Public Bodies Bill [HL]

Debate between Lord Evans of Temple Guiting and Lord Taylor of Holbeach

Monday 28th February 2011 Lords Chamber

[Lord Evans of Temple Guiting]

My Lords, I rise to speak briefly as a great admirer of NESTA, an organisation that works in an exciting and important area of our society to create a viable commercial future for science, technology and the arts. NESTA’s core objective is to combine capital investment with non-financial support to help innovative early-stage companies to turn their ideas into commercial success. These target companies, referred to as seed companies, are vital for the cultural success and economic growth of this country. Without this assistance in the early stages of development, these companies will be held back from reaching their full potential. We should all be grateful to NESTA for its part in facilitating the creative industries’ £50 billion annual contribution to the economy.

NESTA is a unique organisation with a world-class reputation. It is the UK’s leading expert on innovation and carries out some cutting-edge work with the creative industries. Let me give your Lordships three examples. Its creative mentoring programme brings together new creative businesses with successful figures in the industry to help them to grow. It has worked with the National Theatre to bring live theatre to more people through the power of digital distribution. It is also working with our fashion industry to encourage the best UK designers to work more closely with British high-tech manufacturers.

NESTA is also recognised as one of the UK’s leading organisations producing world-class research, concentrating on exploring future areas of economic growth. It has always enjoyed a greater level of independence than any other non-departmental public body because of its unique set-up. NESTA has an endowment from the National Lottery, as we have heard from the noble Lord, Lord Warner, and therefore operates at no cost to the Exchequer. In this case, moving NESTA from the public to the third sector will, in principle, allow it to continue its vital work as an early-stage seed funder and to act as a test bed for innovative solutions to some of our greatest challenges in the commercial creative sector.

In terms of detail, it would be helpful if the Minister could comment on the following points, which have also been raised by my noble friends Lord Warner and Lord Dubs. What consultation have the Government undertaken with the board and different interested groups about the change? What process will the Government use, as my noble friend Lord Dubs asked, to select and appoint trustees? The Minister may also like to inform the House, in light of the Public Administration Committee’s recent report on quangos, why this body is one of the few bodies to have been singled out for charitable status.

[Lord Taylor of Holbeach]

My Lords, I thank the noble Lord, Lord Warner, for introducing this amendment, and the noble Lords, Lord Dubs and Lord Evans of Temple Guiting, for their contributions, which give me an opportunity to explain how the Government see the role of NESTA. It is government policy to reduce the number of NDPBs and NESTA did not meet the Cabinet Office criteria for remaining an NDPB. However, NESTA and its activities are still considered highly valuable to UK growth and innovation. The Government are clear that they want that work to continue. That view will be widely held throughout the House.

We have no intention of winding down NESTA and its activities. Instead, the proposed reconstitution of NESTA as a charity, with its £329 million endowment held in a separate charitable trust, will allow it to continue its valuable work. Far from halting its activities, establishing NESTA as a charity preserves its ability to deliver its public benefit mission at no cost to the taxpayer. I confirm the analysis of the noble Lord, Lord Dubs, that there is no question of saving the taxpayer money in this matter, since the body is independent of taxpayer funding. We can further distance it from government and enhance its independence by making these changes. It will therefore cease to be classified as an NDPB and as part of the public sector. We have already worked closely with NESTA to develop the detail of this reform. We will seek Charity Commission approval for the proposed new model. This model builds on that successfully used by the Millennium Awards Trust, which similarly derived much of its funding from the National Lottery. We want to build on that model.

Once NESTA becomes a private sector charity, the Government will no longer select or appoint the trustees. The separate charitable trust, which will be created to hold the endowment in the public sector, will have a protector. The intention is for the protector to be appointed by Ministers and for NESTA the charity to be the trustee of the trust. The role and powers of the protector are yet to be defined but they will be based on the Millennium Awards Trust model. This is a very positive step that is being taken by the Government. We firmly believe that this model represents an opportunity for NESTA to continue its success. However, we also believe that NESTA’s current status as an NDPB is by no means a prerequisite for it to continue to flourish. Establishing NESTA as a charity is part of the Government’s wider commitment to hand power to the big society and not simply to rely on central bureaucracy to control public life. The Government’s proposed model reflects this objective while safeguarding the public interest in the large endowment managed by NESTA.

I have been asked by many noble Lords about the nature of the discussions that we have had with the Charity Commission. There was an initial discussion with the Charity Commission last December and there has been an exchange of correspondence since then. This is designed to ensure that the objects of NESTA are charitable. BIS and NESTA itself have carried on these discussions. They are positive and we are confident about their outcome. While there have been no public consultations, officials worked closely with NESTA’s senior management team to develop the charitable option and NESTA consulted informally with its board of trustees, which is supportive of the change in status. NESTA also consulted several key stakeholders. Its staff were informed on 14 October 2010, following the Government’s announcement on public bodies reform. Since then NESTA has held regular meetings with staff to inform them of the transitional process and provide the opportunity to address any questions or concerns that they had.

In a statement released at the time of October’s announcement, NESTA’s chair, Sir John Chisholm, said that the board welcomed the decision and described it as an extremely positive move for NESTA. The statement also contained endorsements from Sir James Dyson and from Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations. Since then, NESTA has written to key stakeholders and engaged with the public via its website and social media sites, giving details of the proposed transition and welcoming any questions regarding the change in status. In the light of these considerations, I hope that the noble Lord will feel able to withdraw his amendment.