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In other words, the level of charges did not matter. He goes on to justify that by saying that the judgment
“results from the relief to the beds and the medical staff of the general hospital”—
in other words, the saving from the public purse. Therefore, I urge Ministers that, if we are to meet the test set by my right hon. Friend, that the Bill should make a difference, we need to heed the words of the Charity Commission and the NCVO, not old-style class warriors, and look for further clarification in the Bill.
My right hon. Friend and the Joint Committee went much further in one of their musings than I would choose to do and said:
“Nonetheless we believe that the Government should consider reviewing the charitable status of independent schools and hospitals with a view to considering whether the best long term solution might lie in those organisations ceasing to be charities but receiving favourable tax treatment in exchange for clear demonstration of quantified public benefits.”
I would not go that far, but I urge Ministers to look at the question of the application of the public benefit test.
Perhaps my right hon. Friend was reacting to some of the evidence before the Committee. A former public school headmaster, Dr. Anthony Seldon, said:
“There are two very different kinds of independent school.”
I think that he is right. There are what
he characterised as the small minority: what my right hon. Friend
referred to as up to 50 per cent. of private schools,
according to figures from the Independent Schools Council. Dr. Seldon
referred to
“the small minority which are very wealthy which are doing extremely nicely...and which...I do not think are very innovative. They look after themselves and they pay lip service to odd charitable things, but they are a self-perpetuating oligarchy and...they have great wealth, and I think they should be doing much more”.
That is the voice of someone with knowledge of the private sector.
We are talking about £100 million of public money. We are talking about giving 80 per cent. relief on uniform business rates; tax relief on bank deposits and income from investments; the ability to claim back tax paid by benefactors; and exemption from VAT payments on fees—not inconsiderable matters. This test should be a rigorous test.
There are two possible scenarios. I hope that my neighbour, my hon. Friend the Parliamentary Secretary, will listen to the debate and the moderate voices of the NCVO, the Charity Commission and his many friends on the Labour Back Benches who wish him well in his future career, and consider adding to the Bill with regard to the application of public benefit. If he does that, he could create a progressive consensus in the House. Not only those on the Government Benches, but in this instance at least the Liberal Democrats may well be part of that progressive consensus, and we could be faced with a Conservative party which, remarkably today, is to the right of the Independent Schools Council in that it insists that the public benefit test should not apply to private schools. That is a remarkable position. I do not think that the right hon. Member for Witney (Mr. Cameron) has noticed this, and that position may well change by Third Reading. Even so, I think that the Conservative Opposition would oppose such an amendment. Such a progressive consensus could be created. The alternative is probably for an amendment in line with the wishes of NCVO and the Charity Commission to be moved, perhaps from the Government or the Liberal Democrat Benches. Then we would have the unedifying spectacle of those on the Government Benches being divided on the issue. If the renewal of the Government was one of my central concerns, I know which of those two political scenarios I would be aiming for.
5.7 pm
Tom Levitt (High Peak) (Lab): It is always a pleasure to follow my hon. Friend the Member for Selby (Mr. Grogan). We have many interests in common; unfortunately, class war is not one of them, so I will return later to see where we disagree on the issue of public benefit.
I rise
as the chair of the all party group on the community and voluntary
sector, a Home Office-appointed chair of the Community Development
Foundation, and a former trustee of a major national charity, to
welcome the Bill, which has had more than its fair share of scrutiny
over quite a long time, as a number of hon. Members have said. But it
is a little rich to hear protestations from Opposition Members about
the time that the Bill has taken. They will recall that before the 2005
general election, the Bill was one of those that the Opposition was
asked to co-operate with in order to give it a fair wind to complete
its
parliamentary stages before that election, on the ground that it was
relatively uncontroversial. They declined, and that was their right as
an Opposition, but that meant that the process had to start again. That
is why it is now some six years since the strategy unit report was
commissioned to consider the relationship with the voluntary sector in
its wider sense. That is why it has taken six years for us to reach
this point. Clearly, we are now approaching the end of the process, and
I am sure that we will come out with a Bill that we will all be pleased
to work with and see
implemented.
As my right hon. Friend the Member for Darlington (Mr. Milburn) has said—I think that I have read the same report as him—the public strongly support the work of the voluntary sector. For example, 88 per cent. of people believe that charities are well managed and spend their funds wisely, while 84 per cent. of people claim that they have implicit trust in the activities of the best known charities.
