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Baroness Hanham: My Lords, I thank the Minister for that quite long but very welcome explanation of what this order is all about. Having heard the explanation, I understand why the lunar calendar was abandoned—it made life so complicated. I have only one question, on which he may already have touched, to which I should like a brief answer. What notification will be given to tenants in advance of these new changes taking effect?

Baroness Sharp of Guildford: My Lords, I, too, thank the Minister for his extensive explanation. We on these Benches agree that it is a small but useful reform. We, too, have just one question. We gather that the new order will require a new form, which is being prepared. Will the new form be ready at the same time as the order comes into force? If not, what will happen?

Lord Evans of Temple Guiting: My Lords, it might help the House if I explained how this new rule will be explained to tenants. The form will be available to be sent to tenants and to be put on the web almost immediately after the order is approved, if it is approved.

As regards what notification is given to tenants in advance of the change, the period of notice is likely to be—the one word that I cannot read is the final, all-important word. In the circumstances I shall have to

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write legibly to the noble Baroness. I apologise for not being able to answer what is a very obvious question. However, I am now informed that the relevant period is one month.

On Question, Motion agreed to.

Voluntary and Community Sector

6.15 p.m.

Lord Plant of Highfield rose to call attention to the role of the voluntary and community sector in service delivery in the light of the report of the Strategy Unit Private Action, Public Benefit and the Treasury's cross-cutting review; and to move for Papers.

The noble Lord said: My Lords, better very late than never. When my noble friend invoked the concept of backward drift in relation to rent increases, that well summarised our afternoon's experience!

I feel privileged to have the opportunity to move the Motion. The issues are very important for the health of our society, which depends upon a vibrant and diverse civil society of which the voluntary and community sectors are a part. The importance of the issues is attested by the number of speakers who have committed themselves to be here for a lengthy debate. I am grateful to all noble Lords who will take part.

I should begin by declaring a number of interests. I chair Centrepoint, the charity which provides accommodation and training to homeless young people in London and elsewhere. Centrepoint receives money from quite a number of statutory bodies. I also chair two other registered charities, although they are not service deliverers in the way that Centrepoint is; namely, Hope, which raises money for research in the University of Southampton Medical School and the Development Trust of the University of Southampton. I was until November 2002 the president of the National Council for Voluntary Organisations for the previous five years.

In an important speech given to the Social Market Foundation on Monday evening, my right honourable friend the Chancellor of the Exchequer made the point that we need to think very carefully about the precise relationship between the individual, the market, the state and the community in our society. While there may, of course, be political disagreement about his answer to the questions posed by this relationship, I am sure that all sides will agree that these are relationships of the utmost importance. That is part of the focus of this debate.

The market is indispensable for a free, productive and dynamic society, but it will not meet a whole range of needs of individuals and communities. At the same time, those of us on the Left—in the view of many rather belatedly—have become more and more aware of government failure as well as market failure. In that context it is natural enough that government should look to partnership with the voluntary sector to help in the delivery of services.

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That is because, as the Treasury document makes clear, the voluntary and community sectors possess features which give service delivery by such groups an advantage—or an added advantage—over state delivery. As the document makes clear, these involve specialist knowledge and experience in—to take a couple of random examples—volunteer mentoring or using the experience of ex-addicts or ex-offenders to work with those at risk of becoming addicts or offenders. The voluntary sector can use that kind of experience, which would be much more difficult to replicate and use in the state sector.

Community groups and users of services are also involved in making an input into the planning and delivery of services which the voluntary sector can facilitate. That is important in the context of the Government's intention to maintain national standards while seeking local discretion on their implementation.

There is also the independence from traditional public sector agencies that enables services to be delivered in innovative ways. Along with that might go greater flexibility and less power for vested interests. There is also the possibility of access to the wider community, which might be greater than that available to representatives of statutory agencies. Many of those with whom the voluntary sector works may be very distrustful of most forms of officialdom, however well intentioned those officials may be.

Also, voluntary sector organisations are in many cases, although of course not in all, based in the communities that they try to serve. They will therefore be able to draw on a degree of dispersed, fragmented and local knowledge and understanding, which might prove difficult for statutory bodies and agencies to access.

Finally, the voluntary sector has a very important campaigning role. It not only draws attention to the most marginalised and powerless members of society, but through campaigns seeks to improve the delivery of collectively funded services.

Those are the features of the voluntary sector that we in it cherish, and that the Government want to mobilise in the interests of better service delivery for all our citizens. The central problem is how far it is possible for us to preserve those very features of autonomy, innovation, local knowledge and so forth if we are in increasing partnership with government. Also, how far can government, dispensing taxpayers' money to the sector, adopt a relationship with it that does not erode precisely the features on which they want to rely in order to improve service delivery?

We certainly need to avoid what the noble Lord, Lord Dahrendorf, recently called the nationalisation of the voluntary sector. That would be bad for service delivery, simply because it would drive out the distinctive features of the sector. At the same time, it would be bad for the culture of a free society, because a strong voluntary sector is important for such a society.

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I am certain that the Government recognise—the two reports show that they do—not only the opportunities available to them, but the dangers. It is in that context that we need to consider how important are the reports.

It is an exciting and challenging time for those of us involved in the sector. In the past 10 years, for the reasons that I have given, we have seen a growing understanding of and work with the sector across government. Partnership has become a norm at least in intention, if not always in practice. Policy initiatives that are expected to impact on those in the voluntary sector are increasingly developed in consultation with it. The compact has embedded the role of the sector, its concerns and its legitimacy in government policy, and at the level of relationship between particular governmental departments and agencies and particular voluntary sector bodies.

In the past 18 months, the voluntary sector and the Government have worked together on the two important reviews, the Treasury review of the voluntary sector in public service delivery, published on 10th September 2002, and the Strategy Unit report on the legal and regulatory framework of the sector, published on 25th September. We have all committed a lot of time and effort to the reviews, and they offer an important opportunity to reform the environment within which we operate, which must not be lost.

To that end, it is crucial that all parties agree on the importance of introducing a charities Bill as soon as possible, to ensure that we can put in place a legal and regulatory framework to allow the charities and voluntary sector to thrive, preserve its distinctiveness and develop with confidence in future, as it has during the past four hundred years or so.

At the NCVO annual conference in 1999, my right honourable friend the Prime Minister said:


    "History shows that the most successful societies are those that harness the energies of voluntary action, giving due recognition to the third sector of voluntary and community organisations".

The message was reinforced at the same conference the following year by the Chancellor, who said something very similar. Those speeches represented a step change in the way that the sector's role has been recognised at the highest levels of government. They signal that the Government have a clear commitment to the sector and its role.

Emphatically, however, the matter is not party political. At the charities breakfast during the Conservative Party conference on 8th October last year, the Leader of the Opposition backed the need for a charities Bill. As I understand the development of Conservative social policy, the party certainly wants to place a great deal of emphasis on collaboration with voluntary sector delivery. Charles Kennedy, the leader of the Liberal Democrats, to whom I once had the pleasure of teaching philosophy—that shows how old I am getting—said at the Charities Aid Foundation annual conference:


    "I believe that legislation is vital in the 2003–4 parliamentary session. If the Government misses this opportunity, the chance for change may be lost for a very long time".

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There is much cross-party agreement about how to move forward on these issues.

The delivery and reform of public services are clearly the biggest domestic political issues that we currently face. That is clearly a key issue for many voluntary organisations in their role either as service providers or representing service users. I briefly turn my attention to that.

I believe that there can and should be an important role for voluntary organisations and charities in the delivery of collectively funded services. Where they add value and distinctiveness, where they remove stigma and intolerance and where they are more flexible, innovative and personal than the state, they can and do make a significant difference to the most marginalised and disadvantaged in our society. Without that, millions of people would receive worse or even no support. Furthermore, I do not believe that that service delivery function need necessarily be corrosive of the values of such organisations. With strong governance and widespread use of the compact, organisations can retain their distinctiveness and deliver services.

The aim of the Treasury review was to consider the extent to which voluntary organisations already engage in public service delivery, the scope for greater involvement and what barriers might exist that government could remove or help the sector to overcome. We now have the outcome of that review and, on the whole, the voluntary and community sector has responded positively. However, it is clear that while the review and recommendations are welcome, their implementation is crucial. All of the consultation and partnership working will be in vain unless we ensure that at national and local levels the recommendations are made a reality.

The Government have recognised—this is very important—that they must pay a fair price for what they get from the sector. There is explicit recognition that government funding of the sector should include the relevant elements of an organisation's overhead costs. That is something for which the sector has long called and would make a significant improvement for many service delivery organisations. However, 70 per cent of voluntary sector activity takes place at a local level; how will that be implemented? How will local authorities be persuaded to regard the voluntary sector as a legitimate alternative provider of services? What levers have national Government identified to persuade or even force local government to take the sector seriously and to implement the letter and spirit of the cross-cutting review? There is recognition of the need to support the capacity of individual organisations. Investment must go into that capacity building, which is of crucial importance.

The report also includes extensive recommendations in relation to improving contracting and procurement processes in government. The Treasury is committed to producing new guidance, and there is also a commitment to develop a protocol on how government departments should engage the voluntary sector in programme development and service delivery.

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We then come to the compact, which is pivotal in all of this. The Government have reinforced their commitment to the compact. That is extremely welcome, but it must be accepted that the compact is only an instrument for changing a wider culture in national and local government. There is still quite a long way for that cultural change to go. There is still too much of what one might regard as the principal/agent model, with the voluntary sector being seen as a kind of subordinate agent to the principal—namely, the local authority or government—rather than as a genuine partner. The compact is the best way of changing that culture, and I am pleased that the Government have reiterated their commitment to it.

In the short time remaining, I turn briefly to the issue of the reform of charity law. I do not believe that that is a side issue in terms of the delivery of services. We need a strong regulatory framework within which to operate. There has been strong support for the recommendation that all charities should be able to demonstrate that they provide a public benefit. It is a matter of simple logic and justice that any organisation wishing to have charitable status should be able to demonstrate that public benefit, as I am sure most of them will be able to do.

The proposals for new legal forms for charities and not-for-profit organisations are interesting. The report proposes the creation of community interest companies—a new form specifically to promote social enterprise. Will those be part of the sector or will they be in competition with it? That is an interesting development, but we do not yet know the answer to that. It will be important for those public interest companies to embody the values of the sector, despite the degree of professionalism, and so forth, that they will inevitably need to develop in order to be companies rather than straightforwardly voluntary organisations.

I believe that there is great support for the proposals aimed at reforming the Charity Commission—that is, that it should become a statutory body with clear objectives. We do not want more regulation but we do want the regulations currently in place to be properly implemented.

The tasks indicated in the two reports are important but delicate. We need community involvement and we need volunteering to develop active citizenship and the creation of communities which have a proper sense of responsibility for their own fortunes. At the same time, we need to ensure that the relationship with government is on a proper footing which does not threaten the very values for which the voluntary sector stands. Some people will think that the two are irreconcilable; I do not believe that they are. My Lords, I beg to move for Papers.

6.31 p.m.

Baroness Howells of St Davids: My Lords, the report and the review we are discussing appear to have received strong support from both the London Voluntary Service Council and the National Council for Voluntary Organisations. I take heart from that. I know that the report will be discussed in general terms; I want therefore to use my privilege to call attention

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specifically to the role of the black voluntary sector in service delivery during the early years of the immigration of people from the Caribbean. It was the only means of getting services to the community.

