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26 Jun 2006 : Column 60

Our constituency work gives many of us a useful insight into the situation in addition to any expert knowledge or experience that we may have, as has been illustrated in our debate. However, my hesitation arises from a experience with the Charity Commission that is not too far removed from that of the hon. Member for Cheltenham (Martin Horwood). During the Thatcher era, the commission listened to people on the right wing of politics who suggested that charities should be banned from campaigning and seeking changes to the law or the policies of Government. The hon. Member for Isle of Wight (Mr. Turner) tried to portray those people’s pernicious activity as being against illegal activity, but it was no such thing—it was outrageous. How can organisations such as the Alzheimer’s Society, to which the hon. Member for Cheltenham referred, NCH, Mind, Age Concern or even a local citizen’s advice bureau choose between providing a service to those whom they exist to help and arguing the case for those with no voice of their own? Those people were attempting to muzzle charities.

Of course, charities should not undertake party politics, but charitable judgments are inevitably also political judgments. That is why so many of us came from community and voluntary action into political action and why we MPs generally know where the line needs to be drawn. On that occasion, the commissioner, to his credit, listened to cross-party concerns, and the subsequent guidance made it clear that charities could campaign, but that such campaigning had to be undertaken in the context of an organisation’s charitable objectives. That guidance made all sorts of sense because it said that charities could campaign on the issues that they existed to promote.

Another example of common sense is the list of 12 specific charitable purposes, plus a catch-all, that is set out in the Bill. Again, the matter has been sensitive. I especially welcome the inclusion of animal welfare on the list because it is something for which I have long argued. There is always a danger of the reactionary argument that animals are not part of the public, but the way in which we treat those with which we share the planet has long been recognised as an important measure of our humanity and is thus a proper charitable purpose. The inclusion of animal welfare puts that beyond doubt in respect of charities. They, like schools and like organisations that are concerned with saving life, will have to show how they deliver the public benefit. However, the Bill is about the vehicle for providing public benefit, so it is a mistake to get bogged down in political detail in respect of public schools or any other political issue.

I hope that the Committee will grasp the issue of public benefit intelligently. Let us explore what those words mean and, from the debate on that, give clarity to the Charity Commission in developing the concept further, but let us also try to avoid being too prescriptive. The Scottish definition, which was mentioned by the hon. Member for Cheltenham, has some merit. It is a brave effort, but even it might turn out in the long term to be a straitjacket, and we must avoid such dangers, otherwise we will return to charitable legislation year after year, which would be a mistake.

Martin Horwood: I am grateful to the right hon. Gentleman, both for giving way and for comments he
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has made on matters about which we obviously agree, but I remain puzzled as to why including something such as the Scottish formula in the Bill would be any more prescriptive or confusing than having that in guidance from the Charity Commission.

Alun Michael: There are organisations, such as the National Council for Voluntary Organisations, that would like there to be something in the Bill but start to express concern as soon as a particular wording is looked at, including the Scottish wording. It is very difficult to change anything that is in primary legislation, but if there is a debate that looks into the concept of public benefit and develops the idea so that it is clear what Parliament means, and that idea is then developed further by the Charity Commission, we may be able to deliver the consensus that we all want, and to strengthen it.

I am coming to the conclusion that there is no a quick fix in terms of the wording, although I am sure that we will all applaud if the right words are found. Indeed, my right hon. Friend the Minister for the Cabinet Office indicated that if there is perfect wording, she will welcome that. However, it will be the worst of all possible worlds if we get the wrong wording and we are then trapped by that and do not have the flexibility to develop.

The other argument I would make is that the purpose of Government and Parliament must be to enable rather than to constrict. The issue under discussion affects not only the public sector and the responsibilities of Government, but the active engagement of citizens. We therefore need to be very careful, and the more flexible the definition, the better, provided that we all work on getting clarity and consensus in the delivery of the definition and what it means in practice.

In its briefing to Members last week, the Charity Commission indicated its willingness to listen to the debate and to engage with parliamentarians as they get on with the development of the guidance to which the hon. Member for Cheltenham referred. I suspect that that would be a very constructive way to proceed—saying neither, “No, we are not interested,” nor, that we must define too closely in law the nature of the public benefit test.