The public misunderstand some aspects of the sector. My right hon. Friend the Member for Darlington has referred to the statistic that while 97 per cent. of people know that Oxfam is a charity, only 15 per cent. of people know that Tate Modern is a charity. The Charity Commission report also states that 90 per cent. of people say that they have received no assistance or advice from a charity, although 75 per cent. of them actually have received assistance or advice. I suspect that that is because people have received what they regard as professional and sound advice, which they do not believe could come from a charity.
Mr. John Gummer (Suffolk, Coastal) (Con): In discussing the public perception of charities, does the hon. Gentleman agree that there will always be some charities which do very good work in unpopular circumstances? Examples include charities that work with certain categories of prisoner and small religious groups of which we may not approve but which contribute in their own way. It is important to recognise that the charity field covers unpopular areas as well as popular areas.
Tom Levitt: The right hon. Gentleman is absolutely right, which is why it is important that there are organisations such as the Big Lottery Fund to make objective decisions rather than simply giving the most money to, for example, the organisation that gets the most votes on a television programme. There has to be public input, but equally funds must be distributed rationally and objectively. Those who are in receipt of services provided by the voluntary sector are impressed by its work, and it enjoys very high levels of esteem and confidence.
I have one slight reservation about the title of the Bill, because I had hoped that we could move on from the word “charity” and deal with issues in terms of the wider sector. I have come across elderly constituents in High Peak who have told me that they are aware of pension credit but will not claim it, despite being in poverty, because “I don’t want charity.” There is still the Victorian idea of charity being a handout rather than a leg-up, but charities and voluntary sector organisations enhance people’s capacity to deal with their own lives and give people a leg-up rather than a handout.
Communities in which the voluntary sector is healthy are themselves healthy communities, and we can judge how healthy and effective a community is by the activities of the voluntary sector within it. I shall provide three examples of how different voluntary sector organisations in my constituency have changed in the past 10 years.
Ten years ago, I was on the management committee of my local citizens advice bureau, a modest organisation in Buxton which delivered advice and which was known for being well meaning. However, access was limited, and the advice was made available to those who knew where the CAB was, who knew how to access it and who could understand the advice when it was given. That organisation has changed in the past 10 years: it is still a voluntary organisation and its principal function is still to provide advice through highly trained volunteers, but it has a professional local leadership, a professional way of working, two fully equipped offices and a sub-office and a contract with the Legal Services Commission to deliver legal aid. It is a much bigger organisation than it was, and many of the volunteers have developed specialist areas in which they advise their clients.
The information and advice provided by Citizens Advice can be accessed by us all through its excellent website, so one does not have to go to an office. It has done something tremendous in my constituency: in partnership with the PCT, it provides a volunteer adviser once a week in every GP surgery in the rural area in my constituency, which has led to some £2 million in previously unclaimed benefits going into people’s pockets in the past two years. Those people are getting their entitlement because a voluntary organisation dedicated to the public benefit has delivered, which is why I was upset when the Conservative and Liberal High Peak borough council decided to freeze its funding for the CAB this year. It took people like me—I swam 100 lengths of Buxton swimming pool to raise £1,700—to make sure that my local CAB was not in deficit this year.
My second example concerns the council for voluntary service in High Peak, which did not exist 10 years ago—my constituency comprises 650 sq m of territory where 75,000 adults live, but there was no co-ordinating body for the voluntary sector. Nowadays, the council for voluntary service is a professionally led organisation which is the main source of advice for voluntary organisations. It provides physical resources, such as office facilities and meeting facilities, and access to funding, and it is an incredible source of training for people who are setting up their own voluntary sector organisations and charities or working in their communities. Through the council for voluntary service, the voluntary sector is well represented on the local strategic partnership between local authorities and other service providers in my area. The council for voluntary service provides an invaluable service, and it has the respect of other public services with which it works to provide rounded, comprehensive, holistic and personally focused services. It is a wonderful example of the sector flourishing and helping people by delivering a public benefit, and I wish that more local strategic partnerships around the country treated the voluntary sector with the importance that it receives in my constituency.
My third example of a local organisation concerns the Nepal Children’s Trust. My constituency does not stretch as far as Nepal, but before I visited that country a few weeks ago, I was contacted by the trust, which began with four ladies in the New Mills area in my constituency. One of those ladies went on holiday to Nepal, where she saw the problems that children were having in one of the world’s poorest countries and decided to do something about it. She has built up a network of a few dozen people around the country who not only engage in fundraising, but go over to Nepal to make sure that schools are built, that the children of prisoners get the support that they need and that children’s human rights are upheld. The trust is doing excellent work, and it is a lovely example of how a group of people with a conscience and a sense of purpose can set up their own charitable organisation and make a difference.
