The change in political attitudes
So much for the behaviour of charities: what about the other main element in the cloud that hangs over them – the shift in the attitude of government? In the first decade of the 21st century, under the Labour administrations led by Tony Blair and Gordon Brown, the sun shone on charities and the voluntary sector. Charity law was modernised, the Office of the Third Sector (later renamed the Office for Civil Society [OCS]) was set up in the Cabinet Office to smooth the path for charities and the sector was seen by the government as an important component in the drive to reform public services. Gift Aid was relaxed so that donations of any size – not just those above £250 – could bring a tax refund to charities. Many Labour MPs and ministers had worked in the sector when the party was in opposition and were sympathetic to it. In an ambitious document in July 2007, Brown pledged to invest an unprecedented half a billion pounds in the sector.12 ‘We set out … a vision of how the state and the third sector, working together at all levels and as equal partners, can bring about real change in our country,’ wrote the Prime Minister in the introduction.
All that was severely modified, however, after the global financial crisis and the formation of the Conservative-led Coalition government following the general election in 2010. Charities were not spared in the new era of austerity: the funding of capacity-building organisations set up by Labour came briskly to an end, and subsidies to umbrella bodies like the NCVO and the Association of Chief Executives of Voluntary Organisations (Acevo) were soon phased out. Responsibility for charities and voluntary organisations also slipped down the Whitehall hierarchy. The budget of the OCS fell from £227 million in 2009/10 to £56 million in 2014/15, a drop of about 70%.13 When Theresa May became prime minister in July 2016, the OCS was moved from the Cabinet Office, seen as the policy centre of government, to the more peripheral Department for Culture, Media and Sport (later the Department for Digital, Culture, Media and Sport, DCMS); and after the general election of 2017, when the Conservatives lost their overall majority in Parliament, the sector lost a minister of its own and responsibility for it was added to the portfolio of the minister for sport. This prompted the shadow civil society minister at the time, Steve Reed MP, to remark that the government didn’t quite know what to do with the OCS. “It should be at the centre of government rather than parked in a lay-by somewhere,” he said.14
After 2010 there was also more overt criticism of charities from some parliamentarians, mainly on the right of the Conservative Party. Charlie Elphicke, MP for Dover and Deal until 2019 and a member of the public administration select committee, complained during a hearing of the committee that “Shelter doesn’t provide any shelter” and that political lobbying by charities “subverts democracy and debases the concept of charity”.15 Elphicke, who was jailed for two years in 2020 for sexual assaults, went on: “If a member of the public puts a pound in a rattling tin, and that money is spent on press officers and Bell Pottinger to lobby a bunch of politicians, wouldn’t that person feel a bit disgusted and a bit cheated?” His fellow committee member, Robert Halfon, Conservative MP for Harlow, said there were too many very large “Tesco-type charities” that spent millions of pounds lobbying in Whitehall and questioned whether such organisations should have charitable status. The fundraising scandal discussed above also prompted outspoken criticism from some MPs.
Trevor Morris, then visiting professor of public relations at the University of Westminster, told a Charity Finance Group conference in 2013 that charities were not seen as innocent any more, faced the prospect of more attacks and should prepare for a moral crisis. He said in a subsequent interview:16
“The Today programme on BBC Radio 4 is a parade of heads of charities and NGOs making their case, often in a highly politicised way. The government is wrong, money must be spent, business must do something. It sounds like politics to me. It’s not about helping poor old ladies or hedgehogs – there’s a different feeling coming through. Some right-wing politicians have jumped on it because it’s not risky any more – it’s become acceptable to say not all charities are good … The public has a sense that some charities are rather pleased with themselves – they pay themselves a lot of money, they hassle us in the street, they’re not apologising. There’s a sense that people are less deferential towards charities and more questioning of them.”
The Charity Commission gets tough
The alteration in the political mood after the change of government in 2010 was mirrored by the general approach to the regulation of charities by the Charity Commission for England and Wales, a non-ministerial government department headed by a chair appointed by a government minister. The regime at the Commission had been relatively indulgent and charity friendly during the previous decade under two chairs appointed by Labour, Geraldine Peacock and Dame Suzi Leather. Things changed after the appointment as chair in 2012 of William Shawcross, a hawkish journalist, author on geopolitical subjects and biographer of Queen Elizabeth, the Queen Mother.
The new regime began in earnest after a report by the NAO in 2013 prompted by the Cup Trust scandal, mentioned above, stated that the Commission was failing to regulate charities effectively and ‘does not do enough to identify and tackle abuse of charitable status’.17 A drive began to improve internal efficiency, take a harder line with errant charities and generally toughen the rhetoric. Shawcross talked of the Commission as a ‘policeman’, albeit a friendly one. By 2015 he was able to report that the Commission had used its various statutory powers to tackle abuse and mismanagement in charities 1,200 times in 2014/15, compared to 216 times two years previously, and had opened 103 new statutory inquiries – the strongest intervention at its disposal – compared with 15 two years before.18
The new board that Shawcross appointed included one person with 25 years of experience working in social enterprise, but its composition was otherwise seen by some in the charity sector as indicating an emphasis on enforcement, with a particular focus on preventing charity funds being diverted to support terrorism.19 One of the new board members was Peter Clarke, a former head of the Anti-Terrorist Branch at Scotland Yard, who said in an interview in 2013 that his role included helping to improve partnerships with the security services and other agencies.20 In 2014, Shawcross told The Sunday Times: “The problem of Islamist extremism is not the most widespread problem we face in terms of abuse of charities, but is potentially the most deadly. And it is, alas, growing.”21 He said the Commission was currently running five inquiries and 43 ‘monitoring cases’ into charities where there were suspicions related to terrorism, particularly in Syria.
In 2015 the Conservative Party cancelled a fringe event at its annual conference by the Muslim Charities Forum after an allegation in The Daily Telegraph that it had links with the Union of Good, which had funded Hamas, considered to be a terrorist organisation.22 Two years later Baroness (Sayeeda) Warsi, co‑chair of the Conservative Party from 2010 to 2012 and a former minister in the Coalition government, said in a lecture that the Commission had a “disproportionate” focus on Muslim charities that made them feel under scrutiny all the time.23 This was unjustified, she said, referring to a reported statement by Tom Keatinge, director of the Royal United Services Institute’s Centre for Financial Crime and Security Studies, that “the abuse of UK charities in support of terrorism is negligible. The standards are very high and awareness amongst the big charities of this issue is intense.”24
The Commission’s own annual reports, Tackling Abuse and Mismanagement – later renamed Dealing with Wrongdoing and Harm – show that in the five years from 2012/13 the number of statutory inquiries relating to terrorism that were opened