Having, over the years, set up a number of bodies such as those under discussion, I very much welcome the ending of dual registration as a charity and as a company limited by guarantee. That has worked, but it is not logical and charitable incorporation completes a range of options, along with the community interest company, which I had the pleasure of bringing into effect last year, and models such as industrial and provident societies. That will make much more sense for social and charitable entrepreneurs in the future, because they will be able to choose the model that best suits what they want to do, rather than having to constrain artificially the nature of their organisation.

As I said, my second point is to set this debate in the context of wider developments in the third sector. When I undertook the review of the Government’s relationship with the sector, I often referred to the voluntary and community sector as a loose and baggy monster. That is the term that Henry James used to
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describe the novel, but in my mind, when applied to the voluntary sector, it describes a friendly, creative and dynamic creature, and it indicates the impossibility of neatly defining a sector that includes major grant-giving trusts, major service providers, quirky specialist organisations, universities, museums, many of the types of organisations that have been referred to in the debate, and a whole host of local and even neighbourhood organisations. Indeed, the scope and variety of the sector leads to many people extrapolating from contact with one or two charities and thinking that they know it all. In truth, none of us knows it all; we never can, and we never will.

I suspect that that is a particular problem in Whitehall, where the language used is frequently wrong—and language does matter. All too often, the best intentions expressed in the wrong words give offence in a way that the speaker did not intend, as when John Major tried to woo the sector. The then Government did not spot that the “make a difference” initiative would immediately be reduced to an acronym by the machinery of government and become the “MAD initiative”. However, I am talking about much deeper language, usage and meaning. To communicate, it is necessary to understand the language of the listeners and what is behind the terminology in question. That is a big challenge to Government, and I know that my hon. Friend the Parliamentary Secretary takes it very seriously.

That challenge is even greater than before, as we now have a family of loose and baggy monsters. There is considerable engagement between the charitable and the wider voluntary and community sectors and the co-operative and mutual sector and the burgeoning social enterprise sector. The rapid development of that sector offers tremendous opportunities. Let us not forget that we are talking about businesses that have to achieve success in a competitive market, as well as to deliver in respect of the values on which they were established.

These sectors overlap in places, and the variety and energy are great. There is also engagement with the activity of volunteering—something that I regard as the “essential act of citizenship”, and which is not just a part of the voluntary sector but which contributes across the piece, including to the public sector. Indeed, it is important to realise that there is a link between these ideas, the development of the wider third sector of overlapping entities and the growth of corporate social responsibility—and even the ideas of enlightened shareholder value that we discussed recently in the Chamber in relation to the Company Law Reform Bill.

So in looking at the role of charities in the wider third sector, I warmly welcome three developments in particular. The first is the engagement between these sectors, in order to agree what they have in common and to develop a capacity to speak to Government with a single voice when appropriate. I stress the words “when appropriate” because such varied sectors have widely varied interests and agreeing where to agree cannot be allowed to be a substitute for a whole plethora of contacts and engagements with both national Government and local government across the whole piece. Having said that, the Third Sector Network’s statement of principles is enormously
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important in that it provides a position statement that is necessary for dialogue with Government and sets out the importance of independence, and the focus on social justice, diversity, dignity and respect and on issues such as participation and empowerment—again, a theme stressed by the Prime Minister only last week.

I will not go through the whole document, but it is important to recognise that sustainability is important and that accountability—a word that has come up time and again—is to wider humanity and to enduring values, rather than merely to the Government of the day. I hope to continue to play a part in nurturing a dialogue on this—I have had the privilege of taking part in some discussions—because it is good for all parts of the sector in question and good for Government that such discussion takes place. I pay tribute to the NCVO for nurturing the process, and to all the other players for coming to the table.

Secondly, it is in this context that I earlier welcomed the Chancellor’s initiative. Given the considerable overlap between different parts of the third sector and that the one thing they have in common is that they are driven by values, and given that the way that the Government treat them is often very significant, it is surely right to nurture a dialogue in pursuit of a level playing field where people can pursue their values through a business model or a charitable model, or an association or a partnership, or even through a company model as with the new community interest company.

