Community and Voluntary Sector

Baroness Morgan of Drefelin Excerpts

Thursday 31st October 2024 Lords Chamber

Moved by

[Baroness Morgan of Drefelin]

That this House takes note of the contribution of the community and voluntary sector to society across the United Kingdom.

[Baroness Morgan of Drefelin (Lab)]

My Lords, I am genuinely humbled to be introducing this debate, given the unparalleled collective wisdom that I see across the House among all those taking part today. That is why I am delighted that we gather to acknowledge and celebrate the indispensable role of charities in our nations. I look forward to the maiden speech of the noble Baroness, Lady Porter of Fulwood.

Charities are indeed the backbone of our society: they are on the front line wherever things are in crisis in our communities. From the riots in the summer to the pandemic to the devastating cost-of-living pressures still being experienced across the country, charities are there for people at the worst of times. However, charities are also there for things that make life better and communities richer. They build bridges; they bring people together where there is division; and they are deeply trusted, often where the state is not.

I am delighted to share, hot off the press, figures from the National Council for Voluntary Organisations’ annual voluntary sector almanac. This shows the size and shape of the sector and provides rich data to understand the trends and challenges that are being experienced. The latest data published only last week shows that, in 2021-22, we had 166,000 voluntary organisations across the UK, and a striking eight out of 10 of these were small charities with income below £100,000. These organisations provide essential services, from health and social care to homelessness, and we will hear so much more about that today. While some services receive government funding, let us remember that many do not.

Charities strengthen our communities by engaging volunteers and creating spaces for connection. They are led by volunteers, who give their time and skills as trustees, and many are entirely volunteer run. Moreover, they amplify the voices of the marginalised, ensuring that they are heard by decision-makers. It is such a key role for the sector. Last year—we will hear more about this this afternoon—the Association of Medical Research Charities invested £1.7 billion in UK research. It has contributed much more than money to the sector, supporting R&D that focuses on patients, accelerates impacts and addresses areas of unmet need.

Charities play a crucial role in our economy, as everyone knows. They develop skills in communities, supporting people back to work and providing opportunity to young people. As organisations, charities are major employers, running businesses with a social purpose. Charities contribute an estimated £20 billion per year—or 1% of GDP—to the economy. That is very impressive. Andy Haldane, former chief economist of the Bank of England and now chief executive of the Royal Society of Arts, has estimated that, when the impact of volunteering is accounted for, this contribution increases tenfold to £200 billion, which looks like 10% of GDP. In 2024, the sector employed 3% of the UK’s workforce, and the sector’s workforce has grown by 30% since 2011. Believe it or not, charities employ more people than all the major supermarkets put together.

Charities raise funds from diverse sources, including philanthropy, social enterprise and innovative partnerships with businesses. In 2021-22, the sector generated £69.1 billion, with the public contributing an amazing 48% through donations, legacies and trading activities in charity shops. Notably, according to the UK Giving report, some of the least affluent areas are the most generous—it is such an impressive observation. Government funding accounted for 26% of the sector’s income in 2021-22—down, I am afraid, from 30% in previous years—and this is part of a long-term decline in government funding to the sector. I very much hope that this might be about to change.

As the Prime Minister said at the launch of a new civil society covenant earlier this month, charities are innovative and dynamic. They are, indeed, resilient. However, crisis upon crisis, experienced by many charities, means they are struggling. More people than ever are turning to charities for the support that they cannot get elsewhere. According to the latest VCSE barometer from the Pro Bono Economics observatory, most charities expect demand to rise for their services. One in three charities do not expect to be able to meet this demand, which is very concerning.

I believe that, with the right focus, we have the opportunity to create a better environment, where voluntary action can thrive, especially in deprived areas where the impact can be so great. There are three main areas on which I want to quickly focus, because I know we have so much to talk about today.

First is the relationship that the sector has with local and national government. Charities and volunteering are essential, as we know, for building a healthy, resilient society, yet the relationship between the voluntary sector and government has become truly strained in recent years. This is especially true for the vast majority of charities that are small, local and heavily reliant on local government support—support that has been continuously cut over recent years. Despite these challenges, 61% of the public believe that Britain would be a better place if charities and community groups had a stronger voice in decision-making. Initiatives such as the VCSE accord in Greater Manchester show what is possible when civil society and public bodies collaborate effectively together, but these successes need to be more widespread, and there is huge potential for that.

NCVO and the Association of Chief Executives of Voluntary Organisations are effectively working together to change the dynamic with government, and I know that the Minister will want to say more about that. Following the publication of their Voluntary Sector Manifesto, they are engaging directly with government to reset the relationship with civil society. On 17 October, I was delighted to hear, a ministerial round table and a reception hosted by the Prime Minister in Number 10 kicked off the development of this new civil society covenant—a vital opportunity to redefine how we all work together. NCVO and ACEVO are engaging with civil society to bring them in and help shape the covenant, including charities and voluntary organisations, particularly including those small organisations I have talked about. The new covenant has a real chance to build meaningful, long-term partnerships for social change. That is what it is all about. For this to succeed, both government and civil society must commit to collaboration, ensuring that charities can continue their mission while helping shape a more equitable, engaged society.

