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My right honourable friend the Foreign Secretary has committed the Government to improving and strengthening the UK's human rights work, and has made clear that human rights will be woven deeply into our foreign policy decision-making at every stage. The noble Lord, Lord Luce, mentioned the Commonwealth. We see it as a valuable network to help to carry forward our human rights policy. The noble Baroness, Lady Symons, asked about the current programme of Commonwealth reform. The current programme is led by the Eminent Persons Group. Our hope is that it will reinforce the potential of the Commonwealth in upholding core values. That is my personal hope, and I have great confidence that progress will be made.

The Prime Minister and the Foreign Secretary have described a policy of practical promotion of human rights, where we work with the world as it is, not as we wish it to be, as being the right way forward. They argue for adapting our approach for each context while pursuing our goals with determination.

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There is no one model for promoting human rights in our foreign policy. Each context will demand a different approach. Promotion of human rights implies making robust commitments to the realisation of economic as well as social and political rights- including the rights of women, which are vital and central-and those of minorities and disabled people. It means commitment to enhancing the role of opposition political parties-always difficult for some countries to understand. It means commitment to devolving power to local and regional government, promoting substantive gender equity, addressing the rising tide of religious intolerance, championing efforts to democratise international institutions, and providing effective avenues to enhance the participation of youth. Those are the requirements.

I repeat that, in addressing those requirements, the Government will be guided by four themes. The first is dealing patiently and clearly with the problems that have arisen and that have affected the UK's moral standing. The second is being candid-without hectoring-with countries that do not fully share our values or are violating their human rights obligations. The third is powerfully advocating British values, such as democracy, tolerance, and the upholding of human rights and the national responsibilities which go with them. The fourth is strengthening the rules-based international system.

I end by again thanking the noble Lord, Lord Alton, for enabling us to express those sentiments and to have this debate. It has been a good debate and, I hope, has carried forward the ideas and values to which we all adhere.

2.04 pm

Lord Alton of Liverpool: My Lords, anyone who doubts the purpose or point of your Lordships' House would be well recommended to read the Hansard of today's debate. There have been many thoughtful, powerful and insightful speeches made by noble Lords from all sides of the House. I thank everyone who has contributed, but particularly my noble friend Lady Hollins for her maiden speech today, which reminded us of the importance of not overlooking the human rights of people who are less advantaged than us-people with learning disabilities. I thank the Minister-the noble Lord, Lord Howell of Guildford-for the comprehensive way in which he dealt with what was inevitably a panoramic and wide-ranging debate.

I close the debate with just two quotations. The Foreign Secretary, William Hague, stated:

"While human rights are not the only consideration in forming a nation's foreign policy, if we allow human rights to suffer while we pursue our legitimate national interest, we will in the long term have failed".

He wrote those words in the foreword to the annual report of the Conservative Party's Human Rights Commission in 2007. It is a high bar-a good bar against which to be judged. In conclusion, I give the last word to Aung San Suu Kyi, who said, "Please use your liberty to promote ours". That is precisely what we have done in your Lordships' House today. I beg leave to withdraw the motion.

Motion withdrawn.

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2.06 pm

Moved by Lord Janvrin

Lord Janvrin: My Lords, I am most grateful for the opportunity to introduce this debate today on the case for encouraging philanthropy. At the outset, I declare an interest as a trustee of the National Portrait Gallery and of the Gurkha Welfare Trust, the chair of the trustees of the Foundation of Prince William and Prince Harry and of the Entente Cordiale Scholarship Scheme, a member of the development committee of St George's Chapel, Windsor, adviser to the Parthenon Trust and deputy chairman of HSBC Private Bank (UK).

I want to use my speech to explain why I think that the need to encourage philanthropy is both relevant and timely and then set out some ideas of what could be done to achieve more giving in our society. I should preface what follows with two acknowledgements. First, I pay tribute to those many individuals, organisations and foundations who give generously and regularly to charitable causes at home and abroad. My contention is certainly not that we are a mean lot, but rather that we as a society-particularly the more wealthy among us-could give more, and now is the time to work out how best to encourage that. Secondly, I acknowledge those who lead thinking in this field-for example, New Philanthropy Capital, the Institute of Philanthropy, the Charities Aid Foundation, Philanthropy UK, and many others-who provide the research and intellectual underpinning on which I have drawn liberally and which is vital if we are to change attitudes.

Why do I think this debate important and timely? The starting point is obvious. It goes without saying that there is a real need both in our society and globally. We cannot be indifferent to the needs of others, and we-government, business, charities, media, and individuals-must all be looking for new ways to address that challenge.

Secondly, and more topically, the current public spending cuts will inevitably affect the charitable sector. Some 13 per cent of charities in the United Kingdom receive over half their income from the Government, and many more will be affected by reductions in public expenditure. In the excellent debate on the charity sector in this House on 5 October there were many references to the serious implications of this.

Thirdly, donors large and small have also inevitably been affected by the economic downturn. Figures from the National Council for Voluntary Organisations and the Charities Aid Foundation suggest that the total amount donated by individuals fell 11 per cent between 2007-08 and 2008-09. Certainly, the anecdotal evidence-shared, I have no doubt, by others here-is that it is a tough environment for fundraisers at the moment.

All, however, is not doom and gloom. Those in the fundraising business should take some comfort from the fact that there is still considerable wealth around. Much of the wealth is self-made. Over 15 years ago,

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75 per cent of the Sunday Times rich list was inherited wealth and 25 per cent self-made, but today those figures are reversed. Many, in financial terms, have done well in recent years. The nature of philanthropy has also been changing in recent years. New philanthropists are more likely to be closely engaged in ensuring the effectiveness of their giving, more likely to be co-operating together and more interested in looking at innovative ways of charity financing. Despite, or perhaps because of, present economic circumstances, there is much creative thinking going on. Indeed, I understand that an independent group of leading figures from the world of philanthropy, business and charities is at present discussing how best to give a lead on some of the issues that I hope this debate will cover.

Fourthly, and perhaps most importantly, the present coalition has expressed an interest in encouraging philanthropy. Since I originally tabled this Motion, we have had an undertaking that the Government, bringing together the Cabinet Office, DCMS and, crucially, the Treasury, intend to publish a Green Paper on giving by the end of the year and a White Paper by the end of March next year. I very much welcome that commitment and I hope that this debate will contribute to their thinking.

I have a few suggestions on what I hope is now being considered. First, the Government should set their sights firmly on the fundamental challenge of changing public attitudes to giving. How can they do that? Above all, the Government need to find ways of getting across the idea that philanthropy is fundamentally something to be encouraged, recognised and supported, and is not inevitably some form of personal aggrandisement or, at worst, a potential tax scam for the rich. They need to explain that private philanthropy can complement government priorities, not replace them, particularly by investing in those innovative, risk-taking and high-impact charities that are so often at the forefront of social change. That general message can be reinforced by looking at new ways in which donors can be recognised-for example, through schemes like the Beacon Fellowships and indeed through the honours system, which is obviously a very sensitive area, although philanthropists have rightly been recognised in that way in the past. The message would also be strongly underlined if there were moves to revise regulations, such as the substantial donor legislation, which sometimes seem designed to make the relationship between recipient and donor awkward, if not discouraging.

Secondly, a major signal of commitment and support of philanthropy and the charity sector generally would be given if gift aid could be simplified and made more efficient. That can be presented, rightly, not as an additional tax break but as streamlining the existing tax regime. In particular, I hope that the Government will consider allowing charity aid providers to reclaim higher-rate gift aid allowance on behalf of donors. Apart from anything else, that may encourage more people to set up charity accounts, so making their giving a more regular and structured part of their financial arrangements.

Thirdly, I hope that there will be at least some consideration of further so-called "lifetime giving

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opportunities". There are three areas most often advocated. There is the extension of "acceptance in lieu" rules on works of art gifted to recognised museums during a person's lifetime as well as on death, as proposed in the Goodison report. There is the extension of existing tax breaks on gifts of listed shares to unlisted shares. The argument that it is not worth extending the scheme because few people make use of it probably has more to do with lack of knowledge of the scheme rather than anything else. Then there is the whole area of lifetime legacies-for example, in the form of charitable remainder trusts, which play an important part in the philanthropy scene in the United States. While I accept that this is a very difficult moment for the Government to be introducing tax incentives, I hope that the Green Paper can have something positive to say about these ideas, not least as a most powerful expression of support for philanthropy and the charitable sector.

Fourthly, I hope that the Green Paper will address ways of supporting new forms of charity financing-for example, through social investment models like the East London Bond, the social impact bond, online giving vehicles and matched funding. It seems to me important that the Government look for ways of incentivising these new ways of funding where they have the potential to be effective.

If the Government can do much to encourage philanthropy, so too can other interested parties. I shall mention three in particular: the corporate world, charities themselves and the media. The business world can and should do more to encourage philanthropy. In the past 20 years or so, it has recognised that corporate social responsibility is in fact good business. Within this evolution, straightforward philanthropy has obviously played a part, as has volunteering-giving time rather than money-but much more can be done. There is little doubt that more corporate encouragement for payroll giving would be an effective way to encourage greater employee giving, as would the increased use of matched funding for employees' own fundraising activities. Both schemes would have the potential to introduce younger people to giving and philanthropy.

Charities themselves need to take a hard look at their own activities to assess the effectiveness of their fundraising, however hard their development and fundraising teams are working. There are many lessons to be learnt about the need to look after donors, to have a greater understanding of what motivates them, to work out how best to recognise them if they so wish and generally to make donors more central to the activities of the charity itself.

It is difficult to exclude the media from this list of those organisations that might have a material bearing on how much is given in our society. Many media organisations now very effectively promote their own charity campaigns; for example, at the moment through Christmas appeals. However, considering the number of people who are actively involved in the charity sector and the philanthropy world, their coverage of these areas is sometimes pretty limited. Local media in particular have an important role to play in encouraging community philanthropy and recognising local giving at that level.

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In conclusion, the case for encouraging philanthropy is clear. It is important, it is timely and there are things that can be done. We would be building on the policies of the previous Administration and embracing the thinking of the present coalition Government. Indeed, this is an issue on which the House of Lords is well placed to take a lead, not least because I would guess that so many in this House are engaged in this sector and in raising funds. Now, I believe, is the time for government, business, charities and the media to make a concerted effort to change attitudes to philanthropy at every level so that it is seen as part of life, particularly for those fortunate enough to have done well in recent years, to give something back. Our objective should be as simple as it is ambitious: to make a step change in the culture of giving in this country.

2.21 pm

Lord Brooke of Sutton Mandeville: My Lords, I first declare the same interest as I did in the charities sector debate on 5 October. I have set up two trusts, one for lay causes and one for ecclesiastical causes, under the Charities Aid Foundation's admirable and efficient umbrella. It is a happy element of our conventions in your Lordships' House that on occasions such as this we thank and congratulate the initiator of the debate on securing it for us, and on his or her opening exposition of the issues. I do that unreservedly in the case of the noble Lord, Lord Janvrin, whose introduction was exemplary. In the words of Milton's "Lycidas", he and I-though not simultaneously-were,

at a school in Wiltshire, founded in 1843 for the sons of clergy. It is a felicitous coincidence to follow him on this subject.

I also congratulate the House of Lords Library on the comprehensive briefing it produced on the very large subject for this debate. It is a rich quarry for the future, as well as for today. The depth and quality of the Library note's bibliography is an index of the increasing global attention being given to this subject, although it is a marginal coincidental disadvantage that the CAF and NCVO's annual research report, UK Giving 2010, will be published tomorrow, rather than yesterday. We are rolling the pitch for tomorrow's news.

Six-minute speeches on such a subject tend inevitably towards a scattergun technique, but the variety of components that this debate will generate will also constitute a rich quarry for your Lordships' House's continuing dialogue on these matters. The Library note was particularly helpful in demonstrating how multifaceted is the projected agenda, with genuine arguments on either side of particular developments. Thus, I shall identify sub-agendas still ahead of us as well as asking some questions.

I am familiar with the growing need for increased capital, as well as revenue, to enable charities and causes to pursue particular projects imaginatively. I recognise the importance of lifetime legacies as a topic. That seems a particularly good subject for a Question for Short Debate in your Lordships' House, unless it falls outside our rules. Another such is the present state of payroll giving within the corporate

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framework, as the noble Lord, Lord Janvrin, mentioned, the origins of which now go back some 25 years. The present national revenue outturn of £9 million a month might seem modest, but since the number of payroll givers is approximately the same as the overall shortfall in donor numbers in the UK between two recent years since the recession began, the fact that payroll givers are individually contributing £12 a month is a good base on which to build this philanthropic conduit, especially as its nature implies sustainability.

At the level of SMEs, when I was in a privately owned firm, we set aside a proportion of profits for charity, with the whole membership of the firm-one man and one woman, with one vote each-voting on what we should spend the outcome on. I like the look of the Government's intentions towards increased giving set out in the DCMS business plan, which was published in November in advance of the Green Paper from the Government as a whole. Although the DCMS business plan I allude to understandably did not major on online gift aid, which is primarily a Treasury issue, I detect that on this matter, which is so important to increasing the gift aid yield, movement may be occurring in Whitehall.

I can foresee for intellectually respectable reasons that we shall be revisiting the arguments about additionality, which fuelled the lottery debates in the early 1990s, in the context of the relationship between increased charitable giving and the spending cuts, and, indeed, in the context of the big society itself. It seems particularly important that we should secure the same common ground that changed the position on the National Lottery etc. Bill 17 years ago between Second and Third Reading, so that at least the Front Bench of the official Opposition voted in favour of the Bill at Third Reading.

On the Government's new agenda on personal and national well-being, the CAF's World Giving Index has demonstrated a clear correlation between the giving of time and money and overall well-being. It would be no bad thing if this effect of philanthropy being a contributor to personal well-being became a focus in the new campaign, with its relevance to social capital. I hope the Government and the Office for National Statistics will accede to the CAF's suggestion that charitable giving becomes one of the indicators for well-being in the planned index.

