Chamber and committees

A charity can apply on behalf of an individual—even if an individual was not in a position to apply for a dispensation or did not wish to, the charity could apply on their behalf. It is not just down to the individual. I hope that that reassures the member.

The amendment relates to specific concerns that OSCR raised about the impact of the discretion to grant dispensations of its own accord, because that would be a legal obligation.

Good morning, convener.

Section 2 imposes a specific requirement to include the names of charity trustees on the Scottish charity register. As well as ensuring transparency and accountability in charities, the section aims to ensure that the publication of any information does not put anyone at risk. When the safety or security of any persons or premises could be jeopardised, an application for dispensation can be made to the Office of the Scottish Charity Regulator to exclude the charity’s contact address or any trustee names from the register.

A discretionary element was added to the bill to allow OSCR to apply dispensations to a charity or class of charities without the need for an application—for example, in the case of a women’s refuge charity. However, OSCR has expressed some concerns regarding that element of discretion. In particular, it is concerned that it might create an additional burden on OSCR to look behind every charity entry on the register in order to ascertain whether dispensation should apply. That was not the intention of the provision.

Following discussion with OSCR, the Government is satisfied that the key policy intention can be achieved in other ways—for example, by OSCR taking the initiative to contact a particular charity or class of charities to discuss any security concerns with them and to invite applications for dispensation that could then be processed swiftly.

As such, amendment 1 adjusts the process to be followed before a dispensation is granted. It removes OSCR’s ability to grant a dispensation of its own accord while retaining the ability to grant dispensation and remove the relevant information following an application from a charity or trustee.

I hope that the committee appreciates the need to overcome this technicality.

I move amendment 1.

On the point that has just been raised, my understanding is that there is no definition of a religious charity, which is one of the technical difficulties with the bill. For that reason and others, I cannot support the amendment in the name of Jeremy Balfour.

Fundamentally, charities regulation is in place to ensure and maintain public trust in the operation of charities. The register of persons holding a controlled interest in land, known as the RCI, is an essential part of the Land Reform (Scotland) Act 2016, and that legislation was passed unanimously. The purpose of the RCI is to improve transparency in relation to land and property assets, irrespective of what type of legal entity owns them, and to ensure that a direct link exists between the property and whoever exercises a controlled interest in that property. The bill seeks to increase transparency in relation to charities.

I appreciate that concerns have been raised about the RCI, particularly by the Church of Scotland, and my assumption is that Jeremy Balfour’s amendment relates to those concerns. However, I must stress that a bill on charity regulation is not the place to try to address those concerns. Indeed, the amendment would change the obligations of the RCI, which have, as I have said, been debated in Parliament not just in relation to the 2016 act but in the discussions on the Scottish statutory instrument on the RCI.

The information that will be available on the Scottish charity register under section 2 of the bill is a charity trustee name. The RCI relates to transparency in ownership and control of property and, as such, requires additional information to simply a list of names. Therefore, the information that is required is not the same and the two registers are not like for like.

The Scottish Government has had considerable recent engagement with religious organisations, particularly the Church of Scotland, in developing the RCI regulations. To address the concerns of some religious stakeholders, the transitional period before offence provisions take effect for non-compliance was recently extended by 12 months to 1 April 2024, with the unanimous support of Parliament. That provides those who need to register with the RCI with more time to prepare their submissions.

All parties supported the introduction of the RCI, which is a key part of our land reform strategy. Parliament has made much progress on delivering greater transparency in relation to individuals who have control over decision making in relation to land. The RCI regulations are a complex piece of legislation, and there is a risk that amendment 21 would lead to unintended consequences.

I therefore urge the committee not to support amendment 21.

I press amendment 13.

Amendment 13 agreed to.

Section 13 agreed to.

Section 14—Notice and obtaining information

Amendment 22 appears to follow on from a recommendation that was made in the committee’s stage 1 report. In my response to that report, I agreed that

“effective and open communication ... is vital ... to ensure smooth implementation”.

OSCR also wrote to the committee to set out an initial outline for communicating changes to charities. In addition, it confirmed that it would share its plan with the committee ahead of engagement with the sector.

Amendment 22 focuses on charities with two or fewer employees, but that covers 73 per cent of charities. OSCR would, in any event, be expected to aim its support and guidance at the majority of charities. The amendment also requires OSCR to communicate with each charity, but at present it is not possible for OSCR to do that. That is why we have put section 11 in the bill and lodged amendment 20. There are more than 25,000 charities and, although OSCR has contact details for the majority of them, communicating with each one is not technically possible.

However, I am sympathetic to what Mr Balfour is trying to achieve. I would be happy to work with him on a stage 3 amendment that would enhance OSCR’s existing reporting requirements. I therefore urge him not to press amendment 22.

Amendment 23 would require ministers to carry out a review of the act that the bill becomes, starting six months after royal assent, and to lay a report before the Parliament

“no later than 31 December 2025”.

