still be doing its work. I think that in politics, charities and other contentious matters, such questions are best left aside until administration is more efficient and much more effective, and until the Charity Commission is in better shape to discharge the tasks not only which it has in hand already but also those which will lie ahead.

The Charity Commission has been long neglected. It is a great shame that, through lack of staff and resources, it has become so ineffective in many of the duties which it could have undertaken. The noble Lord, Lord Allen, has pointed out that the work of the commission has increased, and the number of staff has gone down; the result is that a great deal of its work has been neglected.

We should all distinguish between the two main groups of charities—the collecting societies and the charitable trusts. I believe that the Government should now embark on some form of communication to all charities, and especially to the collecting societies, and tell them what the Woodfield report is recommending, indicating the matters that the Government have under consideration, and giving them encouragement to do their own work in making their administration, accounting and efficiency more satisfactory. We want the charities to do as much as they can to make themselves fit for their jobs and prepared for greater responsibilities when they come.

As regards the next group of questions, those lie in the hands of the Charity Commission and without primary legislation they could embark upon those if only they had the resources to do so. I hope that it will be indicated what the Charity Commissioners are being prepared to undertake in the period between now and legislation.

As regards legislation itself, surely the vague reference to the length of this Parliament— "sometime in this Parliament"—is not good enough. Now that we have got going, let us, for goodness' sake, get on. As the noble Lord, Lord Allen, has pointed out, there are not many contentious questions on administrative powers, scrutiny and the rest of it. To a large extent the questions involve administration and the degree of control and supervision to be undertaken over a wide field of activities. I hope that the Government can be encouraged to get on more quickly than they suggest. I hope that the Minister, whom we welcome to the Front Bench, will be able to give us better news about the prospect of earlier legislation.

The keynote of all collecting societies should be accountability. I want to see that more than anything else. They should be accountable to their members if they are member societies, to their subscribers and supporters in any case, and to the public. They are collecting public money and they are spending public money in their noble causes. Plainly there is a wide public interest in all that they are doing.

In addition, we shall need a much more powerful commission than some of us envisaged to carry out the supervisory and regulatory functions that I think should be entrusted to it. We want something very close to the Building Societies Commission, which will have oversight over diverse activities of numerous bodies, all engaged in similar tasks but having a common obligation to the public interest and public affairs.

The noble Lord, Lord Allen, referred to appeals being made by broadcasts on television. There is mention in the report of the nature of fund-raising appeals. I am deeply concerned at the prospect that charities may go into the advertising slots of television. I invite noble Lords, if they are able to get a copy, to look at the report written by Diana Leat in December 1986 for the Central Appeals Advisory Committee. That report was produced under the auspices of the Joseph Rowntree Memorial Trust with which Mr. Guthrie, who is to be the new chief charity commissioner, has been associated.

If charities want to become whiter than white, they must steer clear of the subtleties and techniques of detergent advertising. They must realise what dangerous people ad-men are. We must realise that when politicians consult them, they must have something that nobody else has. We see that something on television, and not only in advertising. I should like to ask a few pertinent questions on that matter. How are we to be sure that the pictures we see are authentic or are we to have studio models of deprivation, child abuse, neglect and poverty? Are they to be portrayed in television advertising? Will they be real?

Indeed, in the Leat Report, it is said that one of the most successful broadcast appeals for public money for charitable purposes was one which allegedly was not true. That is an important aspect of the future opportunity and future danger. There is a special danger in the emotional presentation of children. There have been more appeals this Christmas than I can remember and there is a multiplication of organisations looking after children. It is time that there was some regulation regarding appeals made on television and it should be undertaken by the television authorities themselves.

While all these matters are being surveyed and gone over in longer debates than those which we have had so far, I believe that we ought to have a closed season on further fiscal concessions to charities and on further inducements to public generosity subsidised by public money.

In the meantime we ought not to have any extension of the role of the voluntary effort in the field of statutory social services and other services which are provided by government. This division between what should be a state service and what should be left to voluntary service is a difficult line to draw. Years ago I had the job of trying to draw that line while in the Harold Wilson government. It is not an easy one. Are the charities pathfinders or are they the salvage squad? Are children's homes in the charitable field merely branches of the social services which have to provide for children in care? There are all kinds of duplication of effort and no straight line between them.

I think that we should leave charities with the benefits that they presently enjoy—they are very substantial—and not confer more upon them until the public can be better satisfied that the field of charitable work is in better order than it is now.

Finally, I should like to say a word about charitable trusts. I listened with great interest to the noble Lord, Lord Wolfson. I think that charitable trusts have an obligation to be accountable in some large measure. There is far too much secrecy about what some charitable trusts are doing. Although it may not be public money, it is in the public interest to know. I am short of time now and I must leave that point.

All in all, we are very grateful for the work that has gone into this matter so far. We hope that at the end of the debate the Minister can give encouraging news about the Government's determination to get on with the job, which is long overdue, and on which so much work has been carried out in the past 12 months as a start.

6.2 p.m.

Lord Grimond

My Lords, I congratulate the noble Lord, Lord Allen of Abbeydale, not only on another excellent speech on this subject but also on having actually achieved something. Perhaps this should not surprise us as he is a very formidable operator in the public sector. However, I congratulate him on his success so far.

It seems to me that before setting out to reform anything, one should have clearly in mind the mischief that one is trying to end and the questions that need asking. To me, one of the best features of this report is that it concentrates the mind on these matters and pinpoints certain things which need doing in the field of charities.

The salient conclusion to my min d on reading this report is that there is very great success in the charitable field and not all that much to complain about when one thinks of other fields. Of course, if a commission were set up to look into heaven it would certainly report that it had some grave defects. It would probably make suggestions that possibly another half dozen archangels and even a small distribution of gold crowns would improve matters. Given the state of the world, I think that the charities and the Charity Commission come out of this inquiry pretty well, especially when, as we know, the Charity Commission has had its staff reduced.

I was particularly interested in the passages in this report which deal with Scotland because, as the noble Lord, Lord Allen, has already said, Scotland has no Charity Commission. I was looking forward to seeing a comparison of the English and Scottish experience and rather expected to find that things were not at all good in Scotland. This report mentions certain aspects of the Scottish scene which in the view of the inquiry need attention. But in Scotland too there does not seem to be any widespread criticism of the present situation, nor indeed is there as much to be done as one might expect.

Unlike previous speakers, I have some slight sympathy with the Government. First of all, there are innumerable things on which one might spend money and some of them seem to need money at the present moment more than does the reform of the Charity Commission. Secondly, to my mind one of the great ills of the present time is the outpouring of legislation. I think that whenever a Bill is introduced the Government and Parliament should ask themselves very seriously whether it is really necessary. A good deal of the recommendations of the report can be, and some have been, effected without legislation. I am all in favour of that. I do not deny that legislation may be necessary, but I suggest to the Government that when they introduce it they should not go into too much detail and should not try to cover too much ground because some of the Bills that we have received lately have been practically unmanageable.

