Meeting of the Parliament

Meeting date: Wednesday, June 28, 2023

Official Report 1008KB pdf

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Charities (Regulation and Administration) (Scotland) Bill

As members will be aware, at this point in the proceedings the Presiding Officer is required, under standing orders, to decide whether, in her view, any provision of the bill relates to a protected subject matter—that is, whether it modifies the electoral system and franchise for Scottish parliamentary elections. In the Presiding Officer’s view, no provision of the Charities (Regulation and Administration) (Scotland) Bill relates to a protected subject matter. Therefore, the bill does not require a supermajority to be passed at stage 3.

The next item of business is a stage 3 debate on motion S6M-09725, in the name of Shirley-Anne Somerville, on the Charities (Regulation and Administration) (Scotland) Bill. I invite members who wish to participate in the debate to press their request-to-speak buttons now or as soon as possible.

16:24  

I am pleased to open this stage 3 debate on the Charities (Regulation and Administration) (Scotland) Bill. I thank all the members of the Social Justice and Social Security Committee, past and present, for their diligent scrutiny of the bill during stages 1 and 2 and for their support for its measures and the amendments that have been made. I also thank the committee clerks and other staff of the Parliament, who, as always, have provided support to MSPs throughout the passage of the bill. I thank my bill team for all the hard work that they have done both for my predecessor, Shona Robison, and for me.

I also want to highlight my gratitude to all the stakeholders who have taken the time to express their views on the bill through oral and written evidence to the committee, and through discussions with the Scottish Government. That evidence provided us with a clear understanding of the day-to-day experiences that are faced by charities across the country. As the bill is a technical one, the contributions of legal professionals have also been invaluable to the refinement of the provisions.

I am grateful to the Office of the Scottish Charity Regulator for its work over a number of years with the Scottish Government to get the bill to this point. OSCR has been key to identifying the changes that are needed to modernise charity regulation to ensure that public trust and confidence in charities remain high. I specifically thank OSCR’s legal and policy advisers for their expertise and input through the process.

It is not often that we get a bill with as few amendments as this bill has had at stages 2 and 3. On behalf of the Government, I wish that all stage 3 processes were as quick as this one has been. On reflection, that is partly because of the cross-party support for the bill as well as its technical nature. I thank members for their contributions and I am grateful for the way in which we have all attempted to improve the legislation as it moved through the parliamentary process. That is based on the fact that we recognise that the charity sector is a vital partner to all of us in society, and it certainly is a vital partner to Government in supporting our communities.

Many of us, right across the chamber and across the country, are involved with charities in a personal capacity, either as trustees or volunteers, and are very aware of their work in our constituencies and just how much they contribute, day in and day out. I take this opportunity to thank all the volunteers and staff who give their valuable time and energy to this essential sector—you are all critical to the health and wellbeing of our people, places and communities.

Of course, I would also like to thank all the people who support charities through donations, in whatever form they take. The latest sector overview report from OSCR sets out that Scottish charities have a combined income of more than £14 billion each year. That clearly demonstrates how widely they are supported by the public, which in turn can happen only if the public trust charities. Research shows that trust in charities and what they deliver is high, and we all want to keep it that way.

On Friday, I had the pleasure of attending the Scottish charity awards, which are organised by the Scottish Council for Voluntary Organisations. I was genuinely humbled by the passion and innovation in that room, which were exemplified by the winners of the charity of the year award, Diversified. Established in Livingston, Diversified is Scotland’s first autistic and neurodivergent youth-led charity. People involved in the charity use their own lived experience to help to design and lead services for neurodivergent young people. It was a real pleasure to meet people from that charity at the awards on Friday, and it was a pleasure to see all the finalists receive their awards. We did not talk much about charity regulation and charity law on the night, but I hope that it forms the basis of the trust that people can have in charities to allow all those individuals to carry out the good work that they do.

I am sure that members will all agree when I say that the talent and breadth of experience in Scotland’s charity sector are truly exemplary and something that we can all be proud of. The Government’s focus is to ensure the best possible conditions for the charity sector to thrive and support our communities, and that is the aim of the bill.

