Session 2010-12
Publications on the internet

To be published as HC 716-iii

House of COMMONS



Public Administration SELECT Committee

Funding of the Voluntary Sector

Tuesday 3 May 2011

Sir Sandy Crombie, Robert Mirsky, Martin Brookes and Chris Blackhurst

Evidence heard in Public Questions 225 - 316



This is a corrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.


The transcript is an approved formal record of these proceedings. It will be printed in due course.

Oral Evidence

Taken before the Public Administration Select Committee

on Tuesday 3 May 2011

Members present:

Mr Bernard Jenkin (Chair)

Nick de Bois

Charlie Elphicke

Paul Flynn

Robert Halfon

Kelvin Hopkins


Examination of Witnesses

Witnesses: Sir Sandy Crombie, Senior Independent Director, Royal Bank of Scotland, Robert Mirsky, Head of Hedge Funds UK, KPMG, Martin Brookes, Chief Executive, New Philanthropy Capital, and Chris Blackhurst, City Editor, London Evening Standard, gave evidence.

Q225 Chair : Welcome to this session of the Public Administration Select Committee. I hope you will forgive us that many of our colleagues are busy in other parts of the House at the moment and we may have to interrupt this session while somebody leaves and then somebody arrives, but I am most grateful for your indulgence. This is a session about the big society and charitable giving. I wonder if you could each identify yourselves for the record.

Sir Sandy Crombie: I am Sir Sandy Crombie. Today I am representing the Royal Bank of Scotland, but I can talk of other experiences if that will be helpful at any stage.

Robert Mirsky: I am Robert Mirsky; I am a partner at KPMG. I am also the founder of the charity Hedge Funds Care.

Martin Brookes: I am Martin Brookes. I am the Chief Executive of New Philanthropy Capital, which is a charity that does research about charities and advises donors.

Chris Blackhurst: I am Chris Blackhurst. I am City Editor of the London Evening Standard and I also sit on various charity and arts boards.

Chair : Thank you very much indeed for joining us.

Q226 Robert Halfon: May I just apologise that I have to leave very shortly to go to a debate on childhood obesity, which is a big issue in my constituency. I do apologise to you for that. I just want to ask you a couple of questions about philanthropy: could you just give me your views about why American philanthropy is so much bigger and larger than it is over here in terms of giving to charities and voluntary groups and foundations?

Sir Sandy Crombie: It is never wise to volunteer, perhaps, at these things, but it is just speculation on my part: I think in the US there is a great deal of expectation that you will look after yourself; the state does rather less. Therefore, I think there is just perhaps more of an expectation that if you can give, you do. My understanding, though, in the US is that quite a large proportion of monies given go to education, or the higher end of education, and religion. So it is not clear to me that the benefits are felt in the more difficult areas of society just because overall more money is given.

Robert Mirsky: I think I am the only American on the panel, so to me, certainly in setting up a charity in the UK, there were cultural differences in looking at doing things here versus there. Initially I thought perhaps it was the tax system-there certainly are some easily identifiable benefits in the US, such as direct tax deductions and things like that, that, frankly, I did not understand worked quite well here too. In fact, I actually had a conversation with one of my personal tax partners here to say, "What are the differences?" He has dual nationals, and said it is actually easier for them to make charitable donations here. At the end of the day, I do not think it is a discussion around tax; I think that there are cultural differences between the countries, whether it is because the society there deems it necessary to do that; I was raised to believe, "You must do this; you must give back." I do not know if it is the same.

Q227 Robert Halfon: Is it because maybe taxation is higher and the state is bigger here, so we are less inclined to give philanthropically?

Robert Mirsky: Certainly, I feel that what I have noticed here in the work we do-my charity focuses purely on the treatment and prevention of child abuse in the UK-and from conversations I had with people about our grant-making going to charities that do pick up slack where Government cannot manage to do what the expectation is that it will do, is that people push back quite hard. They say, "No, this is Government’s responsibility; it is not our responsibility to do it," and I certainly get pushback there.

Chair : Do any other witnesses want to come in on that?

Chris Blackhurst: May I just say on the American difference that perhaps they are at the same stage that we were in the Victorian era; we then lost that intervention when we had far greater public funding, the welfare state, etc. Their industrialists do have a far greater sense of duty that perhaps we had back in the 19th century or the turn of the century. When you go to universities you see these boards of great names that gave money and they did it out of a sense of duty of putting something back. Somewhere it has got lost. I do not think it is just taxation; I think we are a bit fixated on the tax benefits, although they do have them.

Q228 Robert Halfon: Why do you think we have lost it here?

Chris Blackhurst: I think we lost it because of the growth of the welfare state and growth of public funding. If you look at the American system as to where their money goes, I think it was just said earlier, an awful lot of their money goes to education and healthcare. In our society that has been lost and we just do not do that.

Q229 Robert Halfon: Do the budget measures go some way to address that? If not, what other measures would you put into place to try and increase philanthropy?

Chris Blackhurst: I think they go some way; I do not think they went far enough. I think the one thing the Americans do that we do not have, as I understand it, is lifetime giving. That lifetime giving means you can give to a charity and whatever you give is ring-fenced from future taxation. That is a huge benefit and that allows you to develop a relationship with a charity. One of the complaints that charities make here is that we only give when we are dead, and you cannot really have a relationship with a dead person. Whereas, if you say to a charity, "I want to give you £1 million, £500,000, £5,000, £50"-whatever-they can develop a relationship with you; they can get to know you. You can go to events; you can start having a relationship, or a friendship, and in America they do that.

Martin Brookes: Without taking issue with anything that has been said, I think just a couple of things are worth highlighting. One thing that they have in the US that we do not really do very well here is very visible giving. There is a lot of research that shows that if I give and I give publicly, then you are more likely to give. That way of doing it we find sometimes a bit garish, but very visible public acts of giving are very valuable in terms of creating a culture in which people give, so I think that is important. They also have far less inherited wealth than we have, and there is lots of research that shows that if you inherit your wealth, you are markedly less inclined to give money away than if you have made your wealth yourself.

Chris Blackhurst: I would like to add one thing to that as well that I think we overlook. Certainly in the last decade for people who give, particularly who give large amounts, the tendency-and I would say this wearing a media hat-has been slightly to wonder, "What are they after? What honour are they after? Are they after a peerage? Are they after a knighthood? Why are they doing this?" That has created an unhealthy atmosphere in society.

Q230 Chair : We will come back to the peer effect of giving and how we can encourage that later on in our cross examination. However, I wonder if I could ask a slightly obvious question: should the financial sector be donating more money.

Chris Blackhurst: Do you want an obvious answer? Yes.

Q231 Chair : Yes. And does the panel agree with that? Nobody disagrees with that?

Sir Sandy Crombie: Yes.

Robert Mirsky: I think every sector of society should be giving more. I do not think it is solely focused on the financial services sector.

Martin Brookes: I think it is an obvious place to look at in terms of where wealth is concentrated; the proportion of giving by rich people versus poor people; the concentration of wealth in a small number of very significant institutions that could do so much more, both directly and in terms of encouraging their staff. So I think an overwhelming yes.

Q232 Chair : The bankers in particular are in the category where they have made their money rather than inherited it. Yet, as a proportion of their income, the impression we get is that they seem to give rather little. In fact, Mr Brookes, you have written, "Perhaps bankers do not feel a sense of duty and responsibility towards charities and the causes they tackle," though you add, "I refuse to believe that bankers are less moral than the rest of us. We all seem to feel rather limited duty to charity, as low levels of giving overall suggest." How do we tackle this less than moral outcome from these otherwise probably perfectly respectable people?

Martin Brookes: I think we should actually talk with them and engage them in dialogue about what they do for charitable giving and whether it is enough, and whether they could do more. We could just harangue them, but I am not sure that is very purposeful or productive. So I think talking to them about how they encourage their staff to give, how they matchgive what their staff might donate, how they matchgive what their staff might fundraise. I think there are purposeful conversations that could be had with the banks, whereby you could get to a better understanding of what the barriers are to them doing more. Then, eventually, you may reach the point where you decide that they are less moral than the rest of us, but I think that I would want to defer that conclusion and try a number of things before you get to that rather pessimistic point.

Sir Sandy Crombie: This conversation has morphed away a little bit from your starting point, which was the financial sector, to perhaps individuals who happen to work within the financial sector. I do not think the two should be confused. Companies operating in the financial sector are really no different from any other company; they have to justify what they do. If you wanted a view on whether companies could generally do more, I would say yes. I think companies could be better citizens as companies, and I think they could do more to encourage the individuals who work for them to give more as individual citizens. In that sense, I would agree that more could be contributed generally. I would not want in a sweeping way to say that only one sector could give more.

Chair : I think we all agree with that.

Sir Sandy Crombie: Companies generally could contribute more, but they always have to justify what they are doing. Internally, they have a rationale for what they do because ultimately the companies are owned by shareholders or they are responsible to members one way or another.

Q233 Chair : I should point out that His Grace the Archbishop of Canterbury has argued that most wealthy financiers should be required to volunteer. I do not know how we would achieve that. Mr Blackhurst?