The most important points that need attention in this field are first, the register and adequate facilities and staff to examine the accounts of charities; secondly, the amount spent on administration; and thirdly, the question of fund raising. I repeat what has been said innumerable times, that this is very big business and it is all too likely that fraud will creep in. There are dangers both in administration and fund raising. Therefore, I must reiterate that the public have a complete right to know what goes on in charities in order to forestall any possibility that they may be used for evil purposes.

To those who wonder why charities, voluntary donation of money and so forth, should be subject to public examination in this way, I say that not only do they benefit from large tax remissions but they are used for the Government to some extent to channel funds into worthy causes. The voluntary societies are not entirely voluntary in that sense and if people do not like it they do not need to set up a charity.

I reiterate that I spent many years as a director of the Joseph Rowntree Social Service Trust, which, unlike the Rowntree Memorial Trust and the Rowntree Charitable Trust, is not a charity, but it does—or hopes it does—pursue and fund certain valuable experiments and interests. The original assistance to parliamentarians, and so forth, was paid by that trust and could not have been paid for by a charity. We pay our taxes and are outside the Charity Commission; and so long as we remain within our articles of association, we can do what we like. That is a perfectly good way of putting money into good causes if you do not like the supervision of charities. However, in the charitable field it is perfectly reasonable, and indeed necessary, that the administration should be good and should be seen to be good.

Obviously, some of the greatest successes of the charitable field have been those accomplished by the great charities—the Nuffield Foundation, the Wellcome Trust, the Wolfson Foundation, and so forth. There is a certain temptation to think that the small and peculiar charities which proliferate over the country are out of date and must be inefficient and unnecessary. I protest against that view. When I was a director of the Manchester Guardian, which has no shareholders and therefore distributes no profits, year after year we distributed to charities small sums of money—very small sums of money in some cases. The charities were mainly local ones in Manchester and Lancashire. I remember saying, "Isn't this an awful waste of time? What's the good of going through all this palaver of giving very small sums to very obscure charities?" However, on looking into the matter, I found that some of those charities did a great deal of good at very little expense. There were quite a number of people who depended on them. They considered them part of their life; not only did they get some money from them, but they were interested in them; they knew all the other beneficiaries, and so on. I should be very sorry to see those kinds of small charities either too much bureaucratised or even amalgamated.

The great controversy at the back of all this inquiry is something into which the committee could not look; that is the question of what is a charity and what is the difference between a charity and a lobby. On the whole, I think that the committee was very wise not to go into that question, and I rather agree with those who have said that this is not the moment to do it. But if it is not going to be done now, we must expect the cotroversy to continue. It will depend a great deal upon the success of the improved efficiency which will result from the Woodfield Report as to how far that controversy goes.

I hope very much that the speaker who follows me, the noble Baroness, Lady Faithfull, will return to some of the suggestions that she has made on this subject before. I am not altogether clear about some of the proposals with regard to the Charity Commission. I am not clear what the exact advantage a project manager is. "Projects" have become the small change of all discussion. What is a project manager? I am not sure what it means. However, I very much liked her suggestion in a previous debate about what parliamentarians might do.

I welcome the report. I trust that if legislation follows, it will not be too detailed and will stick to the main purposes of the report. Once again, I congratulate the noble Lord, Lord Allen of Abbeydale.

6.1 p.m.

Baroness Faithfull

My Lords, I also pay tribute to the noble Lord, Lord Allen of Abbeydale, for initiating this debate, and who better, as a former head of the Home Office. For all of us concerned in the realm of charities in this country, I suggest that this is a momentous debate. We had the Nathan Report in 1952, the House of Commons Report in 1975 and the Goodman Report in 1976. Little action was taken as a result of these reports. Now at last we have positive action in the form of the report of Sir Philip Woodfield and his team commissioned by the Home Secretary and the Chancellor of the Exchequer.

We congratulate Her Majesty's Government on taking action; all those in the country who have worked for change will be grateful. Many others will also be grateful. Perhaps I may mention the retiring chief commissioner, Mr. Denis Peach, who has given imaginative and positive service during his time at the Charity Commission. We wish him well.

There are up and down the country those who have called for reform and who have done good work. Perhaps I may mention two names: Mr. Harry Kidd, the director of the Legislation Monitoring Service of Charities, who produced this extraordinarily good book, Malpractice in Fundraising for Charity; and Sir Charles Kimber, the charities review organiser in 1980 in Oxfordshire, to whom I am particularly indebted for the help he gave me with the Parochial Charities Bill.

My particular interests lie in the following recommendations. Recommendation 2 states: The Home Office and the Charity Commission should review and clarify the division of responsibilities between them: the direct accountability of the Chief Commissioner to the Home Secretary should be preserved". Recommendation 3 states: Two additional part time commissioners should be appointed by March 1988". I suggest that the present Home Secretary, Mr. Douglas Hurd. is unique in that, unlike any of his predecessors, over many years he has taken an interest and taken action.

In previous debates in your Lordships' House I recommended an advisory council or board consisting of a Member of the House of Commons, a Member of the House of Lords and a member representing charities. I still ask myself whether this would not be a sensible move to support future Home Secretaries, who may not be as interested, able and imaginative as our present Home Secretary. Such an advisory board could consist of people to whom the public could appeal.

I appreciate that in paragraph 27 of the Woodfield Report it is stated: The traditional device of an independent Advisory Council would not be a sufficient answer to these requirements"— that were cited in earlier paragraphs. Instead of an advisory board the report recommends the appointment of two additional part-time commissioners. The noble Lord, Lord Allen, made reference to these.

Recommendation 3 might well meet my point. But perhaps I may ask the Minister when he comes to reply to clarify the role of the two part-time commissioners. For instance, what would be their job description? Would they be available to the public? Would they work under the chief commissioner? What would be their relationship with the Home Secretary? From what sector of the population would these part-time commissioners be drawn?

Recommendations 4, 5 and 6 concern the management and organisation of the Charity Commission and these are greatly welcomed. I have to say to the noble Lord, Lord Grimond, that I approve of the recommendations in the Woodfield Report on the question of management and the appointment and setting up of a top management board. I also approve the career structure for staff by secondments to other departments and to other charitable organisations. Here we extend a welcome to the newly appointed commissioner who comes from the Rowntree Trust, Mr. Robin Guthrie. It is encouraging to see that, greater use of information technology is recommended. There are now over a quarter of a million charities in the United Kingdom, with an annual turnover of well in excess of £10 million.

At a luncheon given in honour of Mr. Denis Peach by the Home Secretary at which I was present today, one of the members suggested that we might scrap the register altogether to save having to put it on computer and that everyone should re-register and it would go straight on to the computer. I only heard about that at lunch today and I have not had time to think it over, but it appears to me quite sound.

As one who has presented to your Lordships' House the Parochial Charities Bill, which, together with the Small Charities Bill, was considered by a Select Committee under the chairmanship of the noble and learned Lord, Lord Brightman, I am bound to point to Recommendation 30. The Charity Commission issued an excellent report on the Charities Act 1985 but it states that: The response has been modest". The work that I did on this Bill leads me to support Recommendation 29, that, The Commission should as soon as practicable establish a local…liaison section to promote and assist future local review work". As in past reviews of local charities, this work could be devolved to a local voluntary organisation from the local authority.

