Skip to main content

Charities (Protection and Social Investment) Bill [HL]

Volume 762: debated on Wednesday 10 June 2015

Second Reading

Moved by

My Lords, the House will be aware that I am now the Minister in charge of this Bill, rather than my noble friend the right honourable Lord Taylor of Holbeach. I am grateful to him for introducing the Bill when I was unable to. I am happy to assure the House that I, too, believe that the provisions of this Bill are compatible with the convention rights and would have been content to sign the necessary statement had I been in a position to do so when the Bill was introduced.

It is with the greatest sense of honour and humility that I stand before your Lordships today, and I also put my arguments to the House with some trepidation. Some 22 years ago, I was sitting in the Gallery of your Lordships’ House watching a debate on which I had written a brief for Conservative Peers. The noble Lord, Lord Williams of Elvel, had been passed a copy of my brief and proceeded to dismantle and shred its arguments one by one, with grace and charm, paying tribute to the brief’s author along the way. As they say in Sicily, it was nothing personal, just business. It made me realise the great contribution that this House makes to public debate by scrutinising policies and testing the arguments that underpin them. In our fast-moving world, where the digital revolution is accelerating the pace of change, the temptation to act quickly is greater than ever. Now, more than ever, we need the chance to deliberate, review and kick the tyres of policy—and that brings me to the Bill before your Lordships today.

Like so many of your Lordships, I am a trustee of a charity, the Foundation Years Trust. Set up by Frank Field, its purpose is to understand what more can be done to help disadvantaged children in the first, all-important years of their lives. Among my fellow trustees is the noble Lord, Lord Hall of Birkenhead. I mention that not simply to declare my interest but to observe that charities are organisations in which a sense of shared purpose overrides political allegiances.

Down the generations, long before Lord Beveridge and the foundation of the welfare state, people have formed little platoons to battle against the five giants of want, disease, ignorance, squalor and idleness, at home and abroad, overcoming great challenges, sometimes at risk to life and limb. Only today, I read that the readers of the Sun knitted, for the charity Loving Hands, an amazing 500,000 items of clothing for children in need around the world. Quiet acts of generosity like this show that charities still have a very special place in people’s hearts, at a time when the public’s trust in so many other institutions and professions has plummeted. A recent opinion poll revealed that charity workers are among the most trusted and respected in society today. I am sorry to add that, according to this poll, the least trusted in our society are government Ministers, narrowly beating journalists and bankers. Having worked in banking, in journalism and now in government, I am somewhat concerned about what this says about me.

Charities must earn the public’s trust and generosity. They must never take it for granted. The vast majority of charities know this full well and are run responsibly and competently. It is in their interests, and the interests of society as a whole, that the charitable sector is properly regulated. Furthermore, charities must have the freedom to innovate and find new ways of fulfilling their mission. That is the purpose of the Bill before your Lordships today: to strengthen the public’s trust in charities, and help charities to do more.

Before I outline the measures in the Bill, I would like to pay particular tribute to my noble friend Lord Hodgson of Astley Abbots. He has laboured hard, over a number of years, to help charities flourish. This Bill implements some of the recommendations from his thorough review of the Charities Act 2006. His insight and advice have proved invaluable, and long may his wise contributions continue. Likewise, I would like to thank the noble and learned Lord, Lord Hope of Craighead, for ably chairing the Joint Committee on the Draft Protection of Charities Bill, and other noble Lords on that committee for their helpful pre-legislative scrutiny. Many others in your Lordships’ House have also helped to shape this Bill today, and I am sure that it will provoke further debate. My door is always open to meet and discuss its measures.

The bulk of the proposals in the Bill relate to the Charity Commission’s powers. As I am sure noble Lords will know, the Charity Commission registers and regulates more than 164,000 charities in England and Wales. In 2013, following a high-profile regulatory failure, the National Audit Office reviewed the commission’s regulatory effectiveness. Its report found that,

“the Commission does not do enough to identify and tackle abuse of charitable status”,


“is not regulating charities effectively”.

The NAO made a number of recommendations to improve the commission’s regulation of charities and to strengthen its powers. Further calls for stronger powers were made by the Prime Minister’s extremism taskforce and the Home Affairs Select Committee. When the NAO published its report, the previous Government published proposals to give the commission new powers. After public consultation, these proposals were refined and a draft Bill was published. Following pre-legislative scrutiny, further changes were made. Thanks to all of this and the contributions of so many noble Lords, the proposals have been well scrutinised and the Bill before your Lordships today is much improved as a result.

