Charity Law Reform
The next item of business is a statement by Margaret Curran on charity law reform. The minister will take questions at the end of her statement, so there should be no interventions.
I welcome the opportunity to make a statement to Parliament today about charity law. The topic is new to my portfolio and I welcome it, as charities are vital to our communities in Scotland. Charities deliver a wide range of services and their work with disadvantaged and marginal groups plays a key part in achieving greater social justice in Scotland. It is therefore essential that we enable charities to operate in a climate of trust and respect by providing firm and fair regulation in which the public can have confidence.
I am sure that members are aware from the press of the case of Breast Cancer Research (Scotland). I share public concern that money that was donated for charitable purposes has not been used as would have been expected. That has the potential of undermining charities in Scotland. I will not comment further, as the case is—as I am sure members are aware—sub judice. However, I pledge to the Parliament that I will, as the new minister with responsibility for charity law, look carefully at the issues raised by the case as I develop proposals for the charity legislation to which we are committed in the partnership agreement.
The Executive's response to the McFadden report—published at the end of last year—contains responses to all the recommendations in the report as well as setting out our plans for the way forward. We accept the thrust of the report—that there should be better regulation of and support for charities in Scotland.
Our plans will for the first time provide charities and the public with an up-to-date register of Scottish charities and a central source of support and advice for charities, their trustees and the public. We also plan to create the office of the Scottish charity regulator—OSCR—whose functions will include the routine monitoring of charities, for example through scrutiny of annual accounts. That will directly address a gap in regulation that has been a cause of concern for some time.
The Executive is working hard on the many tasks that need to be done to bring OSCR into operation as soon as possible. We have been carrying out a location review in accordance with our policy of bringing the benefits of public sector jobs to the whole of Scotland. I will shortly announce where OSCR will be located and the regulator and other staff will be appointed swiftly thereafter.
The new regulator will be an agency of the Scottish Executive. The agency model is an established and effective way to deliver regulatory functions and its use means that we do not have to wait for a legislative opportunity to set up a regulator but can do so quickly. Our target is for OSCR to be operational as soon as possible and we will take swift action to move things on.
Those arrangements will deliver—and deliver soon—a more robust regime of regulation that will build on the wide powers available to ministers under existing legislation. Some of those powers have been exercised in the past few days by the Scottish charities office. I most certainly do not rule out putting the regulator on a statutory footing if I consider that to be necessary; I will give the matter detailed consideration as the regulator begins to take effect.
The changes that we are putting in place are designed not only to encourage and support the work of charities but to reassure the public that their money and support is not abused. To that end, OSCR will have teams that are engaged in monitoring, supervision and investigation. Close working within the agency will enhance its ability to intervene effectively and to stem potential difficulties before they become serious.
More serious matters will be pursued rigorously and action will be taken as necessary. Where necessary, the regulator will take civil proceedings in the courts on behalf of the Scottish ministers, for example to suspend trustees, to appoint a judicial factor to manage a charity's affairs, or to freeze a charity's funds in order to protect them. Where it is possible that criminal activity is involved, the regulator will refer the case to the Crown Office. It will be crucial that the investigations section of the regulator's office includes the expertise necessary to make judgments about appropriate actions and referrals, which is why the staff of that section will include a fiscal nominated by the Lord Advocate.
OSCR will take over and build on the good work of the Scottish charities office. It will have enhanced resources to allow it to carry out monitoring and to gather intelligence that might lead to the earlier detection of problems. OSCR will provide for the first time a central authority in Scotland that will receive and monitor charities' annual accounts. That will be done under ministers' existing powers to require charities to supply their accounts without payment. OSCR will also publicise the obligation on charities to make their accounts available to anyone who requests a copy and will seek charities' consent to include copies of accounts that are sent to it on a publicly accessible database. Transparency is important if we are to provide the public with information and give confidence. Ministers will wish to consider carefully whether we should make that a statutory matter.