I have two last points. The first concerns trustees. The Charity Commission has had neither the staff nor time to stretch out to help, assist and confer with trustees. I draw your Lordships' attention to the Centre for Voluntary Organisation and Management at the London School of Economics, where there are courses both for the management of voluntary organisations and training and help given to trustees to assist them with knowledge of how to be trustees and how to run a voluntary organisation.

Finally we raise the burning question. These recommendations cannot be carried out without further resources. Will those resources be available? Many of us were deeply distressed and hurt by the report of the National Audit Office. All the work that has been done by Sir Philip Woodfield and his team, and the inspiration which has been given to the work by the retiring Charity Commissioner, by the report, and by the Home Secretary, will come to nought unless there are resources.

6.19 p.m.

The Earl of Longford

My Lords, it is a privilege to speak between the noble Baronesses, Lady Faithfull and Lady Lane-Fox. They both embody the charitable impulse at its best: a warm heart supported by a great deal of expert knowledge. I hope that my noble and revered friend Lord Houghton will forgive me if I say that I was a little worried by one of the propositions that he appeared to be advancing. As he said the same thing last time, I suppose that I have probably understood him correctly.

I understand that the noble Lord, Lord Houghton, fears that there is a danger of too much money going to charity. I take precisely the opposite view, I am afraid. In this country, in which we are told that we are getting richer every minute, I think there is a danger of not enough money going to charity. As I shall not use up my time, perhaps I may be permitted a personal reminiscence. In 1950 I made my first speech as a Minister of some kind in the Labour Government of that period in reply to a debate initiated by Lord Samuel on voluntary action. Mr. Herbert Morrison, the then Deputy Prime Minister, took particular trouble to make sure that I made a very strong statement indicating that the Labour Party, although a party connected with collectivism, was heart and soul behind the movement for voluntary action. I am sure that when my noble friend Lord Mishcon replies on behalf of the party, he will say the same thing as strongly and no doubt more skilfully.

I shall not dwell on the subject. I remember that the philosopher Kant—I spell that for the benefit of our friends who have to take all this down—was accused of starting from both ends of the road at once and never meeting himself in the middle. I have three propositions to unfold briefly. The first is straightforward and the other two might need some balancing out.

The first proposition is simply to support most strongly all the arguments that the noble Lord, Lord Allen, with all his expertise, brought forward for strengthening the work of the Charity Commission, for giving it more resources to enable it to do the work much better. I shall not dwell on that as it has already been touched on and will be mentioned again by other speakers.

The other two propositions need careful juxtaposition. On the one hand we want to remedy abuses and on the other hand we do not want interference with charities. The noble Lord, Lord Grimond, will perhaps for the first time approve of me if I say that I have myself started three small charities in my time. That is what he begged us all to set about doing. The last thing we should have benefited from, either then or later, would have been interference from bureaucrats coming round and sniffing about to see what we were up to.

In my opinion the Charity Commissioners have been extremely wise. Everybody has to put in a report and if there is any cause for anxiety the matter is considered more fully. But the last thing that the charities would want would be increased interference by a central body, whether that be the commissioners, the courts, the Government or anybody else. I am sure that anybody who has presided over a great charity—such as the noble Lord, Lord Wolfson, or the noble Lord, Lord Allen, who has done the same for MENCAP and with whose predecessor I was associated in past years—would be the last to want people inspecting them more closely. It would be absolutely fatal and in fact impossible. I hope we shall not hear any more of that.

That brings one to the question of the guidelines that ought to be laid down for charities by the commissioners. Here I have changed my views since our last debate only a year ago. Now I believe that it is not possible to lay down more precise guidelines. I do not say that it never will be, but I do not believe that we should benefit from more precise guidelines. To take but one issue; it is clear enough but it will always give trouble. I am quoting from a Home Office document issued recently: It is well established that charities may campaign in furtherance of their objects. The RSPCA Act 1932, for example, conferred specific power on the RSPCA to conduct 'persuasive educational and parliamentary operations' and to make representations to Parliament and a Government department". That campaigning, which is a crucial issue here, is settled in the right way for the moment and I hope that it will never be disturbed. The question then arises as to what is political and will be ruled out. That is a difficult issue which I do not have time to go into now. However I quote something written by the then chairman of the Charity Commissioners to my friend Mr. Peter Thompson, the dynamic founder of the Matthew Trust—a gentleman who has done more in my estimation for mental health than any layman. The letter from the then chairman acknowledged the difficulty, indeed the impossibility, of defining the word "political" with any precision. For myself I am now for once, and perhaps for once only, in favour of the status quo.

I shall raise one more issue, turning to the other side of this, that concerns abuse. I gave notice of this to the noble Earl, Lord Ferrers, and it refers to something I said on the last occasion, when I asked a question about the foreign organisations which set up charities in the United Kingdom and then take the money out of the country. I dealt with that matter in greater detail last time. I hope that the noble Earl will be able to say whether that abuse has been corrected.

I shall not detain the House further. I have risen partly because of my long-term involvement with charities and also because of my desire to win the good esteem of the noble Lord, Lord Grimond, by boasting of the small charities that I started, but most of all to say how strongly I support all that the noble Lord, Lord Allen, is doing and will continue to do.

6.27 p.m.

Baroness Lane-Fox

My Lords, the noble Lord, Lord Allen of Abbeydale, should be congratulated not only on once again leading out the home team, as it were, which has become almost an annual fixture, but also on his determination to improve the role of the Charity Commissioners, something that was so well reflected in his speech.

It is very much in the category of high finance. The recent scrutiny was greatly needed to look through the whole of the Charity Commissioners' work. The Woodfield report contrives to cover all the points that have given many of us concern. My main worry about it has been that the commission has been working with outdated equipment. It was an obvious recruit for computerisation and also for sophisticated filing methods. No doubt this view of mine was coloured by my own visit to the commission some years ago. I went on behalf of a charity which wanted certain information from the commissioners. I found a very old-fashioned system operating. Nobody could do more than provide me with a heap of dusty old files to open up and search. It took me several days. I am delighted to read of a brighter prospect for anyone sent there on a similar quest in the future.

The kind of information that the commissioners have to provide can be of great use. I was very disappointed to read that the report does not favour making a scale of charges here. This is the only point at which I do not agree with the report. At Part 11 paragraph 118 it recommends against such a scale of charges. I believe that someone should pay if something is of value to them. This is a valuable opportunity that should not be missed. It is very satisfactory to read the Home Secretary's reply in another place on 21st January. He gave a warm welcome to this report. He said that an extensive reform of the system was needed and declared that the majority of recommendations were already being put into effect. He hoped that those others that require legislation would be dealt with later in this Parliament. My goodness, that has come a long way.

I have read the views of the National Council for Voluntary Organisations and the Council of Charitable Support. In general they both give the report their very full approval. The NCVO is anxious that the proposed registration fee of £25 is likely to discourage new charities. My own view is that there should be a fee of perhaps not more than £10. Having been through the business of registering on several occasions, I believe that the larger sum could be a discouragement but that the smaller one would encourage the charity at least to keep the rules. I believe that there are others of your Lordships who would like to raise the bid to £50 but I fear this would drive more charities underground where already there are, I am told, 100,000 unregistered.

