Hansard

As members know all too well, charities form a vital part of Scottish life. Their unique qualities mean that they are especially well equipped to provide to the public services that are sensitive to local needs. Social justice, community regeneration and skills development are but a few of the objectives that charities can help us to achieve. Charities are, however, forced to work in a complicated and archaic legal framework that does little to support them.

Existing charity law is based on a statute that was passed in 1601. In May 2001, the report of the Scottish Charity Law Review Commission—the McFadden report—found, not surprisingly, that it was high time, 400 years later, for an update of the law on charity. The McFadden report was the result of a wide-ranging year-long consultation process, in which questionnaires and leaflets were sent to every organisation that is recognised as a charity in Scotland, and with large public meetings being held in our major cities.

When the commission concluded its work, its final recommendations were referred back to the charity sector for approval; its response was overwhelming support for the recommendations. In essence, the McFadden report recommended a complete overhaul of the current system. The Executive has accepted the case for charity law reform and has thereby taken an important step towards creating a framework that is fit for the 21st century.

It is now time to move on from positive sounds to positive actions. There are some important implications for legislation, which should not be allowed to fall by the wayside. One of the commission's key findings was that the 1601 definition of a charity no longer fits today's public perception of a charity. The public view of charities 400 years ago was that they were apolitical organisations that pursued objectives such as the advancement of religion, education or poverty relief. These days, such a narrow definition is insufficient.

As members know, there are about 50,000 voluntary organisations throughout Scotland; however, only 28,000 are recognised by the Inland Revenue as Scottish charities. Many organisations that members of the public assume are charities do not have that status, Amnesty International UK and Greenpeace being two examples. Because those charities seek to influence legislation and are, in a sense, political, they are unable to benefit from having charitable status. At the same time, there are many publicly funded organisations—quangos by any other name—that the person on the street would not think of as charities, yet which have charitable status and are subsidised by the taxpayer. It is time that we introduced new legislation to reflect and protect charities today.

McFadden recommended four defining principles for Scottish charities: First, a charity should be for the public benefit. That should be its overriding purpose, which is essential if charities are to maintain their good names. Secondly, they should not be profit-distributing organisations. Thirdly, they should be independent and lastly, they should be able to have political—but not party-political—aims. I acknowledge that there needs to be a debate on what constitutes public benefit and on how we define bodies' independence. As for the political aspect, members need not fear—I do not think that anybody is proposing that the Official Monster Raving Loony Party should become eligible for subsidy. Many charities have a political lobbying arm, but that does not make their aims any less laudable.

Westminster is currently looking into redefining charitable status. It would be ideal if there were a convergence of views between here and Westminster and if we shared our information and thinking. It looks, however, as if legislation will not reach the UK Parliament until 2005, but Scotland need not wait until then because the Labour party, with others, has made an absolute commitment to legislating through a single charities bill.

Let me turn to regulation of charities. In Scotland, charities are not currently monitored to ensure that they comply with the existing body of legislation. They are not required to lodge financial or any other information centrally and, although they are required to provide copies of their accounts on request to members of the public, they do not have to provide core information, such as how many people they employ and what they spend on fundraising.

As organisations that are known for their lack of profit motive and for being run by dedicated staff with loads of committed volunteers, charities are usually rightly viewed with trust and respect by society. In fact, surviving as they do on donations, their good name is their life-blood. However, under today's less than robust legislation, the bad practices of a few charities might muddy the names of the others to the cost of society as a whole. Therefore, there is a clear need for a legislative framework for charity regulation.

In England and Wales, the Charity Commission establishes charitable status and is the centre for charity regulation. It is clear that the independence of that organisation is valued; in fact, the strategy unit in Westminster is working on making England's Charity Commission more independent. We have no equivalent organisation in Scotland, but the McFadden commission shows that there is a widespread belief among charities that that situation must change. I believe that the Executive shares that view and I welcome its stated aim of putting in place a new regulator for Scottish charities that is proportionate, independent, accountable, transparent, consistent and fair. However, I urge the minister to consider putting the proposed new regulator on a statutory footing as part of the key guarantee of independence and stability.

The way in which the Executive has involved the charity sector in consultation is to be commended. We in the Parliament pride ourselves on our inclusive approach, which sets us apart as an effective democracy, but if we are to come up with a sustainable solution, consultation must be continuous. We must face the fact that if the solution is to last for the next 400 years—as the current legislation has—it had better be sustainable. Consensual legislation will be strong legislation, so a charities (Scotland) act that reflects the McFadden report is crucial to our relationship with the charity sector and to our reputation as an inclusive legislature. Consultation must be seen to be more than mere gesture.

Things are already changing for the better for charities in Scotland. Reform that is suited to Scottish needs and which is informed by local consultation on the charity agenda is a breath of fresh air in a stale and neglected corner of the law. That is illustrated by the comments of an employee of the Scottish Council for Voluntary Organisations, who said:

"Before devolution I was a policy officer with SCVO and spent most of my time travelling to London to persuade politicians down there that issues of interest to the Scottish voluntary sector were worthy of a small amount of parliamentary time. We spent eight years trying to get charity law on to the agenda of the Westminster Parliament, but it was on the agenda of the Scottish Parliament from the word go."

Let us not lose that momentum. Charities are the heartbeat of civic society and they protect our values in an age of cynicism and social fragmentation. However, we should not through haste lose the essence of reform. We need a modern definition of a charity so that we can support organisations that deserve help, and we need a body that is sufficiently independent of Government influence to protect and regulate the sector. I urge the minister to put the commendable work that has already been undertaken to good use and to make rapid progress on charity law reform.