Finally, beyond or within the debate on additionality, I hope we can also pay attention to whether philanthropists working with the third sector can provide more flexible and responsive targeted public services. I give an example from rural housing. There is a putative scheme in the south-west where a social entrepreneur has seized on the problem by securing house-by-house projects in pockets of land at odd corners of like-minded landowners' land, to be developed in line with increased local employment opportunities. It is a case of "many a mickle makes a muckle", but in a genuinely sustainable direction. However, it is also clear that it does not readily fit into the public housing arrangements of the previous Government's most recent Housing Act. I am not making a partisan point but I seek to get houses built in a part of our economy that is badly in

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need of them. While on the rural economy, has the Prince's Countryside Fund now become a cause to which we can contribute across a post office counter?

2.28 pm

Baroness Pitkeathley: My Lords, I, too, thank the noble Lord, Lord Janvrin, for securing this debate and giving us the opportunity to focus on this important topic. I declare two interests: I chair the advisory body for the Office for Civil Society, which funds Philanthropy UK, the leading resource for free and impartial advice to aspiring philanthropists; and I am married to the chief executive of the Association of Charitable Foundations, which manages the project.

Is there anybody who is not in favour of encouraging philanthropy? You can hardly be against it, even though, in the United Kingdom, it can have negative connotations of the very rich patronising the poor for their own ends-a hangover from Victorian times, perhaps-or, nowadays, of very rich people taking advantage of tax loopholes or just offsetting their guilt about being rich. Even with those negative associations, it is generally thought to be a good thing for the individual or foundation doing the giving, for the recipient and for society at large. However, it has its complications. Your Lordships may be familiar with the quotation from Edith Wharton, the American novelist:

"There is nothing like the exasperation of the would-be philanthropist when he first discovers that nothing complicates life as much as doing good".

Many philanthropists have echoed the words of the founder of Sears Roebuck when he said that making his first million dollars was a lot easier than giving it away wisely.

Of course we should encourage more philanthropy, but I will sound some notes of caution. First, we should not be tempted to go too far towards the American model, in which giving is seen much more as the ordinary expectation when an individual makes money, and in which being acknowledged publicly is much more acceptable. We have a different tradition and culture in this country, and the difference is crucial in how we handle philanthropy.

Secondly, there is no possible way that, however well intentioned and well managed, philanthropic giving can replace or match government funding that is being withdrawn-the numbers simply do not stack up. For example, last year government spending on education, welfare and health was more than £300 billion, while all philanthropic giving-donations, legacies, corporate spending and trusts and foundations-only came to £16 billion. Philanthropists are funders at the margins and do not have the capacity to support even the whole of the charitable sector, let alone replace government funding on a wider scale.

The Government's focus on encouraging philanthropy is much welcomed by foundations and by individuals, but there is suspicion about it being politically motivated. Philanthropists want to make their own decisions and lead from the front, and the benefits of family foundations cannot be turned on and off like a tap. Of course, they want to work in partnership with government-they can see the benefits of that-but their motivation is to

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give, not to substitute for government funding. They give precisely because of their independence of action and their scope to drive their own visions. It is extremely important to remember that when engaging with philanthropists.

I am not suggesting that the Government's attitude to philanthropy should be totally hands off. On the contrary, they should make it clear that the promotion of philanthropy is a critical component of their infrastructure plans, and should support the development of a structure to co-ordinate the growth of philanthropy in the United Kingdom and ensure that it is focused on donors. Too often, for example, fundraising is seen to focus on recipients and on the funding of special projects. To encourage philanthropy, we must view it through the eye of the prospective donor, as the noble Lord who introduced the debate reminded us, and must understand what information and support they need in order to decide to give, and to do so confidently and effectively. There is currently a daunting array of choices facing a potential giver, with much duplication and potential waste and a worrying lack of oversight or accepted good practice. Donors and their advisers would benefit from a common code of practice that ensured the best interests of both donor and beneficiary.

I agree with the noble Lord, Lord Janvrin, about the Government taking a lead in encouraging people to develop the habit of philanthropy. While we may say that this is not a good time to do it, when times are so hard, let us not forget that the poor have always given proportionately more of their income to charity than the rich. Tax relief is also important. Let us remember the differences between the United States and the United Kingdom in this regard, too. While gift aid is welcome, I agree that the cumbersome process of claiming back has a negative impact on givers and receivers. Transferring a higher percentage of the benefits of major gifts back to donors is strongly to be recommended. I look forward to the Minister's response to those ideas.

There is evidence of untapped philanthropic potential in the United Kingdom, but it will not be fulfilled, either in money invested or in results achieved, unless there is great assistance to philanthropists to direct their wealth in a way that satisfies both them and the big society. We need more philanthropists, great and small; more widespread philanthropy; and more thoughtful and effective philanthropy. There is a case for establishing a single body with the overarching purpose of increasing philanthropy in the United Kingdom that would inspire and guide new philanthropists, and help donors make effective choices. Again, I hope to hear the Minister's response to that.

We should remember the benefits of giving. Citizen engagement benefits civil society. Giving connects people to society, and by encouraging all scales of giving and philanthropy, we develop society. While spontaneous philanthropy of the sort that we have seen lately in big gifts to the British Museum and the National Theatre is much to be welcomed, the true potential of philanthropy will not be realised if it is simply left to happen.

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2.35 pm

Lord Phillips of Sudbury: My Lords, I, too, thank the noble Lord, Lord Janvrin, for securing this debate. I also thank the Library staff who produced an excellent note. I declare an interest: I am a long-in-the-tooth solicitor whose firm, Bates Wells and Braithwaite, acts for most of the charities already mentioned in the debate. Therefore, I have an intimate involvement and connection with charity.

Of course, the philanthropy is not just charity. The definition in the Oxford English dictionary is:

"Concern for the welfare of mankind, especially as shown by acts of benevolence".

Benevolent is defined as:

"Wishing to do good; actively friendly and helpful".

I will concentrate on the non-financial philanthropy that can easily be overlooked in a debate such as this. Money is an easily measured commodity, the giving of time and compassion is not. I will also say that philanthropy is the heart and soul of this country. It represents the very best of our culture, our history and our traditions. One of the finest reflections of that is that the Statute of Elizabeth 1601 is the only piece of British law that survived the American declaration of independence. Its preamble is still the foundation of American charity law, as it is of our own.

I return to the giving of time, skill, wisdom and compassion. One of the unfortunate consequences of the development of our society and culture over the past 40 years is the removal of a greater proportion of what one might call the natural elite, or middle classes, from practical, active engagement with communities and society. In my profession, if you were to compare the amount of time and engagement with his or her community of a solicitor in 1950 or 1960, with that of a solicitor today, you would be shocked. Many of my professional brethren do not have the time or energy to devote any of their remarkable intelligence and experience to the public realm. That is a sadness for them and for our society, because there is no more useful person in civil society, at whatever point or level, than a solicitor, accountant or banker, who can bring to the deliberations of whatever body they are concerned with the skills and experience that they have garnered in their professional life. If nothing else, I hope that we as a society will think more about how we can do something to reverse this malign trend.

In so doing, I would like to think that we would learn to celebrate again men and women who give no money-because they have no money to give-but give of themselves in a practical, informal way that is the lifeblood of our communities. Although she will certainly not thank me for so doing, I hold up to you Mary Tatum, a lady of advanced years in my home town of Sudbury, whom I have known from boyhood. She has no money, no influence, no power and no position; yet she has devoted her 70-plus years to a philanthropic way of life that is a shining beacon to anyone in this Chamber and beyond. She will help the needy, the oppressed and the confused in any way that she can and at any time, with little regard to her own needs and financial wealth. But my goodness, she has immaterial wealth: in that, she is a billionaire.

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I would also like to think that the great professions in this land, and the great business organisations, will do a great deal more than corporate social responsibility has yet delivered to fill the gap. It is astonishing that less than a handful of law faculties-fewer than five out of more than 100-set ethics as a necessary component of a law degree. It is shameful that of the 200 business schools, only two have a compulsory ethical component. If ever one wanted to inculcate, or re-inculcate, a sense of wider philanthropy among those who will be tomorrow's leaders, surely it must start at that point.

I wanted to throw into the rich stew of today's debate the thought that the philanthropy of time, skill, compassion and experience is not only wonderfully beneficial for those to whom it is given but inestimably beneficial to those who give it.

2.41 pm

Baroness Prashar: My Lords, I, too, thank the noble Lord, Lord Janvrin, for securing this debate and for his masterly introduction. I also declare an interest: I am honorary president of the Community Foundation Network. This afternoon I will be speaking mainly about community philanthropy, which I was delighted to hear the noble Lord, Lord Janvrin, mention, and the importance of harnessing local capacity to increase giving and its effectiveness.

Community philanthropy is planned, strategic giving, made with a specific end goal in mind. It recognises that philanthropists are most likely to be motivated to engage with recipients, and continue to extend their support for them, when they share with them a common interest, may that be geographic, ethnic, social or cultural. That is what community foundations are engaged in. Community foundations connect doers with donors at local level. They offer expertise in a specific locality, identify common interests and develop strategies and ways of bringing philanthropists closer to the work of the recipients. More importantly, they embrace not just charities but all organisations that work to benefit their local community without the motive of profit.

The foundations' work demonstrates that strong local communities provide a framework within which many social problems can be addressed; that small amounts of money applied in the right place can have a disproportionately large effect; that connecting donors with community groups creates social capital as well as financial support; and that communities are strengthened by relationships between rich and poor, the haves and have-nots. The activities of the community foundations include raising new philanthropic funds, identifying the groups that deliver change, investing in organisations through grants and monitoring subsequent progress, and developing endowments to create permanent and independent funding.

The Government want to empower people and communities and develop a culture of responsibility, an objective which I fully support. But to give effect to this vision we need to engage the full range of resources available to us centrally and locally. We need to build on and support existing initiatives which have been successful in encouraging philanthropy. One type of

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infrastructure of which I have personal knowledge is the Community Foundation Network, a membership body of 50 or so accredited community foundations located across Britain. CFN has been supporting local community foundations to realise their full potential. Over the years community foundations have undertaken a range of grant programmes for government and the lottery which has enabled them to develop a unique capacity to identify and fund local groups based on local knowledge provided by an army of volunteers.

There are not many organisations that have this level of knowledge drawn from the community. While giving has, as we have heard, been declining elsewhere, the community foundations have grown. This movement is supported and led by the CFN, which has managed a range of successful private sector and government grant programmes to unlock the potential of community foundations to deliver. CFN is an enabling body. It is not just another intermediary organisation. Its work is closely aligned with the Government's big society agenda. Community foundations are one of the most valuable tools in our armoury to help the Government realise their aspiration of the big society.

If the Government are to achieve the culture of responsibility and encourage philanthropy they should be supporting not only centralised organisations but organisations that have an extensive local reach. The community foundation movement is an existing infrastructure with a proven track record and a local, decentralised delivery capacity. It was therefore disappointing that when the list of organisations through which the Government might choose to deliver grants-that is, the grants administration framework-was announced, none had a local delivery capacity, a local reach or a track record in developing new giving. Can the Minister assure the House that the forthcoming community first programme will include organisations with local reach and that this dimension will not be overlooked? If this does not happen we are in danger of damaging rather than harnessing the infrastructure that has proved itself capable of developing innovative community philanthropy. It also runs contrary to the Prime Minister's desire to unleash community engagement. I look forward to the Minister's response.

2.47 pm

The Earl of Listowel: My Lords, I, too, thank my noble friend Lord Janvrin for calling this timely debate. Over lunch my noble friend Lord Northbourne reminded me of Coram Family and the establishment for children in Holborn, which was endowed by Hogarth and Handel in the 18th century. Because of that endowment it has become a centre of excellence, and the model on which the previous Government based their children's centres. Those centres are highly successful institutions that serve the most vulnerable families in society. They are immortalised not only in their art but in their philanthropy in standing up to the experience of orphans in London in the 18th century. I was also reminded of Toynbee Hall, a similar institution that enabled women and men such as Attlee to move from their privileged backgrounds, to learn what it was like for people living in the east end, and to change their political beliefs, the institutions and the direction of this nation.

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Only on Tuesday evening I heard from a director of children's services that he would have to end a training programme for his foster carers. The programme had significantly improved the literacy of his local authority's children in care and reduced the number of foster placement breakdowns. His local authority simply could not find the funds to continue the project. Money is very short, as my noble friend said.

I am also prompted by what my noble friend said to think about corporate social responsibility, and I declare an interest as the recipient of hospitality from the National Grid. I have been very impressed by its programme for young offenders in the past several years. Beginning in Reading young offender institution, the Grid offered young people a three-month training programme and guaranteed a job at the end if they were successful. At the start those jobs were fork-lift driving and laying pipes. Since then it has successfully trained up 2,000 trainees, and its record is of reducing reoffending from 70 per cent in the general population to 7 per cent, or probably less. That is a good example of philanthropy from business. It has been led by Sir John Parker, the chairman, who has now reached out to many other companies across Britain to support this initiative, which has been developed by Dr Mary Harris of the National Grid.

I strongly support what the noble Baroness, Lady Pitkeathley said, about the state not being able simply to offload its responsibilities on to philanthropists. Furthermore, matched funding from local and central government will be crucial to encourage giving.

I wish to highlight an excellent programme for vulnerable children, and I ask the Minister what means are currently available to make it easy for this and other services that make a difference in helping children to find philanthropic support. I am thinking particularly of the online giving vehicles to which my noble friend referred. What should the first port of call be for philanthropists looking to support specific projects for vulnerable children-not big name charities, as important as they are, but individual projects that may appeal to particular donors with particular interests?

My example is the charity Siblings Together, which sets up summer and Easter camps each year for children in local authority care and their brothers and sisters. The charity's founder, Delma Hughes, is a registered art therapist who experienced local authority care as a child and grew up without the opportunity of knowing any of her brothers or sisters. With the help and support of Hilton Dawson, then the chief executive of a children's charity and now chief executive of the British Association of Social Workers, she visited America to work in one of its Camps to Belong and to learn from its experience. Mr Dawson also made available his charity's venture facilities for Ms Hughes's first camps.