Chris Blackhurst: I would disagree with His Grace the Archbishop of Canterbury-I do not know whether I am allowed to or not-because, as has just been said, I do not think you can single out bankers. Bankers are put upon enough as it is. If you single out bankers you lead to a whole slew of arguments about whether they should relocate offshore, whether they are being singled out. I think generally all companies and all wealthy people should be encouraged to give more. Within that, obviously that includes banks and other people in the financial sector. Why just banks? Law firms, accountants, they are full of wealthy people.

In order to encourage them to give more, several things need to happen; a mechanism needs to be put in place. To come back to the Archbishop saying that they ought to be required, if all companies had a dedicated charity director, if they had a section in the annual report that this person had to take responsibility for, and actually had to say how much they give to charity, which charities and why, that would change things immediately. It would cease to be just a paragraph in the Chairman’s bit, which is often their own pet favourite. I would like to see the charity sector get more efficient. If you are asking wealthy people, who by definition are successful, efficient, entrepreneurial people, to give money to charity, you cannot just expect them to give willy-nilly. I think the charity sector themselves have to show increased efficiency.

Q234 Chair : What role should charities themselves play in promoting philanthropy among this group? Are charities particularly good at it? Mr Mirsky might have a view about that.

Robert Mirsky: Just to relate back to your earlier point for a second about the assumption that bankers and those in the financial services sector do not, as a whole, give enough to charity, from anecdotal experience and from my experience with Hedge Funds Care, there has been significant growth in what we do. Every year our revenue has continued to grow as we get more support from the hedge fund industry in particular. There are many individuals with whom I work in the hedge fund sector who give not only money but time. I was spending a day a week out of a work week getting the charity set up. I was not alone in setting up the charity. So I believe that your question is: what else can charities do to be encouraging more involvement? Is that right?

Q235 Chair : How can charities market themselves better?

Robert Mirsky: Again, Hedge Funds Care in particular is a charity that does also serve the purpose, I hope, of reflecting the philanthropic values of the hedge fund sector to prove that there is something being given back to society, to our community. So we do spend time speaking with people in our sector and also those in the charity sector to help them understand what we are doing and why we are doing it. There is an active marketing campaign that takes place alongside what we do to raise money.

Martin Brookes: Can I chip in there? I think charities have done a very poor job in the last couple of decades, and perhaps for longer, marketing themselves to wealthy donors. You see evidence for that when you talk to individual charities about the profile of their donations and how many big ticket donations they get. They tend to get very small five- or six-figure donations. In the last decade you have seen a number of charities start to recognise this and start to invest in so-called high-net-worth fundraisers. However, the fundraising industry generally is not very good, frankly. We just do not have a very high quality fundraising sector in Britain. It is not just me saying that; the former head of the industry of fundraising would say that. There is a dearth of quality fundraisers in the UK, unlike in the US.

Unless you get better quality fundraisers, it is quite hard to make pitches to the sort of people that Chris describes-the sort of people that Robert knows as well in hedge funds-who are used to high-quality professional services. It is very easy and perfectly legitimate to criticise the financial services industry for not giving more; I am very happy to do that. However, charities have done a very poor job at marketing themselves, presenting themselves and reaching out to wealthy donors. I see every week when we talk to charities about presenting to donors where we are advising, we are often having to say to them, "Do not do it like this. Do it like that. This is really poor quality. Can you provide something more efficiently, higher quality, more timely and so on?" So the problem rests partly with charities as well as with wealthy donors.

Q236 Chair : Is it because some charities-how shall I put it-are evidently of a different philosophical persuasion than many people who earn large sums of money, and people who feel that charities are campaigning against the system that is producing the wealth might find it quite difficult to give money to people who share very different values?

Martin Brookes: Sometimes. It can play a role, but I think that can often come across in the form of a problem of language, for example-that they use different languages and have different expectations of how to manage relationships and so on. So it is partly ideological, but it is partly to do with the practicalities of how these two sides do business.

Chris Blackhurst: If I could just interject, I think all charities should be required, almost as a matter of law, to declare on the front of their blurb what percentage goes to the charitable purpose and what percentage goes to expenses. That ought to be required and it should be publicly there. I would like to see the Charity Commission being far more proactive in this area.

Chair : The Charity Commission’s job is to ensure that the money is used properly, but I hear your suggestion.

Q237 Charlie Elphicke: Just a supplementary on that, Mr Blackhurst. Do you think that there is a problem that too many charities talk the talk rather than walking the walk, and that their propensity to campaign rather than get on and do the work of engaging in the need causes a lack of trust and puts donors off?

Chris Blackhurst: Yes. My perspective, and it really is only a perspective, is that there are too many management charities. I think it is baffling. I cannot remember the figure, but if you look at the number of charities devoted to cancer the figure is enormous. There are just far too many. I hear what has been said about the Charity Commission, but I would like to see the Charity Commission behaving as a proper watchdog. I would like to see it almost like the Financial Services Authority or Ofcom for the charity sector. I would like to see its people going in, I would like to see it giving marks and I would like to see it forcing consolidation. There is a ridiculous number of charities; why does the Charity Commission not say, "We think you should merge"? It just does not seem to happen.

Q238 Charlie Elphicke: When charities abuse their position, too often the Charity Commission is a bit of a paper tiger, isn’t it?

Chris Blackhurst: Yes. I think we are all familiar with cases where there is fraud and somebody has been stealing out of the tin; there are those cases, but generally they do not seem to be taking an overview of the sector and looking at how it can be improved.

Chair : Anybody else?

Robert Mirsky: Donors have a responsibility as well to ensure that the money they are giving, and I think Martin would probably agree with this, goes to charities who are working in responsible, efficient and effective ways. Charities themselves I think can operate, assuming they have a reasonable charitable purpose, and in my opinion there can be as many charities as you want.

Q239 Chair : That is where an employer has a specific role, isn’t it? If an employee says, "I want to take an interest in such and such a charity, but I want to give it some time to find out how they spend their money and help them do better," that is where an employer needs to say, "Right, we will give you time off to do that," or "We’ll make allowances in your hectic 90-hour a week schedule in order for you to be able to do that."

Robert Mirsky: I certainly think that charities should have information disclosed that would make it easier for employees-

Chair : No, I am asking a different question. It is about the role of employers giving people the time to find out about those charities, to be involved in those charities.

Robert Mirsky: I think it would not be unreasonable for employers to give-

Q240 Chair : But in your experience are employers under pressure? We know that the financial services sector is a very pressurised sector where people burn out because they are so hard worked. Do employers instinctively give the time for that sort of thing?

Robert Mirsky: In my experience with the companies with which I have worked, the corporate and social responsibility programmes are significant programmes for us. There is a genuine interest and a growing interest, I think, in ensuring that the businesses do undertake appropriate corporate and social responsibility. So they are giving time; they are giving access.

Q241 Chair : So your message is that the culture is improving?

Robert Mirsky: That is my belief, yes.

Q242 Chair : Well, you seem to be evidence of that, certainly.

Q243 Kelvin Hopkins: Bankers have been in the news a lot in the last two or three years, and with good reason but, as you say, bankers are not the only rich people and some of you have been suggesting that many other rich people have not had the same focus. However, is the recent new emphasis on philanthropy simply a smokescreen or fig leaf to take attention off the bankers and their bonuses, and haven’t they continued to get away with it?

Martin Brookes: I am not quite sure how to respond to that. I do not think there is an intention that philanthropy is an attempt to detract attention from bankers and the responsibilities of bankers. I think there is a genuine growth in the idea of philanthropy and what it means, and I think that goes hand in hand with a growing proportion of wealth being made rather than inherited, with a lot of wealth in absolute terms being made and-notwithstanding the events of the last couple of years, that is still the case-of many people making wealth very young, of there being some very prominent examples of people giving away lots of money, such as in the US.

So I do not think that philanthropy has been created as a smokescreen. I certainly would accept that there have been times when the rhetoric around philanthropy and what is being done by wealthy people has been exaggerated and hyped, and used to try to offset some of the criticisms being made of bankers, but I hope that is a meaningfully different perspective. My organisation, with the word "Philanthropy" in its name, was not created by bankers to make them look good in anticipation of them being criticised in the future. It was a genuine attempt by people who had made a lot of money to try to improve levels of charitable giving and where charitable giving was done. It might get raised occasionally as an example of why bankers are okay; it is not an example of why bankers are okay.

So I think the construction of your point is flawed, while I have some sympathy with the idea that philanthropy is sometimes used-wrongly-as an excuse for bankers’ behaviour.

Chris Blackhurst: I would just add to that. I do not think we should get into a debate as to why people give; it is one of our failings. Why do bankers give? If they give it for good PR, what is wrong with that? The fact is charities benefit. We could argue forever about whether they are doing it as a smokescreen because they are earning tonnes of money elsewhere. As long as they give more, who cares?

Q244 Kelvin Hopkins : The tenor of some of your comments so far is why the rich in Britain do not give actually, compared with America. Maybe I am cynical; maybe I am just a realist, but isn’t the real threat that the Governments might one day start to raise taxes on the rich a bit, and rather than have taxes you would like to have this culture of apparent philanthropy-a little bit of giving-to deflect Governments from raising taxes on the rich?

Martin Brookes: As the Chair has quoted me, I am not an apologist for bankers. I was once a banker myself, but I am not an apologist for bankers. The idea that the people I work with and talk to give or want to talk about philanthropy as a way of offsetting or minimising in some way is patently absurd. It just does not hold any water at all. The people I talk to and who set up my organisation want to give in order to achieve things with their money that they have made. It begins and ends there. There is no sub-agenda; maybe for others, but I certainly do not see it.