There might well be a case for tightening other areas of charity law. Public charitable collections are often the first point of contact between charities and the public, which is why it is important that the public should have confidence in the way in which collections are carried out. A framework for regulating cash collections exists at a local level, but the requirements are not always understood or enforced. OSCR will carry out a range of tasks to facilitate and encourage better local arrangements for public charitable collections.
The existing regulations do not cover collections by direct debit or standing order, which are sometimes called tabard collections. Fundraisers who use such methods should abide by codes of good practice. We have said that, in principle, local authorities should be able to regulate collections of promises of money. Such a measure would require a change in primary legislation, which I will consider.
The definition of a charity is key to deciding which bodies receive the benefits of charitable status and thus fall to be regulated. We agree with McFadden that the current definition of a charity is outdated and that a new UK-wide definition would be desirable. No such definition was in prospect when the McFadden commission carried out its work, but one is now. The Cabinet Office strategy unit report on charities and the wider not-for-profit sector offers a modernised definition based on the principle of public benefit and a wider range of purposes that encompasses, for example, the promotion of human rights and the advancement of amateur sport. The strategy unit's definition reflects the spirit of the McFadden recommendations.
The new definition would apply in Scotland through decisions of the Inland Revenue, but I do not want to rule out legislating for charitable status to be conferred in Scotland by the regulator, using either the same definition as the rest of the UK or a different one. However, we must bear in mind that the Inland Revenue would be an important part of the scene. Eligibility for tax relief, which is a reserved matter, is central to the viability of many charities and a key attraction of charitable status. As McFadden recognised, if a different definition were introduced in Scotland, we could get into difficult and confusing territory, with the possibility that different categories of charity would operate here. We must work through those issues, working closely with the charities sector.
I want to be abundantly clear that we are committed to legislation—I am deeply committed to it. The consolidation and updating of existing statutes is, to my mind, essential. We are on record as saying that legislation is required to introduce a new legal form for charities—the charitable incorporated organisation—to extend trustees' investment powers and to improve the procedures and powers of the charities nominee.
Further review might result in proposals to put the register of charities on a statutory footing and to extend the powers available to the regulator. As I have said, those extended powers might include the power to grant charitable status.
I am committed to better and more robust regulation of charities in Scotland. In the best interests of charities and the public, I will ensure that the new regulator that Scotland needs and deserves is put in place as quickly as possible. Experience will determine exactly what will be in the legislation that we introduce, and the new Administration will give further consideration to that. However, as I have made clear, I will not hesitate to legislate for a statutory regulator if I consider that to be necessary. We see our plans and the development of legislation as complementary. We believe it to be in the best interests of charities and the public for us to ensure that our plans are put into operation as early as possible.
We have 19 minutes for questions, so they should be kept tight. I repeat my earlier caution that this is a time not for mini-statements, but for crisp questions and clear answers.
I welcome the fact that the issue has been put back into the social justice portfolio. We were concerned when it was shifted into the justice portfolio and disappeared without our hearing much about it. However, the minister's statement was very much along the same lines as the speech that was given by the Deputy Minister for Justice just before the end of the previous session. Legislation has not yet been programmed, despite the fact that, in 1999, the Lib-Lab coalition promised to review charity law and that, in 2002, it promised to introduce legislation.
All that we are being offered now is a non-statutory Government agency—a regulator—as a holding measure that can be set up quickly. If the regulator can be set up so quickly, why was that not done in the previous session, rather than as an interim fix now that public interest has been raised because of the Breast Cancer Research case? The consultation has been well carried out and the sector is calling for legislation. What is the Executive's timetable? When will it commit to legislation on charity law in the Parliament?
I welcome Linda Fabiani's support for the issue's being shifted to the communities portfolio. I re-emphasise my commitment to working in the field and my recognition of its significance. Members will know that the previous Executive gave much attention to the matter and consulted widely. It set up the McFadden commission and, once the commission had reported, it engaged properly—as it should have done—with the commission's conclusions and looked to carry its work forward.
