The Parliamentary Secretary, Cabinet Office (Kevin Brennan): The Charity Commission recently published its second economic survey of charities, which showed that just over half of the charities surveyed are feeling the impact of the downturn. While 30 per cent. of those surveyed have seen their incomes decrease, 32 per cent. say that they have already taken steps to combat the impact of the downturn. The full results of the survey are available in the Library of the House.
Mr. Jones: As the Minister has indicated, the economic survey revealed that charities were feeling the impact of the downturn, but 20 per cent. of them reported that they were experiencing increasing demand for the services that they offer. Given the increasing importance of the third sector in delivering what are often core services, can he say what the Government are doing to help ensure that those services are maintained in the downturn?
Kevin Brennan: I am grateful to the hon. Gentleman for that question. Although the survey showed that 5 per cent. of charities reported that they had had to cut services or were holding off new services as a result of the downturn, only 2 per cent. reported that they had had to reduce staff during the recession. We have introduced our Real Help Now recession action plan to meet the demands of organisations in the third sector, as they have made it clear that they are worried about the increase in demand at a time when it is possible that their income will fall. The package includes a modernisation fund to help charities meet the challenges of the recession and a fund to help charities in the front line that are working in the most deprived areas, as well as schemes to increase social enterprise and volunteering.
Mr. Adrian Bailey (West Bromwich, West) (Lab/Co-op):
Although the recession is having an impact on potential funding streams for charities, does my hon. Friend agree that they may also be affected by a rise in the demands made on them by people who become unemployed? Another effect of the recession may be that people leaving jobs might want to contribute their
skills to the charitable sector. It is most important that the sector is geared up to maximise the benefit and the potential that it can deliver to both groups. Will he say what is being done about that?
Kevin Brennan: As part of our recession action plan, we have made available, together with the Department for Work and Pensions, up to £10 million to broker volunteering opportunities for people who become redundant during the recession. That will enable them to learn new skills and offer some of the skills that they have already to the charitable sector. That is extremely important, as is the fact that charities must consider how best to modernise themselves as they respond to the downturn. That is why, at their request, we introduced the £16.5 million modernisation fund that will help them to work together more closely, for instance by occasionally sharing back-office functions or possibly, where appropriate, merging operations.
John Howell (Henley) (Con): The Prime Minister promised in his Romanes lecture in Oxford that science would somehow be exempt from the recessions effects. Can the Minister say how that is likely to play out for charities that provide scientific research?
Kevin Brennan: I am sure that the hon. Gentleman is one of those hon. Membersthey come from all partieswho agree that charities make a huge contribution to scientific research in this country. The Government have been extremely progressive in creating an environment in which the third sector has been able to develop research, especially in medicine and genetics. The Prime Minister is absolutely committed to ensuring that this country is one of the best countries in the world for scientific research.
Derek Wyatt (Sittingbourne and Sheppey) (Lab): I have more than 200 charities in my constituency. Given the success of directgov.uk in corralling websites across Parliament and Government, would it be possible to do the same for charities? Could some of the software used in directgov.uk be made available for charities on a portal?
Kevin Brennan: I am glad that my hon. Friend has given me an opportunity to tell the House that we are introducing a new funding portal. As a single gateway for third sector organisations, it will direct them to appropriate funding. I am working with the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for West Bromwich, East (Mr. Watson), to ensure that it will fit in with the digital programme that the Government already have in place. My hon. Friends question also gives me an opportunity to announce that measures being put in place today will enable smaller charities to cut up to £5 million of red tape.
Mr. Francis Maude (Horsham) (Con): It is clear that many charities are having a really tough time because of the recession. It has now been admitted that the Financial Services Authority knew of the risks with Icelandic banks as long ago as the beginning of last year, at which stage it informed both the Treasury and the Bank of England. Why were charities and the public not warned of the risks of investing in those banks? Will the Minister apologise for that failure, which has accentuated the financial woes that charities now face?
Kevin Brennan: I have had the opportunity to meet representatives of the charities involved in the Save Our Savings campaign, and I have also met MPs who have charities in their constituencies that have been affected by the Icelandic bank problems of recent months. The Government are continuing to listen to the concerns of third sector organisations whose investments are tied up in the administrative process. I know that my hon. Friend the Economic Secretary to the Treasury met representatives of some of the affected charities just last week, and that he is considering the outcome of that meeting.