In particular I am delighted with the suggestion that it is intended to make submission of annual accounts obligatory, with failure to do so punished by removal from the register. As an adviser on disablement grants to a charitable trust, I know that new appellants make much of their registration with the Charity Commission. As things are, that state does not indicate any extra grace; but, if Woodfield's recommendations here are adopted, it will.

From my two connections with the Commission I stress the urgency and importance of adopting the recommendations in this report. Increased resources of course will be needed to make it work, and that has already been referred to by other noble Lords today. It is not only important that there is a due measure of supervision, but also that the public knows about this. Fortunately there has not been any big charity scandal to date, but it is high time to take steps to prevent any such possibility. These funds, like taxes, come from the public; but, unlike taxation, this money is voluntarily given and as such deserves most careful handling. For these reasons I applaud the Home Secretary for going as far as he has.

Finally, perhaps I may ask my noble friend whether the Home Secretary's statement implies that funds will be made available to carry out the recommended changes.

6.33 p.m.

Lord Denning

My Lords, I too welcome Sir Philip Woodfield's report and many of the recommendations. I congratulate him on the speed with which he has done it.

One can only concentrate on one or two features which appear in this scrutiny. I should like to concentrate on the need for keeping a full and accurate register of charities. Section 4 of the 1960 Act said that every charity, subject to limited exceptions, is to be registered with the Charity Commissioners and that it is the duty of the trustees to register it. That duty has not been enforced because there is no sanction for it. The noble Baroness, Lady Lane-Fox, said that there were 100,000 charities which are not registered when they ought to be. Indeed the report says that many charities required by law to register do not bother to do so. There is no sanction for failure to register.

I should like to tell your Lordships about the importance of registering charities. Once a charity is registered, the charity itself, when it issues appeals, puts with its name a registered charity number. That is a guarantee to the public of which note is taken. Indeed in paragraph 38 of this scrutiny it says: The most widely known fact about the Charity Commission is probably that it keeps a register and issues registration numbers to charities. The natural assumption is made that having a registration number shows that the charity is reliable, well run and worthy of support. I also add that it is accountable to those in authority for its running. If there is any mishandling of the charity, it can be called to account and investigated. That is the importance of a registration. It is a guarantee to the public that it is a well-run charity.

The other equally important point is that a registered charity has enormous tax concessions and taxpayers get relief on their subscriptions to charity. In regard to this the scrutiny says at paragraph 45: … the public is entitled to have access to basic information showing which are the bodies receiving the large fiscal benefits which the state gives to charities. It states that tax concessions amount to £550 million and rate relief to £120 million. So there is the important benefit of tax concessions, the other important factor being registration. That is the effect of registration: on the one hand there is a guarantee to the public that it is well run, and on the other hand it is afforded tax concessions.

Those being the consequences of registration, is it not important that there should be compulsory registration and a sanction? As I said, in the 1960 Act it was compulsory on every charity to register but no sanction was imposed for not doing so.

I should like to suggest a few sanctions which should be considered. If the charity is not registered, let it receive no tax concessions at all. Furthermore, if it is an unregistered charity, do not let it make an appeal for funds because it does not have the guarantee of the country behind it.

I should like to deal with appeals for funds. We know what fund-raisers do. When they make an appeal for funds should they not say how much they are getting out of it? Paragraph 127 of the scrutiny says: The excessive level of remuneration retained by some commercial FRPs. It appears to be lawful for an FRP to enter into a contract with a charity under which he is entitled to retain 80 or 90 per cent, of the receipts". So the fund-raiser, when he puts this great appeal for funds for this charity or the other, does not say "80 or 90 per cent, is going to me and only 10 per cent, is going to you".

That recommendation surely ought to be in force. If an appeal is made for funds, first it should be stated that it is a registered charity and, secondly, it should be stated on the leaflet or the box how much the fund-raiser is getting out of it. Surely that is a good recommendation.

These are recommendations which would put charities on a proper footing; they should all be registered and properly run. If they are not registered no tax concessions should be given at all and they should be made absolutely accountable. That requires new legislation. That is the main point I would mention.

I also mention schemes and advice. The scrutiny says that these are often heavily loaded with legal phrases, that it is slow, and that the doctrine of cy-près has not been carried as far as it should be. I hope that under the guidance of Sir Robin Guthrie we may change all that. With more resources the Charity Commission can be quick, active and liberal in all these matters. I noticed that in accordance with the terms of reference given to the scrutiny report, it is to assume that the definition of "charity" for charitable purposes is to remain unchanged, and that is probably right.

It would take a long time to define charity but I should like to outline the trouble in which we find ourselves. Noble Lords will remember the case of the Unification Church and that the Daily Mail was said to have libelled the moonies. However, they justified it. The jury stated that charitable status should be investigated. It is being investigated. The Charity Commissioners thought that the charity was for the advancement of religion and the case is being taken through the courts. It has not yet gone far and it will take some years, but it is hoped that the House of Lords will give guidance on what is a charitable status.

Many organisations do not trouble to register as charities. We know of the fortunes that have been made, for example, by the Church of Scientology. It has not registered as a charity. If it had, it might be accountable. Registration as a charity with the Charity Commissioners should be enforced; the statute of 1960 should be enforced by proper machinery.

I have outlined a few of the points which I noted in the scrutiny report. I should like to say that I welcome the report and the many recommendations which it makes.

6.42 p.m.

Lord Parry

My Lords, it is always a joy to follow the noble and learned Lord, Lord Denning, to hear him expound upon cases and to know that he is slightly older than I. I rise to speak in the debate because, as one ages, it is easy to concentrate one' s mind on the disagreeable. There is a great deal of change and all change hurts someone, even when it is change from good to better. The great and enduring help that one receives from society at the present time is the recognition of the definition of charity, which is perhaps even older than that which we are discussing this evening: charity being love.

In all the difficulties in present society at home and abroad there is evidence of a great deal of love and enduring and that people respond to charitable appeals. When it is properly presented to them that there is a need for their gifts, those gifts are forthcoming. They come from those who are very rich and from those who are very poor. They are co-ordinated through charities which are well organised and through charities which are perhaps less efficient.

After many years in the field, I take the view that many of the difficulties and tragedies which occur in the personal lives of those who fall foul of what they first attempted to achieve occur more from accident than design. Therefore the emphasis is thrown back on the need to structure the charitable services in a way which will help all those who wish to give service in those charities, rather than that we should set out to punish those people who we know originally intended to serve their own interests rather than those of the charities.

I have worked happily within the Spastics Society for a number of years. During that time I have been grateful for the help and advice of Mary Holland, who is now with MENCAP, and of Michael Brophy, who is now with the Council for Charitable Support. They are present in the House tonight, as are many other professionals in the field.

I should like to dissent gently from the words of the noble Lord, Lord Houghton of Sowerby. I believe that there is a great necessity to harness the good feeling and enduring optimism which is present in society through the new media in the most efficient way possible. Not for one second do I disagree with the noble Lord that there is a possibility of prostituting that if the wrong people give the wrong messages in the wrong way. However, the important aspect of the White Paper is that we are being allowed to focus our minds on problems that have occurred, some accidentally and some purposefully, and that we are providing some solutions to those problems.