Q245 Kelvin Hopkins: We have not seen very many figures in terms of the actual donations of wealthy people to charity-I have not anyway-but compared with a small increase in taxes on the rich, the amounts involved are very small indeed.

Martin Brookes: And all philanthropists make precisely that same point, including Bill Gates on the Today programme when he was in the UK recently. He decried the idea that philanthropy could be the solution to global problems. He said it could pump-prime models and so on; it could be very valuable, but it was not a solution; it was not a replacement for the state, and that is the biggest donor in the world saying that. I have only ever met donors making that point.

Q246 Kelvin Hopkins : I make a simple point that for vital public services, the state has to have the main role in taxing and paying for those public services.

Martin Brookes: I know of no philanthropist who would disagree with that-not a single one I have ever met.

Q247 Kelvin Hopkins : But there is a legitimate role for giving, in essence, for the extras that it is not vital for the state to provide.

Martin Brookes: But some of those extras are actually very important-developing a cure for malaria, for example, or trying to conquer TB. There are lots of things that the state does not do or does not do very well: creating ways of helping teenage girls who are facing sexual exploitation, which has been a big issue in this country recently, is basically being funded privately to a significant extent, not entirely. So philanthropy has a very valuable, important role to play alongside the state.

Q248 Kelvin Hopkins : We could debate the interface between what is appropriate for the state to provide. Recently I was invited along to a local, major public service organisation, and I thought I was going talk about the provision of services but I was actually asked if I knew any millionaires who could make some contributions. Being a Labour MP, I do not know many millionaires, I am afraid. The one I mentioned who I did know had already given. So that was it, but this was a public service. It was not indeed one of these extras for which charitable support I think is appropriate.

Chair : I think it is a point, not a question.

Kelvin Hopkins : I am deeply sceptical about the whole idea of philanthropy being a substitute for public services paid for out of general taxation.

Martin Brookes: Who says it is?

Kelvin Hopkins : I was asked, as I say, by a local public service for something that is absolutely essential for human life at a particular age, and I thought it was wholly inappropriate to be asked. That should be paid for out of taxation, and the taxes should be paid for proportionately so the rich pay more and the poor play less.

Chair : I think Mr Brookes has dealt with that point by saying that-

Kelvin Hopkins : I shall come back to that.

Q249 Chair : -there are certain things the state does not do very well, or there are certain things the voluntary sector does extremely well that the state cannot substitute for. Moving on, can I just ask, just to deal with this question about Project Merlin, was anybody on the panel involved in Project Merlin or have knowledge of Project Merlin? Was there a conversation with the Government about the relationship between Project Merlin and philanthropic giving of the sector? Sir Sandy?

Sir Sandy Crombie: I suppose I should claim some knowledge, but obviously I was not personally involved in the detail of the discussions. Merlin is a two-way agreement. It was offered by the banks to try to calm the situation, to try to get a Government engaged in ensuring that there is a level playing field for British banks to participate in business and commerce in the future without being unduly disadvantaged. In return, I think what the banks have offered is to ensure that their contribution to society will not be diminished, so each of these major banks will ensure that they will not give less or contribute less in the future. Then it was the contribution into the Big Society Bank, so-called, to ensure that that particular avenue of things could be funded.

Q250 Chair : We will come to the Big Society Bank a little later in our questions, but you mentioned the big society. Can we just deal with another elephant in the room? A great many people somehow feel that these huge bank bonuses are really not compatible with the kind of caring/sharing society that we really want to be living in. There are people who take these big bonuses and just take a vast majority of it home and do not give philanthropically; this is not right and this leads to the Archbishop of Canterbury perhaps feeling as strongly as he does on this matter. How do you as someone in sector or, indeed, someone in the hedge fund sector square the big bonus culture with the big society?

Sir Sandy Crombie: I think personally it is to confuse two issues. What the Board of RBS are trying to do, just as one example in this particular sector, is bring back to health an institution in which the country has a major stake.

Q251 Chair : But the culture of this investment banking climate is that you have to pay these very large bonuses, and that sticks in the craw of a lot of ordinary people, and they cannot understand it.

Sir Sandy Crombie: We are not unaware of that.

Q252 Chair : But how do you morally square this circle?

Sir Sandy Crombie: What we are trying to do is rebuild value in the Bank. The country has contributed £45 billion, at 50p per share equivalent, into this Bank to keep it alive and give it a future. What we are trying to do is put that value back in the Bank. Currently the market values the shares at 41p each. The difference between 41p a share and 50p a share, as far as the country and the Government is concerned, is about £9 billion. There is a lot of value to be put back into RBS before that repayment can be made without a loss of money. I think the country might expect to make some sort of profit on the deal. There is a lot of value to be put back in, and the focus on the Board is to try to get that value put back into the Bank, swallowing what has to be swallowed in order to get that done. We cannot afford, perhaps, to share the high moral stance of Archbishops if it would damage the institution and damage its prospects of restoring value.

Q253 Chair : So your argument is that in a liberal society, where we practise capitalism, which is the only system that provides for prosperity, etc, you have to take a laissez-faire attitude to the morality of people receiving large bonuses and what they do with their bonuses. In the end that is not the state’s business?

Sir Sandy Crombie: I would not use the expression laissez-faire either. We are doing what we have to do to restore value to the institution. The individuals who earn money will have individual rights to do with that money what they will. I do not think it is down to the Bank to tell them how to run their lives, what moral code to have, what duty they should feel to society to contribute personally their time or their money. We cannot involve ourselves in that any more than any other employer could. However, that is not to say that the institution itself is in any way falling short of its responsibilities. It feels a sense of duty to the country, a sense of commitment given the funds that have been made, but then the Bank actually underneath all of this, behind the scenes, has been a significant contributor over the years. In my role as chair of the sustainability committee I have good sight of all the various activities that the Bank indulges in and it is trying very hard indeed to be a good citizen as a corporation, as well as to give its employees a chance-themselves individually-to be good citizens.

Q254 Charlie Elphicke: Gentlemen, would I just be alone in thinking that most people in financial services, and indeed most high achievers and wealthy people across the whole of the UK economy, work long hours. If that is the case, are they not just going to go home at the end of the night, bushed, sit down, have a gin and tonic, relax in front of the TV? And our best hope is not to ask them to volunteer, but to give money because that is the greatest contribution that they could make because their time is arguably better spent generating more money and building up the economy?

Robert Mirsky: There is quite a lot that we do, again with the charity that I am involved with, that uses the skill set that we have gained and learnt in financial services: leverage, the ability to identify good businesses, solid opportunities and to undertake joint ventures. All of that skill set that we have learnt through the normal course of our activities we then take and use within the charity to make that charity more efficient, to help us grow funds and be able to make further grants of funds. So I do not think it is simply a matter of saying we would like more money from the financial sector. The time is incredibly valuable.

As I said, I was spending a day a week at least when starting this charity. I was very lucky; my employer at the time said that this was important to do, not least because it was something that was in the sector and would help from a broader marketing perspective for the firm, but I think also because it was the right thing to do, and it was that confluence of interest that made what we did successful. So no, I do not think it is simply a matter of saying, "Just give us more money," but it is also, "How else can you help?"

Chris Blackhurst: I would say as well I think there is an issue, if you are looking at bankers to give more, you have to look at the charities they are giving to. Too many give to their former schools, their former universities, and I think there is a wider argument that says, "Should those schools, should those universities, have charitable status?" because there are lots of charities that do not get money from bankers and the bankers will never look at in a million years. It is too complicated to just say that we want their money because I think it is a skewed sector.

The other thing I would say, just in relation to the bankers, is that I do wish we would stop singling out bankers. Wayne Rooney earns £200,000 a week, which is £10 million a year. Is the Archbishop of Canterbury saying to Wayne Rooney or to other footballers, "You earn too much; you ought to be giving more to charity"? Yet bankers appear to be right at the sharp end, and I think it has to be much broader than that.

Q255 Charlie Elphicke: Is that then a central point here? Everyone keeps going on about bankers, but is it first time to move on and, as Sir Sandy said, we should be focusing on getting our money back rather devaluing the business and devaluing the nation’s shareholding in these nationalised banks? Is it also time to stop just going on about financial services? There are a lot of rich people in this country across the whole broad range of areas, and is it not time for us to say it is not just about banks, but we should highlight and increase the awareness of matched giving schemes not just in banks but across other big businesses and other large employers? Is it time that we look across the whole landscape of wealth and encourage each and everyone who gets a good wage to be giving more to charity?

Chris Blackhurst: I would say there is a sharp distinction in the banks that were bailed out by the taxpayer, of which Sir Sandy’s obviously is one. In that instance the Government has some control over that institution. There are an awful lot of banks-Goldman Sachs, Morgan Stanley, JP Morgan, Deutsche Bank, I could go on-who do not owe anything. The Government has very limited control over them; they are multinational businesses. I think we should stop singling out banks and individual bankers, and I agree with you we should be looking at the broader spectrum of wealthy people generally and encouraging them all to give more.