Thirdly, the Prime Minister’s speech last week broke with tradition by starting a dialogue with both the wide third sector and business—together, and at the same time—on the nature and future of public service delivery. That really is joined-up thinking. I worry a little that some parts of Whitehall see the third sector merely as a vehicle for public service delivery. The sector does have a role in service delivery, and there is scope both for the sector to play a bigger role and for the sector itself to grow. But that is not the sector’s whole job and, in the case of many existing organisations, it is not “what they’re there for”. The Government must be sensitive to those differences, too.

I point back to the Thatcher era when the then Government failed to attract the private sector into the provision of social housing. In a panic, they sought instead to use the housing associations as a vehicle; that was like the friendly grip of a hungry boa constrictor. Many small organisations had to choose between very fast expansion, linked to a radical change in their ethos, or going out of existence altogether. Many were forced into being poor property developers and large-scale property managers, and lost their way. Later, many in the sector did find the way to combine values with that expanded role—it is now a mature and effective sector in its own right—but at the time, it was a case study for how government should not do things.

By contrast, new vehicles that are created and designed for a specific purpose can use the experience of charities in the third sector, while meeting the aspirations of government. We are seeing that with foundation hospitals, which have embraced principles of co-operation and community ownership. I pay tribute to my right hon. Friend the Member for
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Darlington for not only seeing, but seizing, that opportunity when he was Secretary of State for Health. I hope that the same will happen with trust schools, and in other fields such as regeneration and crime reduction.

My point is that if the Government want to offer new roles to the sector, it is vital to do so through a partnership approach from the very beginning of policy development, and certainly at the design and delivery stages. Charities might be able to take on such roles in their existing form—some of the bigger ones certainly can—but in other cases, it might be a question of working with the sector to create new types of vehicle, and of being sensitive to those differences. Ministers need to recognise that this might take time, and officials need to be encouraged to develop the capacity for partnership working. Shortcuts do not work: they are damaging to both sides and lead to tears. Just producing a policy document does not create a relationship. Capacity has to be built, and relationships have to be worked at. Policies have to reflect relationships, rather than setting down requirements.

This can be done and it can add value, but it is hard work and the relevant Government Departments have to work in new ways. Indeed, Ministers and officials have to be empowered to work in ways that break the mould, just as happened in the early days of the social exclusion unit, for example. Such things do happen in government, but for the future, they have to become the norm.

In many ways, I have already presented the evidence for my third point, on which I shall be extremely brief. I just want to warn the Government and Parliament—and certainly the Opposition—that this is always going to be hard work. Does Whitehall yet speak the language? I doubt it, and I share the concerns expressed by John Cridland of the CBI at last week’s conference. Supporting the charitable sector is not about paying lip service to motherhood and apple pie; rather, it is about hard work, engagement and dialogue. Indeed, it is more like the reality of motherhood and the job of baking an apple pie.

Most charities exist because individuals have invested in them an extraordinary amount of personal time, energy and creativity. Rarely has that happened because someone planned and costed the job in advance and calculated that it will work. Mature organisations do become more calculating—they use business techniques—and hurrah for that. But most third-sector organisations and certainly most charities—at national and local level—can trace their history to somebody who was like a bumble bee. Nobody told the bumble bee that, technically, it cannot fly, so it does. Charitable endeavour has always been about saying, “Something must be done”, and then setting out to achieve the impossible. That is why charity has to be nurtured, encouraged and believed in and its integrity protected. That is why the Government have been right to hasten slowly with this Bill, and to make sure that it is the right legislation for our times and for many years to come. That is why we must give it a warm welcome and debate the detail with great care, as well as with enthusiasm.

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6.13 pm

Mr. Andrew Mitchell (Sutton Coldfield) (Con): I am most grateful to be allowed to speak in this debate this afternoon, in view of Mr. Speaker’s ruling that members of the shadow Cabinet may not “moonlight”, so to speak, on issues from the Back Benches. I should explain to the House that I sat on the Joint Committee of both Houses set up to scrutinise this Bill in draft, and it is on that basis that I have sought to catch your eye this afternoon, Mr. Deputy Speaker.