The measures in the Bill are, of course, just one strand of a much-bigger strategy to improve the commission’s regulatory effectiveness. The commission now has strong leadership; it has set itself new priorities; and it has received an additional £9 million over three years. This will help it move more of its services online and, crucially, bolster its capacity to identify and tackle abuse and mismanagement in charities. The NAO has followed up its report and acknowledged that good, early progress has been made.

However, there is no point in the Charity Commission working harder to seek out abuse if the commission cannot act effectively when it finds abuse. So the bulk of the Bill is devoted to ensuring that the commission has new or extended powers, of which I would like briefly to highlight five. First, a new official warning power would enable the Charity Commission to take a more proportionate approach to low-level misconduct and mismanagement. The Charity Commission already can and does engage with charities when this happens, but it finds that up to 30% of charities contacted fail to respond adequately to its guidance.

Secondly, the existing criteria, which automatically disqualify a person from being a charity trustee, would be extended to include people with unspent convictions for money laundering, terrorism offences, bribery, misconduct in public office and perjury, and individuals subject to a terrorist asset-freezing designation. Disqualification would be extended to senior management positions as well.

Thirdly, the Bill would give the Charity Commission a power to disqualify individuals whose conduct makes them unfit to be a charity trustee. The commission would be able to act subject to three tests: criteria would have to be met relating to the person’s past or present conduct; the commission would have to consider the person unfit to serve as a charity trustee; and the commission would have to be satisfied that disqualification was expedient in the public interest. The power is accompanied by several safeguards, including for the tribunal to consider the matter afresh on appeal.

Fourthly, the Bill would give the Charity Commission a power to direct that a charity be wound up following a statutory inquiry; and fifthly; trustees have been known to resign from a charity before the commission removes them, and then to become trustees of another charity. The Bill would close this loophole.

I know that, like me, your Lordships will want to be satisfied that there are appropriate safeguards governing the use of all these powers, so it is worth reminding the House that, under the Charities Act 2011, the Charity Commission has a duty to act in a way which is proportionate, accountable, consistent, transparent and targeted only at cases in which action is needed. Furthermore, the exercise by the commission of all of the proposed powers in the bill regarding trustees is open to legal challenge, principally by a right of appeal to the Charity Tribunal.

The second purpose of the Bill is to help charities to make social investments so that they can fulfil their mission in new and innovative ways. Traditionally, charities with money to invest have either sought to maximise financial returns or made grants to further their charitable mission. Social investment is different because it involves investments that both further the charitable mission and expect to generate a financial return. At present, charities have over £60 billion of assets under management, but just £100 million of those are in social investments. By clarifying the law and trustees’ duties, the Bill aims to give charities the confidence and certainty to invest in this growing sector. I should express my thanks to the Law Commission for England and Wales for looking at this point and recommending the new social investment power, which the Bill would implement.

To conclude, the charities in this country deserve our heartfelt thanks and support. They embody all that is great about our nation and bring out the best in our society: a generosity of spirit and a willingness to make sacrifices to help those in need. The Bill will strengthen the public trust and confidence in our charities so that they can do better still. I look forward to hearing your Lordships’ views, and I beg to move.

My Lords, it is a great privilege as well as a great pleasure to have heard the Minister’s maiden speech—I assume, in this case, written by himself—and to welcome him as a trustee of the Foundation Years Trust, a charity that aims, as he said, to develop and action the findings of Frank Field’s review of poverty, a review that was set up to prevent poor children becoming poor adults. The noble Lord’s work at Santander and Quiller Consultants, which advises multinational companies, may be slightly less relevant to this Bill, but we hope that it will be of use to him on his other portfolio. However, the experience that the House might appreciate most is indeed his time as a political secretary at No. 10, so if anyone can find his way around Whitehall, we trust that it is him. However, what my party would like is some of his political nous. Not only was he involved in the perhaps unexpected 1992 election victory, but a year ago he placed a bet on an overall Tory majority in 2015 of 12. So I congratulate him on his flutter and indeed on his assured maiden over at the crease. We wish him well in the tasks ahead.