Q256 Paul Flynn: I heard the Christmas message of the Archbishop of Canterbury. The Christmas message of David Cameron was, "Love thy neighbour and make sure his children have preferential internships." Isn’t it always thus that you were suggesting, Chris, the spirit level idea-that a happy society is one that is as equal as one can make it, but while we can be successful in making the poor richer, what is obviously impossible to do is making the rich poorer? If we are going to bring the two together, we must do that, but it is very difficult to affect the rich because they have been very successful in making themselves rich anyway and if they keep on doing that they will go on making themselves richer.

Isn’t this whole preposterous big society gimmick nothing but an attempt to window dress, to make things look good; it is in the self-interest of politicians, just as much of the money that banks give and the money that comes from big business is purely out of self-interest in order to advance their own PR. If we are going to ensure society becomes more equal and a happier society, as many of us would agree, surely the only way to do that would be to do it from the state and to say, "There are rules here. There are taxes here," and not to try to nudge people to behave in a way that is not sympathetic with human nature? Human nature is to be greedy and selfish, unless the purpose of the state is to overrule that not by nudging, by introducing rules.

Chair : I think we should allow the panel to respond.

Chris Blackhurst: I just want to say one thing on that. I personally was very sceptical about the big society, although I could see where he was coming from. I can see that. Wearing my Evening Standard hat-

Paul Flynn: Oh dear.

Chris Blackhurst: Sorry. Wearing my Evening Standard-

Paul Flynn: Speak as a human being then, rather than an Evening Standard person.

Chris Blackhurst: Well, let’s speak as a human; a human being that works at the Evening Standard.

Paul Flynn: Well, we all have problems in life.

Chris Blackhurst: We started a dispossessed fund to help smaller charity projects in London. I think I can say on behalf of the paper we were absolutely amazed by the response. So far we have raised over £5 million, but part of the reason that that has been successful-and somebody mentioned it earlier-was this phrase "matched funding". For every pound you give, the Government also gives a pound. That really appeals to wealthy people because suddenly they see that they are not just giving it on their own and it is not going into a bottomless pit; there is taxpayers’ money in there as well. So far, that fund, as I say, is over £5 million. That is entirely down to the fact it is matched funding and that is a big society fund, and I am beginning to see where it is coming from.

Q257 Paul Flynn: But it’s chicken feed compared with the money that Government has at its disposal. We know people have a good feeling when they contribute to the television charity giving, but again that turns out to be about £20 million, which is nothing in terms of national charity spending or Government spending. I am not going to apologise, but I do not read the Evening Standard.

Chris Blackhurst: I would take exception to that.

Paul Flynn: I have no idea what your scheme is, Mr Blackhurst.

Chris Blackhurst: If you are a small charity, it is not chicken feed. If I am a charity in Brixton that is trying to help school leavers find jobs, for me £5,000 is a huge amount of money.

Q258 Paul Flynn: But we are talking in terms of national spending, of Government spending.

Chris Blackhurst: Well, we have to start somewhere.

Paul Flynn: That is billions.

Q259 Chair : We could point out that Government debt dwarfs most other debts in society. Any other comments from the panel on this question?

Martin Brookes: I think just painting it as either state or private funding is not helpful. There is scope to increase charitable giving in this country markedly, and there are certain bits of society that are natural places to focus some of that energy, such as the financial services sector. Things like the dispossessed fund I think are very good for the idea of charity, the need for charity and the opportunity for individuals to give privately, whatever their political views. Those sorts of schemes are good and we should encourage them, but that is not saying that the state is bad; private is good. I think that is a false dichotomy.

There is scope for there to be more money directed towards some of our greatest needs because the state is unable, for whatever reason, to service all those needs. People who would want to encourage charitable giving, like the organisation I work for, are not doing that from some ideological position that says we are anti-state. Several of my Board are long time Labour donors. They just think that there is scope for more private funding to come out of particularly the wealthy in society and be well-directed and targeted. It seems to me that is it; it is not about saying that private is better than state.

Q260 Paul Flynn: But how are we going to change the nature of giving in this country? We do not have the tradition that they have in the United States; how do we get ourselves in that position, where it is taken as a given that people are philanthropic? One could also say they have appalling public services in the United States so they have to give. What do we do? Deteriorate the public services?

Chair : Briefly.

Martin Brookes: No, I do not think we do deteriorate the public services at all. There are various things that you can do with a tax system; there are various things you need to do in terms of making giving more public, more prominent, so people do it very visibly and openly. As I mentioned at the beginning before you joined us, there is clear evidence that this is a powerful way of incentivising. We need some sort of UK version of the Giving Pledge that Warren Buffett and Bill Gates launched.

Q261 Paul Flynn: Can we make them all Knights of the Garter and things like that? We use the honours system in that way now. Is that a legitimate thing to use?

Martin Brookes: If that is what is needed to encourage much more giving, then I do not think that is necessarily-

Q262 Chair : Why in particular do you think matched giving has such a low take up amongst national institutions, or indeed amongst business generally?

Martin Brookes: I think it is partly because employees do not know about it. I do not know about the matched giving at RBS.

Chair : Is it the responsibility of employers to create a culture in their companies so that people participate in it?

Martin Brookes: Yes, take Goldman

Sir Sandy Crombie: It is a professional matter.

Chair : Sir Sandy?

Sir Sandy Crombie: Certainly the two employers of which I have experience have both had matched giving schemes, but there is a realisation and belief inside those organisations that we get better, more complete people if they participate in society, if they engage with what is going on outside the office. It is a way of demonstrating to them that we believe it is important as a company that we give them time off to volunteer, and if the organisations in which they are involved need money and they raise some for it, then we will match it.

Q263 Chair : So why is the take up of matched giving amongst financial institutions so poor at the moment?

Sir Sandy Crombie: It may be that some organisations are not as enlightened and do not share the view that they will be better organisations if their people are more complete people and have engaged with society.

Q264 Chair : And how do we change that?

Sir Sandy Crombie: There are organisations like Business in the Community that work with organisations. I spent a year as ambassador for the Prince of Wales in Scotland, effectively working with other businesses in Scotland to spread the message to them of the benefits of taking a more holistic view of their role in society. I think we just have to keep up those inputs to create enlightenment in the leadership of these businesses. That would in turn change the nature of the businesses’ engagement with the communities in which they live and work and the people of those organisations.

Q265 Chair : So we do not need the Government to do anything? What recommendations should we be putting on the report?

Sir Sandy Crombie: I think we had this played out a bit earlier on-the difference between that which is vital and that which is good to have. I often use a parallel, which is the human body. If you immediately enter a very cold environment your body will distinguish between a vital organ and that which is just nice to have. The blood flow to you fingers and toes will be cut off to preserve the heart and lungs and brain. So physically, our systems work to distinguish readily between the vital and the good to have. I do not think there is any dispute among the people at this table that the Government will provide the vital. At the other extreme it is probably easy to distinguish certain things that are just good to have, and in the middle you can have a boundary discussion about whether something is or is not either side of the vital boundary.

What we are talking about here though is voluntary giving. The state takes its taxes; it is not always a voluntary activity, although some may view it that way, and we will use those taxes to provide that which is vital. But we are talking more at the other end of the spectrum, where things are good to have, where we have a stronger society if services are provided. I tend to the view that rather than focus on narrow groups, we have to have everyone believe that it is their responsibility to contribute what you can: if you are at the receiving end, not to ask for too much; if you are at the giving end to give as much as you can, and for that giving to be not just money but in kind. Again, my experience through life has been that people engage in an entirely different way if they give some of their time to a cause, work with the people who are trying to help others and see those who will benefit from their efforts, and they will feel very differently than just writing a cheque. So I think we should.

Q266 Nick de Bois: Sir Sandy, on that point, how much time and flexibility do RBS, the philanthropic nature of which you clearly feel strongly about, allow their employees right across the group, from the branches system through to the bond dealer, to support voluntary effort?

Sir Sandy Crombie: The statistic I have is that 40,000 RBS people gave some office time last year to volunteering. That is 40,000 out of 145,000, so it is a decent proportion. The total number of hours contributed were 170,000 hours, so it works out about four and a quarter hours per human being. As I saw those statistics, I thought, "The numbers are big; that is impressive," but on the other hand I am sure they could bigger.

Q267 Nick de Bois: Do you know what the rules are? Do they have rules on that?

Sir Sandy Crombie: As I understand it, I know one division will give up to three days a year. In my old employer, Standard Life, we were willing to let people have up to half a day a week or a few hours a week or, if people wanted to, we would work with them to give them secondments of up to three or six months.

Nick de Bois: And that was Standard Life.

Sir Sandy Crombie: That was Standard Life.

Q268 Nick de Bois: And that sounds very generous, but RBS?

Sir Sandy Crombie: I do not know that RBS is any different. I do not know the details of every local arrangement, but I do not know of any significant limits within the group to people volunteering a sensible amount of time from the working week to involve themselves with charitable organisations.

Q269 Chair : Would that be a plus point on somebody’s employment record?

Sir Sandy Crombie: My experience over many years is that people become more complete members of society. They are less focused, in the narrowest sense, on their day-to-day job and much more focused, in a broad way, on being more complete people, who can contribute a lot more and make more balanced decisions because they are involved, in a wider sense, in every aspect of life.

