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Charities Bill [HL]

moved Amendment No. 4:"Page 7, line 31, at end insert—" ““7.      In performing its regulatory functions the Commission must act fairly and reasonably, and with regard to the interests of charity beneficiaries and other people who are stakeholders in charities.”” The noble Lord said: My Lords, I start by thanking the Minister and the chairman of the Charity Commission for their letters, which have been most helpful. The purpose of the amendment is to require on the face of the Bill that the Charity Commission must act at all times, when regulating charities, in a manner which is fair and reasonable and to require the commission to have regard to the interests of the people involved in charities, with particular emphasis on the beneficiaries, as well as a charity’s material assets, which, as far as I can see, is all that is covered under the 1993 Act. The requirement for fair and reasonable behaviour by the commission has had much support within the House, and many of your Lordships have said that they want these words in the Bill. The reasons given so far by the Government for not accepting the amendment, or a similar one, appear both surprising and difficult to understand. The issue identified by the Minister on 12 October—that is, that the commission,"““would not change its behaviour as a result of the addition of these words, and so the amendment would have no practical effect””—[Official Report, 12/10/05; col. 335.]" is not one that the amendment seeks to address. There are two issues of importance which it does seek to address. The first, critically, as the noble Lords, Lord Phillips of Sudbury and Lord Dahrendorf, and others have argued, is that it is the perceptions and concerns of charities—especially the smaller ones, whose activities have been seriously adversely affected by commission regulatory conduct in the past—that need to be addressed. The second issue relates to the High Court judge’s ruling in the Little Gidding Trust case, where the judge, on grounds of shortening the hearing, ruled that he would not take into account whether the commissioners had acted fairly and reasonably in the making of the orders which were the subject of trustee appeal on grounds that the commission had acted with bias, unfairness and unreasonableness in the making of them. It is not sufficient for the Minister to attempt to deal with this case law precedent by saying that he understands that the judge so ruled in order to shorten the hearing. Had the Charities Act 1993 placed upon the commission a specific duty to act fairly and reasonably, the judge would have been obliged to take into account the grounds of the appeal and how the commission had acted. I took part in debates on the Bill that produced that Act. Such a measure was not considered necessary at that time but, in my view, it is obviously necessary now when taking into account the Charity Commission’s behaviour, as I have described to your Lordships. When, on 12 October, we last debated the issue of the commission’s duty towards a charity’s people, the Minister said several things—at col. 342 of the Official Report. He said that this amendment was unnecessary because it was not possible for the commission to comply with the new objective, which requires the commission to promote the effective use of charitable resources without taking into account the needs of beneficiaries. He suggested that the commission’s new duty to increase public trust and confidence in charities would require it to take account of a charity’s stakeholders. Such conclusions seem to me to be extremely tenuous and difficult to support from the wording on the Bill. The Minister further suggested that the commission’s new customer network consultative group will influence the commission to take account of charity people. The requirement on the commission to be accountable and transparent, even if it takes customer service seriously with its new feedback group, has nothing to do with the need to stop the commission occasionally acting in a cavalier and damaging way towards a charity’s people. A hand-picked feedback group addressing a commission agenda can, and will, be ignored. Finally, the Minister referred to the commission’s duty to be accountable. A government agency may be transparent and accountable in a general way to a Minister or Parliament but still sometimes do outrageous things in individual cases to the organisations and people that it regulates without being accountable to them for its actions. The Minister’s claims are too general. He refers to the general behaviour of the commission in its broad role. Some of the commission’s past behaviour can give no confidence that that is sufficient. There is a real need to focus the minds of the commission’s staff on an unequivocal statement that they are required to take account of the people and be fair and reasonable when they are pulling a charity apart. Is the Minister perhaps afraid that some downtrodden trustee or beneficiary might successfully sue the commission? Offering the ethereal accountability of the commission to the state is totally inadequate. What is needed is accountability to the individual through the courts, and this amendment will help to provide it. The charity sector remains founded on morality, and charities expect standards of regulation likewise founded on a moral bedrock of decency. The commission’s behaviour has not always met this high standard, and it is necessary that it should meet it and be seen to meet it. I beg to move.