Perhaps I may also pay tribute to the noble and learned Lord, Lord Hope of Craighead, on his pre-legislative Joint Committee report, and to the committee members, including my noble friend Lady Warwick of Undercliffe, who unfortunately cannot be with us today but I know will play an active role later in our proceedings, and my noble friend Lord Watson of Invergowrie, who joins me on the Front Bench for this Bill, along with my noble friend Lord Kennedy of Southwark.

I turn now to my own declaration of interests. I have been the chief executive of two charities and the director of corporate affairs of the country’s largest one. I have been the chair of a small charity and I remain a trustee of two. It will therefore be no surprise that we support independent charities, harnessing as they do philanthropy, volunteering and social commitment. We celebrate the million trustees who give of their time, expertise and dedication to help make Britain a kinder, more interesting and caring society.

I hope that the Minister will be relieved to know that the Bill poses us no problems, and we are content to support its Second Reading. But there are some additional powers for the Charity Commission, and responsibilities for charities that should be added.

Let me start with a concern arising from the recent lobbying Act—it is before the Minister’s time, so he does not have to take the pain for this—which undermines the freedom of charities to speak out on behalf of beneficiaries. I was moved by the maiden speech of the right reverend Prelate the Bishop of Leeds last week, when he quoted from the Book of Proverbs:

“Open thy mouth for the dumb”,

or, in his words,

“give a voice to the experience of those who otherwise are silenced”.—[Official Report, 1/6/15; col. 209.]

That is what charities have long done, but the Government sought to curtail that in the lobbying Act. We will seek to spell out in the Bill the common-law position permitting charities to speak out on issues in line with their objectives. This will give confidence to trustees that they are free to further their objectives in this way.

We are not against the right to buy, but we query the Government’s plan to force housing associations to sell their assets, against their will, regardless of their trust deed, their source of funds or the decision of their trustees. Ninety per cent of housing associations are charities and their property is not state property, so it is not the Government’s to dispose of. It is private property; it may have been donated for a particular cause, such as providing homes for autistic or disabled people, the retired, the homeless, recovering substance abusers or, indeed, a religious community; or the property might be built on rural exception sites in the National Planning Policy Framework, intended for affordable housing in perpetuity. Not only might it be a breach of covenant to use these assets for other purposes, but once sold and resold a sheltered block or a therapeutic or supportive community could be broken up as new private owners or tenants of buy to let with different lifestyles move in.

Charity assets are preserved by legislation for public benefit and may be used only for the purposes defined in the charity’s trust deed. Furthermore, charity law requires a charity to dispose of its assets in furtherance of its charitable objectives, and that does not mean simply for money. Indeed, the second part of the Bill, which the Minister has outlined, allows charities to use their funds as social investment, and we welcome this. Funds will also be used in the provision of homes for the homeless. But that will be completely undone if such homes have to be sold off, and then no doubt resold, as the owner can cash in on the Government’s subsidy.

There are small almshouses, there are “supporting people” charities, and there are large charities such as Peabody—150 years old, with 27,000 homes and its own Act of Parliament. Its chair has said:

“Peabody’s assets belong to us. They are not the government’s to sell”.

All are governed by charity law, based on principles dating from Elizabethan times to preserve charitable assets. Do the Government propose to amend charity law so as to override the trust deed or trustees’ wishes in order to implement their policy?

The Bill will rightly exclude people who have supported terrorism from being trustees, as well as people involved in money laundering or just subject to an IVA. But the Bill does not exclude people convicted of serious sexual offences; they would be debarred only after a complaint to the Charity Commission, leaving the responsibility for checking with other trustees, who may themselves have been involved in such activity or, if completely innocent, be unaware of the background of a new trustee. This cannot be right when charities have access to children or others with vulnerabilities. We want the Bill to add being on the sexual offences register to the automatic exclusions, which will still be subject to the normal waiver provisions.

We will also look to strengthen the Bill so that vulnerable people and children are properly protected. There are some worrying cases where charities become closed shops when abuse is uncovered. The Charity Commission should be able to investigate the fitness of trustees and consider replacing them where the charity fails to deal with abuse allegations. It is surely right for the commission, in regulating trustees, to have a duty to safeguard and protect children and vulnerable adults. Suspected child abuse should be as big a red flag as suspected financial misconduct. Could the Minister let us know the Government’s thinking on this issue?

