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“private charity is no substitute for organised justice.”—[ Official Report, 15 March 2006; Vol. 443, c. 1541.]
That sentiment is now thankfully rare and the value of the voluntary sector as a deliverer of services, an innovator and a social entrepreneur is recognised and celebrated across the political spectrum.
Indeed, the Government’s confidence in community organisations as deliverers of change, in relation to foundation hospitals and trust schools, has sometimes found more support on the Conservative Benches than on the Government Benches. None the less, I welcome the Prime Minister’s announcement last week that there is no longer an ideological barrier to involving the private and voluntary sectors in the delivery of public services. Perhaps, as Steve Bubb, the chief executive of the Association of Chief Executives of Voluntary Organisations, told the Financial Times on Friday,
“things are finally beginning to move”
after repeated pledges since 2000, but limited action. Like him, we will believe it when we see it. The Financial Times said:
“Tony Blair announced a review of the procurement and supply of community equipment worth £200 million a year. This included everything from wheelchairs to the provision of aids needed to keep people out of care homes and to get them out of, or prevent them from entering, hospital.
“Big organisations including the Royal National Institute for the Deaf and Royal National Institute for the Blind and the Red Cross will be involved in the review and will be encouraged to bid for the revamped service that will result.”
I am underwhelmed. Out of an NHS budget of £75 billion, the Prime Minister is able to find £200 million-worth of work for the charity sector. I have news for him: in my constituency, the Red Cross already has that sort of contract. He will have to do better than that to turn his good intentions into reality.
Tom Levitt:
I was present at the conference at which the Prime Minister gave his speech on Thursday, as was the Parliamentary Secretary, my hon. Friend the Member for Doncaster, North (Edward Miliband). The Prime Minister’s announcements, of which that was
one example—we are talking about something that is in addition to the valuable work that the voluntary sector already does in the health service—were widely welcomed not just by people from the third sector and the voluntary sector, but by everyone at that conference, including partners in the private sector and the local government sector. It was a good conference with a positive outcome that will take us forward in a way that the hon. Gentleman’s Government never managed to do in the past.
Mr. Turner: Of course, we all welcome the sentiment. The question is how long it will take the Prime Minister to implement sentiments that he expressed in 2000.
It is right for the Government to see the third sector as an alternative provider of public services, but they must realise three things. If a charity is commissioned to deliver a service, it must be able to decide how. Voluntary organisations work so well because, as the Chancellor of the Duchy of Lancaster said, their independence leaves them free to innovate. If Governments—national or local, of whatever political colour—prescribe how the service should be provided, the hard-won expertise of those charities will be wasted and the contract will not be delivered as well as could have been the case. If one sets up a national or regional contract—perhaps that is what the Prime Minister intends for home-care appliances—one loses the local autonomy and local commitment, and probably the local fundraising, which add love and care to contract delivery.
If we demand that voluntary organisations meet the Government’s objectives too closely, we may find, as the National Council for Voluntary Organisations suggested in its discussion paper in 2001, that each
“may be perceived as little more than an agent of the state.”
It is essential that charities are not too restricted so that the public continue to trust them. Furthermore, we have known for years that too many Government contracts with charities and voluntary organisations last only a single year. Funding often arrives late from Departments. If a contract is too short, long-term planning is impossible and organisations cannot take the risk of investing for the future. Indeed, they sometimes have to divert other income to keep the contract afloat. Staff become uncertain about the future and thus look for new jobs, and delivery declines and the vulnerable suffer.
Meg Hillier: The hon. Gentleman is being dismissive of the important step that the Prime Minister announced. I speak as someone who saw one relative die while waiting for a wheelchair to be provided by a private company on contract, while another waited six months. In the meantime, it was the voluntary sector that provided. The view of the Prime Minister and the Government that such things should be provided properly and well through a good contract with the voluntary sector is the right step forward.
Mr. Turner: The hon. Lady is absolutely right. I have no dispute with that at all.
Tom Levitt: The hon. Gentleman should read the Prime Minister’s speech of last Thursday in which he identified the problem of short-term funding. We are addressing that through the way in which local authorities and others are funded, and it should also be addressed through the way in which the voluntary sector is funded. Is the hon. Gentleman aware that the sector is a partner in the delivery of services? The nightmare scenario that he described will not happen in a proper partnership in which the views of different sides are respected. If the partnership cannot agree how the services should be delivered, there simply will not be a partnership, but we will not see the nightmare about which he talks.
Mr. Turner: I am not sure that I was talking about any kind of nightmare at all. I was saying that there is a great opportunity for the voluntary and charity sectors.
The problem is that seven out of 13 Departments still do not even keep records of whether funding is agreed before the beginning of the financial year, or of whether their contracts run for more than one year, despite the advice of the Public Accounts Committee. Of those Departments that kept records, the Northern Ireland Office was best—I congratulate it on that—but the Home Office, which was the sponsoring Department for the voluntary sector, was worst.