Members will be aware that there is significant support for the reform and modernisation of Scottish charity law. There is also a desire from many who work in and with charities for a broader review of the future of charity regulation. I recognise that, which is why I have agreed that, following the passage of the bill, the Scottish Government will initiate a wider review of charity regulation. I repeat that commitment here today and make clear that we will start conversations with the sector, including the SCVO, this year on the scope of that review.

Moving on to the details of the bill, it makes practical improvements and updates to existing charity regulation—namely, the Charities and Trustee Investment (Scotland) Act 2005. The bill is built around proposals put forward by OSCR, based on its operational experience since the 2005 act came into force. In addition, following engagement with OSCR and the Law Society of Scotland, the record of charity mergers at section 12 of the bill was added, as was a list of minor or technical amendments included in the schedule.

The bill has a range of different provisions designed to enhance the existing framework. Each of the provisions falls under one of three primary aims. The first aim is to increase transparency and accountability in charities by improving public access to information about a charity’s operations. The second aim is to provide stronger powers for OSCR, including the power to issue positive directions to help charities address regulatory issues. The third aim is to bring Scottish charity law up to date with some key aspects of charity regulation in England, Wales and Northern Ireland, enhancing public trust in charities and further protecting charitable assets.

I valued the committee’s positive conclusions and constructive recommendations in its stage 1 report—in particular, the recommendation to include a review and appeal process for any disputes in relation to OSCR’s ability to appoint interim trustees, which resulted in the Government amendment at stage 2.

I have also listened to members’ and the committee’s views and recommendations around communicating these legislative changes. I wrote to the committee to set out the Government’s plans for commencement of the bill, as has OSCR, which has confirmed that it will share its draft communication plan with the committee for its consideration in advance of engaging with the sector.

In addition, amendment 1—with Jeremy Balfour’s assistance—will enhance OSCR’s reporting duties, ensuring that it sets out in its annual report to Parliament the work carried out that year to promote awareness and understanding among the sector of the requirements of charity law.

I was also pleased that, at stage 2, we were able to bring forward some clarifications to the rules around reorganisation of endowments held by statutory charities. Although impacting only a small number of charities, the costs involved in such reorganisations can be substantial for the organisations involved.

The bill makes practical improvements and updates to existing charity regulation and the role of OSCR. It is intended to sustain the effective and supportive regulation of charities during what we know are challenging times for the sector. There is broad agreement from members and stakeholders on the general principles of the bill and its importance in helping us deliver continued support to Scotland’s charities.

I therefore move,

That the Parliament agrees that the Charities (Regulation and Administration) (Scotland) Bill be passed.

I call Jeremy Balfour, for up to six minutes. We have time in hand.

16:32  

I welcome the debate and look forward to the bill becoming an act. I add to those of the cabinet secretary my thanks to the bill team, clerks and staff in the Parliament, and to all those who gave evidence to the committee at stage 1.

As we took evidence, I think it is fair to say that it became clear that this is an OSCR bill rather than a third sector bill. It is very technical in many ways, and its being brought forward has clearly been driven by OSCR.

Everyone in the chamber agrees on the importance of the third sector and the role that it plays in Scotland, whether that is in regard to volunteering, giving to or being a trustee of a charity. However, we have to be aware that society is changing. I say this as one of the conveners of the cross-party group on volunteering: volunteering is becoming harder for people to do post pandemic, and many organisations are struggling to find volunteers to come on board. That is perhaps more true with regard to their being asked to be a trustee, with all the legal responsibility that comes with that appointment.

Over the next months and years as the Scottish Government consults, we must have a wider conversation as to what role the third sector has to play within our society, how we encourage more people to volunteer and how we make sure that charities are able to do what they want to do locally and nationally. That will pose some interesting questions.

The other overwhelming remark that we heard as we took evidence was that there is a desire within charities and the third sector for reform, and for greater reform than the bill represents. I hope that the consultation to which the cabinet secretary referred in her opening speech will not be overly time consuming. Yes, we need to speak and to consult, but we also need to be able to introduce legislation in the next session.

The bill as amended is good. It could have been better if my amendment 3 had been accepted, but we still have a bill that will provide not only transparency and openness but a bit more clarity in regard to the role of trustees, what they can do and what they should do. I am pleased that members accepted my amendment 1 because there was some criticism that OSCR has not been communicating in such a way that the information that it wants to get to charities is getting through.