Your Lordships will be aware of the tragic suicide of Olive Cooke, a 92 year-old poppy seller.

My noble friend will be interested to know that one of the best experiences of my 13 years as Member of Parliament for Bristol East was my friendship with Olive Cooke. She had a face that could light up a room. She was one of the kindest people I knew. I always looked forward to her letters, giving me general and continual advice. Her outstanding contribution—selling more poppies for Remembrance Sunday than any other person in this country—is well documented. But the fact that a person who was, on the face of it, such a strong woman should feel driven in part to her death by being, in a way, prejudiced by her commitment to charitable giving, which was legendary, is quite a stain on our charitable sector.

We have, indeed, heard many tributes to Olive Cooke from her family, from her friends and from the successor to my noble friend in Bristol for all the work that she did not just in selling poppies but in her charitable work. While her family do not think that the action of charities and their fundraising were responsible for her death, it is clear that Olive was persistently contacted by many charities and, being the generous and caring person of whom we have just heard, found it hard to say no.

Since the media coverage of her death, hundreds have come forward to say that they too have come under pressure. A major concern is where elderly relatives, sometimes suffering from dementia, have been targeted. Meanwhile, Croydon has become the 100th authority to have to crack down on chuggers, and at the weekend the Mail on Sunday reported some underhand methods of a private company working for Oxfam, the RSPCA and Cancer Research UK that broke every rule in the book to make money for itself as well as for the charities.

Many, including the vulnerable, feel hassled and harangued by charities, including by cold calling. I have my doubts whether cold calling is ever acceptable. Indeed, we strengthened the Consumer Rights Bill in an attempt to stamp it out. I regret the Government’s failure to live up to their promise to provide call-barring facilities to the particularly vulnerable, but while cold calling from a charity might elicit a donation, it could be at the expense of the trust that people have in charities, as the Minister just described. Furthermore, securing one donation can lead to a ratcheting up of demands, as many stories, including that in the Mail, have demonstrated. Indeed, the UK Giving report showed that a majority of donors agreed:

“I am worried that if I give I will just be asked for more”.

The sad case of Olive Cooke and the Mail’s exposé show that existing self-regulation is not working. A third of fundraising charities are not even members of the Fundraising Standards Board. We will investigate how we might use the Bill to strengthen the commission’s role in ensuring that charity fundraising is properly regulated, possibly by requiring charities to sign up to the industry’s code and to belong to the standards board, or by giving the Charity Commission stronger reserve powers. Olive’s law, or at least getting all charities to be regulated by the FRSB, would be a lasting testimony to this woman’s lifetime of work for charity.

We support the Bill and its protections, but they will never work if there is no one to answer the phone or investigate concerns. ACEVO, the Charities Aid Foundation and the Charity Finance Group all question the feasibility of increasing the Charity Commission’s case load without a commensurate increase in its budget—a budget halved since 2007-08. We recognise the need for savings and for the effective use of resources, but does the Minister think it is realistic for government to give more work to the commission while drastically reducing its resources? We support an effective, robust regulator for the healthy development and growth of the charity sector. I look forward to working with the Minister on his first Bill to enable it really to contribute to the aim that I think we both share.

My Lords, I declare an interest as the owner of a consultancy third-sector business. I am also an honorary officer of the All-Party Parliamentary Group on Social Enterprise.

I commend the noble Lord, Lord Bridges of Headley, on his excellent maiden speech. He introduced the Bill with great style and great knowledge. It is normal to be nervous when making one’s maiden speech but he need have no fear of being shredded today. I look forward to working with him on the Bill.

Reform of charity legislation usually happens at a pace which is somewhere between slow and glacial, so it was a great privilege to be a member of the committee that scrutinised the draft Protection of Charities Bill. The committee was chaired by the noble and learned Lord, Lord Hope of Craighead. Such was his skill, and the diligence of our advisers, that, starting in the first week of November 2014, we held 13 evidence sessions, heard from more than 35 witnesses and concluded our report by 28 February 2015. As a result, I see the noble and learned Lord as the Usain Bolt of charity legislation, and I shall continue to think of him as such in the days ahead.

The Charity Commission was established in its present form under the Charitable Trusts Act 1853, and I suspect that the first debate on the subject of its effectiveness probably took place in around 1854. Every regulator is subject from time to time to criticism from the bodies that it regulates. The CQC and the FSA have their critics, but none draws fire like the Charity Commission.

