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Charity Commission: Bogus Charities

Volume 727: debated on Wednesday 4 May 2011


Asked By

To ask Her Majesty’s Government what assistance they are giving to the Charity Commission to identify bogus charities for overseas freedom movements, proscribed organisations and terrorists to prevent them benefiting from United Kingdom tax relief.

My Lords, a number of government departments, including Her Majesty’s Revenue and Customs, work closely on these matters with the Charity Commission, which has a range of statutory powers and regulatory tools with which to investigate allegations of possible abuse and to ensure that charities are complying with their obligations. The commission also works closely with the police and other law enforcement agencies where there is evidence of criminality and works to raise awareness of the risks of terrorist finance to the charitable sector.

Is my noble friend aware that there are two further areas on which the Charity Commission needs help? First, in relation to Sharia law, all Islamic financial institutions must by law give charitable donations. Secondly, in relation to Sri Lanka, despite the ending of the war, there are still bogus Tamil charities collecting money for Eelam rather than sending it to Sri Lanka. In both cases, should not there be a case for better monitoring, particularly of where the money has gone that has been collected in the UK? Might Her Majesty's Government consider our embassies and high commissions checking on the ground on what exactly the money has produced? After all, the British public provide gift aid.

My Lords, I hope that the House will forgive me if I do not comment particularly on individual cases. It should be stressed that links between charities and terrorism are very rare. By far the vast majority of charities operating overseas are to be commended for their inspirational work and the relief they bring, often operating in very difficult circumstances. We must be able to identify and tackle any abuse but at the same time be careful to enable the vast majority of legitimate charities to get on with their important work without being bound up in red tape. In my view, the regulatory framework gets it about right.

Does my noble friend accept that it would be wise for the Government, when they undertake the shortly to be commenced review of the Charities Act 2006, to review the present planned reduction in Charity Commission funding of one-third over the next four years? Will they not at least think to ring-fence that part of the commission expenditure that relates to enforcement, which is vital to maintain the cherished integrity of charities?

I cannot deny that there is always a link between resources and function. My noble friend points out that there is a review of the functioning of charities legislation coming up at the end of this year, which will be very important and I am sure will have these matters in mind. But I am also sure that noble Lords will appreciate that the Government’s priority at the moment is about spending priorities, given the need to provide deficit reduction.

My Lords, what criteria does the Charity Commission apply in its assessment of whether UK charities with expenditure overseas do conform to charitable objectives as defined by statute?

My Lords, it is up to the trustees of all charities because they are responsible for the audit trail of their financial expenditure. On scrutiny, all charities are subject to proper regulation of their gift aid through HMRC.

My Lords, one of the joys of charitable law is the fact that it is possible to establish a charity in England without having to consult a lawyer. Will the noble Lord please make sure that the Government do not introduce such a high level of regulation that the strong and dynamic voluntary sector is held back by the necessity to employ lawyers and accountants before ever getting a charity under way?

I hope the noble Lord will accept that in the first supplementary answer I gave I said that I totally agree with that view. It is the voluntary impulse that makes charitable giving and charitable activity so important and useful. On the other hand, in asking the Question in the first place, my noble friend pointed out that Governments do have to be aware that there are people who will use charities for malicious ends, so we in Government have to be on our toes to avoid that happening.

Does the Minister recollect that our late colleague Lord Pilkington was in possession of clear documentation showing that on many occasions the Charity Commission had been offered confidential information by intelligence agencies on both sides of the Atlantic but did not feel able to avail itself of that advantage on account of the conditions under which such information would be released? Is the Minister aware of that, and is he able to comment on the situation, albeit, of course, in general terms?

My Lords, my response will have to be in general terms. I am well aware that the Charity Commission receives quite a lot of information, and the pursuit of validating that information takes up quite a lot of the commission’s time. It is right and proper that any allegations are investigated, and I am sure that that is exactly what happens.

My Lords, I gained the impression from my noble friend’s original Answer that he does not think that anything more needs to be done about this problem than is being done at the moment. Am I right in that assessment?

I hope I can reassure my noble friend that I am not complacent on this issue. What I am saying, however, is that considerable resources across Government are devoted to making sure that there is no abuse of charitable funding and no misapplication of funds for terrorism. We have the Charity Commission itself, HMRC, the police and the National Terrorist Financial Investigation Unit. All these bodies, as part of Government, are dedicated to making sure that there is no abuse of charitable giving.

As charity legislation is devolved, will the Minister discuss the issue with the Scottish Executive to make sure that they are also keeping an eye on this?

I am sure that the review of the Charities Act 2006 will take into account the connection with the devolved authorities, and we will want to make sure that they are fully in the picture. Indeed, I hope that the noble Lord is in a position to reinforce the determination of the Government here in Whitehall to deal with this problem.