The Conservatives welcome the bill and look forward to it being implemented. Most importantly, we look forward to seeing the third sector grow and flourish over the next number of years.

16:36  

I am pleased to have the opportunity to speak in this stage 3 debate. I have previously referred members to my entry in the register of interests as a charity trustee. It is a great joy and honour to be a charity trustee. I am sure that many other members of the Parliament and many people across Scotland feel a sense of pride in the charities that they work for. It is important that we bear that in mind today as we discuss issues that will directly impact them and the charities for which they do so much good work.

I also put on record my thanks to everyone who has been involved in bringing the bill to its conclusion. In the classic style of the Parliament, I came to it late in the day. I joined the committee just in time to approve the stage 1 report and then to take part in the stage 2 proceedings, so all the hard work was done by my colleague Pam Duncan-Glancy, who worked with her committee colleagues to take the bill through its various evidence-taking sessions and challenged the Government robustly at various points to ensure that we have the best bill possible today. I thank her for that. I also thank everyone involved from the clerking team, the bill team and everyone who has worked to improve the bill.

As I said at the outset of my speech, we should take the opportunity to thank all those who are involved in charities across Scotland. We heard from the cabinet secretary some of the impressive statistics about the work that charities in Scotland do and the money that they raise for a range of charitable causes. It is important that we put on record our thanks to them.

Scottish Labour will support the passage of the bill at decision time. We believe the bill to be a welcome and overdue step to reform charity legislation. It will increase the transparency and accountability of charities, which is important in progressing charity law and bringing its key aspects into line with other regulatory frameworks in the United Kingdom—those in England, Wales and Northern Ireland.

I will take some time to focus on where we can go further. I am heartened again to hear the cabinet secretary’s commitment to the wider review of charity regulation and law and to engagement with the SCVO. However, the review cannot just be about the structures; we have to take a fundamental look at how we can better support charities and the work that they do.

I highlighted in my speech in the stage 1 debate the importance of ensuring that we consider issues such as the funding cycle for charities. Many charities live year to year in terms of the funding that they receive from the Government or local authorities. That can prove challenging when trying to plan for the future or to make projects go beyond just the one-year phase.

Approaches such as three-year funding cycles have been talked about for a long time in the Parliament, but we never seem to have got to a place where we are offering charities a three-year deal. It is important that, in the conversations that the cabinet secretary has with the SCVO, she listens to its asks on behalf of the wider sector and tries to bring them into the scope of the broader work that she is keen to do on charity regulation and the advancement of charities in Scotland.

I want to briefly say something about Jeremy Balfour’s amendment 3, which was not agreed to. I outlined my concerns about the burdens that the register of controlled interests in land has placed on churches. I think that we need to look at that issue again. I will not rehearse the arguments that I made during our consideration of amendment 3, but I ask the cabinet secretary to reflect on what she has heard today, as well as on what she has heard from churches and other religious organisations over the course of the bill’s passage through Parliament, and to tell Parliament what more she thinks can be done to engage properly with the churches to give them the comfort and support that they need in order to be compliant with the law. The last thing that we want to see is anyone who is involved in those organisations in good faith facing any kind of challenges because they have not complied.

I reiterate our support for the bill, which we will support at decision time. However, we feel that we can go further to support our charities in Scotland, and we are open and willing to work with anyone—especially the cabinet secretary—in that vein to ensure that the review covers all the issues that I have mentioned and supports a good, thriving third and voluntary sector here in Scotland.

On a point of order, Presiding Officer. When I made a contribution in the debate on Mr Balfour’s amendment 3, I referred to my entry in the register of interests. It occurs to me that I should probably have clarified that I am a trustee of two Scottish registered charities. I omitted to do so at that point, and I want to correct the record.

Thank you, Mr Fraser. Although that is not a point of order, your comments are now on the record.

16:41  

On behalf of the Scottish Greens, I welcome the Charities (Regulation and Administration) (Scotland) Bill, and I am pleased to be able to say a few words in this afternoon’s debate. I refer members to my entry in the register of interests.