Q270 Charlie Elphicke: I just wanted to follow up on Mr Flynn’s evangelisation of Marx’s theorem. Do you find that the hypocrisy of politicians is something that harms giving? In particular, when they go on about how shocking internships are when most of them are in fact machine politicians who had internships using their contacts, and then rose to become top of the Shadow Cabinet table. Also, when they go around, bankrupt the economy then look around for someone to blame; it happens to be bankers. Does that approach harm giving when you then want to get money out of bankers to do good things in society?

Chris Blackhurst: I would say it confuses, yes. In the end, I do not think it stops somebody writing a cheque or deciding they are going to spend half a day a week helping a charity. However, I think it muddies the waters. On the one hand you have the Archbishop with a very clear statement, as you said earlier; then you have this murkiness, and nobody is really sure if something is good or if something is bad. I do think it muddies the waters, but I would not put it any more strongly than that.

Q271 Charlie Elphicke: Mr Mirsky, just turning to your own work, Hedge Funds Care UK, presumably the money you raise is then targeted at actually tackling the evil of child abuse at the grassroots level?

Robert Mirsky: Grants only.

Q272 Charlie Elphicke: Therefore, do you find that encourages more donation because the money is actually used properly?

Robert Mirsky: I do again. The way we distribute our funds is through the assistance of consultants that we have worked with. We have actually worked with New Philanthropy Capital in the past as well, but our current consultant is Dr Eileen Munro, who has been working with this Government looking at child abuse in the UK. What we find most effective is having that kind of real expert advice both on the charity side as well as then using our own skill set again to ensure that we are investing in businesses where we can get the greatest return, then involving those who participate in our charity with that grant-making process. We are a grant making charity; we do not undertake the work ourselves, so we make grants to different charities within Barnardo’s and the NSPCC.

So, for example, grants are going to Barnardo’s young women’s project in Islington that works with sexually exploited, predominantly, girls. This year I have found out that, so far this year, with a fairly small donation we have helped 79 children in Islington, one girl under the age of 11 who was being sexually exploited. So having people who are involved with our charity actually come and visit and see the work that we are doing is so hugely important to getting them in the mindset that there is something both outside themselves and there is a real difference we can make. I am hugely encouraged by the amount of support I continue to get and the growing support from, certainly, the hedge fund industry.

Q273 Charlie Elphicke: We should not forget also about smaller charities, like Eaves for Women and the Poppy Project, who do such brilliant work at the grassroots level. How can the work of Hedge Funds Care UK be replicated across other business sectors? How could we do more of this excellent work?

Robert Mirsky: I have to say, although it was difficult at first to find like-minded people, again it was a confluence of both self-interest, which I do not have a real problem with, and that the industry as a whole wants to show we are giving back to the community. If that deflects certain criticism for large bonuses, as long as the money is going to a good cause and we are using that money effectively and efficiently, I do not particularly care why they do it. I would like to just get those charities that are working at the grassroots level that money. So, I think if you can find ways in which other sectors, not just financial services, can find interest both in doing good for society and also improving their own plight within a particular sector, I think that is a hugely helpful way to begin to grow charities.

Q274 Charlie Elphicke: The other issue is in terms of raising money, and perhaps Martin Brookes will be able to come in here as well as an expert. You have Hedge Funds Care UK that I think has raised about £1 million since 2006. Meanwhile, the NSPCC or Children in Need can raise many millions in one night. How does one balance that off? Also is a USP the fact that you spend money at the grassroots while the NSPCC spends, I think, over £20 million on advertising and campaigning rather than dealing with child abuse?

Robert Mirsky: I think there are different ways to raise money and, again for us as a grant-making charity, the efficiency of those to whom we make grants is important, which is why we do give to specialist programmes. Although we have in the past given to the NSPCC, it was only for their ChildLine-their online services-because we thought that was a particularly underfunded area that was working very well. And so, I do think it is important to identify those charities where you can do things efficiently. That ultimately has to be what you as a donor are doing.

Q275 Chair : Before coming to Mr Hopkins, the hedge fund industry has a huge number of individuals who give very large charitable sums across the piece: people like Arpad Busson, Michael Hintze and there are many others. Is this a rather unsung benefit of having a hedge fund industry in London? Isn’t your effort just a small part of a huge amount of charitable giving that goes on that does not show up in the public consciousness at all?

Robert Mirsky: It is and we probably do not speak about it as much as we should as an industry. Even my charity gets significant anonymous donations because people want to support the work that we are doing. The industry as a whole has people across the piece. Chris Hohn and the Children’s Investment Fund, for example, makes huge donations.

Q276 Chair : This is what I find frustrating. The City of London is a huge tax generator for the UK. It is a huge generator of economic growth and prosperity for the UK. It makes London one of the great cities of the world and makes Britain one of the great countries of the world. Yet, it is all at risk because of the reputational problems the City now has amongst the public and amongst a lot of political leaders.

Paul Flynn: Also responsible for the crisis.

Robert Mirsky: But not the hedge fund industry.

Paul Flynn: Hedge funds are part of the gambling industry.

Chair : If the Chairman may finish his question, I would be grateful.

Paul Flynn: It is not a question. It is a statement and a very biased one, if I may say so.

Q277 Chair : Why has the City not got its act together to demonstrate what it does from a charitable point of view and, indeed, to co-ordinate its charitable giving far more capably in order to win over hearts and minds for the benefit of the British economy?

Chris Blackhurst: I would agree with that, and I think one of the weaknesses of the City is that it has failed to co-ordinate and present a united picture and tell society what good it does. Banks themselves have failed to do that and that is a mystery to me. I have said before that if Goldman Sachs paid for Great Ormond Street for a year, it would be "the Bank that pays for Great Ormond Street". It would not be "the Bank that paid big bonuses", and that is how it would be treated in the press. They do not see it that way though. It is a point of weakness in the City; I do not understand it.

Q278 Chair : But doesn’t this speak of so many individuals who have become so insulated from the rest of society by their ambition and, in the end, the wealth itself. They become part of the sort of international, global wealthy community. Though I emphasise, in my experience, most wealthy people I meet give an enormous amount to charity, somehow they have not connected politically with the rest of society. That in itself is a very bad advertisement for such wide disparities of inequality if the wealthiest in society, and those who earn the most in our society, are so isolated from the rest of society.

Martin Brookes: I think that the hedge fund industry is very striking in that there is a list of fairly illustrious individuals within it-some of them you mentioned, like Mike Hintze, Arpad Busson, Paul Marshall, Ian Wace-who have made a lot of money and are very active in giving away not just their money but also their time and their effort. I do think they deserve more credit than they sometimes get.

I think sometimes the investment banks are very striking in not being so active as the individual hedge funds are. I think that is partly the nature of big institutions like investment banks rather than small, more tightly controlled institutions like hedge funds. So I think there are lots of individuals who are very active. I am not sure that the financial services industry collectively is really active. You could trot off a list of very wealthy donors. The fact remains that the richest 10% of this country give 1.1% of their expenditure and the poorest 10% give 3.6%. Whatever list of individuals, and I could talk about Jim O’Neill at Goldman Sachs, who gives a lot a money and is very active as a donor, Goldman Sachs as an institution is not. The richest 10% give just over 1% of their income and it is nearly 4% for the poorest 10%. That is a very striking statistic that collectively as a society we should be awkward about, ashamed of and want to do something about.

Q279 Chair : Should society be ashamed of it or should the individuals concerned be ashamed of it?

Martin Brookes: I think both.

Q280 Kelvin Hopkins: If I could just pursue that, your report draws attention to these statistics that we have just mentioned, but it also draws attention to some of the reasons given, one of which is the rich cannot afford it. I find that less than persuasive and it does, I am afraid, remind me of the famous film, "Wall Street", when Michael Douglas said, "Greed is Good." It was meant to be a morality play-a parable. He turned out to be a folk hero for the City. Appealing to people’s better nature just does not work in the end. If they are rich, if they are self-centred and selfish, they are not going to do this. The only way to deal with that is to have stronger progressive taxation to make sure that people less well off have their fair do.

Martin Brookes: Can I break that down? In terms of the first part, us writing a report that rich people say they cannot give because they do not feel rich enough is not a validation of that statement. It is merely reporting what they say. I think it is a rather depressing statement, as is the statement that, "I cannot give because I cannot connect to a cause," and when we have written those sorts of statements up I hope we have been fairly measured in how we are dealing with them. We are just stating what people say rather than endorsing it.

So I do think it is very frustrating to meet someone who is palpably and objectively rich, who has no sense of where they are on the income distribution and does not want to give because they do not feel rich enough. I think that is really quite depressing. That is really because they are, as the Chair said, disconnected from society somehow. I think we should try to work out how we can connect them to society. That is why I think there is a collective responsibility. It is not just down to the individuals; it is down to us as well.

I have a private view on appropriate taxation and what we should do about wealth, but I do not think my institution and the sector as a whole does, to go back to my earlier point.

Q281 Kelvin Hopkins : We talked earlier about areas that are appropriate for charity. I think money for Scouts and Guides and small organisations that are inappropriate in the public sector-fine.

Chair : Hospices?

Kelvin Hopkins : Hospices do derive a high proportion of their income from the public sector.

Martin Brookes: No they do not. Children’s hospices get less than 10% of their funding from the state. Is that right or wrong?

