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Mr. Sheerman: Is there not a danger in stipulating who can compete for a particular contract? The third sector is very broad; the hon. Gentleman has talked mainly about charities, but the co-operative movement is part of the third sector. The sector includes a diverse
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range of large and small co-operatives and charities. There are also charities that do not really act like charities. Public schools have been in that position for a long time; they do not operate like real charities. If we get too tidy-minded, we might restrict the range and diversity of the third sector.

Mr. Walker: The hon. Gentleman makes some good points, but we have to make sure that we create space for all types of providers, and that we do not favour a group of larger providers over smaller providers. I am sure that most Members would agree, because we all have small charities serving our constituents and constituencies. Another concern about the growth of very large charities is that it could reduce confidence in public giving. If the public see super-mega-charities getting 90 or 95 per cent. of their money from central Government, there is a danger that they might say, “What’s the point of me giving money to charities?” The point, of course, is that although large charities may get lots of money, there are tens of thousands of smaller charities that are desperate for money. We have to make sure that people realise that that option is still open to them, and that there are still many deserving organisations towards which they can direct their money.

People in my constituency are slightly worried that large charities will spend too much time looking towards Government, who fund them, as opposed to towards the end user or client group. Those concerns may be unfounded, but it is my responsibility to bring them to Parliament and to the Minister’s attention. We have talked about political campaigning quite a bit today, and I think that there are legitimate concerns about it. Larger charities have taken on the persona of corporate organisations, and it is amazing how many marketing, public relations and public affairs people they now have. My local charities do not have any people of that sort, because all the money that they raise goes on delivering charitable services to the end users, but large organisations have a lot more money to hire those people, who I am sure do a difficult and important job.

Anne Snelgrove: The hon. Gentleman is making a thoughtful speech and has made some good points. I agree with his point about keeping the balance between large and small organisations. However, I ask him to be cautious on the subject of the number of people employed in PR by national charities. Most national charities that I have anything to do with are keen to emphasise that they keep their overheads to an absolute minimum. If they have people in such posts, it is to enable them to raise more money. The hon. Gentleman does the charities a disservice without meaning to by suggesting that they may be wasting money on those posts, because I do not think that they are.

Mr. Walker: I thank the hon. Lady for her intervention. I do not mean to suggest that the charities are wasting money, but that constituents looking in from the outside may worry about how their money is being spent. It is incumbent on charities, and important for them, to keep explaining why PR staff are important.


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Of course, political campaigning has a role in the charitable sector and I would not want that to be eroded, but all hon. Members have probably been on the receiving end of some fairly aggressive single issue campaigns which basically said, “If you don’t support my position, I’m going to withdraw my vote from you.” We in Parliament know that there are very few black or white decisions to be made in public policy. Instead, there are many shades of grey in politics. As politicians, we must balance the competing interests of our constituents. I make a plea, more to charities than to my colleagues, to be mindful of that.

Gift Aid is a fabulous mechanism for charities to raise additional money for good works. The claiming back of Gift Aid, though, can be time consuming. I am sure that many people who give to charity never get around to filling in the Gift Aid forms so large sums of money are potentially lost. Will the Government consider allowing charities to report at the end of the year the amount of money that they have received from charitable donations—gifts from the public—and the Treasury to provide a lump sum on top of that to reflect the Gift Aid? That would remove from the donor the responsibility of filling out the forms, and from the charity the responsibility of collecting them. The Government would accept the audited amount and provide an additional 25 per cent. on top of that.

My final point concerns the Olympics. In Broxbourne we are very lucky—we have the canoeing, and we are grateful for that. It will be a powerful tool for the regeneration of Waltham Cross, a fairly deprived area of my constituency. However, I am concerned that quite a large sum that would have gone to charitable organisations is being diverted from good causes to fund the Olympics. We need to be mindful that that will have an impact on the ability of charities to provide services in our communities. The lottery should primarily be for the little extra things that make life worth living—a cricket pavilion, an extra football field—and not so much for core funding. I entirely appreciate the importance of cancer scanners, but those are better left to the NHS to provide, as opposed to the lottery fund.

