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The proposed new clause requires that at least 7 per cent of probation budgets other than restricted probation provision as defined in Clause 4 should be used for services provided by charities. During the last discussion in Committee, the noble Lord, Lord Bassam, was surprised that I proposed the figure of 7 per cent until I pointed out that it was the figure suggested at the time by the Home Office. The amendment is supported by two co-ordinating bodies for voluntary agencies working with offenders, and I am glad that the noble Baroness has given them a good report. The bodies concerned are Clinks and the Corporate Alliance for Reducing Re-offending.

In Committee, some noble Lords expressed the fear that a requirement of this kind could be regarded in practice as a ceiling rather than a minimum, limiting the contribution to charities of 7 per cent of probation budgets. The charities with which we have consulted are unimpressed by that argument. They point out that they have never seen anywhere near 7 per cent of probation services budgets devoted to voluntary sector partnerships, and therefore the figure would represent considerable progress. Moreover, the clause makes the point by enabling the Secretary of State to increase the minimum percentage level by statutory instrument if it seems appropriate to do so as time goes on.

At earlier stages there has been unanimity across the House that voluntary organisations play a vital role in the rehabilitation of offenders. The sector is

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particularly expert in delivering high quality services in the areas of accommodation, employment, education, mentoring, addiction issues, mental health, work with offenders’ families and community engagement. NOMS has developed targets to get more offenders into employment and sustainable accommodation, improve their education and involve them in drug treatment programmes. If these targets are to be achieved, the involvement of voluntary and community organisations is crucial. Yet the history of the past few years shows that the Probation Service has often been reluctant to engage the voluntary sector in partnership except when it is required to do so either by legislation or by centrally driven targets.

Until 2001, the Probation Service had an official target to devote 7 per cent of its resources to voluntary initiatives. This was not a statutory requirement and the service never quite achieved that percentage. However, the existence of even a non-statutory target pushed up the proportion of the service’s budget devoted to such partnerships to around 5 per cent. Regrettably, the 7 per cent target was removed in 2001. After that, the proportion of the probation budget spent on contracts with the voluntary and private sectors combined plummeted to less than 2.5 per cent. Faced with the threat of contestability, the Probation Service has recently begun to remedy this by adopting a target of devoting 5 per cent of its budget in 2006-07, and 10 per cent in 2007-08, to partnerships with the voluntary and private sectors.

The Government’s principal argument about the evolution of targets is that of best value, and that is understood. They argue that charities should not be given work if it can be provided at better value by the public or private sectors. Of course no one can dispute that. The problem is that, in reality, even when charities can provide better value the process of contestability could prevent them getting contracts to work with offenders. The amount of bureaucracy which has them tied up in paperwork and so on could be a tremendous disadvantage to any of the voluntary organisations. By specifying a minimum level of contracts with charities, the new clause would guard against the risk of the voluntary sector’s unique contribution being squeezed out of the process.

Past experience shows that unless the Probation Service has to devote a significant percentage of its budget to voluntary sector partnership it is unlikely to do so. By requiring it to do so, the amendment would guard against the risk that charities will be squeezed out of work with offenders, in complete contradiction to the Government’s stated intention of involving the voluntary sector more extensively in the rehabilitation of offenders. The purpose of the amendment at this late stage is to seek from the Minister an explanation of how she sees the expansion of the role of voluntary organisations and what kind of resources will be available to them in future years. I beg to move.

Baroness Anelay of St Johns: My Lords, I am grateful to Mr Paul Cavadino for meeting the noble Lord, Lord Dholakia, and me last week to discuss the amendment. It makes good progress on the amendment debated in Committee, but the principle

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remains the same: it is important to ensure that charities are not disadvantaged under the new system of contestability and can secure as much of the contract work as is appropriate given their undeniable skills, commitment and flexibility. I note that the amendment is supported by the two co-ordinating bodies for voluntary agencies working with offenders, the Corporate Alliance for Reducing Re-offending and Clinks, a body the Minister praised in her response to the previous amendment.