Q282 Kelvin Hopkins : Hospices have grown up and I support our local hospice very strongly and sometimes financially a bit as well. That is one of those at the interface. Some might argue that a hospice is one of those organisations that should actually be part of the National Health Service, but they have grown up as an addition to the Health Service and they are partly public funded, and I think rightly so.

Chair : What’s the question you are asking?

Kelvin Hopkins : The concern I have: you say you want to bring people into society. There is another factor. It is not just about giving and choosing where you give and targeting certain areas where you give, but actually recipients too. When I was young, the idea of charity was frowned upon. We wanted services provided to us to be a social right. Where it is a vital public service-and increasingly charity is creeping into the public services -it is in a sense that we give according to our ability through the tax system but we take according to our needs through the public services.

Chair : But do you have a question, Mr Hopkins?

Kelvin Hopkins : I am trying to press you on this case of where charity is appropriate. If you want to really make sure that people donate generously, can you ever do it through persuading them to be nice and to do it with charity?

Martin Brookes: Can I answer that while making two observations? I think there are all sorts of anomalies about where public funding begins and private funding ends and so on. In the US breast cancer funding is funded mainly by the state; in the UK it is funded mainly by private donations. I do not know which one is right in terms of how you should design a society; I think there are endless anomalies around that. The fact that children’s hospices get less of their funding from the state than do adult hospices I think is very striking. It is a consequence, really, of the ability of the children’s hospices to raise money from the community. I do not think it is necessarily a sensible ordering of things in terms of where the state begins and ends. That is the first thing; it is to say that I think it is very difficult to draw firm boundaries here. There are all sorts of anomalies. I know lots of things that are privately funded that save the state money, and you could argue that they should be publicly funded because the state should be investing to save. So that is the first one.

The second point is I do not think that the children who are helped through Hedge Funds Care and the projects that Barnardo’s run around the country, working with women and children who are sexually exploited, give a damn where the money comes from. I just think they realise that they need help. We as a society should recognise that there needs to be more funding of those things, not less funding of those things. If we can get private donors to do that, to adequately plug some of that gap and provide some of those services, I am willing to do that. I want to do that and I do not think that is an ideological point; it is an entirely pragmatic point. If you ask any of those beneficiaries what is the nature of the cheque that is being written to provide the service, I do not think they really care.

Q283 Kelvin Hopkins : This philosophical debate could go on, but the simple point is that the richest third of the population give less as a proportion of their income than the poorest third.

Martin Brookes: Yes.

Kelvin Hopkins : And it demonstrates to me that the rich do not actually care and will not donate to what are often vital services.

Martin Brookes: I think it shows to me it is a problem we have to try to fix.

Q284 Chair : But it comes down to this peer group pressure. Despite the tremendous examples of many individuals in the City and amongst wealthy people-let’s not just brand the City; I am glad the point was made about footballers-there does not seem to be that culture that if you have been fortunate enough to become very wealthy, then you should participate in the charitable sector with your time and your money. How do we change that culture? Should we encourage more people to boast about what they give to charity? It is a very un-British thing to do; the Americans do that a lot, but the British do not do it. What is the answer to this question? We are all rather shy about what we should do. Sorry, I will start with Sir Sandy.

Sir Sandy Crombie: I think we are probably all shy from suggesting we know the answer to everything.

Chair : But haven’t employers a role?

Sir Sandy Crombie: Let’s try and categorise people. There are those who are giving; there are those who are giving when prompted; and there are those who are not giving at all. If we look at those who are already giving, we could look at why they are giving or what they are giving to and perhaps understand it a bit better because we want more of that to happen. I have a particular example recently where one person, when prompted on three separate occasions, has given quite readily to good causes. He happens to be reasonably well off. So I think that there is a lot of capacity to give that is just needing to be prompted, and we have to look at what those prompts are, because if we can prompt better, whether it is the charities themselves or it is something more generally that is happening, then more will be given. It is not that there is a reluctance; it is just that it is not front of mind and people are just not thinking about it.

Q285 Chair : But is it about employers publicly supporting and publicising those individuals who give more in order to create that corporate culture? In Goldman Sachs, for example, it is a good thing to give lots of money to charity and that becomes part of the corporate culture of Goldman Sachs, which it does not seem to be at the moment. Although, I hasten to add the one person I know who has become very rich at Goldman Sachs has given a great deal of money to charity.

Sir Sandy Crombie: We should distinguish though between the corporation and the individuals. Ultimately, the wealthy individuals are not necessarily going to be prompted by corporations. I think we should separate the two things in our minds. The companies do not rule the people. They can give prompts; they can give-

Chair : But it’s about the culture, isn’t it?

Sir Sandy Crombie: -licence to do things. There can be a culture inside a business, but all businesses will have people who do not necessarily absorb the culture, and I do not think it is the answer to everything. I have already said I think companies can do more, but I thought the debating point here was how we prompt individuals.

Q286 Chair : Do you think politicians asking, "Well, what is his agenda then?" acts as a deterrent to public giving? Mr Mirsky?

Robert Mirsky: Yes, I certainly think asking the question, "Well, why did you do that? Where is the self-interest there?" is an unhelpful thing to do.

Q287 Chair : But it is always going to happen, isn’t it?

Robert Mirsky: It will, but it does not happen the same way in the US that it does here, so I wonder whether it will always be this way or will people accept the fact that this giving is happening and it is benefiting good causes, and the more we attack the less likely it is that there will be continued giving?

Q288 Chair : So in fact the politics of envy is very destructive of charitable giving?

Robert Mirsky: Yes.

Sir Sandy Crombie: Yes.

Q289 Paul Flynn: Could you tell us then, Mr Mirsky, what percentage of the turnover of the hedge fund business is devoted to charitable giving in your organisation?

Chair : It would be more realistic to ask about profits, wouldn’t it, rather than turnover?

Paul Flynn: Profits-even better. Profits and turnover-what percentage ends up in the hedge fund charity?

Robert Mirsky: Sorry, that is not a question I can answer.

Q290 Paul Flynn: What sum of money is involved?

Robert Mirsky: Let’s take an example of the ARK charity, which is one of the bigger charities in the hedge fund industry. Last year I think they raised £15 million at one event.

Chair : I should declare an interest; I attended that event and the former Prime Minister, Mr Blair, spoke at that event.

Q291 Paul Flynn: I regard a hedge fund as part of the gambling industry rather than part of commerce. It does not produce anything; it does not add to human happiness in any way. It enriches the people involved in it, as gambling does.

Chair : By all means answer the question, Mr Mirsky, but isn’t this part of the background noise that we have to overcome in order to encourage more philanthropic giving?

Paul Flynn: The Chairman’s making a statement that these presumably hedge fund people need to be lined up for beatification because they are such wonderful people giving huge amounts of money, but can we get some idea of putting it into scale by saying what percentage of their turnover or profits are given to charity?

Robert Mirsky: The fourth largest charity in this country is fully supported by an individual at a hedge fund. The fourth largest charity-it is larger than the Wellcome Trust now-is supported by the chair of a hedge fund. I cannot tell you how much money from the hedge fund industry goes in.

Q292 Paul Flynn: So there is no way of knowing whether it is the widow’s mite or whether it is an attempt to get to heaven through the eye of a needle, or what are they?

Robert Mirsky: He gave nearly £500 million two years ago to this charity. He gave £350 million the year before. I do not know what the number was for last year.

Chair : When Labour Chancellors borrow as much as they do, that seems like a widow’s mite obviously.

Q293 Paul Flynn: Somebody mentioned Bill Gates earlier on. Bill Gates has a real problem in that he cannot live long enough to spend all his money, and quite rightly he has spent it on unpopular causes, but causes that are right. Getting rid of polio and stuff; that is fine.

Robert Mirsky: The fight against AIDS?

Paul Flynn: When we go along to other charities, and I think Mr Crombie mentioned that he worked for the Prince’s Trust, I have certainly noticed, in my experience, in trying to work with charities as we all do as MPs, that if there is a Prince’s Trust event, the number of people who turn up will be about four times the number who turn out to an event that does not have royalty on it. They have some vague ideas that the MBEs will be handed out when they leave the room with a Knight. There are all kinds of ulterior motives, and is it a question of royalty supporting charities or royalty trying to be shorn up by charities by appearing to be philanthropic and so on.

Chair : Different societies reward different people in different ways.

Paul Flynn: Indeed.

Chair : Stalin used to make people a hero of the Soviet Union. Was that necessarily a good motivation? I think this is a rather destructive line to your question.

Paul Flynn: Better than going to a Gulag I would have thought. There were two ways of doing. You have derailed my train of thought, Chairman, and not for the first time. I think the point we are making: in the standard book for MPs, who are the only group of people who are as despised as bankers are now-we are similar social lepers in society-the advice given, which is absolutely sound advice in a splendid standard work for advising new MPs how to behave, is that all charitable donations are to be strictly anonymous for all kinds of practical reasons and other reasons as well. What we seem to be suggesting here is that we have to give people an ulterior motive for giving to charity by advertising their generosity. Is that the way forward?

Robert Mirsky: If that generates more funding for charities, if we can take more young girls of the streets who are being sexually exploited, I do not really care where the money comes from.

Chair : Is it necessarily a bad thing to celebrate good behaviour and positive social behaviour? Is that a bad thing?