As someone who was not directly involved in the committee scrutiny of the bill, I would like to thank the Social Justice and Social Security Committee for its detailed work on what is a somewhat technical bill. I would also like to thank the bill team and all those organisations—including charities and legal organisations—that have contributed in various ways to the work of the committee, and for providing information and briefings to us as MSPs.

Charities—the third sector—play a vital role in our communities and our lives. As I said at stage 1, they often support us at some of the most difficult or challenging times in our lives. They provide life-saving services, advocacy, constructive critique, resilience, fundraising and so much more. The hard work of staff and volunteers often goes unseen and, sadly, is often undervalued, but our society would not function without those services and supports, and the often selfless and unrecognised work that so many contribute to our collective wellbeing.

Therefore, I would like to place on record my thanks to all those charities—particularly those in the north-east—that seek to do that work, every day, in circumstances that are becoming increasingly challenging.

We have a responsibility to ensure that the regulatory framework within which charities operate is up to date and fit for purpose. Scotland’s charity law has not been significantly amended since 2005 and, as we have heard, the bill aims to update the current system of charity regulation by improving transparency and accountability, enhancing public trust and improving the efficiency of OSCR’s operations.

Although the bill does not represent a full review of charity law in Scotland—like Paul O’Kane and others, I wish that it went further—I welcome the cabinet secretary’s comments about the Government’s plans for a review that takes all charity regulation and legislation into account. I look forward to that. Collectively, we must ensure that that review is wide ranging and that it considers how we can support the sector in a future that will be very different from the world that we inhabited in 2005.

I have spoken previously about the need for charitable concessions for a wider range of activities that are goods in and of themselves—a range of activities that goes wider than the current definition of charitable purposes. Greens would also want to see explicit inclusion of each of the protected characteristics as described in our current equality legislation. However, that is for the review that is to come.

I would like to highlight that we all share responsibility for the provision of clearer information to ensure that the sector as a whole is aware of the provisions in the legislation that we will pass later today. There must be a shared understanding of the implications of the bill for charities and regulators alike. Given the nature of the discussions and debates on the bill to date, I have no doubt that we will all work together to make that a reality, and I look forward to doing that with colleagues from across the chamber.

16:45  

I am grateful to have the opportunity to speak in the debate and I want to reflect on some points, drawing on my role as convener of the Social Justice and Social Security Committee. I want to thank my colleagues on the committee and the clerks for their support and effort in scrutinising the bill, as well as the organisations that have engaged with us and provided evidence to inform the committee’s scrutiny.

The Charities (Regulation and Administration) (Scotland) Bill is long awaited. There have been calls from charities for reform, as well as calls from OSCR. Indeed, the bill is based on practical proposals put forward by OSCR, based on its experience as regulator. The bill has also been shaped by a lot of valuable input that had been provided by other stakeholders.

The bill represents a significant step forward in enhancing transparency, accountability and good governance in charitable organisations. Charities have said that they want the changes to help strengthen and update existing charity law. Current laws are now almost 20 years old, and the charity landscape has changed significantly in the intervening years since those laws were introduced, so it is right that the bill has been brought forward to update the current system of charity regulation in Scotland.

The Scottish Government’s focus is to ensure the best possible conditions for the charity sector to thrive and support communities, and I appreciate that the Scottish Government intends to bring forward further reform for charities, which will definitely be a very positive step for the third sector.

Meanwhile, the bill will improve OSCR’s powers and allow it to publish annual accounts for every charity, include the names of all charity trustees in the Scottish charity register, remove charities that fail to provide accounts and do not respond to its communications, and create a publicly searchable record of removed charity trustees. The bill will also give OSCR new powers to issue positive directions to a charity to take action, such as managing a conflict of interest, where a risk has been identified by the regulator.

As I mentioned in my speech during the stage 1 debate, CHAS put it well, saying:

“charities are in a privileged position with regard to handling donations from the public … those are things in relation to which public accountability is important.”

Therefore, the Scottish Government’s proposed changes are important in order to maintain public trust and confidence in this important sector and its regulator in the years ahead.

If the bill is passed today, there must be an awareness-raising campaign in due course to ensure that forthcoming changes are widely communicated to charities and that there is no onus on charities in terms of the additional administration changes.