I thank my noble friend Lord Allen of Abbeydale for giving the House the opportunity of debating this subject. It is a great discipline on the House to see the noble Lord, Lord Wolfson, and to hear him contributing to the debate as one who has probably done more for charitable purposes in one afternoon than the rest of us have been able to do in a lifetime.

I should like to ask two specific questions and to take the House back to the opening speech of my noble friend Lord Allen of Abbeydale. When the Minister comes to reply, will he tell the House more about the position of the project officer, outlined in the first suggestion, who will be reporting directly to the chief commissioner? Will he say who, what, why and how and comment on the nature of the appointment?

I should like to take the House quickly to two further items concerning the official custodian for charities, items 38 and 39. It has been pointed out to me that the official custodian for charities acts in a voluntary capacity; as I understand it, he is not a paid official. He works economically, he is in a position of great trust and is responsible for advising about investments in this field. I am told that the operation costs approximately £1 million, and that must be set against a charitable investment in the region of £600 million. If people are prepared to work in a voluntary capacity at such a high level, and if such talent can be tapped for what seems to be a reasonable percentage of the total investment, I should like to know whether it is necessary to change the appointment and introduce a bureaucratic structure which might cost more.

In the debate we are making only a beginning, but I believe that there are a number of recommendations upon which there is already agreement. One could probably run a pencil down the list of recommendations and isolate approximately 30 upon which there is already total agreement. As has already been said—and it is also the view of the charity organisation that has been advising me—there are other recommendations that we might wish to go through with a fine-tooth comb. One would need to look at the details and implications of the proposals. However, we are surely in a position where the Minister can say to his right honourable friend the Home Secretary, "It looks to me as though we have total agreement on two-thirds". It would be a pity if the implementation of the agreed portions of the report were held up while we argue over matters about which we are already agreed.

I warmly welcome all the items upon which there is so much agreement and I shall help to question the items upon which there are matters yet to be raised. I respectfully recommend to the Minister that in his report to the Home Secretary he draws attention to the fact that there is a great deal of agreement on the major portion of the recommendations.

6.49 p.m.

Baroness Macleod of Borve

My Lords, I should also like to congratulate the noble Lord, Lord Allen of Abbeydale, on bringing this matter back to your Lordships' House one year later and on having accomplished so much during that time. I am not surprised that he has done so. I should also like to congratulate Sir Philip Woodfield and his committee on what is not only a very helpful but also a very succinct report. I believe that we have all had much pleasure in reading what the report has to say.

I am also pleased to read that the Home Secretary, on behalf of the Government, has accepted the report and that he hopes to bring a Bill before Parliament during its present life. As we all know who have anything to do with this sphere, this is what my noble friend Lord Young would have called a growth industry. How thankful and grateful we are for that. It is an increasingly promising field, but unfortunately also an increasing field for sharp practices, as has been spoken about before. But no wonder in this growth industry the Chancellor of the Exchequer is encouraging more voluntary giving to charity by introducing the payroll system. After all, we are told that the country and he also, raised £10 billion. That is big money, even to the Chancellor.

The report is vitally important at this time because there is a ground swell of trusts, companies and individuals who are willing and ready to help all sorts of people and all sorts of organisations that are in low finances or people who are themselves in trouble. All these organisations and people are increasingly anxious to know that their contributions are well spent. There are 250,000 registered charities. I think it is beyond the hounds of charity commissioners and their staff to look after so many charities. Therefore, they must have up-to-date machinery and equipment, and, in view of the Government realising £10 billion, it seems that the Chancellor of the Exchequer should give money for more staff.

This report has many recommendations which can and must in my view be implemented. We know that charitable status can be acquired as a legal right, regardless, as we are told, of whether the organisation is well or incompetently run and even if the organisation fails to make the statutory return of accounts. That seems extraordinary. We are also told that the Charity Commission has no power to refuse charitable status to an organisation with objects entitling it to that status, even when it has reservations over whether the organisation is one which ought in the public interest to receive the legal and financial benefits of charitable status. That seems to need much tightening. Otherwise, we may have, and perhaps are having, a large number of different charities all geared to helping the same cause. To my certain knowledge that is happening.

Like other noble Lords, I believe that overseeing the accounts is one of the most pressing of all the recommendations made. It is vitally important, for example, that the amount paid on administration is low and is seen by the public to be as low as possible. I welcome the accounts being received by local authorities. Very often it is local people who are giving their money to local charities as well as to big national charities. I warmly welcome the recommendation that members of the public should be able to see, for a small fee, the charity's results.

Charitable status, and all that surrounds it, is invaluable to every new charity. However, the register of charities must be kept up. In my experience—which is quite lengthy and covers many charities—I find that charitable giving and charitable help from the people of this country are sometimes almost overwhelming. I happen to be connected with a charity that at Christmas-time looks after people whom nobody knows because they are single and homeless. We run the charity to look after them. We call it an open Christmas and about 700 people are helped each Christmas.

I do not think I am betraying any confidences if I tell the House that up to three weeks ago—and I did not have time to ask for today's figure—the people in our country who wanted to help the single homeless in London, who have no roof, nowhere to go and no food at Christmas-time, have so far this year raised £605,479. Now that is charity, because it is looking after people they never see who are single and homeless. They might perhaps go round under the arches of Charing Cross, but normally those people are looked after by other agencies. Therefore, the remainder of the money we raise will go to help the agencies that normally look after people who are without homes during the rest of the year.

We employ only two people and our administrative and publicity costs are less than 10 per cent. The rest is done entirely by voluntary effort. Last year 996 people offered to give up some of their time at Christmas to help us look after people who have no homes and no food. That is charity. I hope that it never changes; I am sure it will not.

6.58 p.m.

Lord Mishcon

My Lords, in this interesting and very useful debate your Lordships have not been economical with truth but have been economical with time, and I observe that I, the Minister, and the noble Lord, Lord Allen of Abbeydale, have been allowed rather more time than was announced by the Chief Whip. It would not be charitable if I for one took advantage of that, and I do not intend to do so.

I share the joy that my noble friend Lord Houghton of Sowerby announced at the beginning of his speech when he said that he could commence with a note of approval and appreciation. I should like to join with others of your Lordships in paying tribute, first of all, to the noble Lord, Lord Allen of Abbeydale, for initiating this debate. He is a great initiator of debates which are useful to the nation and we are very grateful to him. Secondly, I too join in the tributes from these Benches to Sir Philip Woodfield and his colleagues for this very worthwhile and workmanlike report. I do not know whether your Lordships have looked at paragraph 4 of Part 2, which is to be found at page 8. Your Lordships will see—and I think it is proper to pay tribute to it—that the total estimated cost of this report was £31,000. It was well worth the money, if I may say so; it is a very economical report.

Tribute should also be paid, as has been done, to Mr. Peach, a great Chief Commissioner whose work will always be appreciated. I know that his successor would be the first one to pay that tribute to him as well. We wish Mr. Guthrie every success.