Q294 Kelvin Hopkins : Can I just make a general point? We are arguing constantly from particular cases to the general. There are individual donors who are wonderful people-Bill Gates, George Soros and one or two others-and lots of others doing nothing, but there are also good causes that are being helped. I should say that sexual exploitation of children should be a matter for the police, for social services and for the health service as well, rather than a charity. If somebody is being sexually exploited I want the police and the social services to be involved as well, and they are publicly funded public services. This constant emphasis on individuals doing good things or donating lots of money actually does not answer the general case about the wealthy people who give nothing or do not care.

Chair : Was that a question?

Kelvin Hopkins : It was a question. I want to make the point about arguing from the particular to the general. It does not work.

Chair : Does anybody wish to comment

Martin Brookes: You are right and we have in the last decade in this country hyped up giving by rich people and taken individual instances of it, and made general points about it. The hard data on how much people give prove that that generalisation is invalid. However, the response to that can be either we harangue rich people, including those who do give large amounts of money and say, "What are their motives?" or we try to understand why those rich people who do not give choose not to give, and see if we can encourage them to give more. Or we can address it through the tax system as well. That is another perfectly legitimate response.

What I think we need in this country is ways of understanding better why people choose not to give and ways of encouraging them to do so. The workplace is key here. That is where people are paid; that is where there is lots of data shared; where you have an infrastructure that can be used.

Chair : And you create a culture.

Martin Brookes: To create a culture and I think Goldman Sachs should publicise those employees that use their very generous matched giving programme of $20,000 dollars a year and hit the ceiling of that. I think they should champion those; they should celebrate those; they should try and encourage others to do that.

Q295 Chair : Do you think the Government writing a thank you letter or establishing a national day to celebrate donors are initiatives that would help?

Martin Brookes: I think there could be better targeted initiatives.

Chair : They could be better targeted? Mr Mirsky?

Robert Mirsky: No, I would agree with that. I am not sure that would help too much.

Chair : Payroll giving-Mr de Bois.

Q296 Nick de Bois: Sticking to the same theme of employers, payroll giving theoretically should be one of the easiest ways of giving money. Once it is done the chances are it will not be adjusted until someone leaves their job. I would just like to kill off, if I may, the talk of rich and less well-off donors. Let’s talk about the middle-income earners, for whom I would have thought payroll donations would be quite attractive. I do not quite understand this, and I would like your opinion. Perhaps I could start with Mr Blackhurst, because I think you have expressed quite a strong view on this. Why do you think it has not taken off as a successful way of encouraging people to donate?

Chris Blackhurst: Because the bosses themselves are not giving the lead.

Chair : That is the point.

Chris Blackhurst: And I would say that if you worked for any organisation and you know that your boss gives 5%, then you are more likely to follow suit than if they do not. I think that is the major problem. All FTSE 100 and all FTSE 250 company executives ought to give 5% of their earnings to charity and then we would see what would happen.

Q297 Chair : Does the rest of the panel agree with that proposition-that it is about those in leadership positions giving the lead?

Chris Blackhurst: It has to come from the top.

Martin Brookes: Yes, but then with mechanisms to help people give.

Chair : Sir Sandy, you were looking pensive?

Sir Sandy Crombie: Around 10%1 of RBS staff contribute through the payroll.

Q298 Nick de Bois: 10% of your staff. That is quite high, would you say, compared with other companies?

Sir Sandy Crombie: My response to that would be 90% do not.

Q299 Nick de Bois: No, I am saying compared with other companies presently. I agree with you it is low, but I am not sure if there is an average. I thought we were talking about 1% of all donations are given through payroll.

Sir Sandy Crombie: I think that is right, yes.

Martin Brookes: Of those firms that have payroll giving, about 6% of employees use it.

Q300 Nick de Bois: Okay, so that is slightly higher. That is my point; I do take your point though. Sorry, carry on.

Sir Sandy Crombie: Can I make my point now?

Nick de Bois: About the leadership.

Sir Sandy Crombie: It started with a statistic. So we have a piece of data. It could have been more? Yes, absolutely. Is it right though for the chief executive to say, "Right, okay, I am giving through my payroll; therefore, so should you"? And I do not like that type of leadership. "If you do not do this, then I will think less of you," I do not think that that is the way to make a difference. I think that we should be looking much more at the generality of the good that can be done.

There has been a great deal of emphasis on individual giving, a lot of talk of the wealthy and whether they are or are not doing enough. Behind some of that we are in a sense talking about large single contributions and we are seeking to get more of them, but what I would have expected charities to want more of is regular giving, because if you are out there and trying to provide a service, then you need the certainty that the funding will be there to allow you to invest in having the skills, resources and the facilities necessary to provide that service on an ongoing basis. That is where regular giving, to me, has a lot more significance than individual one-off lump sums.

Q301 Nick de Bois: Can I bring it back to the point? Do you, in any of the organisations you work with, actively make your employees aware of the opportunity to donate or do you think-and I do not think this is unreasonable-charities should do more to make people aware of what they can do?

Sir Sandy Crombie: In the case of RBS there is a scheme that is actively used. Although perhaps comment has been made that 10% is not maybe as high a proportion as it could be, annual reminders are issued to the staff that this facility is available to them and the benefits are laid in front of them. So there is a prompt on a regular basis to think about doing it this way. That does not mean, of course, that the staff won’t contribute in other ways: either their time or their money. So we cannot presume that just 10% of people are contributing. It is just that 10% have agreed to contribute this way.

Q302 Nick de Bois: No, and I am not trying to make this an attack on RBS. It is almost that you are being a little bit defensive there. I am trying to get to an understanding of why this does not seem to have taken off. So let’s look at the role of the charities. Can I ask you, Mr Brookes, do you think the charities are pushing enough that this is an easy way to donate or are employers resisting? Let’s face it: half our businesses are SMEs. I imagine their payroll would be delighted at the thought of having more administration to do. Is that a problem or are the charities a problem?

Martin Brookes: I honestly do not know the answer to that. I do not have a good sense of it. I do not think it is the charities, but I do not have any real sense of understanding. I totally take the point about regular gifts through payroll, whether they be small or large but regular, and I think it is really important. I do think one of the great puzzles is why payroll giving has not taken off, and I simply do not have an answer to it. It really is something that needs to be cracked.

Chair : Mr Blackhurst, do you have a view on this?

Chris Blackhurst: My view would be that charities are not doing enough and that too much emphasis is put on people writing large cheques. Certainly, from my own perspective, as somebody who receives mailshots galore, I am sure like everybody else in this room, at home, I cannot think of one that has talked to me about payroll giving. It has talked to me about writing a cheque or setting up a direct debit, which are quite complicated things. The beauty of payroll is that it is taken at source, it is automatic and it is quick. I agree; I do not think charities do enough.

Chair : Moving on to corporate social responsibility, Mr Elphicke.

Q303 Charlie Elphicke: Yes, on this Sir Sandy, Royal Bank of Scotland actually does quite a lot of corporate social responsibility work. They have spent several hundred million pounds on financial education in classes, yet as far as I can tell you have not spoken about that at all as part of RBS’s work involved in giving. Do you think you are hiding your light a bit under a bushel as a bank?

Sir Sandy Crombie: It may be a good old Scottish trait to be generous but not necessarily to make a lot of fuss about it. That is not the way that society works up there. I do think the Bank has done some extremely good work over the years. Something like 350,000 children last year had a class to increase their financial awareness. A lot of young adults these days will have benefited as a consequence of this training, and the idea extends way beyond just schools now. So I think the more I understand about what this particular organisation does, the more impressed I am at the range of activities and the sincerity with which these things are done.

Again, a way to categorise what this organisation does quite broadly is to say there is a whole range of individual activities supported by the organisation, whether it is giving in kind or money and, on top of that, I think one way to think of it is that what RBS has done is take its normal day-to-day activities and extend those down outside the day-to-day influence and interests of the group. So it is clearly of interest to the group that the populace has better financial education and RBS has involved itself. It is clearly of interest that people are welladvised and RBS has involved itself in the advice-giving activities for that part of society that needs it. It is clearly important that enterprises get going and RBS has involved itself in stimulating and facilitating the creation of young enterprises.

It does not make a lot of fuss about it, but I think you are right that there has been a lot of good work. Whether it would be an exemplar and should make more of it to encourage others is an interesting debating point, but it is not part of the nature of the place to make a big fuss about it for brand reasons.

Q304 Charlie Elphicke: But equally, at a time when your Bank is under siege from many of the public, as well as from Mr Flynn, and there is great concern across the whole area, is it actually about time the Bank said, "Look, these are things we do; we are not all bad guys." Also, what about Chris Blackhurst’s suggestion? Why don’t you guys fund Great Ormond Street Hospital for a year? Why don’t you do something really radical like that to send home the message that, "Actually, we are not bad guys; we have changed and we care"?

Sir Sandy Crombie: There will come a time when people are willing to listen rather than merely berate those who are termed bankers. I think it is often forgotten that RBS has 145,000 of them and not just a few hundred. The organisation has a responsibility to all of its people to involve itself in society in a manner that is in line with where people live and work. To focus on one organisation in one conurbation that might benefit a very limited population is not necessarily consistent with the values and ideals of the whole organisation, which would want to support the communities where we live and work.