For three years now she has been organising camps, enabling brothers and sisters separated in care to be reunited on holiday and to share exciting experiences together. The staff are all volunteers drawn from social work, youth work and related childcare professions. The children speak movingly of their time together with their siblings. This year the charity ran one of its schemes at a theatre, thanks to the Young Vic, and

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currently has a very attractive venue in the far west of Wales, thanks to the Dandelion Trust. The largest sibling group it has brought together is a group of five.

The trustee board includes David Holmes, chief executive of the British Association for Adoption and Fostering. Each camp costs £12,000 and this summer one of the camps was funded by a trust, the other by the children's local authorities. The Who Cares? Trust publicises the schemes free of charge in its magazines for young people in care. Delma Hughes would welcome philanthropic support for next year's camps.

Surely there should be some vehicle to enable philanthropists to search for specific projects relating to their particular interests. Ideally, it should also connect them to other donors so that they can find donations to match their own and leverage their giving. Ideally, it would also be available to children in school to enable them to get into the giving habit.

I am running out of time. Is the Minister aware of the charity The Big Give, which seems to do all these things? I confess that I discovered this organisation only yesterday, but I have found it a useful tool. I would be grateful to hear from the Minister the Government's assessment of The Big Give's contribution to encouraging philanthropy.

2.53 pm

The Lord Bishop of Newcastle: My Lords, I, too, am grateful to the noble Lord, Lord Janvrin, for initiating the debate. At first sight, the title, "The case for encouraging philanthropy", is a proposition from which few, if any, could dissent, although I realise it might just be possible to read between the lines and discern a subtext that might become a substitute for government funding and allow government to escape from some of its responsibilities to the citizen. However, even if that were anyone's intention-I do not believe that it is-and if anyone wanted to suggest that encouraging philanthropy is a way of dismantling some parts of the welfare state, we should remember that Beveridge's plan took for granted the existence of strong local communities, mutual relationships and support and sheer good neighbourliness. Philanthropy is an essential component of a civilised society, and the mixed economy of individualism, community living, organised philanthropy and state action is surely the key to societal well-being.

I have used the words "organised philanthropy" because I wish to speak about one example of that from my own experience. I declare an interest as one of the vice-presidents of the Community Foundation that serves Tyne and Wear and Northumberland. I shall take further one or two of the points made by the noble Baroness, Lady Prashar. The Community Foundation is one of the best examples of organised philanthropy. It began in 1988 and now manages over 250 donor funds. Last year it made 1,700 grants totalling £6 million, and it is the largest of the 57 Community Foundations in the UK. It is the hub for social philanthropy in the area and inspires, encourages and supports giving, which strengthens local communities, including some of the most depressed and disadvantaged communities anywhere in the country.

Individuals, families, businesses and companies can set up a named fund that supports the needs of the

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causes that match the interests of the donor. The foundation is a kind of philanthropic dating agency; it matches applications from groups and individuals with the wishes of the donor, and then does the rest. It has been successful for three reasons: it has attracted a diverse membership of individuals, voluntary groups, public bodies and businesses, all of whom are engaged in local society; the genuinely strong sense of community and identity at the heart of the north-east; and the sheer generosity of the donors, who have inherited a long tradition of supporting local people, communities and causes. On Tyneside there is a great tradition of generous giving going back generations.

In Victorian times, of course, charitable trusts were set up by the very wealthy, many of whom were paternal employers who cared for their workforce. They knew that their livelihood depended on their workforce and local community and were very aware of the human destructiveness of poverty and hardship. Today, successful business people have increasingly recognised that their success and their wealth carry with it a responsibility to give something back. That has often been done through vehicles such as the Community Foundation.

I am humbled by the sheer generosity of people to those less fortunate than themselves. Initiatives such as the Grassroots Endowment Challenge of the previous Government, together with the launch of Acorn funds, have helped immensely and have brought organised philanthropy within the reach of most people. For example, a donation of £20 a week-£1,000 a year-will build up a fund over 25 years.

Yet there are still challenges to overcome. There is a good deal of evidence of philanthropy among the wealthy, but how do we encourage it, in an organised way, among those who are less wealthy but still comfortably off? How do we shift from spontaneous giving to appeals such as Children in Need to a more organised giving because of the values that we hold about our mutual belonging and commitment to one another and for the well-being of the society of which we are a part?

Somehow we have to encourage and develop a whole new culture of giving. How do we do that? There have been a few suggestions, and I support many of the things that the noble Lord, Lord Janvrin, said. We need to recognise our philanthropists more positively and in new ways; we need to start the educational process in our schools and build up the pioneering work of the Institute for Philanthropy; we need our banks to play their part by setting up charity bank accounts to make it easier to give; we need more challenge funding such as the Grassroots Endowment Challenge; and we need perhaps better tax incentives and a much simplified gift aid system. All that should encourage a culture of giving.

Philanthropy needs and deserves greater encouragement, but it is not and can never be a replacement for public sector funding. It is unlikely that donors will ever give to unfashionable projects or to unappealing and unglamorous but necessary work. I am thinking about three very small charities that are trying to do heroic work by giving care and emergency payments to destitute asylum seekers. Where

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do such bodies go for funding? They do not get it from government and they certainly do not get it from some donors through bodies such as the Community Foundation. Philanthropy can go only so far. It will always need the support of an active Government, and an active Government need to do all they can-along with the rest of us-not only to support the case for encouraging philanthropy but to be active in encouraging it for the well-being not only of our society but of each other.

2.59 pm

Lord Hodgson of Astley Abbotts: My Lords, I am delighted to add my congratulations to the noble Lord who introduced the debate. I am particularly pleased to do so as I share his view that there is a moral duty on each of us to put something back into society, particularly those of us who are fortunate. It is important to do so whatever the economic weather; when the economic weather is stormy, as it is at present, it is doubly so.

My noble friend Lord Phillips said that giving something back could be a matter of time as well as money-of course, he is absolutely right about that-and the pressures of modern life have made that more difficult. However, I regret to say that there has also been a growth in what I call the selfish gene. The tendency to ask "What's in it for me?" has become more prevalent in our society. We need to think about what has made people less responsive to their wider responsibilities. My noble friend referred to business schools being asked to provide courses on ethics. I am not against that but business schools could perform a more important task in undertaking serious intellectual analysis of what one might call a social return on investment. If we could find a way to analyse and measure what the social return of these various projects could be-in the way that we have accounting standards now-it would be an extremely useful way of developing alternative ways of measuring what is going in on our society at the grass roots.

The challenges have been laid out. I wish to concentrate on three brief points. How do we encourage the extremely wealthy and the moderately wealthy to contribute, and how do we encourage the 30 to 50 year-olds, who are probably rather below par in the giving arena, also to do their bit? I declare my interests, which are recorded on the Register, as president of the National Council for Voluntary Organisations and chairman of the Armed Forces Charities Advisory Committee. As regards encouraging the wealthy, we need to do more to find ways to encourage people to set up grant-giving foundations. This is critical because they provide long-term dedicated funding, which is much needed by charities and which is not really available through the gift aid programme. They do so often in areas that are edgy and not immediately populist, as the right reverend Prelate the Bishop of Newcastle said. We know that charities concerned with children and animals are appealing. That is absolutely splendid; I am all for that; but we need to find ways to encourage giving to more difficult, less popular, causes, which none the less have an important role to play in our society.

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There are three things that we could do to encourage people to set up foundations and to participate in this way. First, we could look at the bureaucracy of reporting. The accounting SORP-statement of recommended practice-has expanded year by year and could, and should, be cut back. We should look at the Trustee Act and laws on diversification, which are more of a concern in theory than in reality, but nevertheless lead people to believe that they may lose complete control of the way the foundation they have established operates. Referring to a point made by the noble Baroness, Lady Pitkeathley, we need to reflect on the difference between the US and the UK in balancing the right of society to have transparency about what is going on with the right of privacy for someone who is giving a great deal of money to charitable causes. I have said in the House before that the British disease is not idleness but envy. This means that some people are frightened to establish a foundation because they think that it may open them up to adverse criticism.

The second point I would like to make concerning the moderately wealthy is to support the remarks made about the importance of establishing a regime for charitable remainder trusts. The great concern of the moderately wealthy is that their circumstances may change and therefore the gift that they gave irrevocably to a charity may leave them short of funding in their old age. If we had a charitable remainder trust regime, they could give the capital to the charity, which is what it needs, and at the same time could have some form of income flowing from it for their lifetime and that of their wife or husband. That would encourage people of moderate means, particularly those whose assets are tied up in a single asset such as a house, to be more generous during their lifetime.

Thirdly, I turn to venture philanthropy, which may appeal to 30 to 50 year-olds. All the evidence I have come across shows that web-confident 30 to 50 year-olds are increasingly disinclined to contribute to a huge, anonymous pool. They want to see how their money is being used and its effect, and the more specific that is, the better. It is a real challenge to the sector to find ways to connect means with ends. I am glad to say that the NCVO is doing some creative thinking on this and I think there is quite a lot going on in the sector generally. Examples of this are emerging. My noble friend Lady Barker, who will be speaking in a minute, has pioneered-I am glad to help that in a small way-a project called See the Difference. I will not spoil her thunder as I am sure that she will wish to refer to that project but it enables people to give money through the web to a specific cause and see how a difference is being made. I am sure that this idea will be very important in the future. This is just one example but there are several others out there in the marketplace. They ought to be encouraged and we ought to try to find ways to be as creative as possible in linking people's funding with specific outcomes which makes them feel that they have made a real difference.

This is a critical debate and the noble Lord is to be congratulated on it. I hope very much that we can follow up some of the ideas that have been put forward.

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3.06 pm

Baroness Coussins: My Lords, in congratulating the noble Lord, Lord Janvrin, on securing this debate, I should like to say a little more about the role of business in encouraging philanthropy. In modern terms as we have already heard from several noble Lords, this is part of what is now generally known as corporate social responsibility. I declare an interest as an independent adviser on CSR to various global companies listed in the Register of Interests, all of which commit significant resources to charitable activities around the world. CSR is, of course, about much more than donating to charity or bestowing patronage on the arts. Cynics might say that it is just a way of reducing corporation tax or a relatively cheap way for companies to feel virtuous. However, I would argue that it is a mainstream business driver and a very important aspect of how the success of a company should be judged in the 21st century.

There are various indices and awards that measure and publicise aspects of a company's CSR performance, such as FTSE4Good and the Dow Jones Sustainability Index. The pioneering organisation, Business in the Community, has been mobilising its member companies for nearly 30 years now to work collaboratively in disadvantaged communities. BITC publishes the CR index and in 2008 launched the community mark initiative, which is designed to set a new standard of excellence in community investment.

The word "sustainability" sums up why CSR is important to business. As I said, it is not just about charity, it is also about the way the workplace is run and the workforce is treated; it is about the impact of the business on the environment; and it is about the social impact of its products or services in the marketplace. Unless a business gets all these things right, including the charitable side, its brand image and corporate reputation could suffer. By contrast, we know that new cultural norms and expectations about corporate responsibility are influencing consumer purchasing patterns. We know that FTSE 350 companies that are active in corporate responsibility outperform their peers by between 3.3 per cent and 7.7 per cent a year, so CSR can help give business its competitive edge.

The element of charitable giving or community support should be one of the building blocks of any company's CSR programme. Although its effect and impact may be philanthropic in the traditional sense, it is enlightened self-interest rather than pure altruism which motivates it-and it is none the less welcome or worthy for that. The opportunity for the entire workforce to have a say in which charity should be a company's charity of the year is a good example of how the workforce, as individuals, can feel engaged with the company as a whole. The benefits to the business include positive attitudes towards the employer, team-building and co-operation and, of course, good external publicity. Some companies agree to match-fund what their employees raise and also allow work time, venues and facilities to be used for charitable fundraising activity.

Another example of what might be termed philanthropic business action is volunteering. This features increasingly in companies' CSR strategies.

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This might involve carrying out repairs and decorations at a local school, clearing rubbish from rivers and ditches, or giving children one-to-one reading practice. Some companies have enabled employees to participate in mentoring schemes for older children or for ex-offenders. These activities provide a win-win situation for everyone concerned, with the company benefiting from the reputational capital built up in the local community, which, after all, is also its recruitment ground. Then there are the initiatives which involve in-kind support, whereby a company might donate its product or services, facilities or venues for the benefit of a local or national charity. This might include offering work placement or work experience to students or ex-offenders. It could also work the other way around, with professional accountants, lawyers or marketers spending time with a charitable body showing it how to professionalise or scale-up its operations.

Some strands of CSR have a very obvious business case. Measures to reduce energy consumption, waste and packaging, for example, are good for climate change, but they also, self-evidently, reduce costs-just what every shareholder, board member or chief executive wants to hear. Beyond that, there are still too many businesses which think that the rest of CSR is a bit of a luxury or an optional extra-unaffordable in an economic downturn. They need to be encouraged to understand the business case, but they also need the regulatory and administrative obstacles that can sometimes block a good initiative to be removed. This is where the Government should step in to facilitate the progress of enlightened self-interest.

The barriers, from a business perspective, include the time taken and the cost of obtaining repeated CRB checks. The regime for protecting children is absolutely necessary, but is overly cumbersome, time-consuming and costly. I ask the Minister to look at how this could be streamlined, as well as at other aspects of the red tape which often inhibit businesses from embarking on volunteering programmes.

Another example is the difficulty that can be encountered in obtaining professional insurance cover for employees who donate their time and services. The Government could and should do more to provide incentives to businesses to engage with ex-offenders and other socially excluded groups. I ask the Minister to look again at all these issues and to ensure that the role of corporate giving within the broader context of CSR is fully acknowledged in the forthcoming White Paper.

3.12 pm

Baroness Bonham-Carter of Yarnbury: My Lords, I join others in thanking the noble Lord, Lord Janvrin, for the opportunity to debate this important topic. I will concentrate on philanthropy from the perspective of the arts, culture and heritage and so this debate is also very timely because, next week, the Secretary of State for Culture, Media and Sport will be launching the department's philanthropy strategy.

