Examination of Witnesses (Questions 320
- 339)
TUESDAY 20 NOVEMBER 2007
RT HON
ED MILIBAND
MP AND PHIL
HOPE MP
Q320 Jenny Willott: Presumably,
if we are looking at a system where private sector organisations
are getting the main contracts and subcontracting to the voluntary
sector, they are going to be taking a slice of the profits off
the top of that, so less money overall is going to be going into
the voluntary sector even if they are going to be doing the lion's
share of the work, or whatever proportion of the work it is. Is
that not a concern?
Ed Miliband: I think also less
that it is inherent in the larger scale that the third sector
will not win the contracts. I think it is more about smaller third
sector organisations and the role that they play. The point you
raised about subcontracting is right, and that is why we are looking
across government at the way subcontracting is going to work,
because it will apply not just here but in regional offender management
I think I am right in saying.
Phil Hope: I just wanted to add
one other complaint. One of the concerns that we have heard is
that, if you have got a client group that you are working, that
you have won the contract for, some might be easier to move into
employment in the example we have given, it might be to keep them
from re-offending in others, and there will be other parts who
will take more time, more resource and so on. What we would not
want to see, of course, is that the subcontractor gets the same
level of funding but has to do the harder work with the harder
client group. It is those kinds of details within the contractor,
subcontractor relationship that we think we can learn lessons
about and take it forward to ensure that those kinds of potential
problems can be avoided.
Q321 Jenny Willott: Are you
looking at umbrella organisations or strategic partnerships between
smaller organisations, or are you focusing your effort on looking
at the subcontracting level to try and help smaller organisations?
Phil Hope: I think I mentioned
earlier to Gordon, the idea of smaller organisations coming together
to form consortia can be a very powerful way that third sector
organisations can play a part in these larger contracts. I am
aware that Futurebuilders, for example, has recently invested
in the Cross-Herts Community Counselling (called CHCC) which is
in Hertfordshire, where six youth and children organisations that
provide counselling and advice to young people. Independent, small
charities, got together in that county to form a consortium to
bid to deliver services to children and young people, services
like sexual health and that kind of thing, and it has been a very
effective mechanism. That is at the local authority level, I think
that can happen at regional level, it might even happen at a national
level, and that organisation benefited from the added injection
of a Futurebuilders loan or a grant to build that capacity to
be able to make that bid to then win that contract to deliver
a much better service more coherently throughout that county for
the benefit of children and young people.
Q322 Jenny Willott: You mentioned
that there is a review being done of the process in DWP and what
lessons can be learnt. For the Office of the Third Sector, do
you think that your main role in looking at commissioning across
departments is identifying what needs to be done differently for
the voluntary sector, or do you think you have also got a role
in re-educating government departments?
Ed Miliband: I am not sure I would
describe it as re-education. I might not be thanked by my colleagues.
I think you make an important point, which is that across government
there needs to be greater understanding of what it means to work
with the third sector, the particular challenges that third sector
organisations face, sometimes the weaker financial base that some
third sector organisations have relative to the private sector;
I think across central government and local government there needs
to be a culture change, and this is hard to achieve. Again, I
am not going to make rash promises about how quickly this can
happen, but a part of our job is to change the culture so that
we have longer term funding, which is what third sector organisations
need, so there is an understanding of what they can contribute
to the process. One question is: why is the Office of the Third
Sector in the Cabinet Office? Precisely because we have that cross-governmental
role, and every department, in a way, is a third sector department
and needs, not re-education, but informing how best they can work
with the third sector.
Phil Hope: I would agree. I mentioned
the training of the commissioners before. I think there are many
levers we can use for this: one is training, the other is guidance,
for example, that local authorities might receive. Only today
DCLG[3]
has published guidance on local strategic partnerships and local
area agreements which includes, within its specific reference,
third sector organisations. When they go about the whole process
of commissioning, I just want to emphasise, contracting is only
one part of the commissioning process because the third sector
can play a role, not necessarily in delivering public services
in partnership with the public sector, although we would like
them to do that where it is right and where we get the right outcomes,
but even just being a voice for the user, being able to affect
the design of the service that is delivered, like the RNID[4]
and the RNIB[5]
have done on services for improving people's vision. So, right
throughout the commissioning process, including perhaps tendering
and winning contracts to deliver public services, we want to see
the third sector throughout, and that is a process both for training
and, as Minister for the Third Sector, I see myself as a champion
for that third sector within government talking to ministerial
colleagues on a case by case basis about ways that they can improve
their practice. Indeed, when I have those meetings with ministers,
very often they are keen to tell me about the successes they are
having and the changes they are attempting to make, because they
can see the benefits, where it is appropriate to engage the third
sector, in achieving better outcomes for people.