In Committee I was one of those who expressed concern that, if a minimum required percentage of services to be provided by the third sector were included in the Bill, it might rapidly become the ceiling. That objection has, to a great extent, been overcome by subsection (2) of the new amendment today. The Secretary of State is given the power to increase that percentage by order; that means he could respond to changing circumstances. We are still of the view that the third sector could and should form a minimum of 7 per cent of the delivery of interventions. Indeed, I have always made it clear that I would be happy for the third sector to take the lion’s share of service delivery where it is the right organisation to do so and is in a position to deliver to the standard required.

I share Mr Cavadino’s fear that the Government’s methods for rolling out contestability may mean that private and public sector agencies, in effect, get more work than voluntary organisations, not because they are better at the work but because they have more resources to enter the bidding process in the first place. I feel that that is not what the Government intend. When we look at the model contracts, we may find a way through this by Third Reading. At the moment there is no doubt that the public and private sectors could put teams of people on to the intensive process of writing complicated bids, often at very short notice. That is the real world.

We need to know from the Minister how the Government will ensure that the third sector is not put at a disadvantage in the bidding process. The third sector is, and must be, a vital part of the delivery of offender management services. So, although I still have a long way to go before I am persuaded fully to support the amendment, I recognise the advances it makes. It is important in that it gives the Minister the opportunity to demonstrate how the third sector will not be disadvantaged.

Lord Ramsbotham: My Lords, I am instinctively concerned when I hear percentages put down because, as the noble Baroness explained, they can become ceilings. Of course one wants to see everyone possible involved, but I have to return to the point that I tried to make earlier: this is all very well, provided that the resources are there to commission the people. I have not yet seen set out what will be required professionally of the Probation Service and how much of its budget that will take. It is no good saying, “You have to do that and, incidentally, you have to ensure 7 per cent for the voluntary sector”. That could eat into its statutory requirements, and then what is the Probation Service to do?

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Having read through the regulatory impact assessment in great detail, I am not conscious that these sums have been done. I have tried to engage with the chief executive of NOMS to find out whether the professional probation services provided by the public sector had been costed and the budget that will be available to commission services from the other sectors. Without being too dogmatic, I think that people have to be clear about this. It is no good launching an intention with which everyone agrees unless it can be delivered; otherwise we will end up dispiriting, not only the people on the receiving end of hopeful contracts which can never be given, but too many members of all three sectors.

Baroness Howe of Idlicote: My Lords, my noble friend Lord Ramsbotham has made a very important point. I am encouraged by the history of the 7 per cent requirement. In the past it had a good effect; then it was removed and matters slipped a little. There could be a case for a percentage which could move upwards. However, having said that, the group that I am most concerned about, the smaller charities, must be put in a position where they can compete for the role they would carry out superbly well. I am equally encouraged to hear from the noble Baroness that Clinks is involved in a demonstration in this regard.

We will probably come back to this area. There is some hope if we concentrate on the vital point of providing adequate resources to enable the probation services to carry out their essential functions.

Baroness Scotland of Asthal: My Lords, I recognise the desire of the noble Lord, Lord Dholakia, to ensure that the voluntary sector plays a key role in the new arrangements we are proposing. That has been echoed by all noble Lords who have spoken today, and I fully share that desire. Indeed, it has been one of the key drivers of the Bill. That is why we have been working very closely with the sector and are so heartened by the support for the Bill from many voluntary sector providers, such as Nacro, Rainer and Turning Point. I have already mentioned the positive response that we have had from these bodies and I am very happy that we are working with Clinks.