The coalition is strongly committed to the arts and heritage, and my right honourable friend the Secretary of State fought long and hard to achieve what he could against the background of a very tough spending

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review. This includes National Lottery funding being restored to its original good causes. However, this debate is about philanthropy, and we on these Benches believe-as did the previous Government, the former Minister for Culture, Margaret Hodge, being a particular champion-that philanthropy plays an extremely important role in providing funding and support for the arts and that the role philanthropy plays can and should become even more important.

There is much to celebrate about the state of philanthropy in the UK today and we applaud the generosity of the British people who support countless good causes. Only a couple of weeks ago, more than £18 million was raised for Children in Need. So far as the arts, culture and heritage are concerned, I shall provide a few facts and figures. The sector received £126 million in donations of more than £1 million in 2008-09 and was the second most popular destination for million-pound donations after higher education. Overall, private investment in the arts and culture stood at £655 million in 2008-09. The Art Fund has saved more than 860,000 works of art through its campaigns directed at a public who have responded with their all-important pounds and pence.

The noble Lord, Lord Janvrin, mentioned the need for innovation and imagination. New and exciting forms of private support for the arts are emerging, such as All Visual Arts-set up by hedge fund billionaire Mike Platt-which aims to reinvent the age-old tradition of artistic patronage by investing in artists up-front. The artist receives money in advance that is offset against the final sale price of his or her work, with any profit split 50:50. Art dealers habitually take up to 70 per cent of the sale price, with no advance involved. This way of proceeding means that very few artists can make a living. At All Visual Arts, patrons receive a return on their investment, but the financial arrangement is much more favourable to the artist. This kind of social investment-sometimes called blended-value investment, because there is some financial return and a measurable social return-provides a different kind of support from government and should be encouraged further.

Another scheme at the other end of the philanthropic scale is called crowd funding. It involves encouraging large numbers of people to give small amounts of money through the web. My noble friend Lord Hodgson has already mentioned my noble friend Lady Barker-here I declare an interest, because she is a real friend as well as a noble friend-who is involved in a website called "See the Difference", which is dedicated to the charity sector. In the arts sector next year there is to be launched a site called "We Did This", which will focus on the arts. This is citizen philanthropy, and may have been inspired by the Art Fund's brilliant campaign back in 2007, which successfully saved Turner's "The Blue Rigi" for the nation, when members of the public were asked to pledge their support by buying "a brushstroke". Both schemes promote the involvement of the giver with the cause they are donating to.

The Government need to do more to help organisations raise money so I make some suggestions, some of which have been mentioned. As a nation, we are not good at celebrating private giving. More should be

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done to make donors and their contributions more visible, which would demonstrate publicly the impact that they have on the organisations and individuals who receive them. The director of development for the National Galleries of Scotland has found that donors need to see a link between their gift and the projects that get released in the country. Gift Aid has been mentioned, as has the acceptance in lieu scheme being extended to cover lifetime gifts of works of art. We should also look at match funding, which has been hugely successful in helping to raise money for UK universities. Organisations that are looking to reduce their reliance on public funding by expanding their activities and developing their business models will need help during the transition period. Returning to universities, a crucial lesson learnt was the importance of investing in fundraising skills at all levels from vice-chancellors to new graduates.

The role of philanthropy in the area of arts and culture is emphatically to complement, rather than to act as a substitute for, government funding. Public money dispensed by arm's-length bodies free from political or commercial considerations is a key part of the equation, and one that the generosity of individuals cannot and should not replace. Different sources of funding will work for different organisations, and we want a funding structure for the arts and culture that enables the greatest variety of artists and art forms to flourish. This includes supporting the risky and challenging and allowing the right to offend. With that thought in mind, I end with Oscar Wilde:

"Art should never try to be popular. The public should try to make itself artistic".

3.20 pm

Lord Ramsbotham: Like other noble Lords, I congratulate my noble friend Lord Janvrin on obtaining this important debate and, as the noble Lord, Lord Brooke, said, on introducing in an exemplary manner his case for encouraging philanthropy. Like other noble Lords, I am also extremely grateful to the Library for yet again turning up a marvellous briefing for us, including the definition of philanthropy as being,

I was also glad that it included the statement by the Minister for Civil Society, Nick Hurd, that he is trying to create new social norms around higher levels of giving of both time and money because for me, as the noble Lord, Lord Phillips, said, the philanthropy that we are talking about, particularly in relation to working with the public sector, is giving time, skill and experience as well as money. Some people give time and some people give money, and both have to be enabled.

In that connection, I agree with my noble friend Lord Janvrin who said that the Government need to explain how philanthropy can complement what the public sector is trying to do. In particular, turning to the criminal justice system, which I know is not the Minister's field, the problem faced by the voluntary sector working in the criminal justice system is trying to come to terms with exactly what "payment by results" means. If small voluntary sector organisations, of which there are myriad, have to wait for six years until the result is proved to get their money, they will go under and disappear.

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I am very interested in an increasing tendency for donors to come together to fund projects, including in the venture philanthropy area. In this, they are extremely fortunate to be helped by the admirable briefing that is available from an organisation that the noble Lord, Lord Janvrin, has already mentioned, New Philanthropy Capital. Over the years, it has produced a number of extremely carefully researched reports pointing out to donors where their funding would be particularly valuable. That idea has been picked up by Philanthropy UK.

If I may for a moment concentrate on why I think that is important in the criminal justice system, it is because 50 per cent of all work done to rehabilitate offenders is done by the voluntary sector. Therefore, it is extremely important that that work is maximised, taken on board and enabled by government. I remember that during my first visit to Feltham I asked to meet the voluntary sector organisations that were working there. Forty-three organisations turned up to meet me. Many of them were doing exactly the same work, but with boys from different parts of London. None of them knew that the others were there, and there was no organisation by the Prison Service to make a note of what they were doing or to go out and find people who could come to do work that was required. I am very glad that that has now been rectified and, in addition, there is at last a recognition that the foundations and trusts that provide this money must be included in planning. There is a now a group that meets Ministers to make certain that foundation trust money is included overall in planning and is not wasted.

I mention that because at the same time there is another increasing trend that I welcome. It is the coming together of groups of people who give time, not just money. The Arts Alliance, which is a group of all the organisations bringing arts to offenders, was formed to try to maximise what they can do, to represent them to government and to act as a conduit to pass the Government's views down to the sector. At the same time, another group of foundations and trusts has come together to maximise the recommendations for the voluntary sector that were included in the Corston report for women, because they felt that the Government of that time were not maximising or moving them forward quickly enough and that that again endangered the money that they were putting into it.

At the same time, I have another example-not from the criminal justice system-where this coming together of donors is achieving results. Many noble Lords will be aware of the large numbers of casualties coming back from Iraq and Afghanistan and of all the veterans from the Armed Forces facing other problems. There is the beginning now of a number of personnel recovery centres being established around the country to which they and their families can go for help. The help provided there on mental health, on employment and with practical help in other ways is being funded by collections of charities coming together. It seems to me that if there is to be a sort of new philanthropic movement in this country, it is very much spread around. Rather than small organisations doing wonderful things all over the place but in isolation, as we come into the increased financial stringencies it might perhaps make sense for them to come together and maximise what they do.

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In that connection, I conclude by telling the Minister that, to me, if the public and voluntary sectors and philanthropy are to come together, the key word in it all is partnership. In order to maximise the extraordinary vibrancy and depth of philanthropy in this country, partnership is crucial. In doing that, however, I echo the words of my noble friend Lady Coussins in asking: please, please, will you do something to eliminate the bureaucracy, the red tape and the dangers of the things that the health and safety debate exposed last week which are inhibiting the ability of the voluntary and charitable sector to do all that it does so well for this country?

3.26 pm

Lord Best: My Lords, I, too, thank the noble Lord, Lord Janvrin, for allowing us to have this excellent debate. I declare the interests that I have on the register, which include acting as chair of the giving forum, which brings together a number of interested parties to increase giving within the UK. Like the noble Lord, Lord Brooke of Sutton Mandeville, I declare an interest in having a charitable trust of my own. It is a very small one, and is administered by the Charities Aid Foundation. Perhaps it might be of value if I highlighted some advantages of creating those small trusts, or even of opening a simple account with the Charities Aid Foundation and of combining it with the use of the payroll-giving arrangements.

I want to explain to your Lordships why combining a CAF account or trust with payroll-giving-the CAF administers one of those schemes, called Give As You Earn-has huge advantages. Let me see if I can spell out those advantages. They will, I hope, appeal to that new group of people in the 30 to 50 age group whom the noble Lord, Lord Hodgson of Ashley Abbots, pointed out-they are, not least, in the City and earning money in the financial sector or the legal profession-and who may be in a position to make a monthly donation to the world of charity. Using the payroll-giving instrument and a charitable foundation-a small trust, or simply by opening an account there-has the following seven advantages.

Payroll-giving allows you to plan the amount that you are going to give each month, and then forget about it. When appeals come out of the blue, you do not have to put your hand in your pocket; you take it from the account that you have already established and into which your monthly payment goes. You have the satisfaction of watching the funds accumulate there until such time as you wish to spend them. You also get automatic tax relief paid into that account. It is not only tax relief at the standard rate, which is what happens with gift aid, but an automatic credit to your account of tax at your highest rate. If you are a 40 per cent tax rate payer, 40 per cent is credited to the account; and if in the future you are a 50 per cent tax rate payer, 50 per cent will accrue to your account. If you do not want to get some of that money back by reclaiming it from the Revenue by filling in a lot of forms, it is a very simple and straightforward way to give all the money that you wish to give and of having it all credited against your account for additional tax.

You can be generous when the office marathon runners all suddenly decide that they wish to approach

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you for sponsorship in a month when you have had rather a lot of other expenditure, because it is going to come out of your separate account. You can change the charities that you support at whim. You are not boxed into a monthly payment to the same charity month after month. You can do as you please. If, as I suspect some Members of this House do, you receive occasional fees for lectures or conferences, you can ask for the cheque to be made payable to your charitable account instead of to yourself, and in that way you do not have all the hassle of remembering to declare the money, pay tax on it and then perhaps donate it to charity; the cheque can just be made out to your charitable account. No administration is involved, there is no tax return entry to make, and there are no setting-up costs, so the lawyers get nothing out of this arrangement at all. Finally, and most importantly, it is hugely rewarding to be able to make your cheques out to local charities.

Nowadays, I am afraid that I am approached by charities that are struggling, perhaps because their statutory funding has been cut back, but it is important to be able to assist without damage to one's own finances. I am sure that I shall be more than tempted by the See the Difference programme, which I think the noble Baroness, Lady Barker, will tell us about later.

For all those reasons, the combination of payroll-giving and opening a CAF account has huge advantages. I ask the Minister to consider ways in which the corporate sector-businesses and companies-can be helped to foster arrangements of this kind, making it as easy as possible for people to sign up to payroll-giving and making it part of the culture of the workplace. People in a company simply sign a form and the payroll-giving system allows them to opt to donate so much per month, which they can always top up. If the tsunami appeal comes along, you can donate through payroll-giving just by dropping a note to the HR department. Companies can make this extremely easy for everyone, and I believe that Nick Hurd, the Minister in the other place, is looking at potential incentives for companies to do more. This is one way in which businesses can be very helpful-not least with auto-enrolment, whereby people are included almost whether they like it or not. Everything is made so easy that the process happens almost automatically.

In conclusion, I very much support the suggestion of the noble Lord, Lord Brooke of Sutton Mandeville, that we have a debate on another occasion about charitable remainder trusts-the lifetime legacies to which the noble Lord, Lord Hodgson of Astley Abbotts, also referred. I think that these trusts were first dreamt up in about 2001 by the Institute for Philanthropy, and they were the subject of a debate that we had in 2006-a debate in which some noble Lords here took part. I think that we are now ready for lifetime legacies; they, too, could make a big difference.

3.32 pm

Viscount Eccles: My Lords, it is a great pleasure to follow the noble Lord, Lord Best. The only thing that he did not mention was the gift of shares, which is an

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even sharper way of getting your marginal tax relief out of the CAF. I, too, thank the noble Lord, Lord Janvrin, and the Library.

My theme, briefly, is philanthropy and the church, and I am very conscious that the right reverend Prelate the Bishop of Newcastle will be listening. I am prompted to speak on this subject by reports that the Church Commissioners are again considering the sale of the Zurbarán pictures-Zurbarán being a famous 16th century artist who painted Jacob and his children-which hang in Auckland Castle, the seat of the right reverend Prelate the Bishop of Durham. I live in the north-east of England, which is an area of amazing Christian heritage. I live more or less equidistant from Durham Cathedral and York Minster, slightly closer to Ripon Cathedral and not far from Whitby and Jarrow. Many churches in the north-east of England are old and famous. Escomb and Lastingham, for example, have Roman parts.

The church has always been incredibly philanthropic from the very earliest days of the monasteries and the foundation of schools and university colleges. It is incredibly philanthropic today, as indeed we heard from the right reverend Prelate the Bishop of Newcastle. It is involved in the academy movement, for example. However, the church, too, depends on charity. It depends on collections and on the famous diocesan quota, and it is dependent on appeals. Durham Cathedral, York Minster and Ripon Cathedral all have appeals. Every noble Lord will know of a church not far from where they live that has an appeal because, for example, the roof needs mending.

Why do people give money to these appeals and contribute to church collections? It is always true to say that there is an emotional connection in the giving of money, a feeling that it should be done and that we benefit not only the person to whom we give the money but ourselves. That has been mentioned by several noble Lords. If you go to an advent service in Durham Cathedral, you are much more likely to give money to the cathedral appeal.

This takes me back to the Zurbarán pictures, which were given to Auckland Castle by Bishop Trevor in 1756. He did up a room and put them in it, and they are still there today. It is necessary to think very carefully about selling them. The Church Commissioners are probably seen, quite correctly, as a business, since they manage some £5 billion of assets. If they were to sell the Zurbaráns, the paintings might go for £12 million, which is the figure that is being bandied about. I will not speculate on their destination. There is an idea that they should stay in the north-east, but maybe they will go somewhere quite different. Presumably the money will be added to the endowment of the Church Commissioners. It would yield an income at 4 per cent, which is roughly the yield on the commissioners' portfolio of around £500,000 a year. The question then, if they are sold, is why I need to give money to the local church for repairs if the church has just raised £12 million.