We do not expect the act to be brought into force within six months after royal assent, so there would be no experience of the act in practice at that point. Also, an adequate amount of time is needed for an act to embed so that evidence for a review can be gathered.

I would be open to that, but I am not sure that it would have the effect that Mr Balfour would want. I say that because, if we agreed to an amendment that included a timescale for a review that fitted better with the commencement plans, it would be necessary to divert resources from the wider review that we, as a Government, have already said we will undertake once the bill is enacted. We would be obliged to carry out a review even if nobody was calling for it or had any issues in practice. I do not believe that that is the right approach, particularly when any stakeholders who might want to raise specific points relating to the bill will be engaging with the wider review that we have committed to and will no doubt raise any points there that they want us to consider.

For those reasons, I am afraid that I have to say no to Mr Balfour—I would not be open to that. I do try to oblige Mr Balfour with amendments and assistance, but I will not in this case.

Convener, as I have set out to the committee previously, the Scottish Government intends to take a phased approach to implementation, with at least two sets of commencement regulations anticipated in spring 2024 and summer 2025. That is to allow charities and OSCR the time that they need to prepare for the changes and to give OSCR the opportunity to consult the sector, produce guidance and communicate the changes. The Parliament has the ability to conduct post-legislative scrutiny of any act, so it is not necessary for such actions to be specified in the bill, particularly if the specified timings for them do not align with the expected commencement of the bill.

As I have already mentioned, the Government is committed to conducting a much wider review of charity regulation following commencement of the bill. My officials are already preparing the groundwork for that, and I have carried out meetings on the issue as well. I am committed to working with the sector to shape that review and to ensure that there is a proper opportunity for engagement. During stage 1, members and stakeholders were very clear about the importance of doing that, and I very much agree. A review of the bill would, as I have said to Mr Balfour, hold up that wider review by diverting resources. I therefore urge the committee not to agree to amendment 23 if Mr Balfour moves it.

I am happy to take that away and to provide an update to Mr Briggs and the committee, and we can address that at stage 3, if necessary.

Amendment 3 agreed to.

Amendments 4 to 12 moved—[Shirley-Anne Somerville]—and agreed to.

Section 12, as amended, agreed to.

After section 12

The rationale was to ensure that we provide OSCR with the powers to do what it needs to do, such as in the example that I gave in my introductory remarks of a women’s refuge. If there is a threat to a trustee or a trustee feels that they might be threatened if their information is published, that information can be withheld. We are still upholding transparency, but we are respecting the specific circumstances in which a trustee, for understandable reasons, might not wish their details to be made public. Amendment 1 simply ensures the policy intent of the bill without imposing on OSCR what it might perceive as an additional burden.

These are three very minor amendments. Amendment 15 removes a redundant cross-reference. Amendments 17 and 19 modify two of the headings in the 2005 act, which OSCR and the Charity Law Association, respectively, flagged as being potentially confusing or inaccurate. My thanks to them for highlighting those points.

I move amendment 15.

Amendment 15 agreed to.

Amendments 16 and 17 moved—[Shirley-Anne Somerville]—and agreed to.

The 2005 act retained the concept of designated religious charities, or DRCs, which existed under preceding legislation. The rules in the 2005 act recognise that many religious bodies operate effective self-regulatory mechanisms by having an internal organisation with supervisory and disciplinary functions and seek to avoid overregulating such charities.

However, the 2005 act places restrictions on whom OSCR can share information with and for what purpose. In general, information can be shared only with public bodies and office-holders for the purpose of enabling or assisting in the exercise of either OSCR or the body’s functions. As a DRC is not a public body and the information to be shared by OSCR would not be for the exercise of its own function, it is not currently permitted.

The bill does not seek to change that original policy intent of the 2005 act. It seeks to address a practical issue identified by OSCR and the DRCs around the ability to share information. Amendment 18 will enable OSCR and the DRCs to share information if necessary for any purpose connected with the exercise of OSCR’s functions or for the purpose of enabling or assisting the DRC to exercise any supervisory or disciplinary functions that it holds in relation to its component elements.

For example, when OSCR receives information from an auditor or independent examiner in relation to the accounts of a charity that is a component part of a DRC, OSCR is currently unable to share that information with the relevant DRC. That DRC, in turn, is then unable to fulfil its regulatory functions. This small amendment will allow DRCs to fully exercise their functions in respect of their component parts, thereby improving and enhancing the regulation of those charities. The amendment makes sure that the current arrangements with DRCs can work properly and that the original policy intent is not hampered by the inability to share information when necessary.

I hope that the committee will agree with the approach that is being taken here and will support amendment 18. As the current position is that some charities are designated as DRCs, the bill needs to ensure that they can exercise their functions as intended by the 2005 act.

I move amendment 18.

Amendment 18 agreed to.

Amendments 19 and 20 moved—[Shirley-Anne Somerville]—and agreed to.

Schedule, as amended, agreed to.

Sections 18 to 20 agreed to.

Long title agreed to.