For charities to continue to add value, we must ensure that they are properly regulated and supported. The Charities (Regulation and Administration) (Scotland) Bill is generally regulatory in nature as opposed to doing anything more fundamental about charities, and it is right that we update the elements of current legislation that the bill deals with. I support the bill and hope that other members will back it tonight.

We move to winding-up speeches.

16:49  

I am grateful to rise on behalf of Scottish Labour to wind up on the bill.

There is a huge degree of consensus on the bill. As I said in my opening speech, the bill can go forward. However, it is vitally important to say that we could go further.

I will not rehash those points, because the cabinet secretary heard them quite clearly.

I do not know whether there is some slight heckling from members at the back, telling me to get on with it. No, there is not.

I want to add to what we have heard already. It really is a privilege, for me as a parliamentarian, and for us all, to interact with charities in our work. We all get to experience, in our constituencies and our regions, the huge breadth and depth of wonderful charities that are doing amazing work.

In this place, we host charities probably more often than many places in Scotland do—on a daily basis. Every lunch time or evening in the Parliament, the place is brimming with different organisations coming to talk to their parliamentarians. Those are very often charitable organisations, which do a range of important work. There are charities that provide food parcels for older people; health charities that raise money for our children’s hospices and hospitals; and charities that support our armed forces and veterans community. As I said, it is a great honour to be able to engage with as many of them as we can.

Indeed, this evening, I will host a number of HIV charities from across Scotland to talk about how we progress the route towards the elimination of HIV in Scotland. Yes, Presiding Officer—that was a plug for my event this evening, so I hope that colleagues in the chamber will join me.

I am very happy, on behalf of Scottish Labour, to reiterate our support for the bill, and to reiterate the points that I have made previously about ensuring that we go further in the future. I also reiterate the point about how we deal with religious charities more broadly. I am keen to have further dialogue and discussion on that with the cabinet secretary—I know that she has made that offer previously, and I am sure that she will do so again in summing up.

I do not intend to detain the chamber for much longer than I need to, other than to say that I think that the bill commands support from members on all sides of the chamber, and it certainly commands the support of the regulator. The crucial test, however, will be whether it commands support for its provisions among charities across Scotland—those charities that we all know from our communities. That will be the next test, which is why it is vitally important that we get the monitoring and the post-legislative scrutiny right before we move on to the next phase of the review.

I am grateful for the opportunity to speak in the debate, and Scottish Labour will support the bill.

16:52  

I declare an interest as chair of Heart Research UK’s heart of Scotland appeal board.

As other members did at the start of the debate, I thank our clerks on the Social Justice and Social Security Committee, who have helped us with the passage of the bill. I also thank those who have given evidence to the committee. It is often humbling, when I meet with charities and the third sector across Scotland, to see the work that they are undertaking in our communities and how vital that work is. As a country, we would not be who we are without them.

Our charities have a combined income of more than £15 billion and employ more than 200,000 people, which shows us why the bill is so important. Parts of it are concerning, however—I refer especially to the points that have been raised with regard to our churches and faith groups and the potential unintended consequences of the bill. I hope that, as other members have said, the cabinet secretary will be mindful of those.

Although we have welcomed the one-year delay, the concerns about bureaucracy and additional costs are still very much there. I hope that we will see those issues taken on board, and any necessary amendments lodged in the future, in order to prevent such issues costing our charities any money, because that money needs to go to the front line during difficult times. The arguments put forward at stages 1, 2 and 3 still stand.

The Charities and Trustee Investment (Scotland) Act 2005 has been in place for some 18 years, so it has been necessary to modernise it in order to ensure that our charities operate more transparently. We welcome that, and the fact that the bill brings our charities law in line with reforms in England, Wales and Northern Ireland. However, as my colleague Jeremy Balfour said, it has felt as if the bill has been inspired by OSCR.

There is now an opportunity, with regard to potential reforms coming forward, to do something radically different, and I welcome the fact that the cabinet secretary will now work to put together a proposed review during the rest of the current session of Parliament. That is important, given what it could mean; Paul O’Kane outlined some potential reforms that the Labour Party would like to see around the regulation of charities. However, we also need to look at the overregulation of charities in Scotland.