There are those who find the commission immensely helpful and who value its reports and guidance. There are also those who find the commission so defensive, distant and legalistic that dealing with it is a bit like having your family solicitors tied up in Jarndyce v Jarndyce. Then there are people like me, frequent users of the Charity Commission’s services, who are at times very much supported by what it does but at other times frustrated by its slowness to change.

The leadership of the commission changes periodically, and relationships between the commission and the sector change as a consequence. However, the underlying lack of a clear consensus about what sort of regulator the commission should be means that the relationship between the commission and the sector is never as good as it should be. There is now general agreement with the recommendation of the noble Lord, Lord Hodgson, that, if the commission had to prioritise one area of work, it should be that of its unique role as regulator. However, the commission’s reluctance to signpost charities to other sources of advice or to develop relationships with other sector bodies which could give advice that would not have the same statutory standing as its own but would help poor trustees who are seeking help to get it much more quickly, still generates great frustration. I make these remarks in order to explain why some voluntary organisations have reacted as they have to the Bill, in its present form and its draft form.

The Minister eloquently set out for us the antecedents of the Bill: the review of the 2006 Act by the noble Lord, Lord Hodgson; the National Audit Office report into the handling of the Cup Trust; and the Public Accounts Committee report on the same subject. We also know from the available data that there are approximately 350,000 charities in this country, including excepted and exempt charities, and about 800 small charitable industrial and provident societies. They have an annual income of £64 billion. Yet there is very little evidence of abuse in the charitable sector. Over the period 2007 to 2014 there were only 526 investigations into charities.

As we look at the provisions of the Bill, we have to answer two questions. First, are the provisions of the Bill necessary to retain and improve public trust and confidence in charities? Secondly, does the Bill pass what I call “the Lord Hodgson test”—because it was set out in his report—that:

“Regulation needs to be proportionate, transparent and comprehensible”?

On the whole, I think it does. A number of provisions are welcome. Giving the Charity Commission a new power to issue warnings as a lighter-touch form of regulation of charities is a good thing. Giving the commission the power to remove trustees following an inquiry and to do so within a time period that means that trustees will no longer be able to avoid being subject to the commission’s powers by resigning will strengthen trustees’ responsibilities in this regard. It is important to be able to close that loophole.

It is also important that, as in Clause 6, once the commission has opened a statutory inquiry, it should have the power to direct a charity not to take a particular course of action. It is a bit odd that it has an existing power to direct that something be done but does not have a power to direct that something not be done, when we could be talking about charitable assets.

All those powers are welcome. In particular, the power in Clause 13 to enable charities to make investments in social enterprises that are consistent with their charitable objectives is fine. Much more needs to be done in order to build the social investment market in this country. It is still extremely difficult to find venture capital, for want of a better term, for activities that have a social element as well as a profit element. But it is really important that we give charities this power to put their money where their mouth is.

However, as the noble Baroness, Lady Hayter, has already suggested, there are three key areas in which the Bill needs to be strengthened. The first is the power under Clause 3 that the commission will have to consider any other evidence of a person’s conduct—not just their conduct within a charity—when it has opened a statutory inquiry. In addition, the power is not limited in time, so it could mean that a charity trustee is hauled over the coals for something that they did when they were a very young person. That clause is drawn too widely.

I can see the sense behind the new power that the commission will have under Clause 7 to direct the winding-up of a charity. At the moment the commission cannot do that. It seems to be a sensible step but the basis on which the commission would exercise that power—the criteria it would use—should be open to considerable discussion before the power becomes finalised.

Finally, on Clause 9, “Automatic disqualification from being a trustee”, the noble Baroness, Lady Hayter, is right. It is in some ways desirable that the reasons for automatic disqualification should not be, as they largely are now, financial. It is possible that somebody could be guilty of conduct which was undesirable and harmful to a particular charity, or to charities in general, but which was not of a financial nature. However, as the power is drawn at the moment, and given the references to the counterterrorism legislation and the potential chilling effect that it may have on people who work within Islamic charities and are perfectly upright individuals, we need to exercise real caution and give that great consideration. One of the most impressive witnesses to come before the committee was Christopher Stacey, the director of Unlock, a charity that works with people who have criminal convictions. He gave compelling evidence to the committee that stopping people who have criminal convictions from having anything to do with a charity could be wholly counterproductive. We need to take great care before we make any such blanket disqualification.