The reason that I cannot accept the imposition of a target for the amount of work that should be contracted to any one sector has already been explained. I share the concern of the noble Baroness, Lady Anelay, echoed by the noble Lord, Lord Ramsbotham, that a required percentage could very quickly become a ceiling that is met with difficulty without any real effort to go further and look at the people who can deliver the work. At the moment, approximately 75 per cent of contracts and grants are with the third sector and 25 per cent are with the private sector. The target for 2006-07 was 5 per cent of each board’s main grant; the future target is 10 per cent of each board’s main grant for 2007-08, and probation boards are in the process of preparing subcontracting plans for their regional offender manager, setting out how they will reach the 10 per cent target in 2007-08. Some boards will hit those targets, but the average is likely to be around 3.5 per cent in 2006-07 and 6 per cent in 2007-08. We hope we will be able to accelerate that. By the end of 2008,

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when the trusts come into being, we hope that the 10 per cent direction of travel will be well established, and we wish to see that go further. That is, of course, dependent on outcomes; it is why it is so important that contracts are outcome focused so that those who produce those outcomes are likely to succeed in getting the contracts.

We understand what the noble Baroness, Lady Stern, said on this occasion, but I hope that, with some of the standard contracts we are working on, we will be able to deal with the issues raised by the noble Lord, Lord Hylton: the need to reduce paperwork, to have standard contracts, to have sustainability built in through longer terms and resilience, and to be able to assist smaller organisations to take advantage of the system without being burdened. We are going in the right direction, and I hope that at Third Reading the noble Lord, Lord Dholakia, and others will feel happier that we have built in a sustainable process through which we can all be more confident that we can deliver on the things that we want to. That is why it is so important that we have Clinks and others helping and working with us to see how we can deliver this better.

Lord Dholakia: My Lords, I thank noble Lords who have participated in this short debate. I also thank the Minister for being positive in her response. In the light of what she has said—and I am sure the Government’s intentions will be welcomed by the voluntary sector—I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 4 [Restriction on certain arrangements under section 3(2)]:

Baroness Anelay of St Johns moved Amendment No. 11:

On Question, amendment agreed to.

Lord Bassam of Brighton: My Lords, I beg to move that further consideration on Report be now adjourned, and in moving this Motion I suggest that the Report stage begin again not before 8.33 pm.

Moved accordingly, and, on Question, Motion agreed to.

Finance Bill

7.32 pm

Brought from the Commons; read a first time, and ordered to be printed.

European Communities (Definition of Treaties) (Agreement amending the Cotonou Agreement) Order 2007

Baroness Royall of Blaisdon rose to move, That the draft order laid before the House on 4 June be approved.

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The noble Baroness said: My Lords, as we know, despite the progress of recent years, considerable challenges remain in our efforts to eradicate poverty. The European Union, which represents the world’s largest multilateral grant provider, largest single market and main trading partner of most developing countries, can potentially make a huge contribution to eradicating global poverty.

It is just over five years since the Cotonou agreement, the successor to the Lomé convention, was agreed by the EU and African, Caribbean and Pacific (ACP) partners and ratified by this House. The agreement marked an important step forward in the EU’s relationship with the ACP states, improving and strengthening the principles and priorities of that partnership.

The 2000 Cotonou agreement made several important changes to the Lomé convention, including an overriding objective of poverty eradication, improving and simplifying development assistance through the European Development Fund (EDF) and making good governance underpin the agreement. The Cotonou agreement provides for a revision every five years. The first review was concluded in February 2005. Its aim was to improve the implementation of the agreement, focusing on certain areas of co-operation and addressing some new political and security issues. The trade provisions were not considered as part of the review, as they are the subject of a separate ongoing negotiation to establish economic partnership agreements, to come into effect on 1 January 2008.

The first order details those changes. The central objective remains the reduction and eventual eradication of poverty. New commitments by the international community to the millennium development goals, and on the need to improve the effectiveness of our aid, have been reflected. The changing security and foreign policy climate has been taken into account with an agreement to co-operate in the fight against terrorism, to combat the proliferation of weapons of mass destruction, to prevent illegal mercenary activities and to support the work of the International Criminal Court. The procedures for conducting political dialogue and addressing human rights, democracy and rule of law concerns have been elaborated.

Language concerning several potential areas of co-operation—for example, in regard to the fight against poverty diseases, supporting youth development and use of information and communication technologies—has been strengthened. A new emphasis has been given to supporting countries facing post-conflict or post-natural-disaster situations. The UK fully supports all of these changes. We firmly believe that they help to enhance and strengthen the longstanding partnership between the EU and ACP states.