The Bill is important for the charity sector and the people and purposes that that sector serves. It has already been thoroughly scrutinised. It was one of the first Bills to be subject to pre-legislative scrutiny and it has twice been rigorously examined in another place. However, several provisions remain that will need to be debated and, perhaps, amended in Committee if the Bill is to allow the sector to meet its potential.
The most contentious matter is clearly the public benefit test. Since the 17th century—and in codified form since 1891—there has been a requirement to demonstrate public benefit for most charitable purposes. However, as the Minister said, there has been a presumption of public benefit for the relief of poverty, the advancement of religion and the advancement of education. The Bill will abolish that presumption, so any organisation with a charitable purpose will have to demonstrate a public benefit. The Bill provides for a tortuous and near-incomprehensible formula. Ministers have reassured Parliament that although that will mean that our case law will be allowed to develop, the public benefit test will remain unchanged.
Three groups seem to want to the public benefit test to become more onerous. The first is represented by the Charity Commission, the NCVO and, rather surprisingly, the British Red Cross. The second is a group of lawyers and others who think that although the law on charities has never been the same in England as in Scotland, there should be a post-devolution situation in which Scotland drives England. I was grateful to the Minister for pointing out the objective that the three legal systems should be compatible, but not identical. The third group is the few Government Back Benchers who are chaffing at their failure to maintain the iron grip of mediocrity on Britain’s state schools, with the support, for some reason, of the illiberal democrats to my left. Their motive is essentially to strike down independent schools, which
have shown that pupils can get a better education than they could have done from the state. They ignore the damage done to voluntary hospitals and to charitable retirement homes. They do not seem to have thought of the effect on universities, all of which have always charged fees.
David Taylor: I thank the hon. Gentleman for releasing his iron grip on what is a mediocre speech. Can he say whether Her Majesty’s Opposition are likely to support a wholly admirable and worthwhile amendment that is due to be tabled and that would prevent organisations that charge unduly excessive fees from being granted charitable status?
Mr. Turner: In my speech, which the hon. Gentleman kindly described as mediocre, I was about to say that we will support the Government in voting down proposals for a more onerous public benefit test. I prefer—
David Lepper (Brighton, Pavilion) (Lab/Co-op): I take the hon. Gentleman back to a comment he made a few moments ago. I paused before intervening because I wanted to think about what he said. Did he really mean to say that most state education is mediocre, or did I mishear him?
Mr. Turner: I can assure the hon. Gentleman that he did not hear those words.
I prefer to look at the presumption of public benefit from another direction. Its abolition will create extra work for the Charity Commission and impose a greater bureaucratic burden on charities. If they have to divert resources toward demonstrating public benefit, that will reduce the amount of good that they are able to do.
Daniel Kawczynski: My hon. Friend mentioned that private schools will be affected. He will know that one of the best private schools in the country—Shrewsbury—is in my constituency. It does a lot for charity and is very good for the community in Shrewsbury. These plans will affect it, and I am worried about the impact on it of the extra bureaucracy involved in meeting these requirements.
Mr. Turner: I am concerned about the impact on schools such as Shrewsbury, but I must say that I am far more concerned about the impact on small and much less expensive independent schools that benefit from charitable status and fulfil a public benefit by providing education.
I find it inconceivable that a charity whose objective is the relief of poverty would not, prima facie, be providing a public benefit. Can any Member suggest that a trust for the relief of poverty would not be providing such a benefit? [ Interruption. ] The Minister for the Cabinet Office says “No”, but money spent on proving that what is provided is a public benefit, or on adjudicating on that question, is surely money wasted.
Secondly, removing that presumption from organisations for the advancement of religion is absurd and opens up a huge debate about whether religious activities have a
public benefit. I am talking not about the activities that flow from religion, as most of them are covered by other charitable purposes, but about directly religious activities such as prayer and moral leadership.
Martin Horwood: Am I right in thinking that the hon. Gentleman is therefore retreating even from the position of his noble Friends in another place? They said that “all charities” should
“have to meet a public benefit test, no matter what their purposes are”.—[ Official Report, House of Lords, 28 June 2005; Vol. 673, c. 154.]
That is the view of the Conservative party in the House of Lords, which is hardly the most progressive of organisations.
Mr. Turner: I am asking Ministers, either now or in Committee, to justify requiring organisations for the relief of poverty to spend time and money demonstrating that they provide a public benefit.
Mr. Turner: I will give way to the right hon. Lady.
Hilary Armstrong: I think that the hon. Gentleman has misunderstood the Bill. He is absolutely right in saying that a presumption has been removed, but there has always been the view that public benefit ought to be able to be demonstrated. Every organisation is now expected, as it registers, to publish information annually, so that the public know what it is doing, what its objectives are and how it is fulfilling them, and how it is raising money. Most organisations also want to tell the public what they are spending that money on, and that they are not spending it mainly on administration. I do not believe that individual organisations will face any additional costs if they are already seeking to inform the public properly. One of the purposes of the Bill is to maintain public confidence in the charitable sector, and the only way to do that—
Mr. Deputy Speaker (Sir Michael Lord): Order. The right hon. Lady has made her point.