At the same time, we have heard about community foundations and giving money to the church to organise a community foundation or a school. The two-way street has been a consistent feature of the church and

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needs to be thought about very carefully. It might be better to go the other way around with the Zurbarán pictures in Auckland Castle: that is, to raise money from charitable sources to keep the castle and its pictures as they are.

3.38 pm

Baroness Barker: My Lords, I begin by declaring some interests. I am the owner of a consultancy called Third Sector Business, which works in the charitable sector, and, as a number of noble Lords have said, I also work with See the Difference. I put on the record the organisation's thanks to the many Members of your Lordships' House who over the past two years have shared with us their wisdom and support. We are immensely grateful for that. In a moment I shall talk about what See the Difference does in some detail, because it points the way forward for many of the issues which the noble Lord, Lord Janvrin, raised so eloquently in his speech.

Christmas is upon us and I have a gift for Members of your Lordships' House. It is a sure-fire way to get through the Christmas shopping crowds in Oxford Street. It is very easy. All you have to do is put on a fluorescent jacket with the name of a charity on it and carry a clipboard. The waves will part and people will avoid you. That is because "chuggers" encapsulate what is wrong with the relationship between charities and donors and why that has to change. Currently we have a situation in which charities engage with people in a conversation about money. We Brits do not like talking about money. The Americans do-that is why they are different-but we do not. We shy away from it, so the way in which charities ask for support and engage with their donors needs to change. Why is that? It is because some 16 million of our compatriots aged 25 to 50 are frustrated givers, and they conduct much of their life on Facebook. They are very interested in and concerned about issues. They want to engage with charities but they want that engagement to be fulfilling, rewarding and fun; they want it to be something that they can share with their friends and family. Above all, they want to see the difference that their input will make.

My charity and others-I name-check AliveandGiving and the Pennies Foundation-are waking up to that and are trying to find ways in which we can use the internet, films and videos to make the connection that people want between their act of philanthropy and the output. That may involve Durham Cathedral or, in the case of Bill Gates, delivering malaria vaccines to Bangladesh. We know that seeing the difference that you make is the most inspiring thing and it is inspiration, not obligation, that drives philanthropy. Our charity trains UK-registered charities to make little films that make a specific ask for money. If you or I or anyone gives any amount of money, the undertaking is that we will receive feedback that shows exactly what difference our money made. That is immensely powerful.

Why am I raising this issue in this debate? The lives of the next generation, particularly the younger end, are in many ways organised around the internet. For 20 year-olds these days, if something goes wrong with their mobile phone, that is it; life comes to a grinding

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halt. Yet in the charitable sector we think that mobile phone technology is new. We need to get the expertise from the private sector and other places to help us to develop apps and so on, so that giving to charity becomes part of the culture of that generation. People from that generation are, I believe, very generous, but they want to give in a way that is different from the way in which the older generation give.

I believe-and I would love to debate CSR at considerable length with the noble Baroness, Lady Coussins-that some of the biggest contributions that our biggest companies, particularly retailers, could make to the charitable sector would be to share their wisdom about IT, social networking and management information. More than anything else, that would be an enormous help to the voluntary sector, not least because in many ways-the noble Lord, Lord Ramsbotham, alluded to this-charities will have to become consumer-led organisations. We know that consumer-led organisations can meet the expectations of their consumers only if they have good systems behind their work to deliver. We expect private companies to have good systems, but we expect charities to run on thin air. That does not work.

My question to the noble Lord, Lord Taylor, is whether there will be a digital strategy in the Green Paper and the White Paper. If we do not deal with issues such as the need to increase digital giving, as discussed in the recent ResPublica report, we will continue to exclude that generation from something that we all take for granted as a rewarding part of our lives. There is a great deal of hope in the work that we and organisations such as the Pennies Foundation and AliveandGiving are doing. It enables small charities, in particular those working with unpopular causes, which will never have the resources that the big 10 or 20 have, to reach out to a whole load of people whom they would never otherwise meet. People out there are willing to support unpopular causes, such as working with drug addicts and offenders, if they can see what is being done. This is an immensely exciting time for charities, and I believe that the Government have an important role to play in bringing together the best of the private sector and the best of the voluntary sector to ensure that we make this huge leap towards engaging a new generation in a new way of handling philanthropy in society.

3.44 pm

Lord Fellowes: My Lords, I congratulate my noble friend Lord Janvrin on and thank him for initiating this debate, which is on an increasingly important subject. I declare an interest in having connections with various charities as trustee.

No one would doubt that the encouragement of philanthropy is a thoroughly good thing, but in my view the tax incentives for personal giving are about as good in this country as anywhere, although the business of claiming tax deductions seems more convoluted here than necessary and conspicuously more so than in the United States.

The charitable sector is at present suffering a double squeeze. First, many endowments and private resources were decimated in the dramas of 2008, from which

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they have not fully recovered. Secondly-and this is a more recent pressure-many public bodies have recently had their grant in aid severely cut. Those with charitable status will inevitably pursue with increasing vigour the pool of money from foundations and individuals which the traditional charitable sector has hitherto had pretty well to itself. Here I must declare a particular interest as a board member of the British Library. Many such public bodies have been operating in the commercial field and in the search for philanthropic donors for years, and with some success, but those efforts will now have to be stepped up, and there is no easy way for them to do it. They cannot just flick a switch and say, "We'll make up the gap by getting £X million of philanthropic giving" and launching a few eye-catching exhibitions for which they can charge. In today's world, that just will not work.

So where will they go for honey? There has been a surprising and distinct trend over the past five or 10 years showing a sharp decline in corporate philanthropy, also known as corporate social investment, relative to individual giving. That says much for the generosity of the individual, but also much about shareholder power, which nowadays is seldom supportive of corporate philanthropy in the old form, giving with no dividend expected. They want their company to get a bang for its charitable buck in the shape of profile, reputation and business advantage.

While corporate philanthropy in the old sense is increasingly rare, the alternative-corporate sponsorship and partnership-is growing, albeit slowly. But it is still in its infancy as a major force in the philanthropic market, by no means correcting the imbalance between corporate and private giving. To help this correction along the way, I should like to see tax incentives for corporate support and charity in all its forms increased to reverse the trend whereby the individual is bearing the brunt of charitable demand. I am happy to say that the individual will always be the beating heart of real philanthropy, but that nowadays will never be enough.

Sponsorship or partnership-call it what you will-between major companies and charities, whether public or private bodies, is very much part of the way forward, but I hope that the Government see fit to give the tax system a nudge or two in the right direction to make it easier and more attractive to the donor and the recipient. That could change the present trickle of help into a constant and benevolent stream. The burden on the individual will be lightened and the recipient body will benefit, not only financially but in the long-term relationships built up between it and the corporate sector. That sector will acquire an understanding of a world outside its normal ken. There should be no losers in this, but possibly prizes for all.

3.49 pm

Lord Luce: My Lords, I am not sure whether being last in the debate is an advantage or disadvantage. One can say without hesitation that the range of knowledge and experience that we have heard in this debate has been quite remarkable. The sense of timing of my noble friend Lord Janvrin is also just right, given that we all agree that we face a traumatic period because of

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the dramatic reduction in public expenditure over the next four years. With much of the taxpayer support that has been going to charitable bodies due to be reduced, there is an opportunity, as well as a challenge, for this country to find a way of improving the culture of giving.

As a former Arts Minister and a former university vice-chancellor, I have found that this country lies somewhere between the United States and the continent in respect of the balance between public and private financing. Of course, the United States has a long history and tradition of generating a sense of duty of giving by private individuals, along with a kind of anti-state sense-no doubt fostered more recently by the Republican Tea Party. An interesting point to observe is that, as a proportion of GDP, individual giving accounts for 0.14 per cent in France, 1.7 per cent in the United States and 0.73 per cent in the United Kingdom. That rather bears out the idea that we lie somewhere in the middle.

Listening to many of the comments of noble friends in the House, I found it interesting to hear about some of the new characteristics in giving. For example, 75 per cent of all high-net-worth individuals take the view that they want to give more during a recession. Even more significant, the younger generation-classified as the 18 to 34 year-olds-feels a growing responsibility to share wealth. I recall from talking to Dame Alison Richards, who was the successor to my noble friend Lord Broers as vice-chancellor of the University of Cambridge, that 33 per cent of the undergraduates at Cambridge are thought to be actively involved in participation in charitable work. That is very different-and a big improvement-from my day.

The characteristics of the donors are also interesting. As my noble friend Lord Janvrin said, many more of the givers now are business owners or businessmen rather than people who have inherited wealth. It is interesting that their motives for giving, according to the studies, come from wanting to give something back to the community, which gives them a sense of personal fulfilment. I think that all that is encouraging. Donors also desire to be involved in anything to which they give money, such as social ventures or whatever they happen to be. They want to help to make the charities more efficient, which in many cases is much needed.

Therefore, an immense challenge faces the coalition to produce, after an intense study, a broad range of measures and incentives that will encourage greater giving in this country. We must give credit to the previous Government for the work that they did, not least in introducing gift aid and in setting up organisations such as UK Philanthropy. The coalition must build on that.

I found that, after some experience as an Arts Minister-I should also declare an interest as president of the King George V Fund for Actors and Actresses and president of the Voluntary Arts Network-I could prove to the Chancellor, which was an important thing to be able to do in seeking more taxpayers' money, that every £1 of taxpayers' money would generate £5 in the private sector. I think that a large amount of that was due to the Association for Business Sponsorship

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of the Arts, which raised money from employers through challenge funding and match funding. The association also enabled employers to be more involved with the arts organisations, which also gave pleasure to their employees.

For universities, matching funding can also be a great help, particularly when raising money from alumni. From my experience at the University of Buckingham, I also know the value of local community philanthropists, such as Evelyn de Rothschild, who was generous enough to give money for a new building for business studies. But the Government's review must range broadly from lifetime legacies to endowments-which we have not discussed very much-and bequests. It must cover local community foundations, corporate and payroll giving, and innovative funding of one kind or another.

There has been some suggestion that gift aid might be replaced by some other tax incentives. If that is the case, gift aid still has a long way to go. It is a marvellous incentive, but only 68,000 out of 162,000 charities participate in the gift aid system. A 1 per cent increase in gift aid would produce another £45 million for charities. I hope that we do not undermine gift aid, but find ways of improving it.

This is a real chance to try to help change the climate for giving, but none of us has any illusions that it is a gradual and long-term process. The Government need to take a strong lead in this area. I hope that the Minister will reassure us that they will do so.

3.56 pm

Lord Lloyd of Berwick: My Lords, I shall speak in the gap for no longer than a minute. I very much agree with what the noble Lord, Lord Best, said about the Charities Aid Foundation. He listed many of the benefits which that body confers, but he missed out perhaps one. There may be others who like me inherited a very modest portfolio-which is probably the wrong word-of shares. Those shares increased so much in value over the years that I would not have been able to sell them without paying a very hefty sum by way of capital gains tax. I therefore transferred them to the Charities Aid Foundation, which is able to sell the shares at their current value. Far from being a pain, it turned out to be a positive pleasure to do so.

3.57 pm

Baroness Thornton: My Lords, I congratulate the noble Lord, Lord Janvrin, on initiating this debate. I also congratulate other noble Lords on their contributions to what has been a fascinating debate, with each contribution serving to illustrate the knowledge and experience that resides in your Lordships' House.

The great philanthropist Andrew Carnegie said that the man who dies rich dies disgraced. Without doubt, the history of giving and philanthropy is ancient and honourable-there are records of generosity and civic and monumental good works that go back hundreds if not thousands of years. In medieval times, giving to the needy-and the endowment of monasteries, Barts hospital, universities, cathedrals and schools-was one way of ensuring of your place in heaven. Ironically, the schools thus endowed, established originally to

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educate the humble and less well-off, included some which are now our most expensive public schools-but I do not intend to go down that road today.

Today there is probably a less clear line to the Almighty. It is difficult to explain, for example, why Michael Jackson was the most generous giver to charity of all rock stars, or why Bill and Melinda Gates and Warren Buffett give through their foundations the equivalent of the budget of a small state for the eradication of some of the world's most horrible diseases in the poorest countries. Carnegie's maxim is as true today as it was when he made his huge bequests in 1901, which were the equivalent of £7 billion today. As the noble Lord, Lord Luce, said, people want to give something back. Indeed, what else should you do with such huge amounts of money when you reach the point that you want for nothing and there is nothing that you cannot afford? I echo the noble Lord, Lord Phillips, in asking who is the greater philanthropist, the person who gives £1 billion from a fortune of many times that size, or the old lady who finds £20 from her weekly state pension for the homeless or the Haiti disaster?

Several questions have been explored in the debate, the first being how to encourage philanthropy at all levels. Does our tax system encourage or make giving difficult? What are the barriers? I hope that the Minister will be able to tell the House what progress is being made in that direction.

I was told a few days ago by the director of one of our great arts and heritage institutions that it is easy to donate a valuable work of art after you are dead but, because of the suspicion and bureaucracy of the Inland Revenue, you have to be very determined to do it if you are alive. Another leader of an arts institution has said that, while endowments have their place, tax incentives for giving are a matter of urgency in this period of savage cuts.

On that theme, the Charities Aid Foundation, which has been mentioned many times today, estimates that almost £750 million is lost to the charitable sector in unclaimed gift aid. Maximising donor usage would compensate for the fall in overall donations of more than £700 million. I urge the Government to continue the work of the previous Government to raise awareness of gift aid among the public through creative, widespread campaigns. We know that incentives exist within the tax system for higher earners to give. Some donors can claim tax relief for themselves at 20 per cent of their gross donation, or redirect any tax refund to charity. However, recent research by the Charities Aid Foundation revealed that 50 per cent of higher rate taxpayers are unaware of that tax incentive. When unaware respondents were informed of the option, more than half said that they would be willing to give that personal relief to charity, but the current processes are a barrier to doing so.