Q323 Jenny Willott: The final
area I wanted to ask about was the issue of complaints, particularly
when it comes to the public sector. The Charity Commission did
a survey last year that found out that nearly 70 % of charities
did not have a complaints procedure and of those charities that
were delivering public services, 40 % did not have a complaints
procedure. Is this an area of concern and an area that you are
actually actively working on? That is the first question. The
second question is whether you think that will go against charities
that are taking part in commissioning and whether that is something
that is going to prevent them getting contracts and being successful?
Phil Hope: I think you are right
to raise it as an area that people have raised as a concern. To
go back to those surveys, a greater percentage of some of those
charities, if we look at the actual statistics, do have complaints
systems than is perhaps thought. I know ACEVO were less convinced
by the basis of the survey. In principle you are right to raise
the concern of whether there is a mechanism for complaints from
service users and so on. We would expect charities, third sector
organisations, to have complaint mechanisms as part of the way
they go about doing their everyday business but, in particular,
if they have a contract from local government or central Government,
that part of that contracting process, what is commissioned, would
include the third sector bidder showing and demonstrating how
they might handle complaints were they to happen. The complaint
can be taken in this case to the local authority if it is a local
authority contract being provided, in the same way that you would
go to the local autohrity to complain about a service you had
received being delivered under that local authority, and ultimately
to a local councillor and, I am sure, if you come to my surgeries
you would see it, and in your surgeries, to the MP to raise about
a service that has been provided with the local council. Ultimately,
it is the contract in which you might see the evidence of the
complaint mechanism being in place.
Ed Miliband: Just to add to that,
I think this is a really important point because I know this question
of accountability has consumed some of your evidence sessions.
I am not trying to anticipate future questions. You need the internal
procedures in third sector organisations, but ultimate accountability
for services lies with the commissioning public authority. I have
a number of SureStarts in my constituency, SureStart children's
centres run by NCH,[6]
and NCH need their own internal procedures but if there is deep
community dissatisfaction with the SureStart or something is going
wrong, and thankfully there is not, indeed it is the case that
it is the local authority that has responsibility for commissioning
of that service and is ultimately answerable. This issue of accountability
of third sector organisations is rightly raised by people because
it is an issue that needs to be addressed, but I think it comes
from the fact that it is the public authority that has ultimate
accountability. It is really important that is not lost because,
after all, that is why we elect people to have that accountability.
Q324 Jenny Willott: What is
being done with those organisations that do not have those processes
in place? What are you doing to rectify that?
Phil Hope: Part of the training
programme for commissioners, part of our encouragement of people
to understand the commissioning process and to contract successfully,
will include ways of influencing how that public commissioners
go about commissioning pieces of work to understand and see the
importance of that. For charities generally not in receipt of
public funding, as it were, it is a matter for the charity trustees,
of course, who have oversight for the proper management and administration
of their organisation. You would expect to see organisations taking
responsibility for ensuring that services they provide, outwith
necessarily being funded through contracts in the way that I was
just describing, and developing best practice. Many organisations,
like the National Council of Voluntary Organisations, ACEVO and
others, issue good practice guides and so on that third sector
organisations might draw upon in developing their own complaints
procedures or other forms of procedures to run themselves effectively.
Q325 David Heyes: Can I just
focus on the role of the Charity Commission in this question.
We had the Chair and Chief Executive of the Charity Commission
in front of us a couple of months ago and they have been given
the challenging task of deciding what is public benefit. This
is particularly an issue around faith-based charities and fee-paying
schools. I asked the Charity Commission people who were here whether
any of them would need to declare an interest in this, were they
sending their children to fee-paying schools. Momentarily I felt
like Joe McCarthy, it was almost like the Charitable Commission's
committee that were asking awkward questions. It has emerged since
that certainly the Chair sends her child to a fee-paying school
and I suspect from the response we got that several other members
of the Charity Commission have got those kinds of interests. It
seems to me that the core decision about whether the activities
of a fee-paying school are charitable or not is fundamentally
political. Why was that difficult political decision given to
the Charity Commission to struggle with?
Ed Miliband: Let me perhaps explain
some of the background to this, David. I had the pleasure of taking
the Charities Bill and the Charities Act through Parliament, including
the detailed committee stage on this, last year. What we did in
relation to fee-paying schools was we removed the presumption
that organisations for the benefit of education were charities.