We are now at an appropriate stage to move swiftly, with the establishment of the agency. Members will see that the proposed legislation is not in this year's legislative programme. However, through the work of the agency and the work that is being undertaken to establish the exact basis of the legislation, we can look forward to moving as effectively as possible to legislating. The policy and timetable that we have set out will allow us to ensure that the legislation is comprehensive and as effective as possible. I am sure that Linda Fabiani would welcome that.
Despite the answer that she gave to Linda Fabiani, and although we can all have 20:20 vision with the benefit of hindsight, I ask the minister to agree that the proposed action might, with advantage, have been taken much earlier. She will accept that the vast majority of charities operate in a perfectly satisfactory manner. In such circumstances, great care and sensitivity must be shown, and the Executive must ensure that any regulatory regime is not over-intrusive to the extent that the individuals on whom we all rely and who make a tremendous contribution to charitable causes throughout Scotland become discouraged. That is a problem especially for those who operate within the smaller charities.
I welcome Bill Aitken's comments. This is an opportune moment to pay tribute not only to the many charities in Scotland and the work of the many volunteers associated with them, but to those who donate to charities throughout Scotland, as they contribute so much to our well-being as a nation. I hope that recent events do not undermine confidence in the sector. We should remind ourselves that wrongdoing is a minority activity in the sector and we should retain our confidence in the sector. I hope that the Parliament can take the opportunity to do that today.
Our attempts at regulation are meant to be balanced and effective to ensure that public confidence is retained and that the charity sector works effectively. That is why engagement with the sector has been so significant.
When we announced the setting up of the regulator, our policies were warmly welcomed by many in the sector as a sign that things were moving in the right direction. I am open-minded about the evidence relating to the need for legislation to enshrine our policies and provide the proper framework. It is proper that we do that in a balanced and measured way so that we achieve what all of us want to achieve: an effective charity sector that protects the interests of the public—particularly the donating public.
I welcome the establishment of OSCR, which was recommended by the McFadden commission. However, I believe that it needs statutory underpinning across its functions. The problem with the Scottish charities office is that it is reactive rather than proactive, as it relies on complaints being made.
We are in danger of unintentionally causing gaps in the system. What is a likely time scale for the bringing to Parliament of legislation to ensure that we do not have such gaps? Further, what is a likely time scale for defining charity in law, given that the current statute is 400 years old?
I am sure that Jackie Baillie welcomes my comments, particularly as I do not rule out there being a statutory underpinning. I intend to consider that issue carefully as I am determined that the legislation that we introduce—not in the coming year, but as soon as possible, as I have indicated—will be the result of proper consideration of the basis on which the regulator should operate and the associated legislative framework. That will ensure that the office works properly.
I am sure that Jackie Baillie will be glad to know that, as part of my homework in preparation for today's statement, I read the comments that she made in the previous debate on this subject and that I am quite clear about her views on this matter. I hope that we can modernise all that surrounds charities in Scotland and take this opportunity to make sure that our approach is comprehensive and ensures that the sector is modernised and made suitable for the 21st century. We must work in partnership with the key organisations that know a great deal about this area and ensure that we contribute to bringing about a charitable sector that is appropriate for a modern Scotland.
The issue of how soon something is to be done is critical. The recommendations in the McFadden report were widely supported in the sector but the Scottish Executive's response to it was extremely feeble, as I made clear to the minister—one of my lot—who was then responsible for the matter.
Following the production of two excellent documents in London by the Cabinet Office strategy unit and the Treasury, the English are now way ahead of us, even though we were ahead of them at the time of the appointment of McFadden. There seems to be a clear agenda and it would be useful if we could get on with it rapidly. I take courage from the fact that the minister left out the words "in due course", which were included in her written text and hope that that means that we are about to get on with it.
