Commons Library analysis: Charities (Protection and Social Investment) Bill [HL]: in detail

The Charity Commission’s powers and its role in regulating charities have come under increased scrutiny with some high profile cases and the publication of a number of recent reports. There has been particular criticism of the compliance and enforcement work of the Charity Commission, including its perceived reluctance to use the powers available, its perceived lack of focus on dealing with serious wrongdoing, and its use of its reduced resources.

The previous Government and the Charity Commission have pointed to the recent increase in the Commission’s use of its compliance and enforcement powers, but both agree that strengthened powers are needed. In January 2015, the National Audit Office found that the Charity Commission had made good, early progress in addressing concerns although significant challenges remained.

Concerns have also been raised about some methods of fundraising. A review of the self‑regulation of charity fundraising led by Sir Stuart Etherington recommended a new approach. The report of this review was published after third reading of the Bill in the House of Lords.

The Law Commission is examining selected technical issues in charity law. It consulted separately on social investment by charities, following which it recommended to the Government that there should be a new statutory power for charities to invest in this way.

In December 2013, the previous Government published a consultation paper which included proposals for change, requested by the Charity Commission, to extend the Commission’s powers to tackle abuse in charities.

In October 2014, the previous Government published the draft Protection of Charities Bill. The draft Bill included provisions dealing with ten of the original seventeen consultation proposals, some of which had been modified. The Bill was scrutinised by a Joint Committee of the two Houses of Parliament. The Committee made a number of recommendations, many of which the Government accepted.

The Charities (Protection and Social Investment) Bill [HL] had its first reading in the House of Commons on 15 September 2015 as Bill 69 of 2015-16, having completed its passage through the House of Lords.

The Government’s Explanatory Notes published with the Bill provide the following overview:

• The Bill:
• provides stronger protection for charities in England and Wales from individuals who are unfit to be charity trustees;
• equips the Charity Commission with new or strengthened powers to tackle abuse of charity more effectively and efficiently; and,
• gives charities a new power to make social investments (investments that pursue both a financial and social return).

The Bill would amend other legislation, including the Charities Act 2011, and includes powers requested by the Charity Commission.

A separate Library Briefing Paper, Charities (Protection and Social Investment) Bill [HL]: in brief (Number 07344, 22 October 2015) provides a summary of the information considered in detail in this paper.

This Bill has been certified by the Speaker as relating exclusively to England and Wales, so the 'English votes for English laws' procedure will apply to it. The procedure is outlined in section 1 of CBP 7339 English votes for English laws.