The second question that this debate raises is where the balance lies between philanthropic giving and the provision of, say, education and health, through taxation and democratic accountability. Like other noble Lords, I turn to America to explore that question. The point can be illustrated by the example of the chief executive of Facebook, Mark Zuckerberg, who has recently set

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up a foundation with $100 million worth of Facebook stock to be used to improve education in America, with the primary goal of helping children being educated in Newark.

Mr Zuckerberg has had a long-standing interest in education, particularly in the low salaries of teachers, and the donation comes at a time when the foundations and wealthy investors in America are increasingly funnelling large amounts of money to public education-but, I have to say, with strings attached. In Washington DC this year, foundations have pledged millions of dollars to pay for an increase in teachers' pay, which is tied to teachers' ability to show that they can help students improve. It is clear that that money is at least in some part substituting for state funding to ensure the fabric and standards of those maintained schools. Who can say that that is not worthwhile philanthropy? However, in the UK context, it raises some interesting questions.

What does the Minister think about that as a direction, and is it the direction in which the Government intend the big society to progress? I note that Sam Middleton, of ResPublica, states in an article on the very useful Philanthropy UK website:

"In this age of austerity, where unprecedented levels of public debt mean less money for the state to spend, the Big Society, far from asking philanthropists to blindly step in to fill the gap left by the removal of government funding, provides the opportunity to revolutionise fundraising and the interactions between donors, civil society organisations and communities".

That is interesting and, to a certain extent, reassuring, but I am not entirely sure what it means. Perhaps the Minister could explain and give us some examples. I agree with my noble friend Lady Pitkeathley that charity giving, voluntary work and philanthropy are not substitutes for adequate public provision.

In exploring those matters further, I have reflected on the role of the cancer charities, Macmillan and Cancer Research UK. Macmillan raises millions to support people with cancer, particularly by the employment of Macmillan nurses in the NHS. Cancer Research UK also raises millions to conduct vital cancer research-importantly, within the NHS. I hope that no one is suggesting that those organisations could possibly provide NHS cancer services. That works, I suggest, because the balance is right. It works best because the public sector and the charitable sector are working in harmony.

I have worked in and with the charitable sector all my life. I started my working life working for Gingerbread. I worked for Citizens Advice and then for the late and distinguished Lord Young of Dartington, then Michael Young, at the Institute of Community Studies at Bethnal Green. Indeed, I remain a volunteer, and I have never doubted that I gain much more from being a volunteer than I give.

The charitable sector in the UK is one of our national treasures. One of the strengths of the sector is its relative flexibility and agility. Given the right leadership, a charity can innovate and adapt more quickly, more easily and with more creativity than large public or corporate bodies. We need to celebrate that.

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It is interesting that family foundation giving is defying the economic downturn and making a substantial and growing contribution to tackling society's ills. That is in a report produced by the ESRC Centre for Charitable Giving and Philanthropy at the Cass Business School. It lists lots of the established charities of which your Lordships will be aware: the Wellcome Trust, the Gatsby Charitable Foundation, the Leverhulme Trust, the Wolfson Foundation and the Monument Trust. It also talks about the new family foundations that have been established over the past couple of decades, largely funded by the successful entrepreneurs of an era of expanding global markets: the Waterloo Trust, set up by the owners of Admiral Insurance; the Volant trust, set up by J K Rowling; the Foyle Foundation; the Martin Smith Foundation; and the Children's Investment Fund Foundation.

I conclude with some more questions for the Minister. The Government have been vocal in their promotion of and support for philanthropy, charity and volunteering, but we have to judge actions not by words but by what actually happens. We need to say that many charities are experiencing huge anxiety about their future. ACEVO estimates that charities face £3 billion in cuts, and I wonder why the Charity Commission is facing a 33 per cent cut over the next few years. I am great admirer of the Charity Commission; it is one of our best and most effective public bodies. I am concerned that the strategic review that it is bound to undertake as a result of the cuts that it faces will lead to a diminution of its effectiveness and, therefore, the support that it can give the charity sector.

We have had a wonderful debate, and I look forward to the Minister's remarks.

4.07 pm

Lord Taylor of Holbeach: My Lords, I congratulate the noble Lord, Lord Janvrin, on securing this debate, as I think all the participants have done. It has been an interesting debate, but the noble Lord's introduction of the topic was a tour d'horizon of the world of philanthropy and was a superb introduction for our debate today. I am sure that the whole House is very grateful to him for his contribution.

I think I have everything here; I have been making notes as I have been going through and I hope to insert them in the right places in the order of events. If I may, I will just make sure that I have them in place to do just that.

Philanthropy has played a very important role in our country for a very long time and continues to do so. All noble Lords have spoken from their own experience. Tributes have been paid to the Library, and indeed it produced a jolly good brief, but in fact it is the experience of noble Lords that has provided the quality to this debate. It was particularly useful to be able to hear about the direct experience of noble Lords such as my noble friend Lady Barker, who told us about her work in this field.

Occasionally the generous acts of a major celebrity philanthropist hit the headlines. Recent examples include JK Rowling and Ricky Tomlinson, but there are millions of acts of generosity every year, from multi-million

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pound gifts to smaller acts of kindness that never attract any headlines. As a society, we need to do more to celebrate these acts.

My noble friend Lord Brooke drew attention to the link between giving time and money and a sense of well-being. My noble friend Lord Phillips pointed out the way in which social action and philanthropy define our society's values. Philanthropy can epitomise social responsibility. People willing to invest their resources for the good of others and the society around them can have a real impact. Independent sources of income from individuals, companies and charitable trusts can help communities to solve problems and improve things themselves.

Philanthropy can also have a wider benefit by enabling individuals to learn more about their communities and encouraging integration. It is, therefore, very good to know that we are one of the most generous nations in the world when it comes to giving. As a proportion of GDP, we are second in the developed world after the United States. According to the citizenship survey that covers 2009 to 2010, 72 per cent of adults had given to charity in the previous four weeks, with £17.70 being the average amount given. This is a very good starting point as we turn our vision for a big society into a reality.

The big society aims to build on and develop all forms of social responsibility. In particular, it is about community empowerment, giving local councils and neighbourhoods more power to take decisions and shape their areas. It is about opening up public services and enabling charities, social enterprises, private companies and employee-owned co-operatives to compete to offer high-quality services. Most of all, linked to philanthropy, it is about social action-encouraging and enabling people to play a more active part in society, because philanthropy without engagement does not succeed. However, if we want philanthropy to play a major part in all of this, we must recognise that there are challenges. It appears that while the amount of money given to charity is stable, the number of people who give to charity is declining, or has declined over the past five years.

Giving could also be more tax-effective. Many noble Lords focused on this and rightly so; it is an area of considerable concern. The Charities Aid Foundation estimates that £750 million of Gift Aid goes unclaimed annually. Noble Lords know how difficult it is to note Gift Aid at the time of giving. Many noble Lords have also pointed out that higher-rate taxpayers are often ignorant of the fact that there is extra money that they can either give or receive themselves, if that is what they would prefer. Certainly, through CAF giving, they could add that to their charitable giving. It presents an opportunity for people to be more generous and to find mechanisms whereby the provisions that the Inland Revenue makes for philanthropy can be turned to good causes.

There were many ideas on this front. When this debate is studied, I hope many of them will be taken up as a result of what has been said. I liked in particular the contribution of the noble Lord, Lord Best, who spoke from his own experience of the practical arrangements that he had come to. We know also that

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there is room for increased giving in some segments of the population. The rich give less as a proportion of their income than the poor. The richest 20 per cent give 0.7 per cent of their income to charity, while the poorest donors give 3 per cent. The noble Baroness, Lady Thornton, asked who was the more generous. If we could encourage a greater percentile of generous giving from the richest 20 per cent, we could transform the landscape of arts and charities in this country. I think that that was the message from the introductory speech of the noble Lord, Lord Janvrin. Government must take action to support philanthropy. We know that there are high levels of social responsibility in our country, but it needs to be cultivated and facilitated to become something more than good will.

Several noble Lords talked in depth about practical matters. I was very grateful for the contribution of the noble Baroness, Lady Coussins, on corporate responsibility. She portrayed an environment in which there was a link between ethics and business, and where altruism and self-interest could coincide successfully to build up businesses and the workplace as a philanthropic community. Her contribution in that area was particularly important. The noble Lord, Lord Fellowes, talked about growing corporate partnerships, and about the ways in which tax incentives in this area could produce a considerable dividend for philanthropy.

My noble friend Lord Hodgson of Astley Abbotts-I will return later to the work that he is doing in this area-talked about trying to identify why people are not more generous, given that the reward for giving, namely, a sense of well-being, is considerable. He felt that we should encourage the wealthy through structures that ensure that less popular causes also receive charitable support, and pointed out that populism and philanthropy do not necessarily produce the most satisfactory outcomes overall. He posed a number of interesting questions about privacy and transparency, and I am sure that his contribution will be read with great interest by those who are producing the White Paper.

I am very grateful to the noble Earl, Lord Listowel, for talking about the way in which charitable action and giving combine. It is true that the Government are providing less funding to voluntary groups. However, the big society provides an opportunity for these groups to access a greater proportion of government spending. We hope that they will be in a position to do this. There is a transitional fund of £100 million, which is designed to capitalise these projects and so enable them to do that. I had not heard of The Big Give. Perhaps the noble Earl will advise me on it, because it sounds interesting. We do know about sites such as, which are also of interest. It is interesting how much we ended up talking about modern technology and philanthropy. This is something that we cannot ignore.

I can reassure the noble Baronesses, Lady Thornton and Lady Pitkeathley, and the right reverend Prelate the Bishop of Newcastle that we do not see philanthropy as replacing the Government's role in the wider society. That is not the thrust of my contribution to the debate, nor, I suspect, that of anyone. We recognise the role of government as the major provider of public service, but as a driver for priorities in social engagement, philanthropy can be an extremely important factor.

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As many noble Lords said, the Office for Civil Society is developing a Green Paper on giving, which will draw on thinking from across government. The Green Paper is due in December and will be followed by a White Paper in March 2011. It could be said that we are having this debate just a little too early. On the other hand, let us hope that we can have a debate after these papers are produced, as many noble Lords would like the opportunity of comparing the papers with their ambitions for this topic.

I am limited in the detail I can provide before the Green Paper is published, but I will talk about it in general terms. The Government have a clear role in facilitating philanthropy. The Green Paper will consider that role and will take a bottom-up approach, recognising that the most effective proposals for increased giving and social action are likely to come from communities, business and civil society. As part of this, it will showcase some of the most innovative approaches, including those which use the latest technologies, and will challenge government, the voluntary and community sector, and business to think about how they can incorporate these approaches. The Green Paper will also take on board the latest insights from behavioural economics to encourage social behaviours. As mentioned by my noble friend Lord Phillips of Sudbury, the paper will focus not only on giving money but on how people can best give their time and skills for the benefit of others and themselves.

Alongside the Green Paper, the Government are taking forward a number of other pieces of work to support philanthropy. As mentioned by my noble friend Lady Bonham-Carter, the role of philanthropy in the arts and culture has a long and noble pedigree. Through the Medici family in Renaissance Italy to Andrew Carnegie in the early 20th century, to the noble Lord, Lord Sainsbury of Preston Candover, and Dame Vivien Duffield today, philanthropists have supported artists and enabled culture and creativity to flourish, enhancing our civilisation. The Secretary of State for Culture, my right honourable friend Jeremy Hunt, will be announcing a package of measures to boost philanthropy in the coming few weeks.

It should be noted that 70 per cent of all private giving to the arts goes to bodies in London. There is a particular challenge, therefore, around fundraising for the arts in the other English regions, which the Government recognise and want to help address. Over the past year, the Treasury has been conducting a review of Gift Aid through a sector-led forum. The forum made a number of recommendations to improve and simplify the administration of Gift Aid and its promotion to taxpayers. Many of the recommendations will be taken forward through a new customer forum chaired by HMRC. The Government aim to publish the Gift Aid report and their initial response on the Treasury website tomorrow. We are just a day too early to discuss it but we can go to bed tonight in thoughtful anticipation of what we will discover on the morrow.

The Government are also taking action to encourage giving in local communities. In that respect, I am grateful for the contribution of the noble Baroness, Lady Prashar. She referred to community foundations and to how doers and givers can have great leverage on

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the way in which these things work. Small amounts applied wisely build up social capital, and rich and poor can discover their shared values in their communities. I commend her contribution to the debate because it exemplified the kind of theme we are hoping to encourage.

The Communities First Fund, which will be launched next year, will include a matched funding programme to encourage philanthropists to contribute to the building up of local endowments that will support local action. While I was listening to the debate, my noble friend Lord Hodgson of Astley Abbotts informed me that the committee in which he is involved has met seven times and will publish a report in March or April about deregulation in the CRB. He is dealing with this matter and I hope that he will bring forward recommendations which will make things much easier for the voluntary sector. I hope that, together, this work will bring about a significant increase in philanthropy.

Philanthropy enables the big society, both as a source of funds that facilitates independence outside the state, and as a means of creating social capital and stronger and healthier communities. I return to the words of my noble friend Lord Phillips of Sudbury on the issue of engagement. The key thing that philanthropy policy should be designed to do is to build on the strong levels of giving in this country. It should make it possible for all who are involved in the charitable sector to feel that their giving will be much easier and more effective.

Again, on behalf of all noble Lords, I thank the noble Lord, Lord Janvrin, for securing the debate, and I thank all noble Lords for their contributions to it.

4.29 pm

Lord Janvrin: My Lords, I add my thanks to all noble Lords who have taken part in the debate. The range of experience, wisdom and ideas has been extremely helpful in supporting what I hope will be the start of a continuing debate on this subject in the coming months. I particularly thank the Library for its briefing, which was produced extremely quickly and was incredibly comprehensive and very useful.

I pick up on the Minister's remarks that we might be too early. I hope that this will be a contribution to the thinking that is going on and I welcome the idea that we might come back to the subject. I remain of the view, and am greatly encouraged in it, that this is extremely important for our society and for us all. I thank all noble Lords for taking part.

Motion withdrawn.