I was asked by my noble friend Lord Longford to reiterate the resounding words of Lord Morrison—I think he was Mr. Herbert Morrison when he spoke those words to my noble friend—in order to make it perfectly clear that from these Benches we welcome the great charitable efforts that are made to relieve hardship in our land and to promote science and education and all the other things that are charitable objects. From these Benches I once more say, not with the force that a Morrison could have used on behalf of my party but nevertheless with as much emphasis as I can command, that of course we appreciate charity, we encourage it, and there is no difference between us on this Front Bench and those on any other Front bench, I imagine in this House.

It has rightly been said that we are dealing with a very important national matter when we deal with charity. It may be said that charity represents the big heart of our nation—and what a big heart it is, as the noble Baroness, Lady Macleod, said. But it also represents big business. One has to be rather careful in that connection that there is proper administration, that there are proper controls, without in any way using the bureaucratic heavy hand which obviously would be neither appreciated nor needed. There must be a balance, since, as has been mentioned in the debate, there are about 250,000 charities, with a gross annual turnover of over £10 billion.

The report deals mainly with the requirements which are needed to improve the Commission's management and the information available to it. Upon those objectives there must be complete agreement. I believe that, by and large, this report makes very sensible recommendations.

It is important that the commission has powers to deal adequately with fundraising malpractices. Your Lordships must have looked with approval at paragraphs 41 to 45, as did the noble and learned Lord, Lord Denning, who rightly mentioned some of the iniquities that occur with some of the professional fund-raisers. I emphasise the word "some" because many of them, by hard work and endeavour and with complete integrity, are responsible for raising large sums for very worthwhile objects, but as always there is a minority of whom we have to be a little careful.

In particular, I was very pleased to see paragraph 41 on page 6, which the noble and learned Lord did not mention, I am sure because he was limited as to the time available for his speech. Paragraph 41 is very interesting and very useful. The recommendation is: It should be an offence for a fundraising practitioner to deduct his remuneration (however calculated) from donations received before paying them to the charity unless he can prove that his intention to do so was made clear to every donor; if such an offence is committed it should be open to the court, in addition to imposing penalties, to determine that the sums deducted be paid to such charity as the court may determine. That is a very good and useful recommendation. One hopes to see it in legislation soon, and that will have to be primary legislation, of course.

Inevitably the question of definition of charity has been raised in this debate. It was said that it was a good thing that Sir Philip and his colleagues had not tried to tackle the problem or we should not have had the report to debate even now. In fairness to Sir Philip, however, I must point out that the terms of reference expressly prevented this admirable working party from considering the matter at all. Indeed, the terms of reference start with the words: On the assumption that there is to be no change in the law relating to the definition of charitable status". Having said that, it is absolutely unavoidable in discussing charity in a debate to consider whether or not we need a different definition of charity from the latest one, which dates back to 1891 and is nearly a hundred years old. It is the definition by Lord Macnaghten, who devised four categories of charity.

The Goodman Committee sat a few years ago, I think in 1976. It studied this matter very carefully. As I remember it, there was only one dissension from its main recommendation that by and large this reliance upon the four classifications of Lord Macnaghten, defined from time to time by our courts to keep up with the social mores of the day, worked out pretty well. The committee, however, suggested that there should be guidelines which from time to time the court would lay down and the Charity Commissioners would publicise, as to how to keep up with the varying social factors that, clearly, would evolve.

I should like to see those guidelines kept up to date not just from time to time in statements that would be made on behalf of the Charity Commissioners, to ensure, possibly by debates in Parliament and elsewhere, that we were keeping abreast of the times in that definition which owes its origin to Lord Macnaghten and, many centuries ago, to Good Queen Bess.

Lastly, I turn to the question of what queries should be put to the Minister at the conclusion of this debate. I do not intend to copy those who have already put questions to him because that would be a waste of your Lordships' time. I do, however, want to ask a few questions which may be slight variations on those queries, or additions to them. I do not think that any of them will come as a surprise to the noble Earl. If they do, I shall well understand (since I have not had an opportunity to give him notice of them) if he decides to reflect upon them, if he can pay them that compliment.

First, what is the Government's reaction to the idea that there should be a charge of £25 on first registration of a charity, this not to be retrospective? The calculation that has been made is that this new step would be very much setting a precedent which, it may be felt, other people less kindly than the Minister of State, or less generous than the present Chancellor of the Exchequer, might want to increase upon to an unsatisfactory extent in years to come. Therefore it is an important precedent that we are discussing. What is the Government's present reaction, bearing in mind that all that it would yield on the calculations I have seen would be about £100,000 a year? I suppose that it would mean that a cashier's department would be needed; it would mean accounts being sent out; it would mean quite a bit of administration. Is the whole exercise worth while for £100,000 a year and would it not be wrong to think in terms of charging anything more?

The official custodian was mentioned, as was the recommendation that his offices certainly be no longer encouraged and at some future date possibly be terminated. It has not been mentioned yet, but my information is that there are some 38,000 separate trusts in which at the moment he is the nominee stockholder. In good faith—I am told this by a worthy organisation, which I think is obviously reliable—many trusts were put to him in perpetuity. Bearing in mind the traumas through which the Stock Market has been in recent months, is this the appropriate occasion to remove investment advice of this nature from many charities which may badly want to depend upon it? What would be the alternative except for those charities to go elsewhere for investment advice? That might be a costly proposition, and the advice, if I may be allowed to say so, might not always be as reliable as that which many charities have received from the official custodian?

Lord Allen of Abbeydale

My Lords, I do not wish to interrupt the noble Lord, but I wonder whether he is quite right in suggesting that the official custodian offers investment advice. He manages the workload but I do not think that the trustees can turn to him for advice, if I am correctly informed.

Lord Mishcon

My Lords, the noble Lord, Lord Allen, may well he right and I may be wrong. If I am wrong about that I apologise, but the information I had was that there is a free service given by way of investment advice from time to time by the official custodian. If that information is wrong I am sure that the Minister will tell me so, and my present ashen colour will turn to pink.

Lastly may I ask the noble Earl a question, only so that there is no misunderstanding? I believe it may be true that the Government have not yet made up their mind fully, but the Home Secretary has recently said that the Government support most of the recommendations in the Woodfield Report. Can the noble Earl tell us what recommendations they do not approve of, so that we may be able to consider the Government's position in a little more detail?

Having asked that, I reiterate from these Benches my appreciation of all the work that went into the report. I congratulate the Government, the Home Secretary, and the noble Earl upon the work that is being done by his department in setting up this working party and in ensuring that it carried out very useful duties which we all appreciate.

7.15 p.m.

Earl Ferrers

My Lords, I should like to add my thanks to the noble Lord, Lord Allen of Abbeydale, for having given us the opportunity today to debate this matter. I should say at the outset that the Government have looked forward to this and have looked forward to the opportunity of hearing your Lordships' views, because the report of Sir Philip Woodfield and his team is a document of the first importance for the future of charitable endeavour in this country. Knowing your Lordships' deep concern for charities, it is appropriate that it should be debated for the first time in this House.

The noble Lord, Lord Parry, said that your Lordships are in favour of three-quarters of all that has been said. Listening to this debate today has been an enlightening experience for me personally, and not least for the fact that it was opened by the noble Lord, Lord Allen of Abbeydale, who was of course Permanent Secretary of the department of which I have the privilege of being an ornament. It is something of a fine tutorial to hear from him.

