Provisions in the Charities Bill, including a power for the Charity Commission to give official warnings, risk threatening the independence of charities, shadow minister Anna Turley told Parliament yesterday.

While Turley said she backed a “strong, well supported regulator”, some provisions of the bill were too broad.

“There are no objections in principle to giving the Charity Commission the power to give warnings to a charity, but the current drafting raises some concerns within the sector,” she said.

In particular, the regulator’s proposed warning powers ran the risk of being used for issues of “relatively low concern”, she said.

“It is therefore important to attach safeguards to the issuing of a warning, and failure to comply with it should not in itself have significant consequences that could be disastrous for charities,” she said.

Turley said she supported proposals to give housing associations statutory backing to control their own assets "in the best interests of their tenants, and not be bullied by a Government determined to sell off affordable housing,” she said.

“We think it is absolutely right that charities have the freedom to dispose of their assets in the way that they see fit.”

Turley said the bill provided a “good and important” way for the regulator to "clamp down on abuse”.

But she said further clarification was needed – in particular with regards to the Lobbying Act.

“We intend to use the passage of the bill to highlight and defend the right of charities by law to campaign and speak out on issues in line with their objectives,” she said.

“So often, it is charities that end up picking up the pieces of our policy failures. It is vital that we give them the right to campaign on their issues, and to challenge and hold us to account. That is a key part of a strong, healthy democratic and civic society.”

Wilson 'not concerned'

But minister for civil society Rob Wilson dismissed concerns of an overly powerful Charity Commission.

“The bill seeks to achieve a balance,” he told MPs. “The new Commission powers need to be broad enough to make them useful. If they are too narrow they would be impractical and go unused or would leave loopholes to be exploited by the unscrupulous.”

Wilson also dismissed concerns about the Commission's proposed powers to disqualify trustees and issue official warnings to charities.

Disqualifications would be considered on a “case by case” basis, Wilson said, while charities would always be able to appeal an official warning through judicial review.

“The last thing that we want to do is give the Charity Commission powers that it cannot use, and for which it could be criticised for failing to exercise several years hence," he said.

"The Joint Committee that undertook pre-legislative scrutiny agreed that, with the appropriate safeguards in the provision, judicial review was the appropriate route for appeals,” he said.

Closing regulatory gaps

Praise for the bill came from Minister for the Cabinet Office and paymaster general, Matthew Hancock.

“An effective regulator needs to have teeth," he said.

"As the National Audit Office reported, the Commission needs our help to address gaps and deficiencies in its legal powers. The bill will close those gaps in the Commission’s capabilities, as well as tackling a number of damaging loopholes in charity law,” he said.

Shadow Minister Louise Haigh also supported “moves to close loopholes and strengthen the Charity Commission”.

“The Charity Commission already has a wide range of compliance and enabling powers, but there are underlying weaknesses, including a limit on the Commission’s ability to prevent and tackle abuse in charities,” she said.

“The powers the Charity Commission did have were not powers that we would expect a modern regulator to hold—they did not go far enough—so we welcome the strengthening of its powers.”

Burden for trustees

But Conservative MP Fiona Bruce said the bill risked burdening trustees with legislation.

“It has become increasingly difficult to get individuals to step up to the plate and to agree to an appointment in a charity,” she said. “That often proves to be one of the challenges that new charities face, particularly—and interestingly—when it comes to the appointment of a treasurer.

“I come to this debate, as I say, with over three decades of practical experience of working in this field. I want to ensure that we encourage and do not deter the very responsible people that the Bill is designed to support.”

With regards to proposed powers to suspend and disqualify trustees, Bruce said she was “concerned about the excessive powers that will be granted if the Bill is passed, which if extended could come to embrace actions that might not have been fully scrutinised or intended by Members”.

“The Bill gives immense power to the Charity Commission. Indeed, in its policy paper of May 2015, the Charity Commission acknowledged that it was gaining ‘a significant new power’ to disqualify people from serving as trustees or senior managers of charities. I am concerned about that wording,” she said.

Bruce said there was a risk that the bill would come into force before a “clear definition of non-violent extremism” was agreed.

“The Government’s counter-extremism strategy says that this Bill would give the commission powers to disqualify trustees for wide reasons, including past conduct and a variety of other abuses, such as extremism. In the same strategy, there is also reference to non-violent extremism,” she said.

Concern for small charities

Conservative MP Wendy Morton called for the bill to “ensure that smaller charities are not disproportionately affected by any bureaucracy or too much legislation”.

“It does not matter whether a charity is small or large: charities have so much to give to our country, society and communities, and I will do all I can to ensure that they get the support they deserve,” she said.

Conservative MP Robert Jenrick raised concerns about whether the Charity Commission was able to undertake greater regulatory work once the bill came into effect.

“I wonder whether the Minister really believes that the Charity Commission has the capacity to regulate the vast number of charities. We have thousands of charities in this country, some of which are extremely complex organisations, as we have seen. Does the Charity Commission have the resources to do that work? I suspect it does not, a view shared by many in the sector,” he said.

Shawcross: 'Robust action'

Despite opposition by some MPs at yesterday’s reading, the Charity Commission’s chair William Shawcross said he was “delighted by the strong support” for the bill.

“The Bill will fill key gaps allowing the commission to take robust action where serious mismanagement occurs. I am glad it has received cross-party support.

“The Bill will help the commission maintain public trust and confidence in charities. It will do so by ensuring that charities and their beneficiaries are protected from individuals who are unsuitable to be trustees. It will also close the loophole whereby trustees can resign before being removed, thus leaving them free to take up a position to abuse other charities

“A number of safeguards are included in the Bill, including a general duty for the commission to act proportionately. The commission is determined to strike the right balance between firm regulation and proportionate action.”