There was a presumption that had existed that this was the case.
We thought it was right that all organisations, whether they were
the NSPCC[7]
or Eton College, just to take two examples at random, had to prove
they were for the public benefit. The structure of charity law
is that there are 13 charitable purposes, in fact 12 and one other
category, covers a wide range of things and you have to be for
one of these charitable purposes and you also have to prove that
you are for the public benefit, which the Charity Commission judges.
The particular case law in relation to the issue of private schools,
which I think is what you are particularly concerned with, says,
and I paraphrase, public benefit should not be restricted simply
to a narrow class of persons and it has to have a wider public
benefit. We set the law and Parliament agreed this law which went
through both Houses of Parliament and we set a framework for the
Charity Commission to work within. They are now embarked on the
general consultation on public benefit and how it should be interpreted
and then they will go into the specific areas. I think it is right
that we set a general framework for the Charity Commission and
then it is for them to interpret the law specifically. I agree
with you, there is a political element to this, which is the overall
law, and then within that it is for the Charity Commission to
determine on a case-by-case. I think it is hard for Government
ministers, and it would not even be right, to determine on a case-by-case
basis whether the public benefit test is met.
Q326 David Heyes: The Charity
Commission are very clearly struggling with this decision. They
have had the round of public consultation that you have referred
to and did not like the results, or were not able to make decisions
based on the results of that consultation, and they have now launched
another round which will run into next year some time. It is difficult
to see how that is going to get any closer to the kind of clarity
that they are looking for. This decision cannot be left unmade
because the Charity Commission is unable to make it because they
cannot get the right consultation response or consensus or because
they are effectively disqualified from making the decision because
of their personal interest. When is it going to reach the point
when this key decision, particularly about fee-paying schools,
has to be taken away from them and you do it for them?
Phil Hope: This is obviously a
matter for the Charity Commission.
Q327 David Heyes: Who manages
the Charity Commission in carrying out their task? Who are they
responsible to?
Phil Hope: The Charity Commission
are responsible to themselves as themselves, a Non-Ministerial
Department, with their board to complete this task. Ultimately
they are accountable to Parliament, directly or via myself as
Minister for the Third Sector. I meet with them on a regular basis.
They anticipate their decisions coming out in the New Year. They
have had a very large number of responses to the consultation
about public benefit from a variety of places, so the size and
nature of the response has meant they need to take a little more
time before they make their decisions and issue the outcome of
their deliberations, and my understanding is that that is going
to be early in the New Year. I think it is more important that
rather than rush it they get it right, they find an outcome which
achieves the law but they have the difficult judgment to make
and because they are independent of government can make that difficult
judgment on a case-by-case basis.
Q328 David Heyes: I am tempted
to ask how long will you give them to make that decision?
Phil Hope: We are encouraging
them to get it right. I think it is more important that they get
it right than they rush a decision or make a decision in haste
that could potentially be wrong. David, I understand your frustration
because you want to see an outcome on this, and so do I, but I
would like to see them come forward with well thought through
proposals as a result of the consultation they have been undertaking.
We should ensure that if there has been, as there has been, a
large number of responses there should be proper time to evaluate
and make judgments about those responses rather than rush into
a decision that might not be a best judgment.
Q329 David Heyes: The other
very difficult and controversial area that the Charity Commission
are grappling with is this question of campaigning activity. I
think the Government have given a very much clearer steer to them
on the way that they should deal with that, which I think is quite
helpful, but there is still one key area where there is uncertainty
and debate, which is about political party campaigning. I have
said here before that my involvement in politics, and I suspect
this is true of you and all of us, is really driven by a core
motivation which is about things like alleviating poverty, promoting
education, the general wellbeing of the population. Those are
really sound charitable objectives but they are also solid political
objectives, it is what motivates us. Why is it that when Amnesty
or Barnado's do it, it is charitable and when political parties
do it, it is not, and political parties do not get the benefits
which flow from charitable status?
Ed Miliband: I fear I am going
to be disappointing you on this, David. The reason why we are
not going to go down the road of making political parties charitable
is because, if you think about it, while you and I both agree
that the Labour Party is for all the noble purposes that you set
out, the truth is it was not set up for those purposes, it was
established to promote the interests of organised labour originally
but Labour in Parliament and so on. To decide whether that was
for the public benefit would require the Charity Commission to
be making an entirely capricious and political judgment about
that. The importance of the charitable purposes and the heads
of charity that were in the Charities Act is precisely that they
do not require that sort of judgment to be made, they establish
some pretty clear charitable purposes under which organisations
can attempt to register as charities with the second lock that
they must be for the public benefit in some of the ways I talked
about. I am afraid we are not going to go down that road.
