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Every post brings to Members of this House and the other place yet another glossy publication from yet another public body, most of which are, I suspect, often instantly recycled, unread, via the waste basket. The waste is absolutely prodigious and Ministers are accountable for it but unable to call the organisations concerned to account. In part, Parliament is responsible. How often do we see amendments in this place to legislation requiring the publication of an annual report or creating some new body or group? I have no doubt that all these bodies are staffed by committed people trying their hardest to do the right thing, but they have taken on a life of their own and they are the front-line troops in the growing intrusiveness and power of the state.

In their response to the Select Committee eight years ago the Government promised that a rigorous review of NDPBs will be undertaken every five years to establish whether the functions of the body are still required. It is a promise which has been broken. When can we expect the Government to act? They need to go further. Could the functions be carried out by the voluntary or private sector? Is it really necessary for the British Council—I am sorry the noble Lord, Lord Kinnock, is no longer in his place as he is the chairman and might have been able to help the Minister—to be running education programmes which private firms could otherwise deliver at no cost to the taxpayer? Could some of the activities of some of these quangos be privatised? Is there scope for income generation, perhaps through Google advertising on their millions of website pages, as the excellent Dan Lewis of the Economic Research Council has suggested? I cannot understand why the BBC allows advertising on its web pages accessed from outside the UK but not on those accessed within the UK. Would it not be better to have the income and save the jobs of the news journalists currently under threat? Can quangos not be dispersed to the regions? Do they really need to be located in the most expensive parts of central London? I have quoted some astronomical costs of quangos but these annual costs are but a fraction of the long-term costs because many of the people employed are on Civil Service final salary pensions and conditions.

I wonder also whether government agencies have been a success. I accept that we invented them when we were in power. They appeared to shrink the size of the Civil Service, but in fact we have seen a growth in the numbers employed and less accountability. Their role often leads to confusion about who is in charge and to outbreaks of buck-passing. Disastrous flooding or a serious lapse of prison security are examples of events which can leave a hapless Minister doing the rounds of TV studios in a no-win position.

I do not make a habit of reading the Guardian very regularly, but David Walker writing in the Guardian’s Public magazine in an article entitled “The watchdogs

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are barking up the wrong tree” highlighted a crucial point which, if no other, I would like to impress on the Minister today.

He said:

He might have added, “or at all”. He argues:

The people who should be asking these questions are not Guardian journalists but the Ministers responsible. I look forward to hearing the Minister’s answers today. I beg to move for Papers.

3.50 pm

Baroness Walmsley: My Lords, I am most grateful to the noble Lord, Lord Forsyth of Drumlean, for this opportunity. I shall concentrate my remarks on the role of charities. The third sector is very different from either government or local government bodies and commercial companies. Apart from their governance structure, they have the volunteering culture but can also develop unparalleled expertise and combine their services very flexibly. This is done by putting the child, the patient, the poor, the whatever, right at the centre of everything that they do and building the support around it—if only all public services did that. It is also a very large sector; for example, it provides 80 per cent of all the palliative care in the UK.

I consulted a number of charities in preparing for the debate, and this is what they said. Age Concern is concerned about short-term contracts from local authorities, which cause a lack of stability and an inability to plan properly. Terminating contracts at short notice also brings about uncertainty about redundancies. When money is tight, it is the council’s own services that are protected, shifting the redundancy costs from the council to the charity. When you pay out for redundancy, that pot of money is lost to the public service pot, so planning to avoid redundancies anywhere is only good housekeeping. Age Concern is also concerned about the reluctance of commissioners to fund core costs. You need to make a bit over the top of cost to fund both overheads and unexpected problems that arise during the course of the contract.

Another NGO said that the recent Compact agreement is great but is not used universally. Some government departments and local authorities are still tending towards one-year contracts. Will the Minister say how the Government are monitoring to see whether all authorities and departments are implementing it fully? The NGO was also concerned about the reluctance of commissioners to put a contingency into the contracts. When a problem arises, such as maternity leave, there is no money in the budget to cover it and the NGO has to go back and ask for more.

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A third NGO was concerned about the process of bidding for contracts, which is often long-winded and behind schedule. That means that by the time you get the go-ahead, there are only a couple of weeks before the work is supposed to start. How can you manage your workforce, whether paid or volunteer, on that basis?