It is no secret that I come from a background of community and voluntary service and that I did much to bring the black voluntary sector into the mainstream of the voluntary sector as it exists in the United Kingdom. I therefore declare an interest and thank my noble friend Lord Plant for moving the Motion.

The black voluntary sector, from meeting needs which manifested themselves in the early 1960s, has grown in strength and vibrancy in its contributions to welfare and in harnessing the energies of those least able to articulate their needs in a sophisticated society. There was no acknowledgement of, or provision made for, those from very small islands who responded to the call to rebuild a nation debilitated by the world war of 1939–45.

It took the energy of those more fortunate to unravel the complexities themselves and to harness the community to bring to the notice of the policymakers what was needed to encourage an almost trouble-free settlement. The organisations were formed around issues that affected the lives of the black community at that time. Many may recall the ancient "sus" law, which was used unreasonably by the police on black young men, and the voluntary action which led to it being removed from the statute book. Noble Lords may also recall how the relevant Act of Parliament was modernised, making the law at least more just and fair.

Another area of concern was exclusion from schools. Voluntary action from the black community led to the establishment of the Saturday school, which grew into the now popular supplementary schools. These operate from church buildings and community centres. They have proved a motivation for many young people despite the attempts made by the system to label black children as educationally subnormal and to blame the victims for their failure rather than the system.

The black voluntary sector, with hard earned public and charitable grants, was at one time the main source of employment for the educated black community. It was the main seedbed for launching second-chance learners in youth work, social work, teaching and secretarial duties. Entering the voluntary sector as a volunteer led to career choices, job satisfaction and, above all, has provided much public benefit to the nation.

Organisations such as the Black Led Churches, Black Women Mean Business and the European Federation of Black Women Business Owners, to name just three, have all sprung from voluntary action on the part of those who saw a need and set out to fill it. The report deals with charitable status. The black voluntary sector regards charitable status as the single factor which has allowed the sector to raise much needed funds to carry out its work. Charitable status is seen as a green light to funders and must never be treated lightly. To the voluntary organisation it is

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recognition for the work it does. I ask the Minister to assure me that the goalposts will not be moved unnecessarily because the black sector has just about completed the work needed for charitable status.

I urge that charitable status should not be determined by reference to an organisation's activities or outcomes but by the objectives of the organisation. It is my belief that most, if not all, of the black voluntary sector will meet the test and achieve charitable status if its work is appraised. The introduction of the 10 charitable purposes should be seen as only the baseline as needs always change. They must be flexible enough to allow those at the forefront of the problem to take the necessary steps to deal with needs as they arise.

The proposed character test is troubling and leads me to ask who will set the test. Will it be ethnocentric or diversity intrinsic in its make up? How will preconceived prejudices be dealt with? I realise I have gone over my time. I have much to say on this subject, but I shall sit down.

6.38 p.m.

Baroness Miller of Hendon: My Lords, I have been chairman of the National Association of Hospital and Community Friends for the past five years. We are better known as the League of Friends. I speak tonight in that capacity. I thank the noble Lord, Lord Plant, for giving us all the opportunity to speak on this important subject.

I am continually impressed by the wonderful support of our 43,000 active volunteers, whose dedicated work and time given—indeed, at personal cost to themselves—adds so much to health and social care in this country. I often say that the health service would be in a much poorer state without their dedicated efforts.

As a national association, our role is to help and support individuals and leagues in their work and to welcome any developments that will assist in that. Recently, I have had to intervene in dealings with the Charity Commissioners and have been concerned by the time and expertise it has taken to achieve an answer, even to a relatively simple question.

We support the view, from our practical experience, that the Charity Commission should focus on its regulatory role—being responsible for registering charitable organisations, ensuring that these organisations still comply with charitable status and collecting annual reports and accounts. The advice and policy function of the commission should be limited to those activities.

We also support the concerns highlighted in the report as to the difficulties of challenging the decisions of the commission. Even as a large and mature national charity, we have found the systems both complex and frustrating and we would therefore welcome the proposal for an appeals tribunal. Cases could then be dealt with easily and with transparency.

We have 800 member leagues. The Strategy Unit's proposal to raise the registration threshold from 1,000 to 10,000 has been the issue that has caused

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most concern. Charitable status, as the noble Baroness, Lady Howells, said, is absolutely necessary in order to get the support of the public, to attract volunteers and when fund raising. We would also welcome any proposal that makes that registration easier and less time consuming.

In conclusion, we generally welcome the results of the report and commend the developments on the level of consultation and the quality of the conclusions. However, we believe that the number of proposals before us will certainly be a challenge for us all to achieve.

6.41 p.m.

Lord Dahrendorf: My Lords,


    "This Government is passionately committed to the work of the voluntary sector".

Those are the words with which the Chief Secretary to the Treasury, Mr Paul Boateng, introduces the mysteriously named "cross cutting review" of the role of the voluntary sector in service delivery. I share that interest, as do many of your Lordships, and not least my fellow combatant for the cause, the noble Lord, Lord Plant, who brought about the debate. In my case, I should declare the fact that I am chairman of the Council for Charitable Support as well as a trustee of the recently founded Charity Bank, which, while both solvent and beneficial, is of course not allowed to be profitable by usual standards.

Behind the Government's commitment is a philosophy, which I should have liked to discuss given a little more time. It is most evident in the attempts first to link the state and the market—as in PPPs, public private partnerships—and now to add the link between public services and voluntary organisations (PVP).

The two papers which we are debating spell out the implications of such thinking. The Strategy Unit report on Private Action, Public Benefit provides the general framework. The Treasury's cross cutting review adds an "action plan for implementation". Important budget measures over the past few years and the setting up of The Giving Campaign chaired by the noble Lord, Lord Joffe, furnish the wherewithal for an approach that is identified above all with the Chancellor of the Exchequer, Mr Gordon Brown.

All that is highly laudable. I strongly support and commend it. However, I start from different premises; and while I enjoyed and continue to enjoy occasional exchanges with the Chancellor, I reach a different conclusion.

The state, the market and civil society are all needed in their own right. Trying to bring them too close may rob them of their innate strengths. I am not sure that the private forces of the market flourish in public/private partnerships. And I am sure that the deliberate marshalling of voluntary and community organisations for public purposes does something to civil society that is not altogether desirable.

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The Treasury review makes it clear at many points what it does. An example is:


    "The Best Value Inspectorate should report on whether the full spectrum of options for involving the [Voluntary and Community Sector] in service delivery has been explored and this should form part of the comprehensive performance assessment being developed by the Audit Commission".

That has become familiar language. But is it how those of us of a more liberal persuasion envisage civil society? Would Alexis de Tocqueville have praised the United States of America for a "best value inspectorate" and "comprehensive performance assessments"?

For us as legislators the relevant issue in this context is the definition of charities. The other report discussed today—that by the Strategy Unit—suggests a "new definition of charity" to be embodied in statute law. Its key concept is that of public benefit:


    "A charity should be defined as an organisation which provides public benefit".

The purposes are then spelt out. Even the miscellaneous option at the end of the list speaks of,


    "other purposes beneficial to the community".

What about an association of stamp collectors, or other more esoteric combinations of people? More relevant, perhaps, what about private schools? And what about foundations whose purposes please one group but not many others?

This is my question to the Government: in practical terms, I wonder whether it would not be preferable to keep the notion of charity and voluntary association much more open? Would it not be better to abstain from any attempt at detailed definition and to leave discretion within certain formal limits to a body such as the Charity Commission. By the same token, would it not be right to free not only "small charities", as they are called in the Strategy Unit report, from many of the obligations that are appropriate only when charities become a partner in public service delivery?

Behind those questions is a philosophy somewhat different from that which informs government thinking. There is a case for public services publicly delivered. There is a case for market forces set free to create wealth. There is a strong case for associations of civil society that are not turned into instruments of "service delivery". When legislation based on the reports comes before us, I, for one, shall defend with vigour the case for liberty.

6.47 p.m.

Baroness Thornton: My Lords, I thank my noble friend Lord Plant for placing this debate on the agenda. As chairperson of the Coalition for Social Enterprise, I have been actively interested in the document Private Action, Public Benefit through its long gestation and in the discussions since its publication last Autumn. I declare also my longstanding association and work with the Co-operative movement.

The Coalition for Social Enterprise is a relatively new organisation, established to provide a voice for social enterprise across the UK. Its membership includes a wide range of organisations such as the

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Development Trust Association, the Community Action Network, the Co-operative Union, Social Firms UK, the Furniture Resource Centre, the Social Enterprise in Liverpool, the Big Issue, the Credit Union and many others, including regional social enterprise networks such as Social Enterprise London and Social Enterprise East Midlands.

Noble Lords will appreciate, therefore, that section five of Private Action, Public Benefit is of particular interest to the Coalition for Social Enterprise. It addresses the range of legal forms enabling not-for-profit organisations to thrive. In that context, the term "not-for-profit" is misleading. Social enterprises are definitely not not-for-profit. They trade for a social purpose. It is what they do with the surplus that distinguishes them from traditional businesses.

The proposals in the document are very welcome. Section 5 identifies the legal issues that the social enterprise sector needed to resolve. It has been clear for some time that the current legal forms available for social enterprise do not recognise the sector's fundamentally different ethos.

There are two measures which are needed to provide a modern, flexible and accessible form of incorporation for the fast-growing social enterprise sector. The first is the creation of a new legal form drawing, as appropriate, on company legislation—the community interest company. It would serve to protect assets against distribution to members or shareholders and would create a new strong brand for small-scale community based social entrepreneurs.

The second proposal is the modernisation of industrial and provident society legislation. Noble Lords will be aware that it can take as little as 24 hours to set up a company in the United Kingdom and cost as little as 90—something of which we should be proud. However, if one wants to establish a co-operative, a mutual or a social enterprise, the I&PS legislation to be used is 19th century and very out-dated. Therefore, it is no surprise that only 200 such companies are registered each year, compared with 6,000 charities, more than 5,000 companies limited by guarantee and well over 200,000 companies limited by shares. They are expensive, complicated to establish and not straightforward to administer. The I&PS legislation has not kept pace with changes in company law. A fundamental overhaul of the structure is long overdue.

The problem is not only that the legislative framework is difficult to access but, in modern parlance, industrial and provident society legislation does not describe the sector or any of its businesses anyway. Therefore, not only does the legislation need to be updated but there also needs to be a re-branding exercise that changes the name to co-operatives and community benefit societies. The document suggests that also.

I believe that both those proposals are great. It is a sign that at a top level social enterprise is being taken seriously. I am keen that legislation should be introduced to create the community interest company as soon as possible. It is equally important that reforms to the I&PS regime should go ahead at the same time.

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I am therefore seeking reassurance from my noble friend that that is what will happen. I am concerned that this is about a level playing field for different forms of social enterprise and to have a variety of legal forms which are equally accessible.

There are more questions that need to be addressed in the lead up to bringing legislation forward. Given the time available, I shall limit myself to just two. First, the report does not address itself to how long-term patient capital will be attracted into the community interest company without diluting its social aims. Secondly, the document is silent on how the community interest company will be regulated. I&PS societies are regulated by the Financial Services Authority; companies are regulated by Companies House; and charities by the Charity Commission. So there is a serious issue to be addressed here.

I am not expecting my noble friend to give definitive answers to these questions. However, I should like assurance that they will be addressed before legislation is brought forward.

6.53 p.m.