One of the privileges of being a Minister is that one never ceases to learn. I must confess that before I started in this particular office some two weeks ago I was not too familiar with charities. Like faith and hope, I always thought that charity was one of the three great virtues, and of course charities swim along in the slipstream, although they are not quite the same as charity. I am grateful for the benefit of the wide experience and expertise which your Lordships have brought forward this evening to the debate. I listened carefully to it all.

It is of course not possible over charitable matters to settle all questions quickly. In any field of social endeavour as soon as one set of questions gets resolved, others come to the top. Rather like the pistons of an engine, once one goes down, something else appears at the top. There are always problems to be dealt with. Your Lordships have given a great deal of pleasure to me by the welcome that you have given to the fact that my right honourable friend the Home Secretary announced last week that the Government strictly and warmly welcome Sir Philip Woodfield's report, and that we hope to put forward legislation to implement his recommendations later in the life of this Parliament.

The noble Lord, Lord Houghton of Sowerby, asked when will that be; and I shall tell him that it will he later in the life of this Parliament, and he will understand what I mean by that. I can assure the noble Lord, Lord Grimond, that when that happens the Bill will be as short and as manageable as possible, and I hope as he would like.

Our welcome to the report underlines once again the Government's support for the charitable sector. We are committed to its continuing growth and health. Voluntary service to the community, the selfless giving of time and energy for the benefit of others, has always been a prominent feature of our national life and a precious vein in our national characteristic.

The noble Lord, Lord Grimond, referred to all those who benefit from charitable works, and so did the noble Earl, Lord Longford. My noble friend Lady Macleod gave us those remarkable figures with regard to Crisis at Christmas. It is true that these charitable works involve an enormous amount of people, both the donors and the benefactors. We take very seriously indeed our task as custodian of this heritage. That is not simply a matter of sentiment. Our support is a great deal more than that.

The charitable sector is now larger and more diverse than ever before. There are now estimated to be more than a quarter of a million charities in the United Kingdom with an annual turnover of £12,000 million. My figures are higher than those that have been mentioned. That is about 4 per cent. of our gross national product. The sector is now very significant indeed. It is larger than the motor industry, the chemical industry and the coal industry. There are some who say (possibly cynically) that altruism is splendid but that it is even better when it is tax deductible. That is a slightly cynical attitude.

The noble Lord, Lord Houghton, said that we have to be careful and strict where public money is involved. It is perfectly true that much money goes to charity as a result of, and even because of, the tax system. That is an important feature of charitable giving in this country. The basic philosophy is to encourage the latent and wholly virtuous desire to give a proportion of one's income to charity. When that is done the person who gives may do so out of his income before it is taxed. Therefore the money given is the donor's money. It so happens that the route by which some of it comes is via the taxation system. Because of that, it is important that we should take great care that it is properly and correctly looked after.

I should like to join other noble Lords who have congratulated Sir Philip and his team on the speed with which the review was carried out and on his clear and well judged report. The sympathetic understanding and judgment which he and his team brought to bear has been reflected this evening in your Lordships' House. As my right honourable friend the Home Secretary has said, it is a view which we unequivocally share. We accept Sir Philip's recommendations and when the opportunity arises we shall introduce legislation to help put them into effect.

Much has already been done to implement those recommendations which do not require legislation, notably to improve the existing management of the commission. The commission has appointed a project manager, a point about which the noble Lord, Lord Allen, asked. The top management of the commission has been reorganised by the chief commissioner into a board which will better enable the commission to identify and respond to further needs. When the new chief commissioner has taken up office we shall appoint the recommended two additional part-time commissioners. The commission's five charities divisions have been reorganised. This has released additional staff for investigation work. So has a small reduction in consents work (such as the selling of land) which the chief commissioner has achieved in line with Recommendation 37 of the report. At the same time, real progress has been made towards establishing adequate management and financial information systems. I should like to congratulate the chief commissioner on his swift and very positive response to the report. I can reassure the noble Lord, Lord Allen, that the Charity Commission has already set in hand a review of its leaflets.

Perhaps I may indicate a little more fully the Government's response to the broad implications of the report and touch on one or two particular areas, some of which have been mentioned and others of which have not. First, we accept the central premise of the report that while the system may be in need of extensive reform, the fundamentals of the present framework for supervising charities are still sound. The essential element in that framework is the Charity Commission. Lest anyone should harbour any doubts about our intentions, I should say straight away that we envisage that the commission will continue to play the vital and central role in a reformed system. I have no doubt that it will pay attention to the interesting suggestions which my noble friend Lord Wolfson advocated, with his large knowledge of this area.

The commission has from time to time been criticised. That is inevitable. Seen in the round, however, there can be few with any knowledge of the charitable world who would not say that its contribution to the sound development of charities, has, over the years, been of enormous value. We wish to see that contribution maintained and enhanced for the future. Quite apart from the unrivalled knowledge, expertise and long experience which the commission is able to bring to bear on the affairs of individual charities, its exercise of legal powers (which are concurrent, let us remember, with those of the High Court), saves both time and the high legal costs which charities would otherwise incur.

But the law under which the commission operates must keep pace with modern developments. It is now nearly 30 years since the last major legislation on charities. Over the years the number and variety of charities has steadily increased and the opportunities for abuse have multiplied. The noble Lord, Lord Houghton, said that he wanted to see control. I agree that the need now is to give the commission powers which are more appropriate to present-day conditions which will enable it to act more effectively in order to ensure that charitable funds are protected against abuse. The changes Sir Philip recommended in his report are, directed towards fostering a greater realisation of the responsibilities of trustees, reducing correspondingly the responsibilities of the Commission but increasing the scale of their activities in respect of malpractice and of efficiency, and improving the quality and quantity of information needed for these purposes". What the report proposes and what the Government endorse is not a radical recasting of the commission's basic functions—those of registration, of scheme-making, investigation and advice—but a greater emphasis on monitoring and investigating abuse, and a shift of resources away from activities with lower priority. To do this effectively the commission will need to be given new powers and to be relieved of some of its present duties.

We believe that this must be right. In saying that, I would not want to give the impression that we believe that abuse is everywhere to be found or that the charitable world is riddled with inefficiency and malpractice. It is not. We believe that the vast majority of charities are competently and honestly run.

The Earl of Longford

My Lords, will the Minister be able to say a word about money raised and then transferred abroad?

Earl Ferrers

My Lords, the noble Earl asks about abuses which occur when charitable funds go abroad. He may be aware that the Government took action against this in the Finance Act 1986. A certain amount of work has been done. It is too early at present to assess whether more needs to be done. We shall bear those points in mind when we are considering legislation for that part of the Woodfield Report which deals with abuse.

The commission's new powers will complement the arrangements, to which the noble Lord, Lord Allen, referred, introduced by Section 33 of the Finance Act 1986, whereby the Revenue can pass information to the Charity Commissioners where it appears that a charity is applying its funds for purposes which are not charitable. The noble Lord asked whether these arrangements are working. I understand from the commission that they are working well. The commission is now considering 51 cases which have been referred to it by the Inland Revenue. A further 60 cases are in the pipeline. The commission's inquiries division is also investigating another 27 cases where it has involved the Revenue. Some of those cases involve large sums of money.

