My Lords, I shall speak also to Amendment 10. I hesitate to suggest this, but these are perhaps two of the most substantive amendments before us today. During the work of the pre-legislative scrutiny committee, it became clear that there was broad agreement that the commission should have the power to disqualify some people from being trustees. Furthermore, there was agreement that there should be an automatic power to disqualify some people from being trustees. We listened to various people from all around the sector, who agreed on many of the measures in this Bill that we might not debate in great detail, such as the power to disqualify someone who might well have evaded disqualification because they had already resigned. There was a general consensus that the commission needed more powers to disqualify unsuitable people to ensure that the reputation of individual charities, and charities as a whole, was upheld. However, we also heard that by and large trustees are overwhelmingly, for the most part, honest people who very occasionally, in rare circumstances, make mistakes, and in even rarer circumstances commit criminal acts. It was against that background that we deliberated the powers in the draft Bill.
The two elements of the draft Bill that received the widest criticism of all were the conditions under which these powers would be exercised, which are the subject of these two amendments. In Clause 3, the range of conduct to be considered by the commission when exercising its powers to disqualify includes many with which we would have no quarrel whatever, where people have been found guilty of misconduct and mismanagement. The point on which there was the most discussion and disagreement among the witnesses who came before us was Clause 9(3)(b)—that the commission could take into account not just a person’s conduct in relation to the charity of which they had already been deemed guilty of mismanagement and misconduct such that an inquiry had been opened but,
“any other conduct of that person that appears to the Commission to be damaging or likely to be damaging to public trust and confidence in charities generally or particular charities or classes of charity”.
So, any other conduct at any time or in any other circumstances. That is a very wide power, and it is one that has drawn criticism not just from bodies that exist to champion charities, such as ACEVO, but, most significantly, from the Charity Law Association working party, the body of charity lawyers who have spent a considerable amount of time working on this. The association agrees that the commission should have
this power but, if it is going to have it, there needs to be clarity and transparency about how it would be exercised. Any trustee who found themselves subject to the power would then clearly understand the evidence that was being used to come to a judgment about them.
The government response to the draft report noted that the commission was already required to produce a statement of reasons under Section 86 of the Charities Act 2011, when it exercises its compliance powers, but noted that it would explore whether an amendment to the Bill was needed to make this clear. There has not been any such amendment. So in introducing this probing amendment, I wish to discuss and get on the record some of the criteria that would be used.
As the Minister said in the debate on the previous group of amendments, the Charity Commission has produced a draft policy paper on how it might use this proposed power to disqualify people. Eventually perhaps the commission could get round to sending it to those of us who were members of the Select Committee and who are discussing the Bill. It is a guidance paper that is comforting in that it makes a series of heartening statements, particularly in relation to Clause 10, but it raises a number of problems too. As the Minister said, the power to disqualify in the new sections introduced by Clause 10 comes in three parts: somebody has to have been guilty of one of the conditions labelled A to F as set out in new Section 181A(7); the person is unfit to be a trustee; and the order to disqualify somebody is desirable in the public interest in order to protect public confidence.
I cannot take exception to conditions A, C, D and E. Condition A states that,
“the person has been cautioned for a … offence against a charity or”,
in the administration of a charity, for which the conviction would be automatic disqualification. Condition C is that,
“the person has been found by Her Majesty’s Revenue and Customs not to be a fit and proper person to be a manager of a body or trust”.
Condition D states that the person was,
“a trustee … officer, agent or employee of a charity at a time when there was misconduct or mismanagement”,
and the person was responsible for, contributed to or facilitated the misconduct or mismanagement. Condition E is that an officer, employee or corporate trustee was responsible for, contributed to or facilitated misconduct or mismanagement of a charity. I do not think anyone would think that any of those would be a reason not to disbar.
The problems lie in conditions B and F. Condition B has already been the focus of some discussion and will be so again. Under that condition, which is in two parts, where a person has been convicted of an offence in another country that is against, or involves the administration of, a charity or a similar body, the person would face automatic disqualification from acting as a trustee if—this comes in the second part—the offence would have constituted a disqualifying offence if committed here. In the Charity Commission’s policy
paper there is no “and” or “or”. There is no interrelationship between those two parts; they are just stated as bullet points.
I have a question for the Minister. If someone who is active in parts of the world where gay people are persecuted is found guilty in a court of law of breaking the law of that country and then comes to Britain, would they be barred from being a trustee of a charity? After all, they broke the law in their own country. If someone was found guilty in Russia of breaking the law under that country’s increasingly draconian laws against NGOs and charities, would they then be regarded in this country as ineligible to be a trustee of a charity under this provision?
By far the biggest problem with this clause is condition F, which we are seeking to delete:
“that any other past or continuing conduct by the person, whether or not in relation to a charity, is damaging or likely to be damaging to public trust and confidence in charities generally or in the charities or classes of charity specified or described in the order”—
in the view of the Charity Commission. That, I rather think, drives a coach and horses through all the other conditions, because if I could not debar someone under any of the other conditions I am sure that I would go to that one.
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The second test to be applied is someone’s fitness to be a trustee. Again, fitness to be a trustee is not defined in the legislation; that is left to the judgment of the commission. In a paper, the commission said that it would look at three broad categories under which it would debar people: honesty and integrity; competence; and credibility. It has set out in some detail how it would stop the sorts of things that it would begin to look at. I have no problem with the examples that it has given as failures of honesty and integrity: that is, things like exploiting a position of trust for personal gain, dishonesty, deception or cheating. I do not have a problem with competence either, because the commission says that it would take the competences of trustees that we all know and love as CC3, the longstanding guidance by the Charity Commission about trusteeship, and if someone was to fail on them, I would understand that.
The problem is credibility, under which a person’s conduct can damage their personal credibility and reputation. Again, the commission has come up with a number of behaviours that I suppose would be acceptable as a reason to disqualify people: being negligent, repeated failure to comply with requirements on tax matters or having been penalised by HMRC. Fine; I agree with that. However,
“conduct which shows a material risk of harm to the work of charities in general”,
is very wide.
The third test is whether or not there has been a failure to act in the public interest to protect trust and confidence in charities. I think that what has happened, particularly by the inclusion of condition F, is that we have given the Charity Commission a power and then we have given it a whole series of escape routes, or wriggle room, by which it can exercise its judgment in
a subjective way. My particular objection to condition F is where it gives the commission the power to retrospectively judge the past conduct of an individual. The noble and learned Lord, Lord Hope of Craighead, spoke before about the fact that people may do things as young people. Under the power of this clause as it stands, that can come back to haunt them and be taken into account by the Charity Commission. I have no doubt that the commission would argue that it would take past conduct into account only if it felt that it would damage trust and confidence in charities, but that is not as objective and straightforward a test as one might think.
All told, these two provisions together, Clause 3 and Clause 10, bring to what should be an objective test something that is far too wide and unclear for trustees to have confidence, first, that they themselves will know that they are likely to be deemed unfit to be a trustee or not to be disqualified, and, secondly, that they will know on what grounds the Charity Commission might disqualify them. Let us not forget that to be disqualified as a trustee has a profound affect on a person’s life. It really affects their reputation, not just their standing within their community but their professional reputation too. This is not a power that we should give the commission without very serious consideration. I beg to move.