Conservative peer raises concerns about giving exempt status to UK's largest charity

Lord Hodgson of Astley Abbotts says he is against the idea of making government departments, which have no powers in relation to charity law, principal regulators of charities

Lord Hodgson of Astley Abbotts
Lord Hodgson of Astley Abbotts

The Conservative peer Lord Hodgson of Astley Abbotts will raise concerns in parliament about the British Council’s move to become an exempt charity. 

Hodgson is concerned about the principle of charities being moved away from Charity Commission regulation and moving to being supervised by government departments that have no obvious expertise in charity law. 

The government last month put down legislation aimed at making the British Council, which is the largest UK charity by annual income, an exempt charity. 

An exempt charity is one that has charitable status and is still required to comply with charity law but, unlike other charities, it cannot register with the Charity Commission, is not directly regulated by the commission and instead has another principal regulator.

In addition, it can only be investigated by the commission as part of a statutory inquiry at the request of its principal regulator.

In this case, the British Council would have the Foreign, Commonwealth & Development Office as its principal regulator. 

The charity, which had an income of almost £1.3bn in the year to the end of March 2020, receives most of its income from running English language and cultural programmes around the world. 

It is also an executive non-departmental public body, sponsored by the Foreign, Commonwealth & Development Office.

Hodgson, who conducted a review of the Charities Act 2006, has put down a “regret motion” that will be debated in the House of Lords at a date yet to be decided. 

It says the legislation to give the British Council exempt status will “introduce further unnecessary complexity to the regulation of the charity sector; will result in divided responsibilities for ensuring compliance with charity law; and therefore risk undermining public trust and confidence in the sector”. 

Hodgson told Third Sector that the British Council was following a number of other charities that had been taken away from regulation by the Charity Commission by becoming exempt. 

This included Kew Gardens and many museums, which are being overseen by government departments such as the Department for Environment Food & Rural Affairs in the case of the former and the Department for Digital, Media, Culture and Sport for the latter. 

Hodgson said he had nothing against the British Council but he was opposed to the principle of charities being taken away from regulation by the Charity Commission. 

“If anything goes wrong with these charities the department, whether that's DCMS or Defra or whatever, has no powers to do anything about it,” he said. 

“They have to hand it back to the Charity Commission to handle the charity law.”

“That seems to me to be a bad thing - you have a divided chain of command.”

He said there was also a question over how much government departments knew about charity law in their supervision of these organisations and said they were not equipped to do so. 

That raised the question of whether the individual charities were complying with charity law and who was making sure they were doing so, said Hodgson. 

“What is the FCDO going to know about charity law in handling the British Council?” he said. 

“This is not an attack on the British Council, it does wonderful work and I’m all in favour of it but I think the way we are handling it is very odd. 

“I will be asking why is this change necessary? How is the British Council being affected by the present way it is being regulated. Why are we making a change?”

The British Council declined to comment on the proposal when approached by Third Sector last month. The FCDO did not provide a response. 

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