The amendment of Cotonou also provides for the establishment of a new financial framework for EC co-operation with ACP states and the overseas countries and territories—the OCTs—of several EU members from 1 January 2008. In June 2006, EU member states agreed to a 10th replenishment of the European Development Fund, the EDF. That is the subject of the second order before the House.

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Overall €22.682 billion, approximately £15.746 billion, will be made available over a six-year period from 2008-13. This represents a significant increase over the ninth EDF, which provided €13.8 billion over a five-year period to the end of 2007. That is a firm demonstration of the EU’s collective commitment to supporting the development of ACP states and OCTs. The UK is contributing approximately €3.36 billion, representing 14.82 per cent of the total. That too is a significant increase over our commitment to the ninth replenishment, reflecting our confidence in the ability of the European Commission to deliver poverty-focused assistance to ACP and OCT partners.

EU member states will also be able to increase their contributions to the 10th EDF. As aid is scaled up in the context of the EU’s 2005 aid volume commitments, EU member states will be able to look to the EDF as a vehicle for channelling additional resources. The UK believes that that voluntary mechanism provides a continuing incentive to the European Commission to improve the effectiveness of the EDF. The European Investment Bank will supplement those resources with an additional €2.03 billion for loans through the Cotonou Investment Facility.

Together with ongoing Commission reforms, the revised Cotonou agreement and the agreement to establish the new 10th European Development Fund represent a further important step in Europe’s efforts to meet the millennium development goals. I therefore commend these orders to the House.

Moved, That the draft order laid before the House on 4 June be approved. 19th Report from the Statutory Instruments Committee.—(Baroness Royall of Blaisdon.)

Lord Astor of Hever: My Lords, I thank the Minister for explaining the orders. We on these Benches are happy to accept them. We support these moves to reduce global poverty, especially where good governance underpins agreements.

I have three questions. First, the EDF is funded separately from the EU budget. The EU has not always been an effective mechanism for giving aid. How will the Government monitor the allocation or lending of funds?

Secondly, to which countries do Her Majesty’s Government envisage the greatest amount going? That is important; the amount of EU aid to the poorest countries has gone down over the past 10 years. How do the Government intend to rectify that?

Thirdly, do they envisage most resources being allocated on bilateral programmes or through multilateral institutions such as the World Bank? If large amounts are to go directly to recipient Governments, how do Her Majesty’s Government envisage that corruption and fraud can be reduced as much as possible?

Lord Dykes: My Lords, we, too, welcome these orders as an opportunity for the United Kingdom to carry on with its hitherto rather impressive contributions to international aid under these programmes. I thank the Minister for the detailed explanation of the two orders.

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The relative position of the recipient countries in the ACP framework is, and always has been, that they are much weaker on average as recipients than are the donators—the member states of the European Union. To some extent that difference has not narrowed as much as we might have expected because of the slowness of development in some recipient countries. The fact that the EU is much stronger gives us the opportunity to increase our contribution; the figures for EDF 10 show an impressive increase from previous figures. A lot of progress has been made over the years since the old days when the Lomé convention first started.

The negotiating postures between the member states and the recipients can often bring problems when the recipient countries do not effectively negotiate what they should be getting and lose out, not only in certain marketplace opportunities and aid fund receipts, but also in how they can deploy their strategies for internal economic development for the few years ahead of whatever year of settlement this is.

This gives the opportunity, which the Conservative official spokesman referred to, for the European Union to carry on increasing its monitoring, supervision and surveillance procedures for these matters. This is a matter of concern. There is a general impression that a lot of improvement has been made in the technical surveillance capacities and the ability of the officials representing the European Union and the member states to make sure that the money is deployed properly for specific projects. The use of money remains a concern in certain countries. The Minister may wish deliberately to avoid highlighting which countries are giving concern, but it is of help to the House if that information is available.

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