Mr. Maude: Listening is all very well, but sorry still seems to be the hardest word. Charities face a really tough time, so is it not doubly important that the Charity Commission monitors effectively the links between charities and violent extremists? Charities rightly have special status, which we all support, but at a time when funds for them are limited, it is important that they are bona fide. Will the Minister ensure that action is taken against charities such as Green Crescent, which seems to have been supporting terrorism in Bangladesh?
Kevin Brennan: Links between charities and terrorism are, of course, completely unacceptable, although extremely rare, as I am sure the right hon. Gentleman would agree. The Charity Commission takes any such allegations seriously. It published a counter-terrorism strategy that was updated last year, and it works closely with police and other agencies. Green Crescent, which he mentioned, is subject to an ongoing investigation by the Charity Commission, which has already taken action to freeze the charitys bank accounts and has suspended a trustee. It is important to maintain investment in the third sector during this downturn. The £100 million cuts to the Cabinet Office budget, which would have come in today, certainly would not be the way to help the third sector at this time.
2. Fiona Mactaggart (Slough) (Lab): What discussions he has had with womens voluntary organisations on the effect of local authority procurement practices on them; and if he will make a statement. 
The Parliamentary Secretary, Cabinet Office (Kevin Brennan): I meet a wide range of third sector organisations, including womens groups, through the Governments national programme for third sector commissioning. We are engaging with local authority and other public sector commissioners on how to improve practice towards the third sector. That includes recent work with the Womens National Commission on embedding key messages and sharing good practice on equalities in commissioning and procurement.
I thank the Minister for that reply, but at a recent meeting that I had with a number of womens voluntary organisations, including Womens Aid, I heard that the shift from grant-funded services to procurement has actually damaged the sector by requiring a one-size-fits-all response. That has led to a cut from 35 to 15 in black and minority ethnic specialist organisations, and a requirement that Womens Aid provides for male
victims of domestic violence, as well as women victims. Will he, and Department for Communities and Local Government representatives, agree to meet people from that sector to discuss whether we could have a better framework for commissioning those important services?
Kevin Brennan: We already have in place a national programme for improving commissioning, which has had the opportunity to train more than 1,000 commissioners across the country, including on the matters that my hon. Friend mentioned. However, I understand the issue that she raises, and I would be happy to meet her and any representatives that she would like to bring in from Womens Aid or other organisations to discuss her concerns, possibly on a cross-Government basis, to make sure that the other Departments concerned are represented, and to talk further about the issues that she raised.
Ann Winterton (Congleton) (Con): Is the Minister aware of the problems facing many womens voluntary organisations, such as the excellent Cheshire Federation of Womens Institutes, as a result of the reorganisation of local government in Cheshire? That adds extra expense, and means extra effort, for that organisation and many other voluntary organisations, because whereas they previously had one set of contacts at Cheshire county council, they now have to duplicate all efforts with Cheshire East and Cheshire West councils. Why did the Government go down that path?
Kevin Brennan: I hesitate to revisit the issue of the local government reorganisation that is coming into force today, just as I would hesitate to take on the Cheshire Federation of Womens Institutes in any way, shape or form, but I note the hon. Ladys remarks, and I am sure that the House does, too.
3. Ben Chapman (Wirral, South) (Lab): What recent discussions he has had with third sector organisations on the effects of the economic downturn on their funding streams; and if he will make a statement. 
The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (Mr. Liam Byrne): My Department is in constant contact with the sector to monitor the effects of the downturn. That is why we are determined to invest £500 million to support the sector over this comprehensive spending review period, and why we committed £42 million in extra targeted help in January.
Ben Chapman: Does the Minister accept that the double whammy of the economic recession will mean not just reduced charitable donations, but the possibility of reduced lottery moneys for charities as a result of reduced ticket sales? Does he accept that childrens hospices in particular and smaller charities in general will be particularly affected? Will he ensure that appropriate practical advice is given to both childrens hospices and smaller charities so that they can weather the period of the recession?