The RNID, which sent us a briefing for this debate, was concerned about four major issues, as the others were. There is a need for full-cost recovery, for an appropriate level of overhead, for an upfront discussion of the risks, and to make provision for them. It also wanted longer-term funding for greater stability. It also had another set of issues relating to campaigning, independence and accountability. It talked about its independence and wanted the ability to engage in campaigning, and not only as a peripheral activity. It wanted permission to broadcast social advocacy adverts and to repeal restrictions on demonstrations near Parliament, especially given the plans for the pedestrianisation of Parliament Square. My noble friend Lady Miller of Chilthorne Domer, who brought in a Private Member’s Bill on that issue, and I absolutely agree with the RNID. On accountability, the RNID would like to see impact reporting used more widely. This is where a charity sets out its objectives from last year, says how many of them have been achieved, and sets out its future objectives for next year.

Sue Ryder, the provider of specialist palliative and neurological care, also sent us a briefing. It is at the forefront of innovation but has concerns about the financial arrangements that restrict its ability to innovate. It cites one-year contracts and no contracts at all as being of particular concern. It told us about the magnitude of the situation. Hospices, for example, receive only 34 per cent of their funding from statutory sources, so they alone are subsidising the Government, just for palliative care, to the tune of £200 million per year—an enormous amount of money. Underfunding means that services are being eroded. They also point out that a lack of transparency in the funding process means that services are funded differently by different PCTs, which is a major contributor to there being a postcode lottery for health. The NSPCC have the same concerns about short-term funding and shortfalls, but added that different accounting or planning cycles can disrupt plans and lead either to unidentified gaps in service, or unidentified overlaps, which are a waste of money.

It is not easy to combine delivery of services with being an effective campaigning organisation, but it is desirable. The people who can alert us to need and bring about change are those closest to the grass roots. This issue of not covering full costs, and there being nothing for contingency and overheads, is serious. The public give money to charities on the understanding that it will be used to provide extra services, over and above what the Government are supposed to provide. If the cost of services is more than they get, charities will have to subsidise from their fundraising, and will therefore be able to do less of the extra stuff, which the public are paying for. The Government get a great multiplier when they use a charity to deliver services. They get it on the cheap because charities use volunteers. That is fine. I do not want to discourage the volunteering culture in any way, but it has to be taken account of.

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NGOs can also provide savings by spreading their expertise over a wide area. By commissioning an NGO to deliver a service, the Government implicitly accept that they have a duty to deliver that service. They may say that if we ask them to pay charities more, they can commission less, so the missing services will have to be paid for by the charity. The charities do not always have the money to do that, so the total quantity of services will diminish, and so will innovation. Charities tell us that their ability to be creative and to innovate is being limited by the failure, financially, to allow for a bit of risk. There is always risk in doing new things. That is a pity, and we all lose by it. I look forward to the Minister’s reply to all these concerns.

3.57 pm

The Lord Bishop of Carlisle: My Lords, I thank you for the opportunity to speak in this debate. I wish to offer some important perspectives from where the Church of England stands. For two years or more, Government Ministers have been in conversation with church leaders about the possibility of the church providing extensive welfare services, rather in the way that the church plays a major part in education. The new direction of the state, it seems, is to be a commissioning state, rather than one that has extensive institutions providing welfare.

Both Government and church are well aware that in the Scandinavian countries and Germany the church provides extensive welfare services. These countries have a church tax, which is paid by most citizens. The money received through taxation is returned to the church in support of its ministers, its buildings and in making possible the extensive welfare work done in its name. I admit that I have sometimes wished that we had a church tax in the United Kingdom. Because welfare provision in these European countries is long-standing, the arrangements for financial provision offer financial security to the church and its welfare institutions. The church is treated as a partner, and its work is trusted, rather than controlled.

The Church of England has very strong roots in local communities, making it well placed in many contexts to deliver quality services in a way that truly understands the local situation, which government departments may not. We very much want to be part of the discussion about the new opportunities that are opening up. We want to engage with the state in extending our considerable involvement in social care and community health provision. There is no single view in the church. In some quarters, present arrangements for partnership seem to work very well; in other areas, bishops and others have serious misgivings, based largely on their experience over some years of local projects in health and welfare, many of which the church has endeavoured to support or lead.