Lord Phillips of Sudbury: My Lords, I, too, would like to thank the noble Lord, Lord Plant of Highfield, for initiating this debate. It is an honour to be in such a glare of voluntary sector talent. In declaring my own interest, I am happy to say that I have acted for more than half the speakers in the course of my 20 plus years as a charity law hack. I am pleased still to be retaining that role.

I shall make a number of brief points in the very short time available. First, I should like to assure my noble friend Lord Dahrendorf that the British Philately Society is a charity—therefore, collect on.

The Charity Commission must retain its dual role of both policeman and friend of charity. That is an excellent and important synergy. I believe that the proposal that it should be re-named the "Charity Regulation Authority" has precisely the wrong ring to it. As regards the two new company formats, the noble Baroness, Lady Thornton, referred to the community interest company. I agree; it is a useful prospect. The other proposal is the "Charity Incorporated Organisation"—the CIO—on which I shall make two points. First, it must be shaped in a way that will be of use to small charities because companies limited by guarantee and so forth are available for the large complex charities. I suggest that it should use a great deal of the uncomplicated machinery of the law on friendly societies and industrial and provident societies. What it must not do, under any circumstances, is lead in three years' time, as the report conjectures, to a situation where only the charity incorporated organisation will be available for charities which wish to have limited liability.

If the public benefit test is introduced, as I believe it will and should be—I pay tribute to the NCVO for launching the idea in its report—the Charity Commission must be bold in applying it, particularly in regard to independent schools and hospitals. Noble Lords may be surprised to learn that the London Clinic and many of the big hospitals are charities.

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I was a little disappointed that the report seemed to show a little of the politics between its seams when, in regard to the public interest and schools, it stated that,


    "to maintain their charitable status, independent schools which charge high fees have to make significant provision for those who cannot pay full fees and the majority probably do so already".

Those last words are superfluous and pre-judge the issues. If the public benefit test is introduced, there will be an opportunity for our great independent schools to throw open their gates and to extend the scope of their activities in a way that the best of them want.

When I was a trustee of a local comprehensive school, I remember the chair of one well-known public school saying to me, "As far as the governors are concerned, we would love to do things with you, but the parents will not have it. They have not spent all this money to send little Johnny here merely to play and engage with the yobs down the road". Provided that the Charity Commission is bold, this is a great opportunity for schools and a great opportunity for hospitals.

The proposals vis-a-vis trade are contained in the one part of the report that is plumb wrong. Under the unsuitable heading "Encouraging entrepreneurialism", the report suggests that any charity should be able to involve itself in any trade—including trades wholly unrelated to its purposes—to an unlimited extent, subject only to a statutory duty of care. As one who has acted for charities for many years and seen the mess they make of their arm's-length trading companies, I shudder. It would take only a few well-publicised disasters to destroy the magic of charity and to undermine the public trust which, the report states, is one of its principal purposes. It would be wholly inconsistent with the altruism which is the legal core of charity, not only its sentimental core; it would distract the boards of charities from focusing exclusively on their charitable purposes; it would expose the charitable assets to trading disasters; it would tilt the composition of trustee bodies even more towards dominance by business people, which may be becoming a problem; there would be no arm's-length relationship with the trade; and the resentment of private competitors would grow by steps because the charities would use tactics and assets to support their trade.

Finally, as regards independence, the Government, however well intentioned, are apt to behave like a bull in a china shop towards the charity sector. Indeed, it would probably be better to say that they are apt to behave like a combined harvester in a cottage garden. The charity world is a cottage garden—wonderfully organic, variegated, chaotically harmonious, evolutionary—all of the things that government is not. So, please, let us keep it independent, as my noble friend Lord Dahrendorf said. It is voluntary and must be unconstrained by legislation unless it is absolutely essential.

6.59 p.m.

Lord Warner: My Lords, I, too, welcome the opportunity that the noble Lord, Lord Plant, has presented to us to discuss the role of the voluntary and community sector in service delivery. I declare an

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interest as chairman of the National Council of Voluntary Organisations, which represents nearly 3,000 voluntary and community organisations in England. Indeed, I had the privilege and pleasure of working with the noble Lord, Lord Plant, when he was the president of the NCVO.

I want to confine myself to two key issues: the development of the capacity of the voluntary sector to play a full part in the development of communities and public services; and, secondly, the need the reform the regulatory framework for the charitable sector.

I begin by paying tribute to the way in which the Government have recognised the need to strengthen the capacity and infrastructure of the sector. However, I am not sure that I wish to go too far down the track taken by the noble Lord, Lord Phillips, in describing its chaotic nature. That does not appear to fit with the approach I have seen from many members of the NCVO. The Prime Minister and other government Ministers have consistently recognised the greater role that the voluntary sector could play in public service delivery, something that many in the sector wish to do without any sense of compulsion.

The Treasury's cross cutting report—not "cost cutting report", as one or two commentators have described it—for the recent spending review sets out a challenging agenda for change. The 125 million future builders fund is welcomed by the sector as a genuine commitment to help it modernise and overcome obstacles to playing a fuller part in service delivery. But in deploying the extra money, the Government must distribute it on the basis of full consultation with the sector.

As the noble Lord, Lord Plant, pointed out, the compact between the Government and the sector is vital to its playing a fuller role. At the local level, dare I say that some local authorities and health bodies have to operate more in line with the spirit and the letter of the compact. They must not regard voluntary organisations as cheap alternatives that can be taken for granted, to be picked up and put down as the mood takes. Having compact champions at a senior level in all government departments should help to improve the way the voluntary sector can work with public agencies. What is critical now is that the sector's infrastructure is strengthened without damaging its independence.

It is also critical that the sector's overheads are properly met through sustained funding streams. To get the best from the voluntary sector and to play to its strengths in helping communities, we need intelligent local and national purchasers of services who build lasting and sustained partnerships with it.

That brings me to my other key point, the regulatory framework for the sector. With considerable courage the Government commissioned and published the report of the Strategy Unit, Private Action, Public Benefit. This sets out a well-argued case for major reform and modernisation of voluntary sector law and regulation. Following consultation with its membership, the NCVO welcomed the report. We believe that the recommendations will create

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a system of charity law fit for the 21st century and offer an opportunity to ensure that the public continues to have high confidence in charities and charity itself.

The proposal to extend a "public benefit" test to all charities is widely welcomed across the sector. In particular, the support of major charities such as Cancer Research UK and the British Heart Foundation is most welcome. Surely it is right that any organisation wishing to gain the benefits of charitable status should be operating for the public benefit.

Over the past 50 years there have been a number of reviews of charity law, but little more than changes at the margin. The challenge for the Government is to maintain momentum. There is a clear level of support for change across the sector and beyond it. NCVO polling indicates that nine out of 10 people believe that charities should be able to demonstrate that they provide public benefit. Furthermore, the need for change must embrace reform of the regulator, the Charity Commission, through it concentrating on its regulatory function rather than trying to combine it with an advisory role.

Momentum in this area is important. Some will argue for delay. Let us consider more. Let us have a Green Paper; let us have a White Paper; let us have a long public debate. Of course we want considered responses from the Government and well-drafted legislation. But over recent years we have used the draft Bill approach to iron out snags in legislation and to consolidate support for change in a given area of public policy. The vast majority of NCVO members and opinion in the sector favour a prompt move towards legislation. It appears to have cross-party support. I urge the Government to begin work on a draft Bill that could perhaps see the light of day in the next parliamentary Session and to plan to pass legislation in the Session after that. I am sure that any endorsement of that kind of timetable by Ministers would be warmly welcomed across the sector.

7.5 p.m.

Baroness Pitkeathley: My Lords, it is entirely appropriate that my noble friend Lord Plant should lead this important debate. He has a most distinguished record as president of the NCVO and it has been my privilege to work with him in that capacity for a number of years. Like many other speakers, I have spent a very large part of my life working either in the voluntary sector or in close connection with it. It would take up too much of your Lordships' time were I to give a list of the voluntary and community organisations with which I am connected, but I must declare an interest as chair of the New Opportunities Fund and as president of the National Centre for Volunteering.

Like other noble Lords, I am extremely grateful for the opportunity not only to discuss the role of the sector in service delivery but also to praise it for its record and for the vital contribution that it has always made to our national life. It seems to me that the emphasis on partnership working that now exists is the firmest possible basis for building on the strengths of the sector.

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The reports that we are discussing contain excellent proposals. But in my view it would be regrettable if the sector became just another service provider, indistinguishable from others. What we must do is to allow the sector to become as effective and efficient a provider of services as possible, while at the same time preserving its unique contribution.

The sector has a wonderful record as innovator and pioneer, and as the voice of the consumer. Many of the services in health and social care which we now take for granted started in this sector. That pioneering work continues—pushing out the frontiers of how services are provided, piloting new services, taking risks, proving that new ways are possible. The statutory sector can and does learn a great deal from how this is done, and we must preserve these pioneering approaches at all costs, ensuring that they are funded and properly evaluated and that the lessons learnt about good practice—and perhaps even more importantly about bad practice—are spread.

Perhaps the most important lesson that our society as a whole has learnt from the voluntary and community sectors is the importance of involving the consumer in deciding the shape and appropriateness of services. User controlled boards, patients' organisations and consumer and citizen panels are now an essential part of policies at local and national level. That this approach has been embraced so enthusiastically by this Government is almost entirely due to the pioneering work of the voluntary sector. It is not easy—it is much easier to provide services that fit the convenience of the provider—but it is vital. User controlled organisations—I speak as one who has been a chief executive in one—are notoriously difficult to manage. But the rewards for the consumer are great and the way this movement has shaped and goes on shaping our public services is something of which we should be enormously proud.

Nor should we forget that a very large part of the work of the voluntary sector is not about providing services at all, but, as my noble friend reminded us, about campaigning—the area in which I have spent a large part of my working life.

Some organisations manage successfully to combine the roles of service providing and campaigning, and we must always ensure that the service provision does not impede their ability to campaign. The United Kingdom has a proud record of funding organisations to campaign against governments—I have found it to be the envy of the world. We must ensure that it continues.

I turn to my specific role as a funder of the voluntary and community sectors. The New Opportunities Fund gives 40 per cent of the half billion that it distributes each year to this sector—about 600 million so far. I hope that we give this funding in ways that are not just about money but also about improving the status, the clout and the power of the sector.

Perhaps I may give an example. Our Healthy Living Centre programme has 300 million attached to it, 50 per cent of which has gone to voluntary organisations as lead partners. What has happened is that these organisations

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have led partnerships of statutory and voluntary, health and social services and environmental organisations. Often, these organisations have not been talking to each other and have had no tradition of working together to deliver services. The voluntary sector organisations have enabled these relationships to develop in ways which have wide significance. As one said to me, "We usually go cap in hand. Now we are in charge and it is wonderful how our input, our power at the table as leader partner, has shaped programmes and services which are of real benefit to our community".

Noble Lords would expect me to mention the possible merger of the New Opportunities Fund with the Community Fund, and I do so in conclusion. The Community Fund has a proud record of funding voluntary and community organisations. Indeed, I have myself been a recipient of major grants when working with carers. It is important that the stream of money that goes to the sector is preserved and that its independence is protected if any new organisation is created. The New Opportunities Fund is as concerned about this as the Community Fund. I am glad to say that we have repeatedly received reassurances about this from the Government.