All those organisations will welcome the Bill—for example, if the children’s trust is one of the smaller organisations, it will no longer be required to register. The organisations that I have mentioned are a long way from the traditional image of charities, which was, if hon. Ladies will forgive me, of members of the blue rinse brigade with their collecting boxes. In the past, too many of those people saw volunteering as an end in itself. Volunteering is a vital part of the way in which a community operates, but it is not an end in itself—there must be a purpose. One organisation—I could name it but I will not—was asked to deliver a different service that was better for its recipients, but withdrew from it because the volunteers did not like change.
We can see the same changes happening on a national level. For example, Leonard Cheshire now delivers most of its services on contract to local authorities. Its residential homes are no longer the independent organisations that they were. It is providing an essential part of delivering care but at the same time ensuring that its users are much more closely involved in the delivery of services, and the shape and nature of those services. It has become a membership organisation in order to become more accountable. The Royal National Institute for Deaf People has also taken that step. More than one Member has mentioned its tremendous pioneering work—at a time when I was one of its trustees, although I take no credit for it—in joining up as partners with the Department of Health and delivering a £100 million programme to bring in digital hearing aids on the NHS for the first time. It was able to do that because of its professional approach and because of the economies of scale involved. It was able to use its power and size to get the best possible financial deal on the purchase of those hearing aids, which, as my right hon. Friend the Member for Darlington said, have made a real difference to the lives of millions of people.
Another
national example is that of last year’s Make Poverty History
operation, which involved the coming together of a huge coalition of
groups, some of which have their priorities in far-distant countries
and work according to their consciences on behalf of people around the
world who are worse off than ourselves. Many groups have taken on that
initiative and made it into a practical commitment. Two towns
in my
constituency are on the verge of acquiring Fair Trade status. They have
achieved that because over the past few years voluntary organisations
have grown up and worked with local authorities, caterers and all sorts
of other organisations to build a coalition of voluntary sector,
private sector and public sector interests that are backing the Fair
Trade cause. The initiative was created by the voluntary sector in a
way that will produce long-term benefit for us all.
I was fascinated to read in today’s newspapers about the largest ever donation to charity. A 75-year-old American gentleman by the name of Warren Buffett has just given more than three quarters of his $44 billion fortune—about $35 billion—to the Bill Gates Foundation, which is, according to The Times,
“the world’s largest philanthropic organisation”
“funds the international fight against diseases such as malaria, Aids and tuberculosis.”
Mr. Buffett justified his actions thus:
“What can be more logical, in whatever you want done, than finding someone better equipped than you are to do it? That is how I feel about this decision about my money.”
Any donation of that nature sets an excellent example—it does not have to involve billions of dollars, which most of do not have.
Martin Horwood: I thank the hon. Gentleman for sharing with us the breadth of his expertise in the voluntary sector. He is right to draw attention to the principle that Warren Buffett has so generously espoused. Does he agree that it might even apply to much smaller charities, which are often registered by the Charity Commission but which might in some circumstances be better off as fundraisers for larger and better established charities, as they have fewer overheads and administrative burdens?
Tom Levitt: The hon. Gentleman makes a good point. I am sure that for some small charities that is the right way to go, although I would not include the Nepal Children’s Trust, which was delivering on a very specific aim. However, this debate is not about telling the voluntary sector what to do but about giving it its head and finding out what works. They may well coalesce, by a process of organic growth, into being fundraisers for larger bodies as the most practical way of achieving what they set out to do, but that is for them to discover for themselves.
There was
a time when we could talk about the public sector, the private sector
and the voluntary sector as three points of a triangle, but today they
are three points on a circle, with every sort of organisation in
between. In any ward in the constituency of any hon. Member here
tonight, we will probably see a plethora of voluntary sector
organisations. In one of my local wards, an active residents’
association elects representatives to the arm’s length
management organisation that looks after their social housing.
We would also find housing associations, the neighbourhood watch,
various sports groups, older people’s groups, local history
groups, and guides and scouts. Tomorrow, I will be pleased to welcome
the
retiring commissioner of the Pennine guides as my guest at the older
volunteer of the year awards, here in the House.
The University of the Third Age is a huge organisation in my constituency. We also have the furniture project. This weekend, I asked the people at that organisation whether it was still a charity—a voluntary organisation—or had become a social enterprise. It collects second-hand furniture and trains people to repair and build furniture and to recycle furnishing materials. It is an accredited training organisation and a not-for-profit company, and in just a few years it has earned the title of a social enterprise. We will find community transport and volunteer car schemes, branches of large organisations such as Amnesty International and Friends of the Earth, and groups such as the one that I spoke to this morning—the local domestic abuse reduction partnership. All those organisations are dedicated to the public benefit of improving the communities in which they work.