The second area that I think is worth focusing on briefly is how the voluntary sector is indispensable to public services. It delivers nearly £17 billion in services each year, reaching people often left out of mainstream systems. Charities bring innovative, efficient solutions across health, social care, housing, the environment and education, meeting essential needs, often where government services fall short. Yet austerity measures have cut deeply into local and departmental budgets—we know that. Many charities are now subsidising public services out of their own limited funds. According to NCVO’s March 2024 research, 72%—a striking number—are starting to step away from public service delivery, with more than one in 10 forced to return contracts before they are completed, despite serious financial and legal consequences for the organisation.

The Government’s redrafting of the national procurement policy statement, which underpins the Procurement Act 2023, is a vital opportunity to emphasise the inherent social value that charities create. The policy statement has the opportunity to clarify that commissioners must account for this social value and reinvest the surplus in innovation and service delivery, where possible. There should be recognition that charities typically do not operate in markets in any conventional sense of that phrase.

Thirdly and finally, I want to say something about volunteering. I can see that everyone around this Chamber has some experience of volunteering; I know the incredible work that that noble Lords do to promote the sector. Volunteering, as everyone here knows, plays a vital part in our society and our economy. The evidence shows that around 14.2 million people volunteered in the UK through a group, club or organisation in 2021; many more volunteered informally. The ONS calculated that, in 2012, frequent formal volunteering produced around £24 billion of economic output, or 1.5% of GDP. That is pretty amazing. If occasional and informal volunteering had been included, that figure would have been much greater.

People give their time to their communities and to the causes that they care about in diverse ways. Volunteers for the RNLI save lives at sea. People in hospitals provide social connection. Governors support the strategic direction and sustainability in schools. Breast Cancer Now campaigners champion access to modern treatments. Volunteers run over 160,000 charities across the country, with 1 million people serving as trustees. Volunteers play a vital role in supporting our communities, delivering public services and building social cohesion. Eight in 10 volunteers give their time in their local area—what a feeling of community this has the opportunity to develop. Volunteering brings significant benefits to individuals, communities and society. It supports positive social, mental and physical health and well-being. It helps to develop skills, knowledge and experience, sometimes serving as a stepping stone into employment. It helps people to build social connections and capital, fostering that sense of community that we all know matters so much. When asked why they volunteer, people say—there are no surprises here—that the most common motivation is the desire to make a difference.

However, fewer people are volunteering now, particularly in formal roles, and this decline in volunteering is particularly challenging for smaller organisations. There are many barriers to volunteering today, which need to be addressed. People living in deprived areas find it more difficult than others to volunteer. Disabled volunteers and people from the global majority are less satisfied than other volunteers, so there is much that we could do there. Younger people are more likely to cite financial issues as a barrier. I therefore support calls for the uplift in the approved mileage allowance payments scheme, which would allow volunteers using their cars to be reimbursed to reduce that financial burden. I also support calls to broaden Section 50 of the Employment Act 1996 to give trustees reasonable time off to carry out their duties, similar to the current provisions for magistrates and school councillors. These ideas could help address the challenge in recruiting trustees, as there are currently 100,000 trustee vacancies and 62% of people who volunteered in the last three years say they could be encouraged to take part in volunteering again. We should look at that huge potential.

In closing, I am extremely honoured to be the president of NCVO, and I take on that role following the incredible contribution of my noble friend Lady Pitkeathley, who is in her place today. I acknowledge the incredible work that she has done. NCVO supports campaigns, such as Volunteers’ Week and the Big Help Out, and celebrates volunteers, encouraging people to get involved. NCVO regularly brings together those involved in the sector to support volunteers across the country, and it is one of the partners of Vision for Volunteering, a 10-year collaborative project to create a better future for volunteering.

I am looking forward to hearing the contributions from across the House and to learning a great deal from the noble Lords speaking today. I also look forward very much to hearing the contribution of the Minister, who I know is very thoughtful on these matters. I beg to move.

--- Later in debate ---

[Baroness Morgan of Drefelin (Lab)]

My Lords, the Minister speaks on behalf of us all when she thanks those volunteers throughout the country. I have only a couple of minutes. I congratulate the noble Baroness, Lady Porter of Fulwood, on her lovely maiden speech. I also thank each and every Member of your Lordships’ House who has taken the time to join this debate and furnish us with yet more insights into the way that the voluntary and community sector adds incredible value to our society.

We have been reminded that the voluntary sector must not be complacent. It has to continue to think about inclusion and how to drive up volunteering rates. We have been reminded of the sector’s power to convene and the responsibility that that brings with it. The incredible variety and diversity of the work of the sector has been discussed brilliantly today. We have also been encouraged—and I want to say this very clearly—to learn from all our nations, particularly sWales. There is so much to learn and so much positivity that can be gained by all the nations working together on the covenant. We learned about the importance of the word “covenant” and how it means not being about transaction but very much about values.

We have heard about people from all over the UK, from Ludlow to Newport, and about the North East Young Dads and Lads. There have been so many great insights in this debate. Something that really piqued my interest is the potential for finding new dormant assets, and I wonder whether the Minister might want to look at that. Perhaps she will write to us about that when there is more to say.

Finally, I say another huge thank you to everyone who has taken part in this debate and to all the voluntary organisations throughout the sector which have sent briefings to your Lordships and supported us in making this such a tremendous debate.

Motion agreed.