We must, however, look at the facts. The receipts for good causes are possibly falling and the costs of administration are possibly rising. We must consider other options, and if we can move forward in a spirit of partnership the new body has, I believe, the potential to build on the strengths of the existing organisations to deliver added value, to make funding more accessible, to be more effective and efficient, and to target more money at deprived communities. I do not want to overstate this—only 7 per cent of funding for the voluntary sector comes from the Lottery, after all—but I know that it is important. No one is more committed than I to seeing that the sector and, most importantly, the individuals and the communities that it represents so effectively, are the final beneficiaries.

7.10 p.m.

Baroness Seccombe: My Lords, I add my thanks to the noble Lord, Lord Plant, for initiating this debate.

When people say that they work in the voluntary sector, it can mean different things to different people. To some, it can mean running an international charity, while to others it can mean rattling a tin for a couple of hours once a year. To my utter amazement, one eminent captain of industry even suggested that all his employees were volunteers because no one forced them to work for him.

I am often asked what my background was before I entered your Lordships' House. If the questioner is a distinguished high flyer, I feel pretty much a wimp when I say that I was working in the voluntary sector and was not involved in the struggle to reach the top of some profession or employment. I have, however, been on the board of one of the largest charities, I have been a vice-chairman of the Conservative Party and, yes, I have rattled many a tin and worked on jumble sales on too many occasions to mention.

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My experience has taught me that there is a great difference between being a paid executive of a charity and doing unpaid work for a charity. Both are essential for large charities to survive. I know, as I have a son who works for one, and I am conscious and very proud of his and his colleagues' dedicated contribution and of the importance of running an efficient and worthwhile organisation.

During my time as vice-chairman of the Conservative Party, I had the privilege of visiting Conservative women's groups in rural and urban areas. I always came away uplifted, marvelling at the wonderful amount of work done for love by these splendid people. Some were county councillors, district councillors, parish councillors, school governors and magistrates. Others were active with the CAB, meals on wheels, the Red Cross, the WRVS, the NSPCC—I could go on and on. And one only had to be there a short time before being caught up in the latest topical local concern. I always left feeling that I had been at the hub of the neighbourhood among those who knew exactly what was going on. I am sure that many noble Lords could tell a similar story.

Another group of volunteers that I must not leave out are the massive army engaged in amateur sport. Most villages have their football team, their cricket team and all the other sports that are the trendy fashion of the moment. The nation would be the poorer and, indeed, less healthy, without the enthusiastic leadership of these impressive people.

Much as I admire those who earn their living working for others, I must pay an enormous tribute to those who just give themselves for love. These are the people who make a difference to lives, not just to their own families but all those around them. However, I see an increasing problem. For my generation, it was far easier to get involved in local matters, as many of us did not have paid employment. Today it is quite different, with most young women working at least part time, and a large number full time. They often juggle their working life with bringing up a family, with all the pressures and, indeed, the pleasures, that that brings. As a consequence, life can be so hectic that issues outside the home have to take a back seat. It is interesting to note, however, that if a busy person gets caught up in a local problem, they can be tenacious and find the time from somewhere to fight their cause.

I was very heartened to read in the foreword of the Treasury publication The Role of the Voluntary and Community Sector in Service Delivery, quoted by the noble Lord, Lord Dahrendorf, that the Government are passionately committed to the work of the voluntary sector, and so they should be. These people—the true volunteers—should be cherished and have the way eased for them. This debate gives us the opportunity to salute them and to show that we really value all that they do and understand that without their good will many charities would grind to a halt.

Volunteers certainly are the cornerstone of the community. Without their outstanding contribution, life would be much more dreary and monotonous and less caring for literally millions of people.

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7.15 p.m.

Baroness Howe of Idlicote: My Lords, I, too, very much welcome this opportunity to discuss voluntary organisations. I thank and congratulate the noble Lord, Lord Plant, for making it possible. It is clear from the long list of speakers that your Lordships should debate the subject more often.

My interest stems from a lifelong involvement with the voluntary sector at all three levels—grassroots, national and international. Currently I am also proud to serve on the advisory committee to the NCVO. Noble Lords have already spelt out the scale of the voluntary sector. It is not just a matter of the huge numbers involved and their considerable financial contribution. Even more importantly, voluntary and community organisations are an invaluable part of our inherited culture. I am sure that the Good Samaritan had his equivalent even in Roman Britain. I suspect that many of us still look back to the 19th century for our charitable role models. In those days, most of the effort was directed at relieving extreme poverty, which is now accepted as the responsibility of the public sector. But the private voluntary sector remains crucial.

New Labour is to be congratulated on its continuing commitment to the voluntary principle—all the more so because in the 1960s, when I was involved in care committee work in the East End of London, a surprising number of old Labour supporters had very ambivalent attitudes towards volunteers who were seen more often than I care to remember as scabs. How attitudes have changed. And thank heavens for that.

So it is no surprise to me that in this exceedingly comprehensive review two Ministers describe their own and the Government's commitment to the voluntary principle as passionate. The personal satisfaction that each volunteer gets from their work is an important aspect of what they do. I emphasise that the voluntary sector has distinct values: independence, leadership and, above all, an innovative approach.

Essentially, the review sees the role of government as an enabler to help voluntary organisations grow, where they want to, into even stronger partners in the vital task of service delivery. As the review says, there is a limit to what the Government can seek to do on their own. The voluntary sector's input is rightly seen as delivering truly unique added value.

That is particularly so at local level. It is there, in local communities, that volunteer leaders are often the first to spot new emerging problems and to set about trying to tackle them. The achievements of the pre-school playgroup movement in the 1950s and 1960s and what it got going come to mind.

In my remaining time, I shall mention a few aspects of the complex reforms proposed. First, there are important changes to charity law. Many are welcome. The 10 new purposes in place of the existing four for determining whether a charity is providing public benefit are for the most part acceptable. Although the declared intention is not to deprive current charities of

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their charitable status, the exact words will need careful scrutiny. For example, the proposed review by the Charity Commissioners to,


    "check the public character of charities which charge fees",

looks disturbingly like yet another threat to the independent school sector as well as to some universities and possibly a wide range of other service delivery charities. I hope that that will not be the result, and I look to the Minister for reassurance.

On the other hand, changes in the law which enable more flexible use of capital assets to meet voluntary organisations' primary aims are long overdue. I welcome, too, the prospect of an easier legal and financial route for charities that wish to merge. Secondly, on practical issues, there is the promise to move to longer term funding agreements. I well remember from my time on NACRO how we could get no decision of a continuing grant for a project right up to the very last moment. Your Lordships can imagine the effect that that had on staff morale.

I am pleased, too, by the decision to allow an appropriate proportion of overhead costs to be included in voluntary organisation submissions—to be extended, one hopes, to the business world. Sadly, the value added tax relief appears finally to have been ruled out. That is a considerable disappointment.

Finally, voluntary organisations are often wary of too close a relationship with government, as the noble Lord, Lord Dahrendorf, said. Some do not want any relationship at all but simply want to be left to get on with what they believe they do well. Those seeking a relationship want realistic government grants and sympathetic backing for their objectives and projects. But they do not want to be drawn too completely into delivering the agenda of the government of the day. Governments never to forget that. It is vital to retain the independence and innovative spirit of the voluntary sector, which we all value so highly.

7.21 p.m.

Lord Judd: My Lords, I, too, thank most warmly my noble friend Lord Plant for giving us this opportunity this evening. I also declare an interest as a past director of Voluntary Service Overseas and Oxfam and, in an earlier stage of my life, as Secretary General of International Voluntary Service. I am currently a trustee of several charities and honorary president of YMCA England.

Like other noble Lords, I congratulate the Government on two challenging and exciting reports. There is much to be discussed, but in the short time available I shall share five reflections with the House.

First, charities have grown up. They now frequently have staff, volunteers and trustees of the highest calibre, matching the best in the private and public sectors. They are increasingly very professional and are not content to treat only the symptoms of what is wrong in society, alleviating the pain, although that is still vital. They want to address the causes. They do not want to be industries dependent on the failures of society but catalysts of social success. That is why the recognition in Private Action, Public Benefit of the

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place of human rights, conflict resolution, reconciliation, environmental protection and improvement, revitalising communities, empowering citizens and campaigning for social change is so important. Open, free democracy must have, to succeed, a thriving civil society.

When speaking of empowering, there is a potential paradox, of which charities and not-for-profit organisations have constantly to be aware. Empowering should surely start within the organisations themselves. There is a debilitating contradiction, when in an organisation working for empowerment, volunteers and supporters are merely used or treated as customers and not themselves empowered. That relates to accountability. However civilised and refined, there is still a tendency for the governance of organisations in this sector to be a closed process. Too often, trustees in effect appoint both new trustees and their own successors. Remarkable work has been done by organisations governed on that basis, but I am not sure that it is altogether healthy, and I am fairly certain that it is not a system equipped to meet the challenges of enlightenment in the century ahead. There needs to be a lot of thought about that.

Thirdly, there is the staff/trustee issue. Organisations in this sector were frequently brought into existence because a group of people felt passionately for a cause and came together to do something about it. Soon they find that they need support staff to help. Success breeds more success and staff numbers grow. In the end, there is a highly professional and dedicated staff in a big organisation setting the pace with trustees desperately trying to keep up with the activities for which they are responsible. I am sure that many noble Lords recognise that situation.

To some extent, there may be an inevitability about that. However, it is not a good guarantee of accountability. One of the special professional requirements of staff in this sector should, I suggest, be the responsibility of keeping trustees effectively briefed in a way that enables them to discharge their responsibilities. It may be argued that that is onerous to staff. However, if well done, it is invariably an investment in an ongoing, dynamic and challenging interface between trustees and staff and in an effective programme.

Fourthly, in their campaigning, organisations in this sector have a vital contribution to make to the evolution of public policy. But their special asset is that they can speak with the authority of engagement and experience and of their high-quality research. They deploy that asset best if people are in effect saying of them with admiration that, "They are doing this and doing that—and, oh, have you heard what they are advocating?" They diminish their special influence if people begin to say of them that, "They are campaigning for this and campaigning for that—but what on earth are they doing these days?"

It is also essential to ensure that when the public hear that an organisation is standing for something, they can have confidence that that stand is the result of

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serious deliberation and evaluation within the organisation and represents a position positively endorsed by trustees and is not just the strong view of a talented, highly committed member or group of staff.

Finally, while partnership with government in delivering services can be an excellent method of ensuring committed, sensitive, people-orientated quality services, there is a danger in organisations going down the subcontracting road. There could be a tendency to begin to look for where or on what the next contract can be found rather than at what needs to be done. That would be—and I choose my word carefully—a betrayal of their role. The creative culture should be one of vision and purpose—as catalyst, pioneer and challenger—and not just an extension of public service.

7.27 p.m.

Lord Bhatia: My Lords, I thank the noble Lord, Lord Plant of Highfield, for initiating this debate. I also declare my interest as the chairman of the Ethnic Minority Foundation and the Council for Ethnic Minority Voluntary Sector Organisations.

I welcome this review by the Strategy Unit which highlights the size and scale of this very important sector and makes a number of recommendations. One of the major recommendations is for reform of the Charity Commission, which will be renamed the charity regulation authority. The aim of the review has been to have a regulator that is independent and transparent.

During the consultation period, I understand that 1,100 submissions were made by the sector. That alone shows the vibrancy of the sector. I hope that the Government will bring forward the necessary legislation as soon as possible. As such a review has not, as I understand it, been held for the past 50 years or so, the vigorous consultation programme comprising 50 consultation meetings is indeed praiseworthy. I hope that the Government will listen carefully to the views of the sector, particularly the concerns of the small charities which are largely involved in service delivery. There will be great distress if the legislation entails the withdrawal of the registration of charities with income under 10,000. I hope that the Government will agree to a limit of 1,000.