On the whole, the Bill is reasonable. Given the historic and ongoing tensions in the relationship between the commission and the sector, it would be right and wise for us to have a thorough and full discussion of those three or four points which need further attention.

My Lords, I, too, wish to congratulate the Minister on his excellent maiden speech and to say how very much I look forward to working with him, along with others who have participated in this Bill so far, as it goes through the House.

As has been mentioned, I have a particular interest in the Bill, as I had the privilege of chairing the Joint Committee which carried out the process of pre-legislative scrutiny during the last few months of the last Parliament. It was plain to us all from the outset that we would have to operate within an unusually tight timescale. I am not sure whether it was necessary to go quite as fast as Usain Bolt but we necessarily had to put our skates on to get through the business in time. The draft Bill was not published until 22 October last year and our committee was not fully constituted until the beginning of November. Nevertheless, we were able to complete our work and submit our report by the end of February.

I wish to pay tribute to the various people from each House, both Members and supporting staff, who made this possible. Every member of my committee played a full part in its work, in our taking of evidence and in our deliberations afterwards. I had particular reason to value the insight and knowledge that some of them brought to bear on our discussions. We took evidence in each of the six weeks that elapsed between our starting work in mid-November and the start of the Recess. There was a further week in January when Parliament resumed, and we completed our deliberations in the middle of the following month. I think we all felt, by the end, that we had achieved what was asked of us. I am by no means saying that we answered every point; wider debate in this House will obviously give rise to much more informed discussion than we were able to bring to bear. But as we said in our report, pre-legislative scrutiny of the kind that we were carrying out, which brings interested parties into the legislative process at an early stage, is a wholly welcome development. It is hard to think of a sector better suited for that kind of exercise than the charity sector, which has so many people all round the country interested in it.

I hope that by our work we have shown what can be achieved, even at relatively short notice, and that we will see more of this kind of process being used in future. Of course, all this would not have been possible without the outstanding support that we received throughout from our clerk, Duncan Sagar, ably supported in his turn by Matthew Korris and Claire Morley. I should mention also Nicole Mason and Jessica Mulley, and Stephanie Biden, who was our special adviser. It was on the shoulders of Duncan Sagar and his team that much of the heavy work rested and we could not have been better looked after or better served.

We appreciated also from the outset the importance of giving as many people and as wide a range of bodies within the sector as possible an opportunity to be heard. I am grateful to all the witnesses who came to give evidence to us orally and to the many more who gave evidence to us in writing. Among the bodies on whose behalf evidence was given were the Charity Commission itself, the National Council for Voluntary Organisations, the Charity Law Association, the Wales Council for Voluntary Action, the Muslim Charities Forum, Unlock, and Bond. The full list of all witnesses is set out at the end of our report. It was a very wide-ranging exercise and, by the end, we were very well informed.

The purpose of the Bill, as the noble Lord has explained, is to improve the powers that are given by statute to the Charity Commission as regulator. The aim is to strengthen the public’s trust in that process, and to enable the commission itself to root out abuse where it can be found and to protect charities from those deemed unfit to be charity trustees or senior managers. As the noble Lord made clear, the process of drafting the legislation did not come out of the blue. It was prompted in part by a series of requests from the Charity Commission itself for new powers to enable it to perform its functions more effectively, and by some well-directed criticism of its operations by the National Audit Office and others. Then there were several reviews, including the notable review carried out under the outstandingly able chairmanship of the noble Lord, Lord Hodgson of Astley Abbots, which drew attention to the need for new and strengthened powers. Our task as a committee was to scrutinise the Bill’s proposals in the light of the evidence which we received—it was an evidence-based exercise—to see that these proposals measured up to the challenges and, if they did not, to consider the respects in which they might be improved. We did the task we were asked to do and made a number of recommendations. We were, broadly speaking, encouraged by the way the last Government responded to them in March just before they went out of office.

However, for many of us, there was a very big question mark at that point as to what was going to happen and what was going to be done to the work that we had done. Our hope was that the draft Bill would not be forgotten when a new Government returned after the general election. The Charity Commission also made it clear that it was keen that these new and strengthened powers should be given to it as early as possible. So the fact that the Bill has been brought forward as quickly in the legislative programme as it has been is especially welcome, and I thank all those behind the scenes who have made this possible.