Mr. Turner: I am grateful to the right hon. Lady for having attempted to explain a difficult point. I would like to know the justification for organisations for the relief of poverty spending money on demonstrating that what they do is not only charitable—that is, it falls within the definition of charitable purposes—but for public benefit.
Alun Michael: Does the hon. Gentleman accept that even if the presumption remains, such organisations ought to show how they are producing value for the public benefit? Will he turn his eyes to the fourth of the categories of charitable purpose in the Bill, which is
“the advancement of health or the saving of lives”?
Is it not sensible to establish a level playing field whereby all organisations are subject to the same light regime—not a heavy bureaucratic one—and the same requirements?
Mr. Turner: I do not think that it is possible to come up with an example of an organisation for the relief of poverty that is not conferring a public benefit. I shall talk about the fourth category of charitable purpose, but first I want to finish my point on religion.
Can any hon. Member say what it is in religious activity that confers an identifiable public benefit—the words used by the Minister for the Cabinet Office? I am talking not about the relief of poverty, which is ancillary to much religious activity, but about religious activities such as prayer and moral leadership. How is an organisation to go about demonstrating the public benefit of prayer, which is work for the advancement of religion? How does one demonstrate objectively that prayer offers a public benefit? It may in fact be extremely difficult to prove that the work of an organisation for the advancement of religion is for public benefit, and our fear is that the way will be opened to interminable disputes, which will be no more than a job creation scheme for lawyers and the Charity Commission.
Finally, who can argue that education is not for public benefit?
Meg Hillier: In my constituency, there are many groups of different faiths, and it would be hard for me to find a single one that did not provide some demonstrable public good other than moral leadership and prayer, to which the hon. Gentleman referred. If I would find that hard in my multicultural, multi-faith constituency, I suspect that that would be true in other parts of the country.
Mr. Turner: That is precisely the point that I was trying—clearly unsuccessfully—to make. The good, other than prayer and moral leadership, is covered by other charitable purposes. The Bill requires a religious organisation, if it is claiming charitable status only under clause 2(2)(c), to demonstrate that the religious activity itself—the prayer and moral leadership—gives a public benefit. I am at a loss to see how one demonstrates the public benefit of prayer.
Martin Horwood: It seems to me to be fairly demonstrable that if a large number of people take comfort from prayer—they can be asked whether it comforts them—that is a public benefit. However, my question is on the relief of poverty. The hon. Gentleman said that he could not imagine an organisation for the relief of poverty being challenged on whether it is in the public benefit, but I remember that when I worked for Oxfam in the 1990s, large numbers of Conservative Members fairly frequently challenged Oxfam and other voluntary organisations on whether what they were doing was in the public benefit. Does the hon. Gentleman wish to return to that situation?
Mr. Turner: The hon. Gentleman fails to recall what was happening at that time. Challenges were put to some charities that they were campaigning politically, not that they were failing to confer a public benefit. The challenge was that they were also unlawfully campaigning using charity money. Some people have changed their views on that.
Who can argue that education is not for public benefit? The principal argument for education being provided at the taxpayers’ expense is that it is in everyone’s interest that we have a better educated nation. The Chancellor of the Exchequer argues that we should extend free education across the developing world, presumably for the same reason. How can it be argued that education that people pay for—those who can afford to do so—is of less benefit than other benefits? In all of these instances the Bill moves the onus. No longer will the Charity Commission have to show that an existing charity is not for public benefit. In future, each charity will have to show that it is for public benefit, making some charities that have lasted for hundreds of years guilty until proven innocent. Just in case anyone advances the argument that an individual charity may not be as beneficial as it should be, I remind the House that the removal of the presumption is merely that.
The Parliamentary Secretary, Cabinet Office (Edward Miliband): I am grateful to the hon. Gentleman for giving way during his extraordinary speech. Does he agree with the principle that all institutions that benefit from the taxpayer through charitable status should have to demonstrate public benefit? That is the principle that is at the heart of the Bill. I thought that that principle commanded consensus in the House.
Mr. Turner: There are two answers to that. First, since 1891 that has not been the case. That was codified at that time. Secondly, I think that it was Gladstone who thought that tax relief was public expenditure. I do not share that view. Tax relief is people keeping their own money, not the state spending money.
Edward Miliband: I do not want to get into an argument with the hon. Gentleman about tax versus public expenditure and the distinction. There is no question that a more beneficial tax regime that is available for those organisations that have charitable status is beneficial, and it represents a loss to the Exchequer. I ask the hon. Gentleman a simple question, as he speaks for the official Opposition on these matters. Does he agree with the principle that all institutions that benefit in this way should have to demonstrate public benefit? We on the Government Benches do and, I think, so do the Liberal Democrats.
Mr. Turner: We must balance the benefit that comes from demonstrating that against the loss to charities and the cost to the Charity Commission of so doing. I believe that there will be additional bureaucracy and uncertainty loaded on to charities as a result of what is proposed.
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