During the stage 1 debate, John Mason, who I do not think is in the chamber, made some important points that could be taken forward for the fully volunteer-run charities that we have in Scotland. Charities that have an income of less than £25,000 face the same bureaucracy and regulation as charities with thousands of employees and millions of pounds of income. I do not think that that is fair, and I hope that in future parliamentary sessions we have the opportunity to look at the deregulation of how charities in Scotland operate and the opportunities that that could present for resources to go to the issues that charities want to campaign and make a difference on.

That is why the consultation did not attract as much engagement from those charities. They are looking after village halls and church halls across our country. They are small charities and do not have the individuals to take on those roles. I hope that, in the future, a potential consultation, or the proposed review, will look at that issue, which could realise the potential of many small charities across our country.

We will support the bill at decision time, as we have outlined. At this stage, we are content with what the bill will do, but it has to present an opportunity for us all to look at how we support our charities. The third sector in Scotland has done so much that we can be proud of, especially during the pandemic. I hope that that is the learning that we can take forward from the bill, so that we as a Parliament look at how we can do more to help our third sector in the future.

16:56  

I thank all the members who contributed to this small but perfectly formed debate, and I again thank OSCR, which will undertake the work to ensure that the bill is implemented successfully, for its close and helpful co-operation with officials in the Scottish Government during the development and passage of the bill.

The bill aims to enhance transparency and accountability in charities, improve OSCR’s powers and maintain public trust in charities. Although it is a small and technical bill, it is nevertheless vital to the sector. Many colleagues have rightly begun to turn their attention to the wider review that was promised once the bill has been passed. The discussions that we have had as the bill has progressed will assist the Government as it looks to scope out the wider review. I thank colleagues for their remarks about the wider review. I agree with them on the importance of that, particularly as I accept that the bill is technical in nature.

We are all aware that the nature of the charity sector is changing rapidly, just as the sector has to deal with rapid changes in society. Today’s landscape, with the growth of enterprising charities, makes for a different context from 2005, when the original act was passed.

Although it is right to ensure that the rules surrounding the regulation and administration of charities remain fit for purpose, as the bill does, we recognise that there is more to do, whether that is around the role of charities, as Jeremy Balfour mentioned, or around the importance of recognising the needs of smaller charities, as Miles Briggs mentioned. I point out that charities with incomes under £25,000 can already, for example, produce simpler accounts. We take that into account, but I recognise that there is more that we need to do.

We will initiate a wider conversation on the longer-term future of charity regulation. It is very important that as part of that we address the concept of what a charity is in modern Scotland. We will require extensive consultation and stakeholder engagement with the charity sector so that we can define what the sector feels are the problems in the existing regime before we decide how to design the solutions. I will always welcome the contribution of members from across the chamber as we scope the review out.

It is clear to us that we must be conscious of the challenges that charities face, whether they come out of Covid or the impact of the cost of living on charities’ operations and funding streams, at the same time that many charities have an increase in demand for services. Witnesses at the committee spoke about the current lack of capacity in the sector to engage with and respond to consultations, so we need to be mindful of that in approaching the review.

Members have also, quite rightly, highlighted the concerns that many charities have around funding, and I recognise that the third sector needs stability and the opportunity for longer-term planning and development. Once again, I reiterate that the Government is committed to progressing a fairer funding approach to the third sector. Unfortunately, the volatile economic circumstances at the moment have presented real, additional challenges that have made it difficult to move forward with multiyear funding to the extent that we wished to during the coming financial year, but we are keen to move forward with that and with the wider fairer funding approach—including prompt notification of funding, outcome-based flexible funding and proportionate administration around applications and reporting.

The bill has been improved and strengthened as a result of the parliamentary process, and I am very grateful to the members of the committee and other members in the chamber for their contributions to the debate. I believe that we now have a bill that will help to strengthen the existing legislation, enhance transparency and accountability in charities, improve OSCR’s powers and maintain public trust in the charity sector.

I stress the importance of the charity sector in Scotland. People up and down the country volunteer and give their time, energy and money to truly commit and contribute to society, usually in an altruistic way, as they want to make a real and genuine difference to the community and the world we live in. It is important that my last words are my thanks to them for all that they do for all of us.

That concludes the stage 3 debate on the Charities (Regulation and Administration) (Scotland) Bill.