Q305 Charlie Elphicke: Mr Blackhurst, you say the Prime Minister needs to consider how CSR can be made to matter more and you suggest it could be done through a financial incentive. First, do you think that RBS and Lloyds HBOS are hiding their light under a bushel and ought to do a bit more? Also, how would you see making CSR matter working in practice?

Chris Blackhurst: I think they probably are hiding their light under a bushel. I did not know they did all that. I think CSR for too long has just been paid lip service to by companies. Let’s be honest, nobody got to be Chief Executive of any private organisation by the amount of CSR work they did. You get to the top because you are good at making money in businesses; you do not do it because your CSR side is particularly strong.

Saying that, we come back to something I said earlier that there ought to be a dedicated CSR director; it ought to be a section of the annual report; every company should be required to declare what it does in the CSR field. That way you start to have individuals in the organisation taking responsibility for it-people who might themselves be high fliers. Too often it is parked at the side; it is maybe somebody who has seen better days in the organisation, who might not be heading for the top, who tends to look after the CSR. That should not be the way it is portrayed.

Q306 Chair : It should be part of the mainstream of the business.

Chris Blackhurst: It should be part of the mainstream of the business, it should be part of the reporting requirements and it should be something that the companies take very seriously indeed.

Q307 Charlie Elphicke: Here is a real irony, because take the case of RBS, and you would not know this from listening to Sir Sandy, but they do have a CSR officer; they do put it in their annual report; they do spend, I think, something like £350 million a year, from recollection-this is serious money and actually serious work. Is it that companies are paying lip service, or are they quietly doing it and should be shouting from rooftops, "Look, we are doing all this sort of stuff"?

Chris Blackhurst: Probably in that case, but I do not think so. It might be because RBS are Scottish, I don’t know; they are deeply quiet. I still come back to this. RBS might be exceptional, but certainly in the City organisations I have come across it tends to be paid lip service to and that is a great pity.

Sir Sandy Crombie: The Financial Reporting Council has a say in what companies put out in their regular reports to shareholders, and there is a great emphasis on reporting that which is strategically important. Within the RBS annual reporting accounts, you will find the section on corporate sustainability, but that which is strategically important to a bank does not necessarily cover every aspect of the good that the people of the organisation do.

Q308 Chair : Is that something that should change?

Sir Sandy Crombie: No. Again, we are talking here in a way about shareholder information, and the Bank does report its activities with the defence sector, energy companies, those who extract oil in perhaps environmentally unfriendly ways and so on. That type of thing is covered as strategically important. We put out a separate corporate sustainability report that goes a little bit further.

Q309 Chair : It is astonishing that there are people who believe that the corporate social responsibility of our major high street banks is not strategically important to those businesses. I find that astonishing.

Sir Sandy Crombie: It is reported, but the weight of reporting, given that banks have such an impact on society in other ways, not just the ways that we are talking about-

Q310 Chair : But the whole of the City is floundering on this great bonus problem-this public relations disaster-of paying bonuses out of banks that some would describe as bust. I would have thought trying to redress the balance on that is strategically important.

Sir Sandy Crombie: Reputation is strategically important, but again I come back to that there will come a time when people are prepared to listen and interpret fairly. At the moment, there may be perhaps more of a perception that what the banks talk about in this regard will be viewed somewhat cynically. So I think we have to try and get over the point at the appropriate time that there is a lot going on, but no more than you would expect in an organisation of the size of RBS. I think the issue is whether we can get other institutions to do this much rather than put too much emphasis on what this particular one does.

Q311 Charlie Elphicke: Finally, how can large organisations build relationships with smaller grassroots charities?

Martin Brookes: I think big organisations often will employ someone who deals with their charitable services side. All the major banks, for example, do that already. They can deal with the relationships with small organisations. Lots of big organisations do already work very successfully with small charities. I do not think the fact that a charity is small necessarily means that an organisation cannot engage with it effectively. It sometimes will mean that it is underinvested in certain things and it does not have many resources, but I think it is very easy and quite straightforward to deal with charities of all shapes and sizes. We do that regularly, and we see big, small and medium sized companies do it. I do not think that the size of an organisation is an excuse not to do something. Having an appointed person who is responsible for all charitable activities in the organisation is a start.

Chair : I would like to deal lastly and briefly with the Big Society Bank, but Mr Hopkins did you have a contribution?

Kelvin Hopkins : I was going to talk about the Big Society Bank.

Chair : Can we start with Mr de Bois first then?

Kelvin Hopkins : Sure.

Q312 Nick de Bois: Thank you, Chairman. Given that the social enterprise market is about £200 million in this country at the moment, the idea of a Big Society Bank that could be capitalised by, as reports have it, up to £400 million I think is fantastic. I am a little confused though. Sir Sandy, if you could just clarify for me, the amount of money that is being talked about being contributed from RBS, is it a grant or is it a loan, or is it a favourable loan? What kind of return are you expecting? It seems like these talks have been going on for rather a while and I am trying to establish what type of loan or grant it is.

Sir Sandy Crombie: As I understand it, the Big Society Bank will be financed from two different directions. One is Government accounts, with some hurdles to be cleared, I think, before that money starts to come across. The other source of funding will be the major banks who contributed to the so-called Merlin Agreement. It was part of that agreement that the Banks would seek a commercial return for their monies; it is effectively putting equity capital into a fund, which will distribute the money on a wholesale basis into other funds and it will eventually end up in social enterprise businesses.

So the agreement is that it should be on commercial terms, whatever that means. There is a vagueness about the term, and no doubt that will come out in discussion with the Big Society Bank itself. The Big Society Bank itself has an obligation, having been given an objective, to come up with a business plan and a structure to realise that objective. The stage that we are at is waiting on the business plan and the structure. When the business plan is available there will clearly have to be discussions between those who are giving substantial sums of money as to what would constitute a return and when that return would come. So I think there is an element of vagueness where that vagueness can be removed with negotiation and discussion. At the moment I do not think we need to get too hung up on that.

Q313 Nick de Bois: I will try not to get hung up on it, but I will try and pursue it if I can. From what you have said there, if it is dependent on a business plan from the Big Society Bank, which is fair enough, that suggests to me that you will be looking at it strictly as a commercial opportunity as opposed to looking at it in a more favourable light: as part commercial and part motivated by putting something back in to the community and into society. As we both know, if a business plan is a terrific business plan it might attract a slightly more attractive deal from a bank. If it is something that you might be slightly concerned about, you could be whacking up the rates on it. Can you be a little more precise?

Sir Sandy Crombie: I cannot be. I am not involved in the discussions, and the discussions are not happening yet.

Nick de Bois: Oh, right.

Sir Sandy Crombie: You have used the term "strictly" in front of commercial. If we were being strictly commercial, I think terms would be sought that are likely to be different from those that in reality will emerge. The Big Society Bank, as I understand it, has a remit to be self-sustaining. It has to make a return on its money, and the Bank and its funders expect it to get an element of return, but I think there is plenty of room for discussion, and no doubt there will be when a plan is produced that is deemed credible, about what that return will be.

Q314 Nick de Bois: If it is anything less than, shall we say, your prevailing business terms, what is the point of you getting involved? Why would you get involved? Is there a little bit of, "Well, perhaps we should do this because we have been the biggest receiver of a donation in the last three years"?

Sir Sandy Crombie: It is part of a two-way agreement between the major banks and the Government to try and settle things down. All the hurt and all the bad feeling that exists is perfectly understood, but we need to find a way, a mechanism or an agreement that says that we want to be part of society and here is an offer.

Q315 Nick de Bois: So looking at it from the other end of the telescope, you have been kind enough to indicate to us that you actually as a group support a number of social enterprises on your own. So what do you see the Big Society Bank providing that you are not doing already?

Sir Sandy Crombie: My understanding again is that RBS involves itself in a very significant way in the social enterprise sector. My understanding, though, without being precise about what commercial means, is that the business that is done is done on commercial terms. So there would have to be a belief that the social enterprise is a viable enterprise and, as well as producing non-financial returns, will produce financial returns that are adequate to service the debt. There is already a commercial market there that exists, and RBS has involved itself in a big way. I think what the Big Society Bank is trying to do is provide ready funding to agencies who are also involved in this area and to make sure that there is a ready supply of capital, not just lending, into this whole business spectrum. I think that is a valid thing to do to fill a potential gap in the market, because banks generally provide funding arrangements rather than capital.

Q316 Kelvin Hopkins : I would like to look at numbers. The fact is the capitalisation of £300 million, if it was donated simply on a proportionate basis by the major banks, they could do that without blinking in terms of the kind of capitalisation that your own bank and others have, which is vast in comparison. It is a very small beer compared with what you do, and to be very mean and commercial about these donations, loans, or whatever they are, seems to me a bit churlish given the vast sums of money that the taxpayers paid to RBS and others to bail you out.

Sir Sandy Crombie: I do not think you should presume that the banks will be mean. The agreements have not been made at this stage.

Chair : Thank you very much indeed to our panel of witnesses. If any of you have anything else you want to add or are burning to say please indicate, but it just remains for me to reiterate my thanks and those of my Committee. I think it has been quite an interesting evidence session because it has brought out some widely disparate views, perhaps more on the Committee than among the panel of witnesses, about how to approach this whole question of charitable giving. We are very grateful for your time this morning.

[1] Note from witness: Correction—staff payroll giving in the UK is 14% not 10%.