Q330 David Heyes: I thought
that might be your answer. Is there available here a kind of halfway
house option which would be to recognise the merits of political
campaigning activity and to give some sort of taxation benefit
by allowing tax relief on donations to political parties, for
instance?
Ed Miliband: That really is not
a matter for me as to what happens in terms of party funding and
all those issues. It is certainly the case that support for political
parties and campaigning for political parties is not a charitable
activity and we have got no intention of changing the law to make
that happen.
Chairman: Do not all political parties
stand for competing versions of public benefit?
Mr Walker: I dispute that fact.
Chairman: I exempt the Conservative Party
from this!
Q331 Mr Walker: The British
National Party in my constituency.
Ed Miliband: I think Charles referred
to this in an earlier session that you had. As well as raising
the issue that I talked about on public benefit, it takes you
down a whole road you would not want to go down about making judgments
between different political parties and the extent to which they
are legitimate or illegitimate. That is why I do not think it
is sensible to go down that road. Phil, do you want to add anything?
Phil Hope: No, I just want to
pick up David's earlier point about campaigning. You are right,
David, we are keen that charities are not fearfully looking over
their shoulders if they wish to campaign. The Charity Commission
are going to be issuing some revised guidance on that in the New
Year as well. We made clear that it is absolutely right within
law and, indeed, the Charity Commission's own guidance issued
in April clarifies this as well, that charities can, and if they
feel it is right should, campaign in the interests of their beneficiaries.
We have seen many very good campaigns of late that have put the
Government under pressure, and quite rightly so, because they
are standing up for what they believe in in the interests of their
beneficiaries.
Q332 Chairman: Was it necessary
or right for the Chair of the Charity Commission to say that she
was going to take no part in the deliberation on the public benefit
test in relation to private schools because she happened to have
a child at a private school?
Phil Hope: The Commission took
independent legal advice and on the basis of that legal advice
to the board of the Charity Commission they made their judgment
about how they should operate. I think that is a matter for the
Charity Commission and their decisions on the legal advice that
they have been given.
Q333 Chairman: It is an interesting
precedent though, is it not?
Phil Hope: Whether it is or not,
that is what they did and that is a matter for them on the basis
of the legal advice they received.
Q334 Paul Rowen: You mentioned
earlier on in answers to Jenny about the incident with the DWP
and the contract Pathways to Work. Are you monitoring across Government
commissioning and involvement of the third sector in commissioning
and do you feel they are getting a level playing field?
Phil Hope: Yes. I described earlier
my role as Minister for the Third Sector which is to work with
the most relevant government departments in terms of those that
might be heavily involved in commissioning and, therefore, making
sure that either at the level of the department and what it is
doing and the way it goes about its business a level playing field
is created to enable the third sector to compete or as a government
department, perhaps, investing some of its resource in capacity
building among those organisations that work in its own field
of endeavour. The Department of Health, for example, has recently
established a £73 million fund to promote the development
of social enterprises within the Health Service and that is an
investment that will help those social enterprises then compete
for contracts to deliver healthcare, mainly social care.
Q335 Paul Rowen: Do you have
some idea of the range of contracts that the third sector has
recently won across different departments of Government?
Phil Hope: I cannot provide you
with that information here and now, forgive me, but we do seek
to ensure that every Government department, where it is going
about its business, does have a commissioning process that does
create this level playing field and recognises the added value
that third sector organisations can bring.
Ed Miliband: There is a cross-departmental
board which oversees the implementation of the action plan and
meets to discuss commissioning and other issues and obviously
will be discussing those sorts of issues that you have raised.
Q336 Paul Rowen: Could you
give us some sort of indication, perhaps in writing, of those
sorts of contracts?
Ed Miliband: Definitely.
Q337 Paul Rowen: To put that
DWP incident in context.
Phil Hope: Sure.[8]
Q338 Paul Rowen: Moving to
local government, local authorities are huge commissioners of
public services and obviously at a local level we have all got
experience of local charities that are involved. Are you providing
any advice to local authorities in terms of how they should go
about commissioning and involving the third sector in a greater
way?