My noble friend Lady Faithfull referred to the two part-time commissioners and wondered what they were going to do. Their function will in essence be to act as non-executive directors bearing a full share of responsibility for key decisions of all kinds. They would naturally contribute to the advice given by the commissioners to the Home Secretary. One would hope that they would contribute to the spirit of openness that has imbued the commission under its chief commissioner, Mr. Peach. The next step is for us to hold discussions with the new Chief Charity Commissioner about the appointments and the job descriptions of those concerned.

The noble Lord, Lord Allen, asked about consents for land transactions. The report concluded that charity property could he adequately protected by statute, and that the requirement which is placed on trustees by Section 29 of the 1960 Act to seek the agreement of the commission before transferring property, should be repealed and replaced by provisions requiring trustees to follow statutory procedures before selling land. We agree with this recommendation and believe that this would provide a more economical and just as effective method of protecting charity property. The trick, of course, is to get the right statutory procedures for trustees to follow.

The Woodfield Report suggested that trustees should be compelled to act on the recommendation of professional advisers as to price, not to sell to one of their number, and that there should be other safeguards. Your Lordships may have other views on this, and if your Lordships have any I should be glad to know them so that we can take those into account.

The noble Baroness, Lady Lane-Fox, referred to charging by the commission. I know that there are many in the charitable world who believe that all the commission's services to charities should continue to be provided free. The report recommends that it would now be right to introduce modest charges for new registrations, for the services of the official custodian if he is retained and for residual work on consents to property transactions. It is obviously right that a retrospective registration fee would be inequitable, that there should be no charge for general advice and no annual fee for filing accounts. The Government believe that the report's recommendations are in line with present circumstances.

The noble Lord, Lord Mishcon, asked about the £25 registration fee and the noble Baroness, Lady Lane-Fox, said that this was too high. I can only say that the Government have as yet taken no decisions on the appropriate level of the fee, but we will take note of the views which have been expressed.

The noble and learned Lord, Lord Denning, urged the necessity for a register of charities. The commission readily admits that the present state of the register is highly unsatisfactory. It is far from complete and far from accurate. Many charities simply do not bother to submit their accounts. Trustees appear to disappear into limbo, so that the commission is unable to contact them, and this obviously is not right. Where their money is involved the public is entitled to up-to-date and accurate information. If the commission is to supervise effectively it needs the information which the register should provide.

We accept the report's recommendations for putting the register on a sound footing. The machinery must be modernised with the aid of computers, and the commission must be given new powers to enforce the regular submission of proper accounts. One would hope that the charities themselves would he willing to do their hit, but if necessary the commission must be able to hold them up to the mark.

As regards enforcement, which the noble and learned Lord raised, the Woodfield Report recommended that registration should be a condition of doing business with a charity. It came down against a financial penalty and the Government are inclined to think that this is right. So far as the register's completeness is concerned, 100,000 charities are from registration excepted by the 1960 Act.

The noble Lords, Lord Parry, Lord Allen and Lord Mishcon, all referred to the official custodian. The Woodfield Report was not concerned with the official custodian's function in relation to land which is only nominal. It did, though, seriously question the desirability and the cost-effectiveness of his investment services. The scrutiny team did not feel able to recommend the outright abolition of this side of the official custodian's work, because they could not foresee all the consequences. They confined themselves to recommending that outside consultants should be appointed to draw up a scheme and a programme for returning investments to trustees. The noble Lord, Lord Parry, was mistaken in considering that the official custodian works on a voluntary basis—he does not.

Many other speakers referred to the commission's resources. I would only say that the extent to which additional resources are required will depend upon the extent to which savings can be made. This turns upon the future of the official custodian and consents work, and on the computer strategy. These are being considered urgently. At this stage I would merely note that the Woodfield Report reached a provisional view that it might be possible to implement the package within existing resources. But we remain to be persuaded that no further gains in efficiency are possible.

I would have wished to speak about two other matters but time is against my doing so. I would merely confine my remarks to saying that this debate has been a most useful one. It marks almost to the day the retirement of the present chief commissioner, Mr. Peach. Under his distinguished leadership, the commission has emerged from the legal shadows with a new flexibility and a human face. To use the modern jargon he has made the Charity Commission "user friendly". I should also like to welcome the new incoming chief commissioner, Mr. Guthrie. I for one look forward to working with him during what will be an interesting period in the commission's history. I am grateful to your Lordships for the advice which has been given. We will take note of it all and I am grateful to the noble Lord, Lord Allen, for having introduced this debate.

Lord Allen of Abbeydale

My Lords, before the Minister sits down, I wonder whether he could say one word about Scotland?

Earl Ferrers

My Lords, I can indeed say one word about Scotland. I had intended to say it had I not been caught by the clock, and having attended yesterday's—

Lord Mishcon

My Lords, the noble Earl has until eight o'clock. Let me encourage the noble Earl. He has until eight o'clock. I am pointing that out in case he thought I was being greedy when I spoke.

Earl Ferrers

My Lords, having attended yesterday's Procedure Committee, which went on for approximately two hours about the length of speeches and about a suggestion that the clocks should change to different colours and that nobody must go over his allotted time, I had the figure of 20 minutes in mind and I realised that I was getting over the 20-minute limit.

Sir Philip Woodfield was concerned that the present arrangements in Scotland were not adequate and recommended that the Secretary of State for Scotland should consider which English and Welsh provisions should be extended to Scotland. My right honourable and learned friend the Secretary of State for Scotland wishes to consult charities and other interested bodies before taking decisions on improving the system of supervision of charities which operate in Scotland, and plans to issue a discussion paper shortly. I am motivated to go on for longer than I should but that is the fault of the noble Lord, Lord Mishcon.

The noble Lord, Lord Houghton of Sowerby, asked about television. The whole question of whether charities should be allowed to advertise on television is currently being considered by the Independent Broadcasting Authority. We do not yet know whether it will make any approach to my right honourable friend the Home Secretary to ask for a relaxation of the regulations.

7.38 p.m.

Lord Allen of Abbeydale

My Lords, I shall not use my allotted time but I should like to say that it has been a most interesting debate and I look forward to reading in Hansard the various points which have been made. I think that this is the third, as it were, annual debate we have had on this topic and I rather hope that the next debate might be on a government White Paper outlining possible legislation. I noticed that the noble Earl did not refer specifically to that point but no doubt it will be thought about; nor incidentally, on a much narrower point, did he say whether the Charity Commission would be able to keep any fees which might be charged under future legislation.

There have been some small differences of opinion as to just how far we should go. I noted in particular the rather uncharacteristic comment, if I may say so, of the noble Earl, Lord Longford, that he is in favour of the status quo. However, there has in general been a wide measure of agreement. What stands out from the debate, especially in the Government's reply, is that at long last things are on the move. I hope that the debate will help to keep up that momentum. I beg leave to withdraw my Motion for Papers.

Motion for Papers, by leave, withdrawn.