Within the charity sector, a distinct sub-sector has emerged from the ethnic minority communities in recent years. This sub-sector is substantially involved in service delivery to its communities. I am part of this sector and work in it extensively. I should like to take this opportunity to share some of the issues that confront the ethnic minority voluntary and community sector.

The ethnic minority communities form about 6 per cent of the population of Britain and are concentrated in some of its largest cities. They form about 28 per cent of the population of London, and it is said that over the next 10 years over 50 per cent of the new entrants to the workforce of London will come from these communities. It is also a very young community.

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Many of these communities live in the inner cities, in some of the most deprived areas of Britain. If one looks at the indexes of unemployment, bad housing, health, education, social welfare, and so on, one finds the ethnic minority communities at the wrong end of the spectrum.

Experience has shown me that the voluntary sector, particularly in service delivery, stands between the community and the state. Community needs are usually articulated by the sector and the policy makers and funders try to respond to these needs. My experience also tells me that if the voluntary sector is weak, the community it serves will also be weak, and this is precisely the current status of the ethnic minority communities and their voluntary sector.

I am not saying anything new in stating that a large part of the ethnic minority community finds itself in difficulties, whether in the area of education, employment, health or housing. The young people in these communities are increasingly finding themselves excluded from the civil society. They do not feel included.

As today's debate is on the voluntary sector and service delivery, I wish to concentrate on what can be done to help the ethnic minority communities through their voluntary sector, comprising some 10,000 voluntary organisations across the country. These are very small organisations and that is why it is important that the new legislation does not end up withdrawing their charitable status.

The ethnic minority voluntary sector is a relatively new phenomenon. The bulk of the ethnic minority community arrived in this country in the past 40 years or so, and its voluntary sector is even younger—spanning no more than 25 to 30 years. From the seventies the sector has started to build up to meet the specific needs of its communities by delivering specific services.

These are small new organisations with insufficient understanding of the way the charity sector works, how policies are formulated and how resources are obtained to deliver services. There are cultural and language problems. There is in some places also prejudice and ignorance about the needs of these communities on the part of the policy makers and the funders.

But, above all, the newly emerging ethnic minority voluntary sector is expected to follow the same regime of rules of the funders as are applied to the wider and more mature voluntary sector which has been around for over 150 years. This is where the "one-size-fits-all" phenomenon causes hindrance to the sector's progress. It is analogous to subjecting a child to the same rules that apply to adults.

Is it any wonder that the ethnic minority voluntary sector is so weak and the community behind it even weaker? If we want the weakest in society to grow, we need to create different sets of rules and support structures for them. The support should be in the form of capacity building, long-term core funding and other such mechanisms to build up these communities. Unless there is a long-term strategy to build up these

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communities and their organisations, we shall all be talking about inner city problems and community tensions for another 20 years, and by that time the problems will be much bigger.

The Active Community Unit of the Home Office, various trusts and foundations and the Charity Commission are doing their best, but all of them and all of us who are in the sector should consider providing the extra support and resource necessary to enable these communities to come out from the margins of society to the mainstream. The proposed changes by the Strategy Unit will certainly help greatly in that process.

7.34 p.m.

Lord Turnberg: My Lords, I, too, am grateful to my noble friend Lord Plant for introducing the debate and for laying out its importance so clearly. I should like to focus on the particular case of those charities which support medical research. Here I declare an interest as scientific adviser to the Association of Medical Research Charities. That group is an umbrella body of over 100 charities supporting research including, for example, the British Heart Foundation, various cancer charities, the Arthritis Research Campaign, the Wellcome Trust and so on. Between them they provide more than 500 million-worth of support for research each year. That is somewhat more than the Government provide for medical research through the Medical Research Council, so it is an important discipline.

Overall, I welcome the Strategy Unit's report and its commitment to encouraging public support for volunteering and giving. I also welcome its general thrust to enhance efficiency and effectiveness, and to ensure best practice. That is after all what the AMRC would like to see.

I would be worried if the Government rushed into speedy legislation, however, before rather more work was done on clarifying what the law will mean and how it will be applied. For example, it is quite unclear at the moment where medical research fits into the list of nine public benefit purposes that will be used to assess charities. On that I resonate very much the comments of the noble Lord, Lord Dahrendorf. If medical research is a public benefit—I obviously believe that it is—where does it fit legally within the list? It might be thought, for example, to fit into such purposes as "advancement of health" or "advancement of education".

The problem is that while some research is directly beneficial to patients' health, much is of a more basic kind. An example is much of the human genome project, which the Wellcome Trust has played such a major part in supporting. Where does that fit into the definitions provided? We need to think through a little more carefully where the categories of public benefit will take us if we are to understand the implications.

By all means, let us see some clarity in charity law. There is clearly much to do, but let us make sure that we get it right before we rush along that route. Again, I welcome the need to clarify the role of the charity

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regulator, and the statement that its purpose will include some strategic objectives. Some increased accountability is welcome. However, I would also like to see a separation between the regulatory role and the advisory role of the current Charity Commission. I am not at all convinced that advice on best practice to charities sits easily with regulation.

Finally, with regard to regulation, I am concerned about the inequality between the regulated and exempt charities. In medical research, the exempt charities are largely the NHS and the universities' own charities. They cannot easily be expected to regulate themselves and be answerable to no obvious single regulatory agency for that activity. That again needs more consideration, and there are a number of other uncertainties that I will not have time to discuss.

Although medical research charities are very supportive of many of the principles outlined in the report, they are not yet convinced that the thinking behind them is sufficiently well developed for legislation to be rushed through. My own view is that it would be much better for more thought to be given, so that all the issues could be teased out, perhaps in a White Paper, before we rush into partly digested legislation. I am afraid that I am less convinced than my noble friend Lord Warner of the need for speed.

7.38 p.m.

Baroness Finlay of Llandaff: My Lords, like others, I am most grateful to the noble Lord, Lord Plant, for having introduced the debate. I endorse the comments made by the noble Lord, Lord Turnberg, in relation to medical research. I must declare an interest, having worked for Marie Curie Cancer Care for many years, and as a patron of St David's Hospice in west Wales. I am also a patron of Coping and Living In Pain, a very small charity set up by patients who have chronic pain. Also, I am a governor of Howell's School, Llandaff.

I want simply to address the duty of the statutory sector in relation to the charitable sector providers. The statutory sector is becoming increasingly dependent on the charitable sector providers for support in carrying out essential tasks just as medical research is now completely dependent on the medical research charities for world-breaking and ground-breaking research. The problem is that there are now many providers with charitable sets of funding in healthcare. For example, in Cardiff the average cancer patient will encounter at least three charitable sector providers on their cancer journey. There are problems in getting all those charitable sector workers to work together. I sometimes say that we need something resembling a rugby shirt, with all of the sponsors down one sleeve. The biggest problem involves fundraisers, who are not able, because of current legislation, to run joint fundraising projects. Although healthcare professionals will begin to come together, there are managerial pressures pulling them apart. I am glad that there is some attempt to address that, although it is not as complete as I should like.

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Another problem of the charitable sector working with the NHS involves integrating information systems and computer systems. The charitable sector sits outside the firewall, so it often cannot access in a timely way the information that is available to NHS providers. When public money is given in a contract, that contract must spell out exactly what is expected of the charitable sector provider and it must be embedded in the long term; otherwise, there is tremendous financial insecurity for the charitable sector provider. The charitable sector must be involved in the planning process from the outset, not just once the planning process is under way. People in that sector have a great deal to contribute at the brainstorming stage of planning, but their voices are often not brought in until later stages. A huge amount of intelligence from the people whom they purport to represent is not available within that sector. As the noble Baroness, Lady Pitkeathley, said so eloquently, the charitable sector has been particularly good at representing the needs of patients and carers in the community, whoever they purport to represent.

Finally, I turn to staff development and the responsibilities of the statutory sector to the voluntary sector. The voluntary sector is particularly good at using volunteers and bringing people—those who may have been out of work for some time—back into the workplace. They are gradually reintroduced through voluntary work to paid employment. The sector is particularly good at creating flexible work opportunities for those with a degree of disability or social problems for whatever reason.

In such staff development, there must be movement between the two sectors. Currently, the voluntary sector is having to pay for education that is routinely provided to those in the statutory sector in healthcare and education. That means that voluntary sector workers are effectively locked out from the advantages available to others. That excludes rather than creates inclusiveness. It also means that movement between the two sectors is not as easy as it should be. In the long term, the statutory sector may miss out on high-calibre people who have come up through the voluntary sector and who can contribute much but who have not been able to access the educational courses they need to take up senior positions.

7.43 p.m.

Lord Brooke of Alverthorpe: My Lords, I, too, am grateful to my noble friend Lord Plant of Highfield for promoting this important debate. I declare an interest as a trustee and patron of a number of voluntary organisations and charities. They are listed in my formal public declaration of interests. I speak today primarily from the perspective of volunteering and as a trustee for CSV—Community Services Volunteers.

I want to make some general points on the government reports, which I genuinely welcome. While most in the voluntary and community sector acknowledge the importance of accountability and transparency in gaining public confidence, they will be keen to see evidence of the Government's stated commitment to maintain the independence of the

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sector. As the voluntary and community sector works alongside the state and the market, it is important that it retains its independence to initiate, advocate, challenge and—very importantly—take risks. We must continue to look to voluntary and community groups to set aside self-interest and draw attention to matters that were previously kept from the public gaze, by highlighting the plight of the abused, the homeless or refugees. I strongly share the views expressed by the noble Baroness, Lady Pitkeathley, on maintaining firm and strong campaigning.

In modernising the framework for charities, I believe that we need to respect the diversity and acknowledge that there is no model voluntary or community organisation in this sector. We should refrain from seeking to bureaucratise the sector with an over-emphasis on targets and processes. In that context, I welcome the acknowledgement in the Treasury cross-cutting review of the need for improved consultation and procurement arrangements between the Government and the sector.

Those, I suggest, are important issues. Currently one does not have to search far to hear criticism about consultation time-scales and dissatisfaction with the contracting and payment arrangements between government departments and voluntary organisations.

However, there is one aspect of the relationship between the sector and government that remains a challenge. It is one that is not susceptible to a quick fix. For government, it is the problem of whom to consult; for those in the sector, it is a question of how much time it is reasonable to allocate to meetings and consultations with government and agencies, which, increasingly, we are called upon to undertake.

A distinctive feature of many voluntary and community organisations is the involvement of volunteers in the organisation and the delivery of services and support. Within CSV, we have volunteers at the end of help-lines; in our schools, they are engaged in raising literacy levels; they support refugee settlement or learning; they mentor excluded school pupils and offenders; or they assist the frail and disadvantaged. They are from all age groups and backgrounds. By their actions, they promote citizenship, helping to re-establish a sense of community and making a crucial contribution to our shared aim of a just and inclusive society.

The contribution of volunteers to community and civil life is invaluable and irreplaceable. We must do what we can to encourage more. For me, a test of these welcome government initiatives is whether they enable those in the voluntary and community sector to face new challenges and involve more of our citizens. We need to ensure that the voluntary and community sector has adequate capacity to realise delivery objectives and an operating context that is less bureaucratic. It should be a sector where application forms and guidance notes are streamlined; where accessibility is easier and made easy to use; and where any requests for information are truly essential for decision-making purposes within government.

