BWB Partners Simon Steeden and Rosamund McCarthy have prepared a briefing in relation to proposed amendments to the EU Referendum Bill, which was debated in the House of Lords yesterday (23rd November 2015). See below for the full briefing.
EU Referendum Bill
Briefing - proposed amendment to the EU Referendum Bill, for debate 23 November:
“The Electoral Commission, in collaboration with the Charity Commission for England and Wales, the Charity Commission for Northern Ireland and the Office of the Scottish Regulator, must issue joint guidance confirming the principles that apply to the engagement of charities with the referendum.”
Overview: why this amendment is important
- The EU Referendum is essentially a single constituency vote and charities from across the UK should be able to engage equally with the referendum.
- There is disparity between existing guidance from charity regulatory bodies across different parts of the UK. However, the underlying charity law that regulates political campaigning is the same UK wide and there should not be cross-border disparity – a single set of rules will create a level playing field across the UK and provide clarity for charities registered with more than one of the UK charity regulators.
- The guidance should be based on the tried and tested model of the charity guidance for the Scottish Referendum – this was stress-tested in a closely contested campaign and facilitates engagement whilst ensuring that charities are still subject to strict rules to act prudently and independently.
The EU Referendum Bill clarifies the scope of the Political Parties, Elections and Referendums Act 2000 (PPERA) in the context of the upcoming EU Referendum. It also adds additional provisions to PPERA to regulate campaigning in respect of this important constitutional question. Ahead of the next stage of consideration of proposed amendments to the Bill in the House of Lords on Monday (23 November), this briefing explains the background context to an important amendment that has been lodged in relation to the Bill. The amendment is intended to ensure that charities are given clear regulatory guidance on the ways in which they can engage in the referendum campaign.
Charities are subject to strict rules on political activity, but are also under duties to further their charitable purposes, act prudently and assess and mitigate risks. In light of the cross-generational significance of the EU referendum, these duties may require an assessment of the impact of either outcome in the referendum on a charity’s objects, activities and beneficiaries. Where charity trustees reasonably believe that either possible outcome of the referendum could have a significant positive or negative impact on their ability to further their charitable purposes, they may properly decide to engage with the referendum campaign, provided they have taken account of associated risks. Particularly in certain charitable sub-sectors, it is possible that charity trustees will come to a reasoned and evidence-based conclusion that advocating a particular outcome in the referendum is an appropriate way to advance and protect their charitable objects. Already, Universities UK has taken this approach, demonstrating the perceived importance of the referendum in the higher education sector. We are aware of other charities which may wish to engage in the campaign in different capacities and with differing objectives.
Whilst it is a clear principle of charity law that charitable organisations may engage in campaigning in furtherance of their objects, providing they do not exist for political purposes and do not seek to support political parties or candidates, the guidance in this area is not currently consistent. The guidance for charities engaging with the Scottish independence referendum issued by the Office of the Scottish Charity Regulator (OCSR) is detailed and practical and clearly delineates the principles which apply to charitable engagement with that referendum. However, this guidance does not expressly apply to the EU referendum. In addition, the English and Welsh Charity Commission’s guidance on referendums (contained in its note “Charities, Elections and Referendums”) was produced several years ago and so is not sufficiently clear about the scope for charitable involvement in the EU referendum campaign. As a result, there are clear areas of difference in the approaches taken by the two regulators, which could helpfully be clarified by joint guidance:
Advocating an outcome in “exceptional cases”
Although the Charity Commission guidance recognises that “there may be some circumstances in which it is appropriate for a charity to set out the pros and cons of a yes or no vote for their beneficiaries” if the outcome of the referendum will have a particular impact for those beneficiaries, it states that “this is distinct from the charity actively campaigning for a ‘yes’ or ‘no’ vote.” The Commission suggests that in “exceptional cases” charities may consider that the outcome of a referendum is likely to directly affect, positively or negatively, the delivery of their charitable objects. However, the EU referendum is of cross-generational significance and could result in a constitutional settlement that will profoundly affect the ability of charities to advance their objects in a range of charitable sub-sectors, as is already clear from the intervention of Universities UK. In these circumstances, it would be helpful for joint guidance to make
clear, at a minimum, that this referendum constitutes an exceptional case in which charities may campaign for a particular outcome provide they satisfy the criteria of political independence and risk mitigation described in the OSCR guidance.