Income-related Benefits (Subsidy to Authorities) (Temporary Accommodation) Amendment Order 2010

Motion to Take Note

4.29 pm

Moved by Lord Knight of Weymouth

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Lord Knight of Weymouth: My Lords, I am pleased to see the Minister, the noble Lord, Lord Freud, in his place. Such is the generosity-indeed, the philanthropic nature-of the noble Lord, Lord Taylor of Holbeach, particularly with his time this week, that he has become a bit of a fixture on the Front Bench. I therefore thought that he may be replying to the Motion-perhaps he is-but we will wait and see.

The order builds on a scheme that my party introduced this year when in government to control the cost of housing benefit awarded to claimants living in temporary accommodation. The current scheme applies only to claimants in temporary accommodation that is leased or licensed by a local authority from a private landlord. The order that we are debating extends the scheme to accommodation where the landlord is a registered housing association. On that very narrow basis, I say at the outset that it is reasonable.

This Take Note Debate has been tabled better to understand the ever changing environment of housing benefit in which this order will operate from April next year. In particular, I am keen to understand how it relates to the statutory instruments that were published this week and reported on by the Social Security Advisory Committee: the Housing Benefit (Amendment) Regulations 2010 and the Rent Officers (Housing Benefit Functions) Amendment Order 2010. Like the order that we are debating today, they limit the amount of housing benefit that can be awarded under the local housing allowance arrangements from April next year by removing the five-bedroom local housing allowance rate so that the maximum level is for a four-bedroom house; by introducing absolute caps so that local housing allowance weekly rates cannot exceed £250 for a one-bedroom property, £290 for a two-bedroom property, £340 for a three-bedroom property and £400 for a four-bedroom property; by removing the £15 weekly housing benefit excess that some customers can receive under the local housing allowance arrangements; and by setting the local housing allowance rates at the 30th percentile of rents in each broad rental market area rather than the median.

These orders are extremely controversial, in stark contrast to the order that we are debating now. However, it is difficult to scrutinise today's order properly without understanding the effect of these two later ones because, in essence, if the effect of the other housing benefit changes is as bad as some people fear, they will increase the pressure on temporary accommodation. This, in turn, is important, given what the Explanatory Memorandum to today's order says about the consultation response. Paragraph 8.2 of the Explanatory Memorandum states:

"Concern was generally raised that local authorities would be required to find alternative accommodation for a number of households in more expensive areas or in larger properties".

It goes on to say that,

I note that at paragraph 7.4 of the Explanatory Memorandum, the Government say that fixing the level of subsidy to March 2013 will,

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On that basis it is clear that the Government are also concerned about the supply of temporary accommodation. Therefore, I ask the Minister what the Government's own assessment of the effect of these changes is on the supply of temporary accommodation. Can he then tell us what additional demand he anticipates from the other changes to housing benefit that are being implemented through the other orders tabled this week? In doing so, he may also want to reflect on what the Social Security Advisory Committee said in its report on the changes. The document states at page 4:

"The Committee's report recommends that the Government should not go ahead with the package of amendments proposed. The Committee raised a number of concerns about the scale and impact of the changes, and the serious effect this would have on customers claiming Housing Benefit who are living in the private rented sector, particularly those claiming according to Local Housing Allowance rules".

On the same page, the document states:

"The Committee challenged the case for change that was put forward by the Department for Work and Pensions. They felt it was contradictory to suggest that Housing Benefit reform is needed to ensure the housing choices of benefit recipients are geared to a similar level that people in work are likely to achieve, as Housing Benefit is also available to people in work. In addition, the Committee found no evidence to suggest that the housing choices made by Housing Benefit customers are excessive, noting research which suggests that the Local Housing Allowance arrangements are not unduly favourable compared to low income working households".

The document continues:

"The Committee commented on the Government's increase in funding for Discretionary Housing Payments which they note represents around 4% of the total cash losses that will result from these measures. They believe this increase will be insufficient to allow local authorities to provide adequate support, even for vulnerable customers, to meet their rent or find suitable accommodation".

I shall talk about vulnerable customers later.

Finally, the report states:

"The Committee concludes that the Housing Benefit measures represent a high risk approach to managing the cost of Local Housing Allowance cases";

and states on page 26:

"Apart from the potential financial hardship, the human costs, the child poverty and other wider negative impacts of these proposed changes, we also see them as being out of step with the broader thrust of policies to incentivise work and to make work pay".

The Minister may also want to reflect on what Shelter said this week. It stated:

"But this will not change the fact that when these changes will come into force, 134,000 households will be uprooted from their homes. It is extremely disappointing that the government has ignored the advice of both its own advisory committee and voices across the housing sector in ploughing ahead with these damaging proposals".

The uprooting of 134,000 households means a massive new pressure on temporary accommodation. Will the changes in this order help or hinder in meeting those pressures?

Given that the Government's own impact assessment on the high-level impact of the local housing allowance measures shows a staggering 936,960 household losers from these changes and that the average loss per household will be £12 per week, does the Minister

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agree that the Shelter estimate is probably quite cautious at 134,000 households? What is his analysis of the geography of this misery? The University of Cambridge study commissioned by Shelter shows a halving of the proportion of affordable neighbourhoods if these changes are implemented. This study suggests that there will be no affordable neighbourhoods in the City of London or Kensington and Chelsea, and less than 10 per cent in Hammersmith and Fulham, Islington and here in Westminster. It looks as though that will result in large numbers needing to use the time to readjust of up to nine months that is now generously offered by the Government, with large numbers needing to move out of the middle of the city to more suburban boroughs. Do the Government share this analysis, and is the Minister confident that this displacement will happen smoothly? Or should these authorities be trying urgently to increase the supply of temporary accommodation to meet their statutory responsibilities?

Does the Minister have any confidence that this temporary accommodation will be close to the schools for the children who are affected? Has he seen the article in today's Financial Times, which reports a shortage of 68,000 school places already, half of which are in London? The Government's impact assessment on their housing benefit changes states:

"Children who experience disruption to their schooling, particularly in the run up to examinations may do less well than pupils who are otherwise similar".

Is it not the case that unless the Minister is confident that he has enough supply of accommodation to avoid these effects, these poorest children will suffer this damage to their life chances? What is his estimate of the extra cost to families of children travelling long distances to school if they are from those 134,000 displaced households-if Shelter's figures are correct?

My final question is on the impact on those with disabilities. The Government themselves state that some individuals may have to move out of the local authority area. They will be forced out of homes that have been adapted to meet their needs. Is this group not the most likely to be in need of temporary accommodation because of the need to wait for housing from the limited supply of stock that meets their individual needs to become available? Does the Minister truly have confidence about the supply of temporary accommodation that has the necessary adaptation for these vulnerable people?

I have raised a number of important questions. I know that some of this is complicated as we start to try to understand the consequences of the Government's changes to housing benefit, of which this order is an integral part. I look forward to some answers. I beg to move.

Lord Best: My Lords, I am grateful to the noble Lord, Lord Knight, for allowing us a chance to review some of these questions. Perhaps the position can be most simply expressed by recognising that the intention is to reduce the housing benefit bill by some £2.25 billion per annum by the end of this Parliament. That is £2.25 billion a year that will not be paid through housing benefit to landlords. There are only two parties from whom this money can come; one is the landlord

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by accepting a lower rent, and the other is the tenants by finding the balance from their own resources, including other benefits-since most are on benefits of different sorts, or pensions. Which of these two parties is more likely to take this very substantial £2-and-a-bit billion hit?

The first question is, I suppose, whether people can move to a different place where they can find accommodation for which the rent will be covered in full. The noble Lord, Lord Knight, looked at the numbers that may be involved, and it does not seem likely that if people move from central London they will find vacant properties in cheap areas on the scale that would be required. They are much more likely to have to stay put and face the eviction that may follow if they cannot pay their rent and all the hassle and trouble that that brings simply because there will not be places available in other areas. There are also social and welfare costs for the boroughs into which any large-scale movement of people would go. There are questions about school places and the other facilities that people will need and, if these are the poorest boroughs, the local authorities concerned are the least capable of finding the social and welfare resources to help those people.

Will landlords reduce their rents? Some landlords will reduce rents simply because the market served by local housing allowance claimants is so large that in some areas there will be nowhere else to go. These are areas with a high proportion of people in receipt of local housing allowances. They are areas of the lowest demand and there may be no work for people who move there. However, in great tracts of the country, landlords are not going to reduce their rents. I chair the Property Ombudsman service, which managing agents of private landlords sign up to to handle their complaints, and I have been talking with those agents about how they are approaching this issue. Their advice to their landlords will increasingly be not to let to those on benefit as they will not be able to pay their rent. Quite a few landlords will already not let to people on benefit, and I think it is quite likely that, as agents are telling me, more landlords will not only say that they will not reduce the rent, but that in future they will not have people on local housing allowance in their properties because they suspect that they will get into arrears and difficulties and that it is not worth the hassle. There are plenty of other people to whom those homes can be let, so when a shorthold tenancy expires, the next people will not be on benefit. The outcome will be a reduction in the amount of letting to those on local housing allowance because of the hassles that people are expecting.

This morning, I talked to the person who manages the rent guarantee scheme for a rather smart outer London borough. The local authority has produced a very good scheme that gives landlords a guarantee of the rent, provided they take people on housing benefit. Landlords have resisted taking people on housing benefit in many cases because rent is paid on a four-weekly basis instead of a monthly basis, because arrears may accrue or because the local authority's administration may mean delays. In order to overcome this reluctance, this local authority and others elsewhere have a rent guarantee scheme so that if the landlord takes these

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people, the rent is guaranteed. Unfortunately, this officer working in the outer London borough tells me that landlords are already saying that although the borough will guarantee the rent, they will not carry on using the scheme because too many hassles and hazards have been introduced by the prospect of housing benefit cuts. This means that this unfortunate officer in that outer London borough is not able to house the people who he is mandated to look after, because the private sector will turn its back on them wherever it can. I know that in some areas it cannot, where the market is so weighted in favour of those on benefit and where there will have to be rent reductions. The trouble is that it may be found that those rent reductions are taken out on the tenant because the landlord who gets less rent in the lowest areas, where property quality is often lowest, may not put back much into their investment if they are getting a lower income from it. The deterioration of those properties may result from that.

4.45 pm

I fear that the most likely outcome is not that people can move happily to a place where the rents are lower and not, at least in the southern half of this country, that landlords will reduce rents, but rather that tenants in many areas will try desperately to stay put. That is the best option for them, in so many respects, but they will try to find the balance of the rent for the landlord from the very low incomes that they already have from pensions or other benefit sources-and, indeed, from very low wages because, as the noble Lord, Lord Knight, has said, one in eight people on housing benefit is already in work. This adds up to a series of people on the lowest income facing considerable hardship. I hope that the Minister is able to respond with some information on how those problems can be mitigated, if not fully resolved.

Lord German: My Lords, I am relatively new to this House; it has been five months now. I mistakenly thought that when a debate is called on a particular order, we debated that order and that if noble Lords wanted to debate another order, they would put a Motion down about it. I was obviously mistaken as it seems to be the way of this House that if you can find one word in the title of the order, you work on that, so I may regard it as a fairly open season. If somebody can explain that method and the way that this House works, I would be pleased to hear it.

It seems to me that we have an order before us which has nothing to do with most of the statements made by the noble Lord, Lord Knight. I understand both the concerns that he wishes to raise and that he wants to talk about the other orders. I wonder why the Motion is therefore not about another order but, be that as it may, I wish to raise one question and one issue about this order and, since it is open season, I would like to make about three or four remarks about the order to which the noble Lord, Lord Knight, has referred.

The first question is about this order. Quite clearly, the burden of applying a new cap on temporary accommodation owned by registered social landlords

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is going to mean a new burden for them. Social landlords may or may not have to readjust their own rental levels with the people from whom they are actually renting the accommodation in the first place. Has an impact assessment been done of that and do we know whether much work is to be done in that area? If so, how do the Government propose to recompense registered social landlords for the extra work that they have to do? Just as, in its system, if local government is having to do extra work one would expect the extra burdens upon it to be recompensed with some funding, is there an extra burden on registered social landlords as a result of this order and, if there is, how are the Government going to recompense them?

On the other order-to which the noble Lords, Lord Knight and Lord Best, both addressed their remarks, which was perfectly reasonable-I have a couple of remarks and questions about issues that need to be raised. First, the noble Lord, Lord Knight, referred to the Social Security Advisory Committee report: but was it not the case, as I believe, that that report was written in advance of the orders to which he referred being laid? Can the Minister tell us whether they have taken account of the views of the SSAC in the orders that were laid, in which case there is another debate to be had that might be overtaken by the events to which the noble Lord, Lord Knight, referred?

Secondly, is it not a fact that we refer to movement in the private rented sector as being something which, one almost gets the impression, is unusual? However, do the figures not show that 40 per cent of tenants in the private rented sector move within a year? There are reasons for that happening and there is evidence of it. Do they not also show that 70 per cent-a huge number-of all tenants in the private sector move within three years? Therefore, mobility in the private rented sector is not unusual-it happens-and I do not necessarily believe that we should be worried about it if it already happens and is already a feature of that sector.

My second point of concern is that the housing benefit changes are often seen through the prism of London. People understand that there is a particular problem in London, which I admit there is, but it is often viewed as representing what is happening in the whole country. There are many areas in this country where the cap will not impact in the way that it will in London. We need to be careful that we do not see the nature of all change through the prism of London alone. There are specific circumstances in London that need to be adjusted and taken into account, and undoubtedly that is a debate to be moved forward.

The fundamental question, to which the noble Lord, Lord Best, referred, concerns the partnership between those who pay the rent and those who receive it. The question is how those who receive the rent can be incentivised to reduce the amount they charge. That is fundamental because, although an equation has only two sides to it, this one has a third, which is the housing stock and the number of houses that are available for social housing. However, I think that that, too, is the subject of another debate. In the equation between those who pay the rent and those who receive it, how is it intended that landlords be

2 Dec 2010 : Column 1659

incentivised to move to the new levels that the Government will be providing? Perhaps in his reply the Minister can outline some of the ways in which that might happen. If it does happen, it might take away some of the evidence from those who say that landlords will not alter and will not move.