The Archbishop’s Council has commissioned serious research on what the Church of England’s response to the commissioning state should be. It is being carried out for the church by the Von HÃ1/4gel Institute, Cambridge. We are pleased to say that it is well supported by Members from both Houses, Ministers and shadow Ministers.

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On the main areas of our concern, my remarks echo points made by the noble Baroness, Lady Walmsley. The first concern is best described as short-termism. Government-based funders will often fund a new project for only three years. As my Carlisle diocesan social responsibility officer put it to me, “Staff can spend one year setting up, a second year doing serious work and a third year searching for funds. The prolonged uncertainty can lead to the loss of key staff members”. As a way of delivery to meet social needs, that is inefficient and totally inadequate.

There are better examples. The church is signing 25-year contracts for the new academies. Christian groups bidding to deliver dentistry are getting 20-year contracts. In all that, we are glad, but the picture is very mixed. Good social care needs long-term commitment, which we cannot emphasise too strongly. The heart of this debate is about the quality of delivery, not about the number of initiatives. Our second concern is goalposts and the tendency for them to be continually shifted. To quote my social responsibility officer again, “The Cumbria local area agreement was launched in April 2007 and was intended to last for three years. Government policy has changed with the publication of the local government and public health Bill. There is now a new single set of 198 measures representing national priorities known as the national indicator set and the only measures on which central government would access outcomes. Cumbria is now required to deliver a new local area agreement effective from 1 April 2008”. The shifting of goalposts represents a serious deficiency in solid, proven, long-term strategy.

Funding is the third area of concern. The church’s diocesan boards of education are statutory bodies with their own financial structures and reserves, so they are reasonably secure, but that is not so for social responsibility. New church institutions would have to be created either at a diocesan level or a national level if the church is to become a major welfare provider. It cannot be prudent to do this if the continuity of funding is liable to be insecure.

The Bishop for Urban Life and Faith, the right reverend Stephen Lowe, has been to look at Anglican church projects in Australia and Hong Kong, and the arrangements for funding are quite different from how things look here. That is central to the debate which needs to be held. If the church is to be a partner, it must be trusted by government and not controlled. As I perceive it, recent governments have found that very difficult. Church projects of course would be audited, but not controlled. My opinion is that, recently, we have been building a society that is very low on trust and very high on inspection and control—I see that, for example, in farming—which is very bad news for a healthy society.

The fourth area of concern, and in many ways the most fundamental, is the possibility of a clash of views in the spheres of justice and ethical values, and the implications that this would have if the church was the recipient of large sums of taxpayers’ money for the provision of welfare. The church sees part of its role as challenging existing assumptions and

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values, and being an advocate for those with little voice or power. We must be about advocacy as well as about delivery.

In spite of huge areas of agreement on the welfare of our citizens, it is increasingly possible that differences could lead us into significant difficulty over, for example, protection for the poor or policies which challenge the Christian understanding of marriage. If the church chose to challenge certain policies and the values undergirding them, it could have government funding denied. Then it could be trapped in the unenviable position of making its staff insecure or having to go along with a policy which compromised the position required by its faith.

In conclusion, these are interesting and challenging times for the church. The nation is changing from a welfare state to more of a welfare society. The church very much wishes to be part of the discussion, but it also has serious concerns and misgivings, which need to be discussed frankly and addressed. It needs to be treated as a long-term partner which is trusted even when it wants to challenge the current effectiveness of delivery.

4.04 pm

Lord Best: My Lords, I am grateful for this opportunity to explore some of the key aspects of relationships between central government and non-governmental bodies. In the six short minutes available to each of us, I want to share some of the experience of the UK voluntary bodies that the Government rely on to deliver their policies for the nation’s housing.