Many Members in all parts of the House believe that the pre-legislative scrutiny process needs to be strengthened and used to a far greater extent, and the Joint Committee, which was chaired so ably by the right hon. Member for Darlington (Mr. Milburn), did a service to the House in terms of the quality of such scrutiny. I am, of course, referring—as he did—to the staff of the House who staffed that Committee and to the many experts who appeared before us, but also to the great expertise of the other place, which, in contributing to that Committee, underlined the advantage of the non-elected principle. I hope and believe that our Committee performed a very useful task, and some of that benefit is on display in today’s debate.

As I said, the right hon. Member for Darlington did a really excellent job in chairing the Joint Committee. He tried to put some minor distance between himself and the conclusions reached, on the ground that he went off to another—rather less laudable—job, but he missed only one meeting and his spirit certainly brooded as we reached our conclusions. He kept us facing in the right direction, and it is perfectly clear that he is ideally suited to being the next deputy leader of the Labour party. He knows that I have some modest experience of leadership elections—on the losing side, admittedly—but if there is anything that the Opposition can do to help him, he has only to pick up the telephone.

On the Government’s reaction to our Committee’s work, which is enshrined in the Bill, I congratulate them on accepting most of our recommendations. They deserve about seven and a half out of ten for their efforts today and I hope that, if they listen fair-mindedly to what has already been said in this debate and in another place, they will have done even better by the time that we reach Third Reading.

Given that this entire process was set in motion by the Prime Minister’s own strategy unit and progressed through a Joint Committee of both Houses, I was surprised to learn that the Government seem to have ignored a number of that Committee’s recommendations, particularly bearing it in mind that it was chaired by the right hon. Member for Darlington—a senior and well-respected former Cabinet Minister, Blairite and close confidante of No. 10. Perhaps the Government need to hear again today some of the arguments that they appear to have rejected.

The recommendations left out of the Bill that the Government have yet to see fit to include are relevant to both the charity sector and the British public, who are so generous with their support through donations not only of money, but of time and expertise. One of the most important points that our work on the Joint
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Committee reinforced was that Britain does have a charitable sector of which we should all be really proud. We have heard today from the Minister that there are more than 160,000 main charities on the Charity Commission’s register. That figure is growing by almost 2,000 a year, and that is not the only upward trend. Between 1998 and 2000, for example, employment in the charitable sector grew by almost 7 per cent., which is a faster rate than in both the public and private sectors. In 2005, the total annual income was almost £38 billion—equivalent to more than £600 for every man, woman and child in the UK.

However, people in Britain are as generous with their time as they are with their hard-earned cash. Home Office figures show that in 2003, more than 20 million people were involved in some kind of volunteering in the community, half of whom were involved in formal volunteering more frequently than once a month. Some 3 million volunteers do work for one or more registered charities, and such work is equal to 1.5 million whole-time equivalent jobs. It was estimated in 2000 that the value of unpaid work to charities was more than £15 billion a year.

Baroness Scotland has stated:

Those aims have been affirmed by the Minister today. However, the Joint Committee had some serious concerns that have not been addressed. The first was that smaller charities should not be overburdened with regulation, but should be encouraged in a climate that promotes philanthropy. Secondly, the independence of the Charity Commission and the charities sector should not be compromised. Thirdly, the new definitions of charities and the removal of the presumption of public benefit should not hit private schools, hospitals and religious groups the hardest. Last, but certainly not least, the Committee was concerned about the ludicrous proposal that excepted charity status should be abolished for armed services mess and sports’ non-public funds—a proposal that should be removed in its entirety from the Bill. It is the rejection of certain of the Joint Committee’s key recommendations covering those points that could prevent the Government from achieving all their stated and laudable aims.

I shall deal first with the independence of the charities sector generally. Among charities and the general public alike, there is growing disquiet that in Lord Dahrendorf’s words, the third sector has

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