That is my brief and modest contribution to the debate, and I thank the House for listening so intently.

2.53 pm

Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op): I welcome the report. As a Labour and Co-operative Member of Parliament, like the Parliamentary Secretary to the Cabinet Office, my hon. Friend the Member for Corby (Phil Hope), it gives me great pleasure to speak on a report that recognises the contribution that the co-operative movement has made in the development of the third sector. Looking way back to the Rochdale pioneers in the 1840s, one could say that they were the first inspirational organisation to develop the third sector by providing whole and unadulterated foodstuffs to their members, providing education to their members, and ploughing back their surpluses into the local community. It was an inspiration taken up throughout the country and, latterly, throughout the world.

When the Minister spoke about changing culture, he put his finger on the significance of the report. We are talking about breaking down the barriers between
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private provision and public provision of much needed services in communities. We are examining innovative ways of providing such services.

The third sector has suffered from a silo mentality for a long time, which is a legacy of the ’80s and early ’90s when inappropriate privatisation solidified hostility towards the private sector in providing public services. That did nothing for the private sector, because decent and reputable private sector providers were associated with cowboy operators. As a result of that silo mentality, the suspicion arose in the private sector that new business models catering for social and environmental ends were not its priority, while in the public sector both consumers and providers of public services decided that the best way in which to deliver such services was through either local government or national Government agencies. The perceptions arose that charities just provided for certain niche needs that the public sector could not, and that social enterprises were just fringe operations catering for niche markets and were not part of mainstream business activity.

The reality is very different. We have 190,000 charities with more than 20 million volunteers and £27 billion of turnover. Social enterprises are defined as businesses that are formed for social and environmental ends. There are 55,000 of them with a turnover of £27 billion, and they add £8.4 billion to the economy. There is a certain overlap between the charitable and social enterprise sectors, because some charities include social enterprises as part of their charitable structure.

Whichever way one looks at it, the charitable and social enterprise sectors form a significant part of the economy and provide important services. The report is significant, because it recognises that point for the first time. It also recognises that the needs of the third sector have often gone unrecognised and unacknowledged—the third sector has historically been the Cinderella sector. Although I would not embarrass the Minister by describing him as “the handsome prince” or the money that he is providing as “the golden slipper”, the report, the importance that the report has been accorded and the money that has been provided will go some way to giving Cinderella the role and recognition that she deserves.

This afternoon I have listened to examples, which I am sure are replicated in all hon. Members’ constituencies, in which volunteers in the charitable sector or social enterprises play a role in the welfare of the local community. If one considers the number of people involved—20.4 million—one realises that that body of people is a huge resource of commitment and expertise that is there to be tapped and organised to benefit the local community. The report is valuable, because it outlines how that resource can be harnessed.

There is no doubt that it is difficult to get young people to engage in traditional political processes and that there is a certain alienation from the traditional governmental agencies that provide benefits within communities, but that does not mean that young people do not have enormous idealism, enormous commitment and a desire to change their own communities. By engaging young people in volunteer activities, charities—as I have said, charities may contain social enterprises—not only contribute to the welfare of their communities, but help young people to
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develop social skills and, possibly, educational skills, which enable them to contribute to a much greater depth as they mature into adults. In demonstrating that to themselves by participating in such activities, they also get an enhanced understanding of the relative roles of citizens, the voluntary sector and democratic Government activity. That must be good for the whole country and democracy. I welcome the Government’s commitment to invest more money in improving such capacity; that is essential if such roles are to be developed.

I want to single out a number of issues on which I would like to probe the Minister; the first is that of community endowment funds. Other Members have mentioned groups that have said to them, “We just need a grant for this, but there does not seem to be any charitable lottery or local government funding stream that provides for our specific needs.” Despite everything that such groups try to do through all the different agencies within local authority areas, there are still unmet needs.