The not-for-profit housing associations have become the principal agencies through which the Government’s plans for affordable housing and the neighbourhood services that go with this activity are fulfilled. Council housing is no longer the mechanism for building new homes for those unable to afford what they need on the open market. Today it is the range of non-governmental bodies—mostly charitable housing associations—that add each year to the stock of affordable homes—so-called social housing. These NGOs have taken on the ownership and management of a million properties previously owned by local authorities. Each of these non-profit, non-governmental housing organisations is an independent body with an autonomous board to govern its affairs. I declare my interest as chair of one of them, the Hanover Housing Association.

Others in this debate are underlining the value of charitable, voluntary and community bodies being genuinely separate from and independent of central government. I heartily and emphatically agree with these arguments and will confine my own comments to commending the work of the National Council of Voluntary Organisations in its negotiations with government over the compact between the two parties. I wish the new Compact Commissioner well in the intermediary role when he or she is appointed.

The voluntary housing association sector represents an interesting case study. After 30 years of regulation and subjection to government edicts, have these NGOs now become creatures of the state? Is there now a master/servant relationship? Have the once-independent housing bodies, which have a proud history dating

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back to the Middle Ages, been captured by the state? Having taken the King’s shilling, have they become part of a contract culture, doing the Government’s bidding in return for payments? I would argue that the housing associations have not yet lost their independence of spirit or action. Housing associations are competitive and innovative, and each is different—working with local communities and specific groups in exciting and important ways. But there is a need to remain constantly vigilant against erosion of this independence.

The new Housing and Regeneration Bill currently in Committee in the other place poses new threats. This Bill introduces a new regulator for housing associations. In most respects the power of this regulator mirrors that of the Housing Corporation, whose place it will take. However, in important ways the Bill gives central government new powers which I fear cross the invisible line and subtly change the relationship between the state and these voluntary bodies, the housing associations. On the one hand, powers are given to the regulator to establish standards that cover all and every aspect of each housing association’s behaviour and to enforce these standards even where there is no question of malpractice or misconduct. “Standards” could embrace the widest range of activities; for example, requiring adoption of any new initiative from central government, as at present with ideas for the Government’s respect agenda for combating anti-social behaviour in the neighbourhoods where housing associations are at work. On the other hand, as well as extending the regulator’s role, the Bill introduces the power of the Secretary of State to direct the regulator as to the standards it should specify and the details of those standards. This chain of command from the Secretary of State to the regulator and thence to the NGO, the housing association, will no doubt be used sparingly and sensitively by the current Ministers who, I know, have the very best of intentions. But the new Bill sets out a line of control which could be seen to enslave the housing associations if a future Secretary of State was so minded.

Perhaps the experience of the voluntary and often charitable housing associations will find echoes in other parts of the voluntary sector represented in this debate. In all cases, the relevant charities and the associations and federations, such as the NCVO and, in the case of housing, the National Housing Federation, need to monitor incoming legislation, blow the whistle when central government cross a line in the potential erosion of the organisation’s independence and, perhaps, look to your Lordships’ House to remove such hazards. One such piece of legislation is now in the wings, and I am grateful for the opportunity to alert the House to the possible need for amending action when the Housing and Regeneration Bill reaches us later this year.

4.11 pm

Lord Wallace of Tankerness: My Lords, I count it a great privilege to speak for the first time in your Lordships’ House. To reciprocate the spirit of the opening words of the noble Lord, Lord Forsyth of Drumlean, it is a particular pleasure to speak in a debate initiated by my noble personal, if not political,

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friend. He and I entered the other place following the 1983 election and I took part in many debates there which he initiated, although it has to be said more often to oppose than to support him. That said, I can also say—and wish to say with appreciation—that as constituency Member for Orkney and Shetland for 18 years, I found the noble Lord one of the best Ministers to deal with when it came to understanding constituency problems and attempting to address them.

When I left Westminster I regularly answered the question, “Do you miss it?” with the response, “It’s people I miss”. One of the real pleasures of being here in your Lordships’ House is in re-establishing old friendships and acquaintanceships as well as making new ones. I have very much valued the warmth of the welcome that I have received and appreciate the genuinely friendly ambience of the House, its Members and not least the staff who, in addition to their friendly demeanour, could not have been more helpful in helping a new boy learn the ropes.

I received a particularly warm welcome from two Scottish Members of your Lordships’ House, who explained that my arrival meant that they would almost certainly no longer be in any danger of topping the annual travel expenses table.

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