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What government need, and must do, is to harness the energy, knowledge and wealth of experience of the voluntary and community sector to make life better. An important part of that is the recognition of freedom and independence for this sector if it is to continue to grow and flourish.

7.47 p.m.

Lord Joffe: My Lords, I, too, am grateful to the noble Lord, Lord Plant, for creating the opportunity to comment upon the two excellent reviews which form the subject of this debate. The commitment of the Government to the work of the voluntary sector is, indeed, quite exceptional, and both reviews mirror that commitment.

Having been involved in the voluntary sector in this country for more than 30 years with large, medium-sized and small charities, it is clear to me that most of the issues that have been a matter of concern have been addressed. With the exception of the Government's approach to VAT for charities, there is virtually nothing in the two reports which I do not welcome.

I share to an extent the concerns of the noble Lord, Lord Dahrendorf, about government being involved too deeply with charities and about charities, in turn, relying too much upon government. However, in my recent dealings with government, I have found that they are alert and sensitive to this issue. It is pleasing that the reviews explicitly recognise that many charities will not want to become involved in the delivery of public services and will prefer to focus on campaigning, or whatever their purpose may be. In that regard, I particularly support what the noble Baroness, Lady Howe, said so eloquently.

I want to touch upon two tangential issues as the substantial issues have been dealt with so fully by other noble Lords. It is self-evident that the voluntary sector cannot rely exclusively on the Government for its funding and that it must raise most of its funds through voluntary donations from the public. Sadly, however, in the past decade the donations made by the public to charity have not kept pace with the growth in earnings and wealth in the United Kingdom and in some periods have fallen so that, measured in real terms, donations today are not a great deal more than in 1992. What is equally disturbing is that the percentage of the population giving to charity has fallen during that period.

It is of critical importance to the voluntary sector that there should be a significant and ongoing change in these trends so that more people give and those who give, give more. That applies particularly to the more affluent in our society, who on average—happily, there are many individual exceptions—are far from generous.

The initiatives which the Government have already taken to promote the volunteering of time and money are important. It is to be hoped that they will continue to support such initiatives. In that regard I declare an interest as chair of the Giving Campaign, supported by the voluntary sector and government, which seeks to develop a culture of giving in the UK where it is

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natural for everyone able to do so to give money and time to improve the quality of life for others in our society. I also declare an interest in a number of other smaller charities.

The Strategy Unit also draws attention to the need for better information about the performance of charities. We have found from our own experience of the Giving Campaign that there is no reliable statistical information about levels of giving in the country. It is important for the future of the voluntary sector that such information becomes available. In the USA a public charity called Philanthropic Research has set up a website called GuideStar, which contains detailed information about 850,000 charities. The UK Institute for Philanthropy, in conjunction with GuideStar, has after completing a feasibility study, recommended the setting up of a similar website, which would be a positive first stage to providing information about what charities do and their financial position. I hope that the Government will support that initiative.

Finally, I turn to the implementation of the two reports. The cross-cutting review sets out a clear implementation strategy aiming at full implementation by April 2006. The Strategy Unit report envisages a Home Office Bill and that it will publish a detailed timetable for the preparation for legislation in due course. Against the background of it having taken almost 400 years for government to propose a new definition of "charity", it is important that the pace of change should not falter. With that in mind, the Queen's Speech in November this year will provide the natural opportunity for a charities Bill to be introduced.

7.52 p.m.

Baroness Prashar: My Lords, there is now a growing recognition in Government that the voluntary and community sector plays a significant role in the structure and aspirations of our society. I am, therefore, grateful to the noble Lord, Lord Plant, for securing this debate, thus providing an opportunity to discuss some of the crucial issues raised by the report of the Strategy Unit and the cross-cutting review.

In making my contribution to the debate, I declare that my involvement in this sector has been and continues to be extensive. From 1986 to 1991 I was Director of the National Council for Voluntary Organisations. Currently I chair the National Literacy Trust—which ran the Government's national year of reading—and the Royal Commonwealth Society, and I am trustee of a couple of other charities. In the late seventies and early eighties I directed the Runnymede Trust.

So, issues such as the legal framework governing the sector, its effectiveness, accountability and independence have been central to my concerns. I have a certain sense of deja vu. Over the past four decades there have been several reviews of charity law and many papers written about its relationship with the Government. But the two reports under consideration provide a real opportunity for change and action, which is long overdue.

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As we have already heard, there is wide support for change and for developing the real potential of what is called in the report,


    "the charitable and wider not-for-profit sector".

However, in implementing the change we need to be mindful of certain factors. There are some issues which deserve further consideration and others which need to be strongly underlined.

I turn first to reform of the charity law and shall highlight the areas which I believe need to be underlined. Any reform must recognise that charitable organisations exist for public benefit and public interest and must safeguard their independence. While the introduction of the 10 charitable purposes will give the necessary flexibility, it is important that these purposes are broad and objective and not linked in any way to specific policy objectives of the government of the day.

Secondly, I strongly welcome the proposal to revise and relax the right of charities to campaign. This has been a controversial area over the past decade. Attempts have been made to inhibit the ability of charities to campaign. Responsible campaigning based on experience and expertise is an integral part of the activities of charities, because campaigns inform, raise awareness, benefit service delivery and influence change for the public benefit. That is quite important in the context of service delivery. So the positive recognition of that activity is indeed encouraging.

An area which needs further discussion and thought is the balance between regulation and self-regulation. Refocusing and reshaping the Charity Commission as a regulatory body responsible for determining public benefit, registering charities and so on, is right. But issues such as management and performance of charitable organisations should be a matter for the sector itself. Stewardship of charities is dependent on their governance arrangements and the role of charity trustees. This is an area where there can be a genuine partnership between the sector and government in providing support for training, development and capacity building. It is a matter of recognising not only the independence of the sector but also the interdependence of both.

The rules of engagement, therefore, need to enable productive partnerships without inhibiting independence. Take for instance the question of mergers. Mergers and strategic alliances in the voluntary sector should not be a matter for government to determine or to encourage but for the organisations themselves. The Government's role should be to provide support and advice.

As I said earlier, all these matters will be discussed in detail, but action is paramount. It would, therefore, be helpful to know what timescale the noble Lord envisages for taking the charity law reform forward.

As for the role of the sector in delivering services, the single most important factor which will influence success is the commitment within departments to learn to work with the sector. That will require a vast change in the culture and the way in which departments operate. Government departments will require an

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engagement in the sector which should encourage brokerage, support innovation and negotiation and recognise diverse ways of delivering services. Risk averse and regulatory relationship will not unleash the potential envisaged in the cross-cutting review. The objective, I am sure, is not to turn the voluntary sector into a pale replica of the public sector, but to harness the strength of the sector in order to deliver services which are relevant and appropriate. Therefore, getting this relationship right will be crucial. Equally important will be how maturely the sector itself behaves.

The virtues and the strength of the sector have been well rehearsed this afternoon. The sector is rich because of its diversity and its independence. It will therefore be equally important to ensure that inadvertently we do not nurture and harness only those organisations which provide services. The sector as a whole needs to develop. In its totality, the sector is a vital part of civil society.

It would therefore be helpful to hear from the Minister what kind of expanded role is envisaged for this sector and what the implications will be for the voluntary sector as a whole.

7.58 p.m.

Lord Best: My Lords, in thanking the noble Lord, Lord Plant, for raising this issue, I would like to tell the story of the move from the public sector to the voluntary sector of delivery of an important mainstream service—social or subsidised housing. Thirty years ago the voluntary housing sector was a very small enterprise and supplied far fewer homes than local councils. Today, the voluntary housing bodies—housing trusts, housing societies, housing co-operatives, together called housing associations—are more than 10 times bigger. They now provide all the new social housing. Existing council housing is also being transferred to those voluntary-sector bodies.

I declare an interest as director of the National Federation of Housing Associations for 15 years of the past 30. For the other 15 years of that period, I was the chief executive of the major housing association in York, the Joseph Rowntree Housing Trust. Perhaps I can draw out possible lessons to inform the Government's plans for expanding other parts of the voluntary sector.

How come the housing associations have grown so dramatically since the early 1970s? First, they have enjoyed the cross-party support of central government, giving them continuity and security from political change. Secondly, that political consensus has maintained a flow of public funding from a national body—the Housing Corporation. That has liberated housing associations from, on the one hand, a precarious dependency on time-consuming and unpredictable charitable fundraising, and, on the other hand, dependency on the benevolence of local authorities, which, for reasons of financial shortages, local politics or self-interest, cannot be relied upon as the sole funding agencies. Thirdly, the performance and reputation of this part of the voluntary sector has

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been sustained and protected by a national regulator—again, the Housing Corporation—which gives confidence to donors, investors and the public; protects the investment of public money; and can set and enforce standards, stepping in when things go wrong.

Importantly, consumer protection is also enhanced by a dedicated ombudsman service. But are there lessons on how not to expand voluntary activity, and on the dangers of a switch from public- to voluntary-sector provision? In considering lessons from the voluntary housing sector, the Government and all interested parties should consider how to avoid the availability of full funding and full cost-recovery compromising the independence and autonomy of voluntary bodies. They should also consider how to prevent central regulation emasculating voluntary organisations, leading to their nationalisation, with their paid employees simply delivering central government's agenda.

The voluntary housing sector has largely avoided those dangers. It has been safeguarded in two important ways. First, the Government have supported a wide variety of voluntary bodies—big and small; old and young; specialist and general; linked to other charities and free-standing; based in communities and more widespread. That measure of anarchy in the diversity of voluntary housing organisations has been a great protection. Secondly, the real independence of volunteers on their management committees—the boards of housing associations—means that the organisations can ultimately say no. Those individuals can bring their own ideas and expertise from other fields but can take their bat and ball and go home if the Government become too bossy.

I am very hesitant at suggestions that housing association board members should be paid like members of quangos, company directors or even councillors who collect attendance allowances. The independence of freethinking voluntary bodies is greatly assisted by control being vested in truly voluntary board members. I strongly support the growth of the voluntary sector in providing key services. I hope that the story of housing associations will provide lessons and warnings to those responsible for pursuing the exciting new opportunities for the wider voluntary sector.

8.4 p.m.

Lord Smith of Clifton: My Lords, I declare an interest as a trustee of three trusts, which are recorded in the register of interests.

The noble Lord, Lord Plant, brings a wealth of both pondering and practice as regards the world of charities. Noble Lords have all said how grateful they are to him for initiating the debate. The debate has been extensive, revealing noble Lords' rich experience of a variety of charities. If one strong theme emerged, it was to stress the independence and spontaneity of charities. Although some noble Lords welcome the two reports more than others, even those who

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welcomed them did so with the caveat that the Government should not attempt to become too tentacular in their approach to charities.

The two reports endeavour to introduce greater order and system into the tangled, complex and obscure relationships that have developed between charities and government over the years. Almost exclusively, the reports deal with those charities which raise money by way of legacies, flag days, collections, seeking donations and so forth, in order to fund the cash and kind succour to those in need on which they are particularly focused.

There remains a great lacuna in the reviews—the flip-side of the type of charities that we have been discussing—namely, the well-endowed, philanthropic foundations which frequently assist charities concerned with service delivery. The noble Lord, Lord Turnberg, made reference to such charities and I shall concentrate on them.