Donald Gorrie tempts me. I assure him that this minister is not feeble and am pleased that he welcomes the fact that a Labour minister is in charge of the matter. I also assure him that I will give considerable energy and commitment to driving the policy forward. I will communicate his regards to Jim Wallace at the next Cabinet meeting.
I left out the words, "in due course" because I wanted to signal that I am determined to move on the issue. It is time to speed up what we have been doing in relation to charity law reform. I am committed to the establishment of the agency but I want to examine the work that has been done and the evidence of those who think that the agency will not go far enough. That way, I can ensure that what we come up with is effective and robust and that it delivers the balance and the confidence that I have already spoken about. I am confident that the work that we have already done will allow us to move swiftly.
The regulator will be able to carry out only the functions of the ministers, the Scottish charities office and the Lord Advocate that are prescribed in our inadequate charity legislation. Is there anything in the minister's statement that would have prevented the problems relating to Breast Cancer Research?
We must consider all the evidence in that case. I do not want to play any political games with it, because I want to ensure that we develop the robust system of regulation that everybody expects that we will be able to develop.
I am advised that the case is in court because of the Scottish charities office's work. We need to develop that work. There is no doubt that there is an argument that we need to legislate and develop more robust regulation. I will consider the evidence in the Breast Cancer Research case and other cases in which we feel that the system has not worked properly or moved effectively enough.
The increased resources that will be allocated to the regulator, the connection with the Crown Office and Procurator Fiscal Service and the other measures that are being put together move us in the right direction. They allow us to establish the evidence that we need to be able to intervene in cases that give us cause for concern. However, it is perfectly clear—and I have said—that we require legislation to move that further on.
I welcome the minister's commitment to consider tightening the law on public charitable collections. It is vital that the public have confidence in those collections.
On the definition of charity, will the minister clarify whether the new definition, which will be based on public benefit, will have an impact on the charitable status of Scotland's independent schools?
I wish to give attention to that matter. As I develop proposals for the new definition, I will consider the impact on independent schools. As my responsibility for charity law is new, I do not wish to be pre-empted on the matter.
I welcome the statement from the minister and agree that we need to act on the recommendations that are contained in the McFadden report.
As the minister perhaps knows, Moira Adams is a constituent of mine. Her endeavours over many years have resulted in the case of Breast Cancer Research reaching the courts. Miss Adams holds an immense amount of information. Will the minister therefore agree to meet me so that she can hear at first hand what problems individuals face under the current law when they try to expose alleged maladministration within registered charities and why it is vital that the current law and system of regulation be updated?
I am aware of Scott Barrie's interest in the matter. I believe that he raised it with Jim Wallace who, I recall, discussed matters relating to the case. I may have to be careful of the sub judice rule in relation to particular cases, but I would take great interest in considering causes for concern about the law and how it currently operates. I would be happy to meet Scott Barrie on the proviso that I would have to be careful about some of the legal issues. However, I am sure that he appreciates that.
I do not want to push the minister on a question that has already been raised, but does she agree that there is a strong case for considering whether private schools—which, as the name suggests, are run principally for private, not public, benefit—should not have the right to qualify for charitable status under the new definition?
I appreciate Patrick Harvie putting on record his views on the matter, which are clear. However, I give him the answer that I gave to Margaret Mitchell.
I make it clear to Parliament that the definition is of some concern. To break the mould a bit, I acknowledge what Linda Fabiani said about Parliament having considered the matter for some time. The will of Parliament is clearly to move on it. I genuinely wish to implement the will of Parliament on the matter and will give proper consideration to the range of issues that will be raised in that connection.
I do not expect the minister to comment on the case of Breast Cancer Research. However, does she agree that there is a need for urgent action on commissioned payments? Will she undertake to consider that urgently? Will she also prove that she is not feeble by giving a firm commitment that, once the case is no longer sub judice, there will be a full public inquiry into Breast Cancer Research to explain why the Executive was alerted to the problem four and a half years ago and took so long to take action? We need the case to be exposed to public daylight, in the interest of public confidence in charities and how they are run in Scotland, and we look to the minister to ensure that that happens. Will she meet me too?