As William Shawcross, the chairman of the Charity Commission, said in his response to the Bill’s mention in the Queen’s Speech, it is a vital piece of legislation from the commission’s perspective if it is to have the powers that it needs to stop individuals from abusing charities. His enthusiasm for the Bill is beyond question, as is the commission’s desire to make best use of these powers alongside those that it already has to police the sector. I think I can say that it is plain, from the evidence which we received, that the commission has turned a corner since he took over the chairmanship. Under his leadership, the performance of the commission has improved significantly. It is in that encouraging context that this Bill should be viewed.

The inclusion of a power to make social investments, which was not before us when we looked at the draft Bill, is much to be welcomed too. As it stands, the Bill is not just about regulating; it is about enabling, too. It is no doubt particularly encouraging to the Law Commission, which does so much valuable work in seeking to find ways of improving our legislation, to see one of its proposals brought forward so quickly.

There are a few points arising from our report that, as chairman, I should mention. First, there is a need for a balance to be struck between too little and too much. It is tempting for legislators, when giving powers to regulators, to set those powers about with condition after condition in an attempt to eliminate any risk that they might not be properly and fairly exercised—yes, there should of course be safeguards, but there must be a balance. There may come a point where the restrictions on the exercise of the power and the hoops that must be jumped through before they can be exercised are so many as to make it impracticable or too cumbersome for those powers to be used at all when they are most needed. As the Bill now stands, the balance has been struck in the right place. I hope that the Minister will bear this in mind as we move through the remaining stages of its passage through this House. I was encouraged by what he said in this respect in his opening speech.

It is worth mentioning, too, that the commission itself has to balance the way it performs its regulatory functions against the need to increase public trust and confidence in charities generally. The Bill does not say anything about the pastoral element of its work, which enables it to encourage and assist charities in what they do. However, the fact is that these two objectives—the one I just mentioned and the regulatory function—are linked to each other. The best way to increase public trust in charities is to ensure that they are properly and scrupulously regulated by an efficient and properly funded regulator. Exercise of the powers that are dealt with in this Bill are likely to affect only a very few charities, but the fact that they are designed so that they are capable of being used when needed should serve to increase public confidence in the sector generally.

Secondly, there is a need to think very carefully about the way that legislation designed to counter terrorism may inhibit the work of charities operating abroad in areas controlled by organisations that are on the proscribed list. We heard evidence—I found it very compelling, as did others on my committee—from the Muslim Charities Forum about the problems these charities face in getting aid through in view of the risk of arrest and prosecution that their workers face when they return home. We recognised that a lot of arguments must be gone through in dealing with this problem. We say in our report that we realise that this Bill is not the right vehicle for revisiting legislation about combating terrorism generally. However, here is a very serious issue that we should not lose sight of if we are to retain the support in the battle against terrorism of all sections of our community, including those charities I mentioned whose work is much to be commended in the field of dealing with Muslim people in our country.

Lastly, there are some matters that we hoped might be addressed in the Explanatory Notes but are not there and some points of detailed drafting where our recommendations have not been entirely reflected in the Bill as it now stands. The speeches so far have made it clear that we are now at a stage where there can be a wider debate about the way the Bill is drafted and the points that are in it and are not, which we could not engage in during our work as a Joint Committee. This is not the time to go into detail, particularly as, from the committee, there are no issues of principle with the Bill. However, there are some points where we feel greater clarity is needed.

On the drafting, our concern was simply to find the best way of expressing things in language that is fit for purpose and that everyone can understand. We drew attention to the use of the word “privy”, which is still there in the Bill. That word, apart from use in jest, has largely dropped out of common use and surely it is possible to find a more modern way of making the same point. Then “unwilling” appears in one clause. That does not easily accommodate people who, when asked by the commission to do something, say, “Yes, we are entirely willing to do that but do not have the power to do so and therefore are unable to do it”. “Unwilling” does not entirely encompass inability and it may be right to look again at that use of language as well.

Of course, we can return to these and other points in Committee. For the time being, it is sufficient to say that I am happy to welcome this Bill and support the Motion that it be given a Second Reading.