They have been a neglected subject of debate for most of the past century and need to be reviewed at least as much as the other forms of charity. Aware of this neglect, the Joseph Rowntree Reform Trust Limited—a foundation which is not a charity and of which I am a director; I declare that interest—commissioned a scoping study from the Centre for Civil Society at the London School of Economics on the contemporary state of philanthropic foundations in Britain. It is entitled From Charity to Creativity. A copy has been placed in the Library. I suggest that it should be read alongside Private Action, Public Benefit.

Its authors, Dr Helmut Anheier and Diana Leat, review the history in Britain from the creation of the 19th century charities to the philanthropic foundations established mostly in the 20th century. They call for a further major transformation to meet the needs of the 21st century which they term "creative foundations". They make many suggestions as to how this could be induced. Although I draw upon their work, the views I express are my own. Largely, I expressed them in the preface that I wrote to their study.

First, compared to the United States, relatively little is known about British trusts and foundations, their modes of operation or any measured outcomes stemming from their largesse. The milieu in which they operate is cosy enough and allows them as much anonymity as they wish. Things have not altered noticeably for the past 100 years. Governing bodies—the noble Lord, Lord Judd, made reference to trustees generally—are self-perpetuating oligarchies serviced by tenured staff, although more recently consultants of one variety or another have advised on specific areas or topics.

Sometimes, some foundations have in some of their work been genuinely innovative. Those new developments derive usually from their staff and occasionally from the prompting of trustees—that bears on the relationship between staff and trustees. However, more often they carry on their business

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much as always. Frankly, there is a good deal of complacency in the world of philanthropic foundations. They carry on beyond the gaze of public scrutiny or periodic formal review.

Too often, foundations have become overly complacent and insufficiently innovative. The role of the Charity Commission—many noble Lords have remarked on this—has not helped, seeking merely to police the law and detect, usually very few, minor frauds. The Charity Commission has been prevented by statute from being proactive in any way so as to prod foundations into being more adventurous and pioneering—for example, by addressing the needs of clients and constituencies that have emerged more recently.

As an index of complacency, it is staggering to find in the Anheier and Leat study just how England-oriented are UK foundations. Northern Ireland, Scotland and Wales scarcely get a look in. The overwhelming bulk of activity and expenditure is grotesquely skewed in favour of England. Similarly, it appears that the transformation of this country into a multi-cultural society—noted by the noble Baroness, Lady Howells of St Davids and the noble Lord, Lord Bhatia—has largely passed by those foundations. Only a relatively small amount of funding is allocated to the needs and aspirations of ethnic groups.

Foundations seem to be locked in a time warp, increasingly lagging behind modern developments. Bearing in mind that 40 per cent of their income derives directly, by way of exemption, from the taxpayer, it is legitimate to ask questions about how they operate and how their missions might be rendered more relevant and creative to the needs of contemporary society.

Two new developments can be discerned which raise concern. First, there is the advent of "new" philanthropic money deriving from the vast fortunes of self-made multi-billionaire entrepreneurs. That will inject much-needed new ideas and map new directions while their buccaneering founders are at the helm, and that is to be welcomed. A caveat, however, must be entered. As large corporate business is increasingly influencing the shape of public policy, so new charitable largesse may also seek to be another conduit of covert influence. We should be on our guard.

Secondly—my noble friend Lord Dahrendorf alluded to this—there has arisen a related, almost reciprocal, problem emanating from the state. Over the past decade or so, the practice whereby governments seek to finance specific public projects or programmes by inviting funds—sometimes from business but also from foundations—to contribute to the overall costs in some form of partnership has become established. The principles and motives behind PFI/PPP are encroaching on and infecting the world of philanthropy.

An exacerbating factor in this trend has been the creation of the National Lottery. When launched, government solemnly undertook that lottery moneys would not be used to finance projects that were previously regarded as the sole province of the state

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and the public purse. That promise was soon and cynically forsaken. Lottery funds, though not formally government-controlled in the way they are disbursed, are clearly heavily government-influenced, as in the case of the costly and ill-fated Millennium Dome and many other similar projects.

If this trend towards partnership funding gathers momentum, philanthropy, hitherto independent, will be in danger of being co-opted, if not corrupted, by the state—a theme referred to by many noble Lords. The boundaries that have hitherto demarcated civil society from the state will be eroded, philanthropic independence will become compromised and agendas politicised.

It is time for a wake-up call. Like long-established businesses that have failed to adapt with the times, many foundations are equally vulnerable to take over, in effect, by government co-option. If foundations are insufficiently innovative and responsive, initiatives will come—indeed, they are coming—from elsewhere.

A renaissance in philanthropy is long overdue, otherwise the foundations, hitherto a bastion of civil society, will be overwhelmed and engulfed, forming yet another first steps agency of government. As Anheier and Leat state, they must change direction to locate themselves,


    "at the crossroads of society rather than at its centre".

They must think the unthinkable.

If there is to be a new charity law, it must embrace the philanthropic foundations. A debate is long overdue and we should examine their work in contemporary society as we have the two papers that we are considering.

This has been an extensive debate. I congratulate your Lordships on your self-discipline. I was watching closely with a stop-watch; only two noble Lords overran their time, and then only slightly.

8.14 p.m.

Lord Hodgson of Astley Abbotts: My Lords, I, too, thank the noble Lord, Lord Plant of Highfield, for giving us the opportunity to have this important discussion and for introducing the debate in such an experienced and able way. The fact that, despite some late scratches, some 20 noble Lords have spoken in the debate, allied to the strong response to the debate on the Unstarred Question about a charities ombudsman tabled by my noble friend Lord Patten on 20th January, is evidence of the high and expert level of interest in your Lordships' House.

On these Benches we have never doubted the value and importance of the voluntary sector. As Iain Duncan Smith said in a speech last June:


    "The voluntary sector should not just be another branch of central government. For us the sector is part of a new political settlement, one which stresses the local over the central, diversity over uniformity and innovation over control".

As a party we are pledged to breaking down constraints on the sector. We intend to build solutions into a voluntary society Bill which we shall lay before Parliament in the first Queen's Speech of the next Conservative government.

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We therefore very much appreciate the Labour Government's new-found enthusiasm for the voluntary sector. However, when I was a Member of the other place a few years ago, it was all Labour Members of Parliament could do to bring themselves even to mention the words "charity" or "voluntary groups". For them—here I echo the words of the noble Baroness, Lady Howe—"charity" was a dirty word and the man from Whitehall or the town hall always knew best. Let us hope that this is a permanent conversion.

The village of Astley Abbotts from which I take my title lies just outside Bridgnorth in south Shropshire. It has 200 inhabitants. In 1815, Hannah Philips, spinster of the parish, left 300 to be invested in government stock, the interest of which was to be split and paid, first, to each of,


    "the most distressed widows in the parish",

and secondly,


    "in the purchase of suitable books for the use of poor children to be instructed as hereafter mentioned".

The words may be a little brutal for modern sensitivities, but the sentiment behind them remains a fine one: the wish of someone who had been lucky in life to provide money to help her less fortunate fellow parishioners.

The history of that educational trust over the past 25 years has signposted and reflected many of the issues raised by noble Lords in the debate. First, I cite the ease, or lack of ease, when restructuring to reflect modern conditions. The trust wanted to combine the two parts and, like my noble friend Lady Miller of Hendon, found dealing with the Charity Commission complicated, time-consuming and costly. Secondly, the trust wished to take advice as to how it might expand the original objectives of Hannah Philips. Getting advice out of the Charity Commission also proved extremely difficult. I support the view expressed by the noble Lord, Lord Turnberg, that a friendly adviser and a regulator do not sit happily together. Although the noble Lord, Lord Phillips, does not agree with that view—no doubt it is one that we shall debate in the future—I must say that I think the roles are very different and not easily combined.

The third issue which has concerned the trust, and one which I do not think has been raised in the debate, is the protection of trustees who have acted properly. All the work is done by trustees who live in the parish and give of their time freely and unpaid. However, they are becoming increasingly anxious about their legal exposure and responsibility in a litigious age for a fund that now approaches 40,000.

As I read through the two reports, I thought about the impact on those huge charities which do such tremendous work. However, as my noble friend Lady Seccombe also pointed out, I was concerned lest we forget or overlook the impact on the thousands of Hannah Philips-type charities which do such valuable work, unsung and unnoticed, across the length and breadth of the country. They too need encouragement and support.

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Like the noble Lord, Lord Warner, perhaps I may congratulate the Strategy Unit on the quality of its report, Private Action, Public Benefit. One may not agree with all the proposals, but the report is clear, logical and well written. The fact that it was able to achieve that in fewer than 100 pages is an object lesson in itself.

The cross-cutting review has many positive and interesting recommendations, but I found certain parts where management consultant-speak appeared to have taken over. I quote only one example from Section 8.9:


    "It will harness the vision, specialist knowledge and expertise of service providers to transform their capability, push out the boundaries and, most importantly, improve service outcomes".

Pass me another platitude. However, as many noble Lords have pointed out, it is in this report that we come to the heart of the challenge. It is easy to recommend, as in Section 8.4, involving,


    "the VCS actively in the planning as well as delivery of services"

but it is pushing that through in spirit as well as in the letter across departments as well as at national and local level that will be the challenge; and to do so, as pointed out by the noble Lord, Lord Dahrendorf, and many others, without smothering the distinctive features of private sector charities.

For the glory of the voluntary and community sector is its responsiveness; and that, in turn, is bound to make it, by government standards at least, less predictable. I note, nevertheless, the implementation timetable in the report, which is clearly an honest endeavour to monitor progress.

Recommendation 24 of the implementation plan is that the Inland Revenue,


    "should work with Customs & Excise to establish a single, integrated help-line service, to provide charities with a single point of contact".

The suggested action is that a help-line will be established by January 2003—a small step, but a worthwhile one. Yet when I rang the Inland Revenue's general inquiry number yesterday—6th February—no one was able to redirect me to this help-line. Perhaps the Minister will let us know whether this first small deadline has in fact been met.

The review is concerned with service providers. But there are many charities that do not wish to be service providers—that does not make them any the less worthwhile as charities. They are concerned that they may be viewed less favourably—organisationally, financially or structurally—than service providing charities. As the noble Baroness, Lady Thornton, said, that means that there needs to be a commensurate, measured and fair regulatory system and a light regulatory touch.

Of course we have to maintain public confidence in the sector, and that requires that information should be made available. But some charities are concerned at the proposal in paragraph 6.1 of the report for a "standard information return". Can one standard return ever sensibly cover the huge range of charities? Moreover, if the information were to become generally

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available, one can envisage journalists and others constructing league tables which could be misleading and could lead to value judgments. It could even serve to undermine public confidence—the precise reverse of what is being sought.

Perhaps I may give a simple example. A charity holds an event at a leading London hotel for 750 people. The net sum raised is 75,000, but the cost of putting the event on could equally be 75,000, so the fund-raising cost is 50 per cent of the gross raised. By contrast, a private party for 50 people in a venue lent free of charge might raise 50,000, with a fund-raising cost of nil. Which is the better function? Which will appear better in any return? Which actually energises the most people to help raise money for a worthy cause?

This has been a fascinating debate. It has shown care and concern about the sector and a widespread view that there is a need for a new legislative framework. But, inevitably, this can be only an appetiser. The main course will be served when the Government's legislative intentions become clear. I hope that we shall hear more about this in the Minister's reply.

8.23 p.m.