Phil Hope: Yes, both in terms
of grants but also in terms of commissioning. The Department for
Communities and Local Government today issued statutory guidance
to local authorities, both on their Local Strategic Partnerships
and Local Area Agreements, both of which include specific references
to the third sector in terms of the way they go about running
a Local Strategic Partnership and drawing up a Local Area Agreement,
which includes references to stability of funding, for example,
proper consultation and engagement and the ability to influence
services as well as receive grants or win contracts to deliver
public services. That guidance has now been issued, local authorities
will be taking note of that. That is the sort of guidance and
good practice for making it happen. Recently I went with the Audit
Commission, because the Audit Commission will be conducting Comprehensive
Area Assessments in future, which are an evolution from Comprehensive
Performance Assessments, and in those Comprehensive Area Assessments
the Audit Commission will be looking at the extent to which the
local authority is striving to support a thriving third sector,
not least because within the local government performance indicators
framework we have included a thriving third sector as one of the
measures that we would expect local government to be achieving.
As well as at the front end, as it were, getting it right to start
with, they will be assessed at the back end through the Audit
Commission and its processes to ensure that the third sector is
alive and kicking in every local authority area.
Ed Miliband: Can I just add to
that briefly. What is interesting about this is we have got this
programme to train the 2,000 most important commissioners of public
services so that they understand the role the third sector can
provide. You might ask what is the motivation for that and it
is partly what I have learned. Just to give an example: in one
part of Manchester they had homecare services, social care services,
provided by a private sector organisation that they were very
unhappy with and they happened upon an organisation called Sunderland
Home Care which does it as a part of social enterprise in Sunderland
and they have now contracted with Sunderland Home Care to provide
the service, but that is an incredibly ad hoc way of that happening.
I am not entirely sure how it happened but it happened in a rather
ad hoc way. Part of the point of training commissioners is a recognition
that what really matters is the people who are making the decisions
on the ground and do they think these third sector people are
nice and fluffy but cannot really properly provide a service or
do they realise the reality that lots of them can provide services,
sometimes in preference to the public sector providers at the
moment, in a way that will better meet the needs of citizens.
Part of the point of the commissioning programme is to try and
get to the people who make the important decisions on the ground.
In another initiative which you will know about, the Innovation
Exchange, which is a web-based initiative, that brings together
people who are commissioning services and people who provide services
to further that process of learning and culture change.
Q339 Paul Rowen: One of the
concerns with the Local Strategic Partnership from the voluntary
sector has been that now it is going back into the control of
local authorities they are going to lose out. Are you going to
monitor within this framework that has been announced today how
much of the money is actually going to the various sectors?
Phil Hope: A third piece of guidance
is being issued today called Principles of Representation, which
is guidance for third sector organisations about how to organise
themselves in order to be better represented in Local Strategic
Partnerships, not just at getting grants, although that is what
most voluntary organisations want at a local level, but being
able to influence the policy of the local council in its place-shaping
role and because in particular many of those local charities that
we all know in our own constituencies are very close to the needs
of the user, they understand and are working on a daily basis
in those communities, possibly some of the most disadvantaged,
with people who have the most needs and in an holistic way can
represent them. We will be trying to ensure that local authorities,
through the guidance I have mentioned, do have the opportunity
to play their part in Local Strategic Partnerships. That will
be one of the measures that the Audit Commission in its narrative
as it writes about each council will be describing in terms of
the extent to which the third sector plays its part and is strengthened
and where you have a weak local presence of the third sector what
the council is doing about trying to strengthen that third sector
in that area.
Ed Miliband: What is really interesting
about the whole process of Local Area Agreements and taking away
lots of the ring-fences that central Government used to put around
funding boxes is it throws up another one of these dilemmas, which
is that lots of third sector organisations say to me, "Why
did you take away those ring-fences? That guaranteed a certain
stream of money, okay it might have been a very small stream of
money, for our organisation in a local area". Why did we
take away the ring-fences? It was because local government was
saying to us, "Look, you are trying to dictate too much to
us, with the whole complexity of hundreds of funding streams,
how we spend the money". That is why I think what Phil says
is very important because it is about saying the deal is that
local government does have more autonomy about how it spends the
resources but it also needs to have a proper appreciation of what
the third sector can do. Let us be honest about this, and we all
probably know this from our own local experiences, we have got
a long way to go in breaking down the barriers and some of the
suspicions that exist between local authorities and third sector
organisations and each accepting the legitimacy of the other.
Phil Hope: I would recommend Croydon,
by the way. Recently it won a Beacon award for having a strong
partnership relationship between the third sector and the local
authority, and maybe that is partly what we would ask local authorities
to do, to look at some of the performance of the best so they
can adopt some of their practices because they work so effectively.
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Royal National Institute for the Blind Back
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National Children's Homes Back
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National Society for the Prevention of Cruelty to Children Back
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