On the needs of charities and provision for them, I have long felt that in our local society there is a huge desire to contribute to welfare in one way or another; that is reflected in the level of charitable giving. However, all too often there is no local charity to fulfil the desire of people to invest in a charitable purpose. There must be some mechanism that marries the unrealised desire of some people to contribute to a specific charitable end with the range of charitable provision within a certain area to meet that.

I see the community endowment funds as a possible mechanism for that. Like everyone else, probably, I look around my local area and see legacies of historical philanthropy: parks, fountains and even little horse troughs provided by a local donor. We have all seen such things, and I would like to think that that spirit is still alive and well. Through the community endowment funds, we have to find mechanisms through which somebody who wishes to contribute to their local community can do so in a way that fulfils their charitable purposes that are presently not met. I ask the Minister to take up the issue. It is totally in line with new Labour thinking; I have often heard that we must have traditional values in a modern setting.

Mark Lazarowicz rose—

Mr. Bailey: My second point— [Laughter.] My second point is about the social enterprise sector. I mentioned the role that co-operatives and the less traditional forms of business model play in meeting social-environmental needs. It is interesting that, basically, the definition of the third sector in the report is about the purpose of a business, rather than its structure. Social enterprises embody a whole range of business models: some are charities, but a subsidiary of some form of social enterprise; others are co-ownership organisations, co-operatives or community interest companies and so on. There is quite a range.

However, a common thread runs through them all, because they all comprise people who not only want to fulfil certain social and environmental ends in the outcome of the business of which they are part, but share certain values. For example, I do not know of any co-operatives engaged in land mine production. Most
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of them would have a higher degree of community responsibility and ethical concern than one might find in a more traditional proprietor-based business structure. The more that one does to boost knowledge and understanding and to promote those forms of business structure, the more likely one is to fulfil certain community regenerative aims.

The hon. Member for Lewes (Norman Baker) observed that the social enterprise sector has requested that we consider the business enterprise and regulatory reform model with a view to enhancing its research into and support for social enterprise within business. I will not repeat everything that he said but merely add that, given the difficulties involved, getting robust statistics to demonstrate the impact that charities and social enterprises have on the economy is an issue that needs to be addressed through the third sector review.

One of the sector’s great problems is that, because it operates in so many areas, the departmental overview of its services is fragmented and all too often is not the priority of any one Department. One of the great virtues of the approach taken by the Cabinet Office and the Minister is that they have pulled those together to give the sector the sort of priority that it should have. I look forward to the Minister pushing the agenda with all Departments to ensure that comprehension of the role that it has to play is enhanced.

Mr. Flello: On the question of outputs as against outcomes, does my hon. Friend agree that although it is sometimes easy to have a list of outputs—things that can be ticked off and measured—the contribution that a third sector organisation will make is often a much softer one with an outcome that cannot be measured until several years down the line, which in itself creates a problem?

Mr. Bailey: I thank my hon. Friend for making that comment. I have in my constituency a charitable trust, the Murray Hall Trust, which works in the most deprived communities to engage people in the educational and training process. Some of its volunteers have become staff and are mentoring people within those communities to try to give them the confidence to train and take on jobs. That approach is bearing fruit, but its full benefit will not be known for many years to come. Although we must have ways of monitoring outputs, they must be sensitive and reflective of the sort of long-term agenda that we seek. We are talking about changing culture and society, and that takes time.

My last point concerns political lobbying. I am a little surprised by the attitude taken by Conservative Members, because in my experience the lobbying done by charities is most uncomfortable for the Government of the day, and as that is not likely to apply to them for quite a long time I do not see why they should be too worried about it. If we are really to have an independent and powerful charitable sector, charities must have the right to lobby politically, and the procedure put forward by the Charity Commission is the correct one.

