New legislation will give the Charity Commission a range of extra powers, including the ability to disqualify people it considers unfit from being a charity trustee, and to force the closure of charities in which mismanagement poses a threat to public trust in the sector.
A draft of the Protection of Charities Bill, announced in the Queen’s Speech in June, will be published by the government today. This is part of a double boost for the commission, which has also been granted new funding worth £9m by the Treasury.
Measures in the new bill include banning people with certain criminal convictions, including terrorism or money laundering, from being a charity trustee. The commission will also be able to disqualify a person from being a trustee "where the Charity Commission considers them unfit", a Cabinet Office statement said.
In addition, the law will close various loopholes in commission powers, such as trustees being able to resign in order to avoid removal and disqualification.
There will also be a new power for the regulator to require a charity subject to a statutory inquiry to shut down "where there has been misconduct or mismanagement and allowing the charity to continue would risk undermining public trust and confidence in charities". A further new power is for the regulator to give an official warning to charities in less serious cases.
The commission asked for tougher powers in September 2013, pointing out that many of its current powers were more than 20 years old.
A subsequent Cabinet Office consultation, which closed in February, showed that charity umbrella bodies and representative groups were divided over whether the regulator should be given the power to disqualify people it considered to be unfit to be charity trustees.
The same day as that consultation launched, the Prime Minister’s Extremism Taskforce – set up in the wake of the murder of Drummer Lee Rigby by extremist Islamists – listed new powers for the commission among seven measures recommended for tackling extremism and radicalisation in the UK.
The regulator today welcomed the bill, but said it was disappointed that certain measures were not included.
"Not all of the measures the commission had proposed are included in the draft legislation," it said in a statement. Foremost among these omissions is the proposal that people disqualified from trusteeship should also be banned from taking up other key roles in charities such as finance director, the statement said.
The commission "had also pressed for powers to prevent mismanagement or misconduct or other breaches before they occur, by directing trustees not to take specific actions", and would continue to do so during pre-legislative scrutiny.
David Cameron, the Prime Minister, said: "I want to build a country which everyone is proud to call home. That’s why I want us to confront the menace of extremism and those who want to tear us apart. Today’s changes will help make sure that when people donate to charity, their money always goes to genuinely good causes."
Karl Wilding, director of public policy at the National Council for Voluntary Organisations, said his organisation would "examine the legislative proposals to make sure they strike the right balance between giving the commission the powers it needs to deal with serious problems, while respecting individual charities' right to make their own decisions."
Lisa Nandy, the shadow minister for civil society, said the announcements were a "step in the right direction", but went on that "ministers seem to have ignored the fact that the Charity Commission doesn't make good use of the powers it already has."