I always end up with a lot of invitations after making statements to Parliament. I would be delighted to meet Keith Raffan. I appreciate the energy and commitment with which he speaks and I understand the drives that lie behind that. I have to be careful about what commitments I make about the case in question, as I am sure he appreciates.
I never anticipated that I would be encouraged to demonstrate my lack of feebleness, but I am more than happy to continue to demonstrate that. I absolutely understand the will and mood of Scotland and of the Parliament on the need to move swiftly on this matter. I pay tribute to the work of Jim Wallace—even if Liberal Democrat members do not—as significant progress has been made in this area and much consultation has been undertaken. The McFadden report was commissioned and we responded to it. Things were delayed for one or two reasons—there were some disputes and some disagreements within the sector—but we will now move on. Sometimes we have to take our time to get things right and I think that that is what we shall do.
I declare an interest: I am patron of the Scottish Breast Cancer Campaign. My parliamentary office assisted Moira Adams in taking her case against Breast Cancer Research to the appropriate authorities.
I am interested in the implication that I think I detected from the minister when she said that she would consider the charitable status of private schools. She could, in theory, come to a different conclusion on that matter from that of her counterpart at Westminster. Were that to prove the case, would it pose any difficulties with regard to establishing what constitute organisations with charitable status in Scotland, as opposed to campaigning organisations?
Margo MacDonald knows that I would never wish to give my colleagues in England any difficulties whatsoever. We have a package of proposals, which I think have been—
On a point of order, Presiding Officer. Could you ask the minister to speak towards the microphone rather than the questioner, so that we may all benefit from hearing her answer?
The acoustics in this hall are poor, so if the minister could assist in that way, I would be grateful.
I apologise. I was trying to be polite by addressing the questioner directly. It is quite difficult to do that, however. I will try to balance the direction in which I face. I ask Margo MacDonald to forgive me. I am not turning my back on her. Others may have done so, but I will not.
Oh!
That was a cheap shot—I apologise.
Charities will now quite properly be dealt with under the communities portfolio. There is some degree of overlap with the justice portfolio and I will keep up the appropriate contacts. I would like to develop a consistent and comprehensive policy and legislative framework that allows us to achieve what we want to. I will give due consideration to the facts that are presented and I will be happy to meet people to discuss the information or evidence that they wish to give to me.
I welcome the minister's statement. Will she confirm whether she intends to assess the work and the effectiveness of OSCR? If so, will she involve all interested parties and agencies in that assessment? Does she intend any such assessment to lead to legislation?
I am happy to confirm that that is absolutely my intention. We will establish the agency because we think that it will have a significant impact on the charities sector. We will examine the effectiveness of the work being done and that will inform our views as we prepare legislation. I am happy to meet people with concerns about the operation of the agency so that it operates as effectively as possible. If the agency does not properly address what we need it to address, that should be reflected in legislation.
That concludes questions to the Minister for Communities. I apologise to the three members who were not called.
On a point of order, Presiding Officer. Am I right in saying that standing orders require a reasonable balance in the selection of questions between members of Executive and non-Executive parties? If so, could you explain which side of the fence the contributions of Mr Raffan and Mr Gorrie come from, and whether they display the good will and mutual trust that I believe are referred to in the partnership agreement and are the hallmark of the new relationship between the Liberals and their Labour counterparts?
You should have listened to my remarks earlier in the day, Mr Ewing. I said that it is swings and roundabouts until the summer recess. I will strike a balance over time. Under the current standing orders, that is the only way in which to proceed. I urge members such as Mr Ewing to consider the overall picture during a week, rather than one specific instance. It is not possible to balance all parties within, for example, the 18 minutes that we had for questions today.