Lord Hodgson’s review consultation phase begins

It has been a long time coming but finally the Cabinet Office has published a series of consultation papers to support Lord Hodgson’s review of charity law. These include a survey for the public, a survey specifically directed at charities, and a series of focused calls for evidence. When the review terms of reference were first published, many of us were surprised at how broad they were – and these consultation documents reflect the ambitious approach that Lord Hodgson has decided to take.

The calls for evidence cover a number of specific topics, including the definition of charity and the effectiveness of organisational forms available, while the surveys ask some very interesting questions such as what the role of charities should be, and whether there are too many charities.

My attention was in particular caught by the questions concerning the role and responsibilities of the Charity Commission:  they certainly reveal how Lord Hodgson is not shying away from some blue sky thinking. But on a slightly concerning level they also indicate that a possible direction of travel for the review is towards a considerably shrunken role of the Commission. How else could one interpret questions such as the one asking whether the Commission should authorise specialist sub-regulators to be in charge of specific groups of charities?

For the past couple of years the Commission has fought off a number of ‘land grabbing’ actions (see the whole debate around the Academies Bill) and this seems to be yet another attempt.

When we consider all this in a context where the Commisison has already embarked on a strategy of rolling back many of its services (understandably due to the cuts to its budget) the prospect in the long term is one of a very small regulator, with limited powers and hardly any connection with charities.

And there are further reaching consequences to this. Just to name a few:

• HMRC – We all know how HMRC is already suspicious of the Charity Commission’s ability to carry out necessary checks to ensure charities are legitimate, so when faced with a weakened Commisison it is very likely that HMRC will make thier own tests even more stringent, creating a whole different layer of regulation with potentially contradictory outcomes.
• Public trust and confidence – What are the implications of a regulator that no longer effectively regulates? If there is a lack of proper checks and balances, the loops through which charities can slip will inevitably get bigger. Add to this the shock horror treatment that any crime involving a charity receives in the media, and the prospect is inevitably a decline in the trust and confidence charities have historically enjoyed from the public.