Charity regulation is in a state of crisis and the current draft Protection of Charities Bill is simply “tinkering around the edges”, according to evidence submitted to the committee considering the Bill.

The claim was made in written evidence by Professor Gareth Morgan, head of the Centre for Voluntary Sector Research at Sheffield Hallam University, who also gave verbal evidence yesterday to the Joint Committee on the Draft Protection of Charities Bill, a group of MPs and peers responsible for scrutinising the bill.

Morgan said the crisis was caused by three factors: a chronic under-resourcing of the Charity Commission, the fact that “vast swathes” of the charity sector were either not registered with or not regulated by the Commission, and an “extraordinary” government refusal to implement many existing pieces of charity regulation which are already on the statute books.

Giving evidence yesterday, Morgan said there were very large numbers of excepted charities – which are regulated by the Commission but not registered with them – and exempt charities, which have another primary regulator and are often also not registered with the Commission.

A National Audit Office report into charities in 2012 found that there were more excepted and exempt charities in England and Wales – both by number of charities and total income – than there were charities on the register.

Morgan also said there were many organisations which were charitable in nature, and were therefore required by law to register with the Commission, but which had not done so. He said no sanction was ever pursued against these charities “except in a small number of high profile cases”.

He told MPs in written evidence that if a new charities bill was being introduced, then far more changes should be made, including many recommendations from a review of the Charities Act 2006 by Lord Hodgson, a member of the committee, which was published in 2012.

“If Parliament is minded to make time for a new Charities Bill, I am surprised that what is proposed by the Cabinet Office is so modest,” he said. “I consider that the state of charity regulation in England and Wales is currently in a state of crisis. Broadly speaking I feel the Draft Bill is simply ‘tinkering round the edges’.

“There are many other reforms to the framework of charity regulation which could usefully have been included in a Bill, including other significant recommendations in Lord Hodgson’s Review of the Charities Act 2006.

“I would have expected that all of Lord Hodgson’s recommendations that needed primary legislation – where there was general consensus on taking them forward – would have been included the next time a Charities Bill was prepared.”

He said that possible examples included sanctions for non-submission of accounts, which could include limitations on the right to reclaim tax under gift aid, a system of charging charities for regulation, and a removal of limitations on which Commission decisions should be appealable to the Charity Tribunal.

Morgan also said existing legislation, which is on the statute books but not enacted, could be introduced, including regulation scrapping the laws around excepted charities with incomes over £5,000, which currently mean tens of thousands of Christian organisations are not registered with the Commission, allowing charitable companies to convert to charitable incorporated organisations, and implementing extensive powers over regulation of fundraising.

He also said there was confusion between different types of charity regulation, and that there was a lack of consistency in the law governing regulation of charities by the Commission, and that governing regulation by HM Revenue & Customs.

“There is a lack of joined up thinking with regard to the regulation of charities in the UK, especially between matters of charity law and tax law, which the draft Bill does nothing to address,” he said.

He said there should be a broad-ranging bill which repealed provisions in the Charities Act 2011 and the powers in the Finance Acts giving HMRC powers to regulate charities, and replace it with a unified law.