MPs have expressed concern about plans to give the Charity Commission the power to issue statutory warnings to charities.
Speaking at today’s debate during the second reading of the Charities (Protection and Social Investment) Bill, several Labour MPs called for the clause in the bill that would grant the power to be amended.
If the bill is passed unamended in this way, the commission would be able to issue statutory warnings to any trustee or charity when it considered a breach of trust or duty or other misconduct or mismanagement had occurred, and to publish them if it saw fit.
Charities issued with warnings would not be able to appeal against them and would not get a fixed amount of notice before they were issued.
The National Council for Voluntary Organisations, the charity leaders body Acevo, the training and publishing charity the Directory of Social Change and the Charity Finance Group were among those to express concerns this week about the potential use of the warnings by the Charity Commission.
Anna Turley, the shadow minister for civil society, told the House of Commons: "There are some powers within this bill that could threaten the independence of charities."
She said she had no objections to the warnings in general, but the existing draft raised some concerns.
"It is possible the commission could issue a warning over a relatively low level of concern and it may be possible that there’s a disagreement between the trustees and the commission over whether it’s justified," she said.
"Yet failure to comply with the warning should not have consequences that could be disastrous."
She said the commission should give adequate notice of its intention to issue a warning and she would be looking to discuss at the bill’s committee stage how many days that notice should be and how many other remedial powers should exist.
She added: "There should also be a consideration for a right of appeal to the charity tribunal, considering the implications a warning would have for the charity in question."
Susan Elan Jones, the Labour MP for Clwyd South, agreed. "Charities depend very, very heavily on funding," she said. "Reputation matters and if there is no right to appeal against a warning, that is something that needs to be looked at."
But Rob Wilson, the Minister for Civil Society, insisted the right to appeal would be available through judicial review.
He said: "A right to appeal through the charity tribunal would be disproportionate. It would tie the commission up in red tape and stop it using the power."
He said the bill provided an opportunity for representations to be made about whether warnings should be published, which he said the government considered "proportionate". As bodies created for the public benefit and in receipt of public money, charities should expect to receive public scrutiny, Wilson said.
He said the government considered the scope of the warning power to be "right and clear".
Earlier in the debate, the Cabinet Office minister Matthew Hancock revealed that the government was seeking to add two reserve powers to the bill at committee stage, after concerns were raised in national newspapers this summer about aggressive fundraising tactics.
The first power, he said, would be to compel charities to join the new Fundraising Regulator, expected to be in operation next year. The other would be to mandate the Charity Commission to step in and take over fundraising regulation if self-regulation failed.
Many MPs urged the government to reconsider broad powers outlined in the bill that would allow the commission to disqualify from trusteeship anyone it felt was unfit or whose conduct could be seen to be damaging to public trust in charities.
But Wilson pointed to the possibility of having a system of waivers, and said he believed a waiver system would be used appropriately by the commission.
He said: "I believe this bill achieves the right balance."