In a slightly mischievous moment, I picked up the list of early-day motions and found that many are promoted by different charities and that loads of Conservative Members sign them. I am all in favour, but I do not think that one can argue against political lobbying
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while at the same time being prepared to sign such motions. The hon. Member for Lewes was again correct when he said that we are talking about overt party political lobbying. It is perfectly legitimate for charities to lobby politically for the social and other outcomes for which they were formed.

Many of these bodies bring a degree of practical expertise to Government deliberation, which is necessary in the formulation and translation of policy into legislation. I have seen that in any number of areas, where charities have taken up particular issues because there has been either an unintended consequence arising out of previous Government legislation or a new need that has emerged or has not been appreciated by it. There is a danger that if one seeks to curb the political advocacy of charities, one will restrict the ability of those organisations to influence legislation and policy in a way that is beneficial to the whole community and to the reputation of this House.

I welcome this hugely wide-ranging report—I would not pretend that I have been able to cover all the issues—because it is going in the right direction and is part and parcel of a process by which we expand the recognition and appreciation of the fact that social enterprises and charities are able to deliver services that will transform the lives of millions of our people.

3.12 pm

Hywel Williams (Caernarfon) (PC): I am grateful to be able to contribute to this debate—I was very anxious to do so. I must start with an apology: I cannot stay for the winding-up speeches because I have an engagement in my constituency. No disrespect is intended to you, Mr. Deputy Speaker, or to the House, because Caernarfon is far away, or, as one wag in my constituency said recently, “The problem with London is that it is so remote from the places that really matter.” In his case, what matters is the village of Rhostryfan.

As a Welsh Member, I must be careful about commenting on a report that is so obviously to do with England, but it contains important matters that are of interest to Welsh Members. Some of the recent developments in the third sector in Wales should be of interest to people in this place. It is sometimes said that Wales does not have a very large voluntary sector, but that depends on how we measure things. Wales has a large voluntary voluntary sector and a small paid-for or professionally employed voluntary sector. We have amateurs in the best sense of the word: amateurs who love the cause for which they work.

Wales is sometimes said to be a land of societies and long-winded committees. The 19th century satirist John Ceiriog Hughes said of organising an Eisteddfod, “What you really need is a date, a venue, a list of subjects and a committee.” Hon. Members will note that he said nothing about competitors or the output of the Eisteddfod, and that the committee was the important matter. I do not decry committees. In fact, I want to pay tribute to people involved in the third sector—in my constituency, throughout Wales and elsewhere—for their commitment, enthusiasm, willingness to give both materially and of their time and, as the report notes, their willingness to work with government at local and national level, and on a UK basis.


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In Wales at least, the common pattern is to have voluntary community organisations. One matter that I wish to explore briefly is the possibility, in Wales and perhaps in England, of some sort of status for local grass-roots organisations that might not wish to register as charities, such as unincorporated association status. There are examples in other countries—I am familiar with Denmark and France, where very small organisations can register as associations. The organisations have charitable purposes, but perhaps do not want to go through the long drawn-out process of registering as a charity. The association status in both those countries provides a minimal measure of formality for those very small organisations and the possibility of extending their existence when the impetus arising from their establishment is dissipated.

In Denmark, for example, there are town and city associations, which run the festivals that are common in the summer. Those associations are small and do not necessarily register as charities. In France I have a friend, Mr. Bernard Le Mer, who is an enthusiast about maritime history, and his association owns an historic sailing boat. It is not a charity as such, but when one member leaves another joins so that the purpose of maintaining the boat is sustained in a way that might not be possible without the association model. He also has an association which is improbably named the Henvic Society for the Promotion of the Importation of Scottish Non Dairy Products—it is a whisky club.

There is a balance to be struck between such small, informal organisations and the opportunities for campaigning that have already been mentioned. I do not want to get involved in that debate and I certainly do not intend to defend the Government, but I noticed from a close reading of the report that it states on page 26 that


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