The charity’s objects being narrower than the referendum outcome
The Charity Commission guidance suggests that where charity’s objects are narrower than the potential outcome of the referendum, “there is a risk of the charity being engaged in party political or inappropriate political activity”. Clearly, it is likely that in every case the referendum will have wider impact than the charity’s objects. This should not prevent charities from campaigning for a particular outcome in the referendum, provided they can justify doing in terms of the anticipated direct impact of the referendum’s outcome on achievement of their own charitable purposes. There will be many examples of charities advocating changes to law or policy properly and in accordance with Charity Commission guidance despite such policy proposals having wider consequences than those the charity is seeking to achieve. A similar statement was removed from OSCR’s initial guidance on the Scottish referendum following criticism, leading to inconsistency between the two sets of guidance. This does not change the fact that trustees should take account of relevant risks in deciding to purse any particular course of action, which often would properly include consideration of the impact of any campaigning activity on the charity’s public support.
“Significant party political dimension” to the referendum
The Charity Commission guidance suggests that where there is a “significant party political dimension” to the referendum, advocating a particular outcome in the referendum could carry “a risk of the charity being engaged in party political or inappropriate political activity”. This raises uncertainties for charities in relation to a referendum that will see some divisions along party lines. The OSCR guidance in relation to the Scottish independence referendum helpfully made clear that “supporting a particular outcome in the independence referendum, where this support is clearly linked to the interests and purposes of the charity, is not, in itself, advancing a political party and is therefore not in breach of charity law”, a helpful clarification in the context of a campaign which say Scotland’s largest political parties all adopt strong corporate positions on the desirable outcome. A similar statement in relation to the EU referendum would provide trustees will helpful clarity.
The proposed amendment
The aim of the proposed amendment is to compel the bodies regulating charities in England, Scotland and Northern Ireland, together with the Electoral Commission, to issue joint guidance confirming the principles that govern charities’ engagement with the EU referendum and campaigning for one if its outcomes. Our concern is that without such guidance, there is scope for a lack of clarity and consistency between the more practical, positive, and facilitating OSCR guidance and the more limited and restrictive Charity Commission guidance to discourage charities from engaging together with wider civil society with a referendum debate that both sides agree to be of cross-generational importance. We are also concerned that charities which are registered with more than one of the UK charity regulators will find it difficult to understand the rules that will apply to them in this area if there is not common guidance from each of the regulators.
We note that these regulators have previously issued joint guidance in advance of recent elections (including the general election) in relation to the application of non-party campaigning rules to charities in all of the UK jurisdictions, reflecting the current absence of a statutory or common law justification for differences in the law applying to charitable activity in this area. In light of this precedent, we are hopeful that the regulators will be happy to endorse the proposed amendment, which may already reflect their intentions.
The amendment does not specify required content for the joint guidance, which would be left to the discretion of the regulators. However, we would argue that the guidance should be as reflective as possible of the guidance issued by OSCR in relation to the recent Scottish independence referendum, bearing in mind that this guidance is relatively detailed and practical, provides clarity in the particular areas noted above, and has been stress tested in a recent and closely contested referendum campaign.
Rob Wilson MP, the Minister for Civil Society, has stated that “it is important that charities can campaign to support their charitable purpose”. The proposed amendment is supportive of this principle, whilst also intended to ensure that charities across the UK can engage with this important constitutional debate on an even playing field, with reasonable clarity about the principles that will govern any such engagement. Recent Charity Commission guidance suggests that the Charity Commission will take account of whether or not trustees have followed best practice in any cases of potential breach of trust or duty. In this context, clarity is essential.
Posted on 24/11/2015 in Legal UpdatesBack to Knowledge