That is not to mention the trade unions, which represent public benefit in the workplace, and political parties. If those of us in political parties are not here in order to promote the public benefit, then what are we here for? Although it is not a matter for this debate, I hope that we will seriously consider the possibility of casting political parties in the same mould as voluntary sector organisations and charities as regards their treatment for tax purposes. That would be one way of stimulating a healthy democracy.
The issue that took up much of the time in the Lords, as it has today, is that of public benefit. I am pleased that the Bill tightens the definition of public benefit, not least by abolishing the presumption that certain organisations automatically qualify for charitable status because they are involved in education, for example. Nevertheless, it is important that we allow for the necessary flexibility and do not tie ourselves down by agreeing on a definition that tries to anticipate all future examples of where public benefit may or may not be demonstrated.
Many charitable organisations have commercial arms. An educational charity should not be banned from having a commercial arm attached to it, as long as the public benefit can be demonstrated by the charitable part of the organisation. I feel the same as some of my Back-Bench colleagues about the ethos of independent and fee-paying private education. I believe that the best way of ensuring that we have no need for it is to make the state sector so good that people will not want to pay. However, it is a fact of life that such schools and institutions exist. Some of them are special schools providing services that are not provided in the state sector. Those organisations should not have their credibility drawn into question when the public are paying those fees through sending children to use their facilities.
As I
mentioned in an earlier intervention, we are now seeing a growing
tendency of independent schools to make their facilities—their
drama halls, sports equipment, field study facilities—and their
time, in the sense of sixth-form preparation, pre-university courses
and so forth, available to state sector schools that have not been
fortunate enough to provide the same facilities. I believe that those
are good partnerships.
Schools in the state sector do not receive any benefit from some
teachers who were trained in that sector, so let us build a
relationship with those teachers, even though they are working in the
independent sector. If facilities benefit only some children, let us
make them available to all children by developing partnerships with
independent schools. I do not believe that a provision to deprive
independent schools of only 4.5 per cent. of their total
income will be for the wider public benefit when we can already see the
tendency for more of their facilities being made available to more
children— [Interruption.] I note that my hon. Friend the
Member for Selby (Mr. Grogan) is itching to
intervene.
Mr. Grogan: I thank my hon. Friend for giving way, but does he accept that an amendment to deal with unduly restrictive charges would not require the removal of charitable status from all public schools, but only that they justify such status? Any schools carrying out the magnificent things that my hon. Friend describes would clearly pass the test, but why should those refusing to share any facilities or to offer any bursaries necessarily be given charitable status?
Tom Levitt: I am confident that the latter sort of school that my hon. Friend describes would not be able to demonstrate any public benefit, so it would not be entitled to charitable status, but I hope that the Bill will encourage schools to go down the former route and make their facilities and bursaries available.
I should like to put a few questions to Ministers on the issue of fundraising and its regulation. It is claimed that the Bill will reduce the burden of legislation and bureaucracy on local authorities, but it seems to me that it does so partly by increasing the burden on the Charity Commission through the issuing and administration of public collection certificates, which have to be renewed every five years—a task currently carried out by local authorities. Of course it makes sense for a national organisation to have a national public collection certificate, once it has been granted, but the question remains whether the Charity Commission has the capacity to deal with it and, secondly, whether it is really removes all the burdens from local authorities. The question of when a street collection takes place would have to be administered by the local authority, as, presumably, would enforcement of the regulations pertaining to public collection certificates. Co-ordination remains the local authority role and the issuing of permits for street collections could be just as burdensome on local authorities as it is now.
I was initially concerned that the legislation did not establish the imperative need for those involved in door-to-door collections to carry appropriate identity cards, but I now believe that it does. It is very important to reassure people on the doorstep that the person they are talking to is who they say they are and working on behalf of the organisation for which they are collecting. Members do not need me to explain that any further.
The need for
ID cards is established in clause 63, but who ensures that the people
have the correct identity cards, adopting the correct style and
containing the correct information? Who ensures that the identity is
somehow authenticated? I cannot believe that it is a job for the Charity
Commission to ensure that every identity card is produced in the
correct way, so I presume that it remains an inspection role for the
local authority to carry out. In view of such concerns about
door-to-door collections, safety and the possibilities for crime or
abuse, it is important for us to seek some reassurances in
Committee.