Lord Filkin: My Lords, I was delighted when I saw that my noble friend Lord Plant of Highfield had proposed this topic for debate. The debate is timely and important. It provides me with a rare chance to speak at the Dispatch Box about a matter for which I am responsible.

Perhaps I may signal what I can do in the limited time available to me. I shall not be able to respond in 20 minutes to all the points of detail that have been raised. To do so would mean that I should not be able to respond to the points of principle that have been raised. Therefore, with the House's blessing, I shall create more work for my civil servants by responding directly with a sequence of letters.

Perhaps I may seek to respond to the big picture and to some of the questions raised. There is general recognition that there is enormous potential. We have had a sequence of major reviews. It is clear that there is a commitment within government—and a commitment across parties—to moving forward; and there is a general recognition that one wants to explore how. Through a positive partnership between government and the sector, one can deliver more for the public. That is the essential focus underlying the debate. How can we make this work better for the public?

We are talking about three issues: the voluntary sector, which has been the main subject of the debate; the community sector, which is slightly different—significantly different in some ways; and volunteering. The debate is about how these intersect in terms of potentially delivering more value for the public.

I shall put the Government's position clearly on the record. Our focus is on how the voluntary sector can help to improve the quality of society in ways that are seen by a diversity of people, not necessarily only by government. We affirm the importance of campaigning, which is often, although not always, against the Government. Secondly, we recognise that the sector has the potential

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to meet needs in different ways and to meet needs that the Government do not think, or do not yet think, are a priority. That may connect back to campaigning. For a healthy civil society, this is crucial, which is why the independence of the sector has to be the lodestone for all of us. Independence, however, does not imply being dormant or quiescent. We want an independent sector that is innovative, active and, at times, challenging.

However, because independence implies that at times there are differences, one should not take that to the other extreme and assume that the sector and public funders are always in conflict. That is nonsense. There are many examples of a similarity of goal and objective between a charitable organisation and public policy—not always, but often.

I wish I had more time to engage with the noble Lord, Lord Dahrendorf, on the issues that he raised in a good radical speech. There is clearly a case for non-state involvement of the voluntary sector, if by that he means not having state dominance. But if he is arguing for no state funding in the voluntary sector, I question that, because I think the public would lose out. It is the terms of that relationship that we are trying to tease out and get right.

So why does this matter? It is potentially because we are looking for the public to gain more and to get added value. Let me rattle off some points. It is clear that a world in which the state tries to do everything to deliver outcomes that the public want is a horrific monster. We have all moved away from that thinking. The state has some defects when it seeks to do things itself. It is clumsy, it cannot possibly go with the fine grain of issues, and it is not always as responsive to innovation as it should be.

We want things done in society that the state does not want or does not think a priority. That is healthy for society, and government must have the maturity to recognise that and not take a monolithic view of the world.

Last on the agenda is the renewal of civil society, the promotion of the growth of social capital, which some of us have talked about recently. We have not touched on that much, although I think my noble friend Lord Judd mentioned it. It is clearly massively important to many of us, and there are interconnections between the agendas. They are not the same, but there are linkages between them.

What are we looking for? We want greater impact, greater contribution by the sector in terms of more innovation and greater ability to identify outcomes that work better when others have failed. We want potentially more scale, because scale is not a dirty word. In other words, if things are good and are done well by the sector, we want more of them. We also want the opportunity for more choice, either in terms of the public getting the outcome they want or a public or charitable funder being able to look at various ways of getting outcomes. That would be my agenda of what our high level objectives would be in terms of the sector having massive potential and importance with regard to the quality of our society.

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The Strategy Unit report, the cross-cutting review and, before that, the compact, signalled that there were some pretty major problems in fulfilling that vision. A number of noble Lords have spoken eloquently about the scale of the challenge facing government and the sector in fulfilling a vision which I think we broadly share. In response to the anxiety about the dominance of state funding or a state funding relationship which is clumsy, skewed or lopsided, we must bear in mind that other funding mechanisms are crucial. The noble Lords, Lord Joffe and Lord Smith of Clifton, spoke helpfully in marking the importance of philanthropic foundations, a topic for debate another time. The work of the noble Lord, Lord Joffe, is extremely important in this regard and is another area for discussion. We can perhaps debate those three areas as potential sources of alternative funding which most of us wish to see expand rather than diminish.

On the tighter topic of service delivery and the Government's approach to the potential contribution of the sector, at one level we are just looking for greater opportunities. We are looking for the sector to be given a level playing field so that it can engage if it wants to. That does not imply that it is second class if it does not want to engage and wants to do other things or does not want to have a relationship on service delivery with central or local government. If it wants to do so, we shall not achieve the potential unless government shift their behaviour. The noble Baroness, Lady Prashar, and the noble Lord, Lord Hodgson, were both clear and challenging about how government have to move their behaviour if we are to unleash the potential.

Let me illustrate some of the things that the Government are doing to try to start the exploration of how to achieve that. I have started a sequence of discussions with Ministers in the Home Office and elsewhere. I talk to Ministers and their officials. We outline the outcomes that they want to achieve—less drug taking or offending from a Home Office perspective, or healthier living—and ask if they would like to start a discussion with us and others on three questions: how the public, if they were liberated, could make a greater contribution to tackling those problems; how the voluntary sector could make a greater contribution; and how volunteers could make a greater contribution. Those three obviously overlap.

We want a sequence of discussions with colleague Ministers, with the voluntary sector and civil servants present, in which we explore those three questions, starting from the question of where we could do things better for the public and what that would then imply for the relationship between a government department and the sector to promote innovation and the development of its capacity.

The response from Ministers I have talked to so far has been excellent, but we have not yet put that into practice. In a sense, it is a process of exploring potential, almost exploring market-making and market development, and trying to develop a partnership relationship rather than the dreadful procurement relationships we have seen in the past.

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The second issue is the need to knock on the head antiquated bad procurement practice by central or local government, with a crude, short-term, adversarial contracting relationship. That is a hopeless way of stimulating innovation or getting value out of any supplier, let alone out of the voluntary sector.

Thirdly, there is clearly a need to look at what can be done to support the development of the sector's capacity. Economists would call it the supply side, but that sounds too technocratic. The good news is that there are two major funds—the Futurebuilders fund and a major fund held by the Active Community Unit—which need to be developed in a harmonious partnership with the sector focusing on how best to stimulate the sector's capacity for more. That thinking is being developed actively with the sector. It gives us a lot of scope to move forward.

We also have to be aware of sectoral issues. The noble Baroness, Lady Howells, and the noble Lord, Lord Bhatia, reminded us of the importance of looking at the contribution of the black and minority ethnic voluntary sector to meeting race equality outcomes in society. Clearly, the Race Relations (Amendment) Act 2000 is a powerful lever to public bodies and to the voluntary sector, even though it does not apply strictly to it.

Lastly, the compact has been around for a year or two. The challenge now is to make people take notice of it and move it forward. We are not giving up on it because we think it is crucial. It has been well developed and now it has to be driven in. I am delighted that Sir Michael Bichard, whom many will know from local government or DfEE days, has taken over the role of independent champion of that. He and I will be fronting the big debate with the sector, with a whole range of Ministers, I hope. I think that is in March and April. We intend to use the annual event as a powerful celebration and calling to account of central government departments, local government or even the sector itself, so that we try to make the spirit of the compact driven and lived more actively.

Although I am being rapid, the nature of all these relationships is one of partnership. We hope that central and local government recognise that they have to approach the issue with some humility rather than just as a dominant purchaser.

I have not said much about local government. Some 40 per cent of the sector's funding on service delivery comes from local government. We are already in discussion with the LGA and will be in discussion with local authorities over at least the next 18 months about how to promote better practice and retail it across others. It is crucial that they are with us as well.

I shall leave service delivery and give a few words on volunteering, as it is germane to the discussion. The noble Lord, Lord Joffe, and others were at the breakfast launch with the Chancellor and Home Secretary when Next Steps on Volunteering was publicised. That is an important document and I am

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keen to work with my colleagues in the Treasury on driving it forward, so that we actually get some action out of it.

In the Home Office, we are asking ourselves what, if anything, the Government could do to stimulate an environment in which more volunteering is likely to happen. I do not mean tax breaks, because that is a Treasury issue. We already put in money here and there to stimulate initiatives. However, we need to think about what sort of support structures at national and local level might most help to promote more volunteering. We should not aim for a central Government, Baldrick-type plan. It should not be like that; there should be some conceptual thinking about what architecture of support would be most helpful.

Lastly, I turn to the issue of regulation and legislation, which in many ways has, rightly, been a dominant theme of the debate. I have at least 40 questions to answer and, given the time, noble Lords would not thank me if I tried to answer them all at this point.

I turn to the Strategy Unit report, and mark that three pieces of legislation are needed to take it forward into practice. We are currently considering the 1,100 responses to the consultation process. We were pleased with both the quality and the volume of those responses. We shall also take this debate as part of the response to that process. The director of the ACU and I will study the debate to see if it informs our thinking, as I am sure it will. In the spring, we will publish our response to the consultation. In time, it will lead to three separate pieces of legislation.

First, there will be a Bill that will be led by the Department of Trade and Industry, although the Home Office and the DTI are working actively in partnership on it now and considering the issue of community interest companies. The noble Baroness, Lady Thornton, is right. The potential for social enterprise is to contribute to social good. These are not profit distributing organisations but, like the noble Baroness, I hope that they are making a profit or they will not last long. It is the distribution that is the defining issue. The noble Baroness, Lady Thornton, referred to a whole string of issues on which there will be consultation in the spring. We are considering those issues, and she will see them at least teased out for discussion in the consultation document.

The noble Baroness also raised the issue of the industrial and providence societies. The Treasury shares our keenness to move forward on that, and we will be looking for a suitable opportunity to do so. The Treasury will be the lead department in that regard.

Lastly, the charities Bill: it would fall to the Home Office to lead on that. The noble Lord, Lord Turnberg, has cautioned us not to be too rapid. I believe that one could argue the 400-year point either way. There will be a serious process of technical work as well as complicated policy issues to address. It is not a simple piece of legislation in terms of getting the detail right and thinking through some of the principles that we have marked. That will have to be done as soon as possible.

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That Bill is a classic sort of Bill for pre-legislative scrutiny and being published as a draft Bill, and I am sure that we will want to do so. Noble Lords will not be surprised to hear that I am not in a position to divulge when it will be in the Queen's Speech. However, I hope that it will be an early one, when we have got it right after a vigorous process of consultation.

There are other issues that I could mention, but that would be diving into detail, which would weary noble Lords. I can promise individual letters.

In conclusion, the commitment is there in government and on a cross-party basis to make this work. I also sense that commitment in the sector.

The challenge for all of us is to be quite mature about how we drive this forward over at least the next three years. I am delighted to have the opportunity to work on the issue within government and with the sector. Government and the sector will themselves need to change if they are to capitalise on the potential opportunity to do much more for the public. We need to get this right over the next few years.

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8.40 p.m.

Lord Plant of Highfield: My Lords, there are some very big issues here, as we have seen during the course of the debate. It has been an excellent debate in which we have had a wide range of very good speeches by noble Lords with great expertise and experience. If I may say so without appearing too sycophantic, I thought that the final speech of my noble friend the Minister was a terrific synopsis of the debate and was quite informative on government thinking. I thank him very much for that. I thank all noble Lords who have taken part in the debate. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.

Electricity (Miscellaneous Provisions) Bill

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

        House adjourned at eighteen minutes before nine o'clock.


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