Lord McKenzie of Luton: My Lords, given the hour and the potentially challenging journeys that some of us will have in getting home tonight, I intend to speak only briefly, especially as I have an invite this evening to Luton's Best. It is an award ceremony for community excellence, which shows that we were ahead of the game before David Cameron thought of the big society.

Luton has a direct relevance to this debate-particularly to the contribution of the noble Lord, Lord Best-because, taking all these housing benefit changes in aggregate, Luton is being affected at the moment. I am told that there is block-booking of bed and breakfast accommodation in Luton by London boroughs in anticipation of what all these changes will mean, and that has ramifications not only in relation to rent levels locally but in relation to the whole range of services provided by, for example, the local authority. Therefore, I say to the noble Lord, Lord German, that even the cap on its own has a spillover effect on other boroughs. Of course, the cap may be a particular issue for London but the other range of issues-the 30th percentile and the CPI-could also in due course have profound effects right across the country.

I also say to the noble Lord, Lord German, that he was a little harsh on my noble friend Lord Knight, who I thought gave a brilliant speech. He was dealing with the context in which this order has to be applied, and it is affected very profoundly by the new environment in which we find ourselves. This order follows on from one that came into effect in April, introduced by our Government. It related, as we have heard, to changing the basis on which subsidy was paid to local authorities from what was called the threshold and cap system, from which local authorities used to generate good revenues by charging at one level but paying rents at a different level. I have no doubt that those surplus revenues were put to good use, but it is right that that was changed. Moreover, as my noble friend said, the extension of the changed subsidy arrangements to housing association leasing systems is in principle a sensible thing to do.

The Explanatory Note for the order states that,

is to be included. I hope that the Minister will be able to say what is encompassed within that. It would also be good to know what the implications of these changes to the subsidy system will mean to the resources of RSLs. I do not think that a detailed impact assessment has been produced, but understanding the impact would be helpful.

We are considering these changes in a substantially changed environment so far as housing benefit is concerned, but I am sure that we will have an opportunity to debate that not only today but on numerous occasions to come. We are dealing with a situation where actual rents are paid by local authorities and are then reimbursed through the subsidy system. I was interested in what

2 Dec 2010 : Column 1660

the noble Lord, Lord Best, said about the impact of all these housing benefit changes on rent levels. He asked whether they would force rents down in some circumstances or have impacts in other ways. One of the changes to be introduced under the housing benefit changes will be the switch in 2013 to uprate local housing allowances by reference to the consumer prices index rather than, as now, by reference to actual rent movements. That inevitably means that there will be a widening gap between actual rents and local housing allowance levels. If the arrangements proposed in the order are to continue at that time, it means that local authorities may be at risk of having to bear the increased shortfall. The noble Lord, Lord German, asked whether these increased burdens are going to be reimbursed by the Government, which is a highly relevant question. I thought that, so far as local government is concerned, the Government had signed up to fund any increased burdens, so I shall be interested to hear from the Minister on that point.

This is not only a question of the eventual switch to the CPI because the switch to the 30th percentile will lower the housing allowance on which the subsidy is to be paid, even though we are dealing with a situation where it is actual rents that are being disbursed by housing associations or councils. This is yet another example of the Government placing on local authorities the responsibility to deal with what are effectively cuts in the system. In a sense, local authorities are the third party in addition to the two already identified by the noble Lord, Lord Best.

I have one further point. The package of housing benefit cuts and reduced investment in social housing along with cutbacks in support for mortgage interest will inevitably lead to increased homelessness. There is no other conclusion that one could possibly reach. That will lead to greater recourse to temporary and bed and breakfast accommodation, and therefore wider applications of the order before us, along with an increasing share of the costs imposed on local authorities. I want to ask a question on one particular point. One of the recommendations made in the SSAC report was to ensure that definitions of,

I have not had a chance to peruse this in great depth and thus get behind the recommendation, but if there is a risk of people not being able to continue with their current tenancy because the level of their housing benefit puts it beyond their financial means, one would expect them to fall squarely within the definition of those who are homeless and have to be supported by local authorities.

I shall close with those brief comments, but this is just the start of a long journey of debate we need to have around the whole range of housing benefit regulation changes which I believe are deeply damaging and very misguided.

5 pm

Lord Taylor of Holbeach: My Lords, I thank the noble Lord, Lord Knight, for asking us to take note. I had to check up on what he was asking us to take note

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of. I looked at the order of business for the day and discovered that it was the temporary accommodation housing allowance, but I understand that he wants a debate on housing allowances and the Government's housing policy in general. Fortunately, my noble friend the Minister for Welfare Reform is sitting at my right hand. I know that he is looking forward to engaging in a broader debate with the noble Lord and other noble Lords who have participated in this debate. As was rightly pointed out, this is an important policy area, in which there has been a considerable policy change, and I think that noble Lords will want to be reassured about that.

I think that it would be reasonable if I were to start by addressing the subject on which I swotted up. I am used to having to have a certain amount of agility on my feet, but it is easier to be agile about some things than others. I shall begin by answering a few questions. My noble friend Lord German asked about the SSAC report. We have sought in the new orders to respond to that report and the issues that it raises. There will be a read-across from the report. That will not necessarily satisfy every point, but we have sought to respond. I confirm what he said about mobility issues. It is important to reflect on the fact that, in many cases, mobility is a built-in feature of the housing market. He asked how landlords might be incentivised to adapt to the new market conditions. One of the ways in which that can be done is through direct payments reflecting reduced levels.

The noble Lord, Lord McKenzie of Luton, asked what other leased accommodation is included. Leased accommodation in Wales and Scotland is not covered by the current scheme, but it will be included. This is accommodation that is leased for more than 10 years-this is not applicable for English local authorities-within the housing revenue account.

The noble Lord, Lord Knight, asked about the impact of LHA on homelessness; the noble Lord, Lord Best, was concerned about that, too. It is too soon to know how landlords will react to changes affecting local housing allowance rates for people in the private rented sector. However, we expect that many landlords will reduce their rents as a result of the LHA measures. There may be some increase in the number of tenants who need to find alternative accommodation, but that does not necessarily mean that they will experience-I am sorry, but I cannot find what I was looking for. I think that there is a joke about this: "Now you're on your own". I shall stop at that point.

The noble Lord, Lord Knight, asked about the impact on children's schooling. We have discussed the possible impacts of the housing benefit changes with the Department for Education and the devolved Administrations. It is not possible to estimate how many households with children would move or where they would move to. Movement from one authority area to another may be more common in London, but schools in London have surpluses. Data show that 75 per cent of primary schools and 65 per cent of secondary schools in London have surplus places available. A transitional protection period will give parents more time to plan a school move if that is necessary.

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The noble Lord, Lord Knight, suggested that discretionary housing payments are insufficient. We have trebled the amount available for DHPs; in addition, we have announced an extra £50 million funding to help local authorities to implement this change. So we are not asking local authorities to absorb all this on their own.

The noble Lord, Lord Knight, asked how LHA reform affected TA. Will customers in temporary accommodation be able to continue meeting their rent when the changes to LHA come into force? The vast majority of households living in temporary or short-term accommodation have as their immediate landlord a registered housing association or local authority. They will not, therefore, be affected by wider changes to housing benefit affecting those in the mainstream private sector.

If I have not covered all the questions that he raised, I shall write to the noble Lord. Indeed, my noble friend is looking forward to engaging on the whole issue of housing allowances at a debate in future.

As for the reforms themselves, this latest subsidy reform will help to control further the level of housing benefit expenditure for people placed into temporary accommodation by their local authority. It will extend the reach of a new subsidy scheme that was introduced in April this year. The intention of these further changes is to create a more level playing field to ensure that funding streams are equalised among different providers of temporary accommodation. First, I would like to acknowledge that the new subsidy scheme for people in temporary accommodation was developed and introduced under the previous Administration. It already appears to be an effective and well planned reform. Given that, I am sure that the noble Lord, Lord Knight, will wish to show his support for the latest set of changes, which continue from where his Administration left off.

Local authorities use various types of property to provide households in need with temporary accommodation, including their own stock, hostels and bed and breakfast hotels. However, most temporary accommodation is secured from the private rented sector, through some form of lease or licensing agreement with a private landlord. The order that came into force in April this year affected housing benefit subsidy for cases in private sector leased accommodation, but only those where the local authority is the claimant's landlord. The changes due to come into force from April 2011, which we are discussing today, will extend the new subsidy rules to cases in leased accommodation where a registered housing association is the claimant's landlord. These are known as Housing Association Leasing schemes, or HALs.

The main purpose of introducing the new subsidy scheme in temporary accommodation was to encourage more local authorities to charge reasonable rents. This does appear to be happening in many cases. Basically, the old scheme allowed too much subsidy to be paid on some properties because it took no account of their actual size or location. Housing benefit expenditure had increased in this area from around £250 million in 2002-03 to more than £640 million in 2007-08. The

2 Dec 2010 : Column 1663

rate of increase in costs was unsustainable, and was disproportionate to increases in the case load, which peaked in early 2005 at around 110,000 households in Great Britain.

I should stress that, since then, local authorities have done a lot of good work on homelessness prevention that has helped to bring those numbers down considerably, but, although the temporary accommodation case load has been coming down, expenditure has been going up. In part, that was due to local authorities in London charging inflated rent levels. Those high rents-averaging £300 to £400 plus per week, even on small one or two-bedroom properties in parts of London-could be met by housing benefit, but such rent levels were very likely to deter people from working. The level of worklessness among households in temporary accommodation is high. Independent research published in 2008 suggests that the level is around 64 per cent but is possibly higher in some parts.

In addition, families living in temporary accommodation in London, where most of the case load is concentrated, often remain in such accommodation for lengthy periods. Despite its name, the average period spent in "temporary accommodation" in London is three years. It is clear that unnecessarily high rents, which often attract 100 per cent subsidy, are not good either for households living in temporary accommodation or for the taxpayer.

The new subsidy scheme that came into force in April this year, which is based on local housing allowance rates, ensures that the weekly amount of subsidy payable for these cases is based on market rates in the private rented sector. In other words, the amount of subsidy now relates to the size and location of the property used by the local authority. There are three elements to the subsidy formula: the rental element, which reflects the cost of leasing a property; an amount towards the management costs-the management costs element-involved in running these schemes; and, lastly, two upper cap limits, of £500 for properties in central and inner parts of London and £375 for properties located elsewhere.

For the rental element, we take the local housing allowance rate based on the size and location of the property and remove 10 per cent. The 10 per cent is a notional amount, which is taken off to reflect management costs that have already been factored into market rents. We then add back into the formula one of two separate amounts for the management costs of running private sector leasing schemes, such as maintenance and void costs. The amounts are £40 a week for authorities in London and £60 a week for other authorities. The lower amount for London authorities reflects their ability to achieve economies of scale. The actual amount of subsidy payable is the lowest of: the LHA-formula amount; the customer's actual HB entitlement, if it is less than that; and the appropriate upper cap limit.

Returning to the rental element, I should advise that the LHA rates used in the formula for this financial year are those that were published in January 2010. Using a static rate provides more funding certainty for

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local authorities throughout the year. From April next year, the subsidy amounts will be based on the January 2011 LHA rates, which will still be set using the median of rents. Therefore, it is evident that the LHA changes announced in the emergency Budget for private rented sector claimants are entirely separate from the subsidy arrangements for people in temporary accommodation.

One of the key issues surrounding the new subsidy scheme's introduction this year was whether to include the housing association leasing schemes-HAL schemes-that I mentioned earlier. At the time, there was no evidence of inflated rent levels among those schemes and, in most cases, rents still appear to be staggered appropriately to reflect different property sizes. However, the risk of having different subsidy rates for housing association and local authority-run leased accommodation is that it could lead authorities to shift from one type of scheme to another, depending upon which seems more generous. There would also be greater potential for private landlords to draw authorities and housing associations into procurement bidding contests, which would increase expenditure.

This latest amendment to the subsidy order-the Income-related Benefits (Subsidy to Authorities) (Temporary Accommodation) Amendment Order 2010 (SI 2010/2509), which is the subject of this debate-will extend the new subsidy scheme to include cases in housing association leased accommodation, as well as close off some other potential loopholes. It will ensure that there is no benefit for local authorities in switching between different schemes based on whichever attracts the most subsidy. It will create a level playing field for providers, who often compete to procure properties in similar locations.

5.15 pm

The impact of introducing this measure from April 2011 means that, for existing schemes where leasing fees sit above the new caps, private landlords are likely to be encouraged to accept reduced payments or see their contract wound up. It means that in some cases households might have to move, but the local authority's duty to continue to provide suitable accommodation will remain unaffected.

We know that renegotiation activities between housing associations and landlords are already under way, and we will monitor this aspect very closely. I mentioned earlier that, from next year, the subsidy formula will use LHA rates. We have said to local authorities that we will stick with these subsidy levels for the next two years, until April 2013. This will provide local authorities and housing associations with certainty over funding for the mid-term and enable them to negotiate with landlords with confidence, helping them to keep costs to a minimum.

I said earlier that expenditure in this area reached £640 million in 2007-08. Initial estimates for this year suggest that the figure will come down to under £500 million-a reduction of almost a quarter. We have some evidence that many rents have started to come down, particularly for smaller properties in London. We will continue to monitor the impact of the changes closely, and we are looking already at possible subsidy arrangements from April 2013 onwards.

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Lord Knight of Weymouth: My Lords, I am most grateful to all noble Lords who have taken part in what has been a helpful debate. I am also grateful for the support that I have had from Shelter and the Chartered Institute of Housing. I am mindful of the challenging journey to Luton that awaits my noble friend Lord McKenzie and I wish him success in it, so I shall be brief. I simply say to the noble Lord, Lord German, and others who were worried that I might have strayed slightly from the job in hand, that I had a call from the office of the noble Lord, Lord Freud, to ask what my interest was. I said that I was interested

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more in the context than in the detail of the order, so I hope that what I have said today was no great surprise. We shall come back to the substance of these issues, on which I look forward to debate with noble Lord, Lord Freud. I am grateful to the noble Lord, Lord Taylor of Holbeach, for being able after a very long and arduous week to give us a very useful explanation of the order.

Motion agreed.

House adjourned at 5.18 pm.

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