To conclude, every Member has his or her own knowledge of the value of the charitable and voluntary sector in their constituencies. They know that the sector can see what is wrong with service delivery and feed back on it. The sector is capable of some smashing examples of innovation and it can be less bureaucratic than the public sector, while certainly personalising services more effectively. In many ways, it can provide a better quality of service, if that is what is needed. We look to the sector to be a voice—not necessarily the only voice, but a voice—of public service users. We look to the sector to be a partner—not a junior partner, but an equal partner—in delivering those services and we see it as a viable and respected sector in its own right.
As a Government, we need to build real partnerships with the charitable and voluntary sector. We need to strengthen the compact and commit ourselves, for example, to longer-term funding streams and full-cost recovery in all dealings with the sector. The Bill provides the framework to liberate the sector, to elevate it and to empower it. It deserves our support and I am sure that it will receive it.
7.26 pm
Ms Celia Barlow (Hove) (Lab): A charity is an organisation that serves the public good and an institution that benefits people. Apart from the very necessary legal and regulatory questions, we should ask ourselves today how we can ensure that our charities can best function in the interest of those people. That is what I would like to speak about today.
Charities can serve many purposes, and one of this admirable Bill’s main accomplishments is that clause 2 gives a clear statutory definition of charitable causes, thereby updating the law. One purpose can be, as mentioned in subsection (2), providing relief to the elderly and saving lives. I would like to refer to one recent example from my Hove constituency of the closure of a care home that was owned by a charitable trust. It provides a telling example of a local charity not acting in the interests of its immediate beneficiaries and we will see how the problem could be rectified by the Bill and what questions still remain.
Before I come to that, however, I would like to say that I welcome the Bill, as many Members have today. It was a Labour Party manifesto commitment at the last general election to provide a new, modern framework for the voluntary sector in order to promote charities and give them better legal guidance. The present regulations for charities are indeed outdated. As my right hon. Friend the Member for Darlington (Mr. Milburn) pointed out, our courts still have to rely on the Charitable Uses Act 1601, passed under the first Queen Elizabeth, to determine what a charitable purpose is.
It is also a great step forward that we now get a clear definition that a charity has to work for the public benefit, rather than relying on the old circular reasoning that an organisation pursuing charitable purposes must be a charity. The new public benefit test will remind all charities that they need to demonstrate their usefulness to the public on a constant basis. However, as my hon. Friend the Member for Selby (Mr. Grogan) said recently, we need to decide on a rigorous definition of public interest.
In the light of recent experience in my constituency since the beginning of the year, I would like to highlight the reform of the Charity Commission’s powers. It is the first major shake-up since 1960, and I hope that it will take effect as soon as possible. Indeed, for some of my constituents, reform is already coming too late.
Mr. Deputy Speaker, you may have read in the papers about the case of Dresden house, a care home for elderly gentlewomen in Hove. For many years, Dresden house was a very happy place for pensioners in Hove, a place where many members of my local communities wanted peacefully to spend their final years. It has been run as a charitable trust since 1910 and was highly praised in official reports. It was therefore a great shock to all the residents when, in January, the trustees suddenly announced that the home was to close and all residents were to move out in three months. Citing economic unsustainability as the reason for closure, the announcement left only 12 weeks for the elderly gentlewomen to find suitable alternative accommodation.
Not only was the building destined to be closed but the many friendships built up over months and years by the residents in the community of Dresden house were about to be brought to an end. The trustees’ decision was perceived by many residents and their relatives to be unnecessary as Dresden house continued to provide a high standard of care, with new residents being admitted to the premises as late as December 2005.
Deeming the closure to be unnecessary, the residents’ group contacted the Charity Commission for guidance, trying to find some facts about the decision to close. The group was headed by Nick Steadman, nephew of Dresden house resident Alice Pink, a 93-year-old gentlewoman who had previously worked as a nurse. I was introduced to Alice in January and came to admire greatly her resolve and strength of purpose. She had moved into Dresden house only in August 2005 and was looking forward to many happy, relaxing years in beautiful surroundings.
The residents’ group and my office wrote many letters to the Charity Commission. I talked to both the commission and the trustees. However, the Charity Commission replied that, under its current rules, it was unable to help in the matter. Despite my intervention, the trustees were unwilling to provide their residents with a clear reason for closure other than general financial circumstances, which could not be independently verified because the trustees were unwilling to disclose their accounts before the end of the financial year and there were no regulations to ensure that they did so. The financial year would expire after the last resident was required to leave the home.
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