I congratulate my hon. Friend on the work that he does representing and speaking up for hospices in his constituency. The third sector and charities such as those that he alludes to go into the downturn in
stronger health than ever before, because we have doubled public income to the third sector from £5.5 billion to £11 billion. We are determined to do more. That is why we are spending £500 million over the comprehensive spending review period, and why we are determined to bring forward reviews and reform of Gift Aid. [Official Report, 2 April 2009, Vol. 490, c. 10MC.] The tax system is now worth £4 billion to charities. Where there are opportunities for us to bring public services, charities and voluntary groups closer together, and to use that strategy to strengthen charities, we will do that. That is why the Department of Health has asked Futurebuilders to manage £100 million-worth of investment in social enterprises over the next couple of years.
Sir Patrick Cormack: They may be excellent, but could one go out today outlawing that ridiculous term, third sector? I have had a go at him about it before. It causes confusion. Let us have some plain English for once. Let us get rid of downturns and third sectors, and talk the English language.
Mr. David S. Borrow (South Ribble) (Lab): Is my right hon. Friend aware that in South Ribble, the Tory council has cut funding to a number of voluntary organisations, including the citizens advice bureau, the womens refuge, Victim Support and a charity helping young homeless people? Will he agree to look into the problem of cuts in local authority support for the voluntary sector just at the time when extra rather than less support is needed?
Mr. Byrne: I am sad to hear about the lack of support that my hon. Friends local authority is showing to the third sector. Local authorities are vital partners in ensuring that the civic strength of this country becomes greater still over the years to come. We are collecting information right the way across the country about how well local councils are supporting, or in my hon. Friends case not supporting, their local charities and voluntary groups, and we will publish those data over the next couple of months.
Mr. Gary Streeter (South-West Devon) (Con): I commend the right hon. Gentleman for setting up the modernisation fund, which we have already heard about. In his discussions with the third sectora perfectly sensible name, by the waywill he make it clear that in these straitened financial times he will give greater weight to organisations that show that they will collaborate and co-operate with other similar third sector organisations in their locality, so that some of the duplication and waste that we see in the third sector can be cut out?
Mr. Byrne: I will do my best. [Official Report, 2 April 2009, Vol. 490, c. 10MC.] The hon. Member for South-West Devon (Mr. Streeter) is right. Very often it is smaller organisations that make the biggest difference to their communities. That is why we wanted to step up the amount of funding that goes through grassroots grants. In the hon. Gentlemans constituency, I understand that there are about nine organisations which receive about £27,000-worth of grassroots grants. Often those small amounts of money will make the world of difference, as he knows. When the Charity Commission recently asked the question of the sectorhowever we choose to define the sector84 per cent. of respondents said that they were more interested in collaboration in the months to come. That is why the modernisation fund, which I am glad to be able to tell the House opens for business today, will provide £16.5 million not just to organisations seeking to merge and grow stronger, but to those that seek advice on how to collaborate more effectively in order to do the job that they are so passionate about.
Mr. Byrne: Volunteering organisations in particular have enormous potential to help people get back to work. We are absolutely determined that long-term unemployment, which so scarred this country during the 1980s, will not be an outcome of this recession. That is why the Prime Minister and my right hon. Friend the Secretary of State for Work and Pensions have set out clear plans to make sure that, after six months, people are given extra training, the opportunity to get extra help to get back to work, or the opportunity to start volunteering in their local communities. That is why the third sector action plan, which we published in January, provided for about £10 million to create about 40,000 volunteering opportunities, to make sure that there is no return to long-term unemployment in this country.
Jenny Willott (Cardiff, Central) (LD): State funding now outstrips donations as the largest source of charities funds, especially in health and human services; in some cases, more than 80 per cent. of such charities total income is made up of Government funding. Those charities in particular are at real risk at the moment as Government Departments come under increased pressure to save money and cut costs. We have already heard this morning that there is increased demand for those services in particular. Will the Minister commit to talking to other Departments to make sure that vital funds are not cut from charities at this time and that they can carry on providing fundamental public services?
Mr. Byrne: Absolutely. We are trying to strengthen the sector over the years to come; that is why we have provided for such a unique and unprecedented amount of money to go to the sector in the months to come. It is important that we strengthen the role of charities and voluntary groups in delivering public services and helping to deliver public services. That is why Futurebuilders is providing so much money to help exactly with that task, why the Department of Health is investing £100 million to help social enterprises step up to provide public services and why the Department for Children, Schools and Families is also providing £100 million to help. This is already a cross-Government effort.
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