Economic Activity of Public Bodies (Overseas Matters) Bill

Lord Wood of Anfield Excerpts

2nd reading
Tuesday 20th February 2024 Lords Chamber

[Lord Wood of Anfield (Lab)]

My Lords, it is rare that a Bill with such a prosaic and innocuous title contains within it such varied threats to foundational democratic principles and practices. This is a Bill that, in the name of defending the rights of a particular minority, infringes those rights and the rights of us all, while establishing multiple dangerous precedents.

I start with the logic of the Bill, which involves a sequence of inferences that, frankly, do not make sense to me. It starts with a desire we all share: to counter anti-Semitism. From this, it deduces the wisdom of banning the practice of boycotts of Israel by UK public authorities and associated bodies on the grounds that these practices often promote anti-Semitism. It then executes this ambition, however, by proposing a blanket ban on such bodies taking any moral or political considerations into account in procurement and investment decisions with regard to all states. Then it backtracks and exempts Russia and Belarus from this ban, and then it provides the possibility of exception for other countries to be decided at the discretion of Ministers—but it rules out Israel and the post-1967 Occupied Territories from being included in further exemptions. This is taking legislative convolution to a new level: a multi-tiered sledgehammer that does not even crack the nut. Sadly, however, the Bill’s clunky complexity is its least objectionable feature, because with each clunky step of justification it tramples on more and more rights and freedoms.

First, the Bill straightforwardly erodes precious civil rights to freedom of expression, freedom to campaign and freedom to boycott, which are almost universally recognised by NGOs—including, by the way, by leaders of four Jewish youth groups, the Union of Jewish Students and other Jewish groups. The first tier of this restriction is restricting the right to boycott. This right is not only important in the history of British political campaigns, as the noble Lord, Lord Hain, eloquently remembered and as the noble Lord, Lord Boateng, testified to. It is a protected form of speech and protest in international law, protected by the ECHR in the Baldassi ruling, and it is protected speech under Article 19(2) of the International Covenant on Civil and Political Rights.

However, the cavalier approach to international law does not stop there because, extraordinarily, the Bill aims to prohibit decision-makers in public bodies from telling us what they would have done if these restrictions were not in force. As the former Conservative Minister Kit Malthouse said in another place during the Bill’s progress there:

“I have never before seen legislation that outlaws disagreement with the law”.—[Official Report, Commons, 3/7/23; col. 619.]


If the Bill ever becomes law, I have no doubt that the compatibility of this principle with Article 10 of the ECHR will be tested very early in the courts—that is, if time can be found to hear the case alongside the litany of other litigation which the Bill will generate.

However, the trampling of rights does not even stop there. As many commented during the passage of the Bill in another place, it undermines the expression of solidarity with groups which are experiencing systematic abuse, persecution and even torture elsewhere, as the noble Lord, Lord Hain, observed; for example, in the case of China with regard to the Uighurs, or Myanmar with regard to the Rohingya.

Further, the partial exemption of certain types of foreign state activity from the list of banned considerations in investment decisions has the effect of generating a new and totally bizarre two-tiered categorisation of human rights. Exception is provided to allow labour rights to be taken into consideration but not torture; bribery, yes, but not genocide. This bizarre legislative edifice is constructing almost by accident a new UK stance on different kinds of human rights abuses that it is appropriate to react to in different ways. It will undermine our credibility, our consistency and our international standing.

What of the principle of a list of countries excluded by law from ministerial discretion to be designated as exempt from these restrictions? The list consists, as other noble Lords have said, only of Israel, the Occupied Palestinian Territories and the occupied Golan Heights. This contradicts not only UN Resolution 2334 but the Government’s own policy towards occupied territories. Its logic is also self-defeating because, prompted by an objection to singling out Israel, it takes steps to single out Israel. As the Guardian’s Jonathan Freedland remarked:

“What is a favourite refrain of the antisemites? That Israel is the one country you’re not ‘allowed’ to criticise. This bill takes a canard and, in the case of boycotts, turns it into the law of the land”.


More generally, our foreign policy will suffer if we embrace the principle in the Bill that the acceptability of actions by other states is not a function of the content of the actions but of whether a state is on a Minister’s list.

On top of these principled concerns, I have a host of more detailed concerns that I hope will be explored in Committee. First, the enforceability of this regime must be seriously in doubt. It relies fundamentally on clarity about, and between, different types of motivation for investment decisions. But distinguishing between these motivations is often far from easy. Areas of the world that are politically volatile also bring with them commercial volatility, disrupted supply chains and nervous investors. In those circumstances, what counts as proper fiduciary responsibility in decision-making and what counts as undue political motivation?

Secondly, I have a set of concerns about education. I will not repeat them because my noble friend Lady Chapman and the noble Lord, Lord Willetts, eloquently described them. However, we will need clarity about whether or not research partnerships, scholarships and other form of financial relationships that UK universities are involved in with institutions abroad are covered by the term “investment”.

Thirdly, the application of the Bill to the Local Government Pension Scheme is a minefield, as my noble friend Lady Young mentioned earlier—in particular in giving the Pensions Regulator a role in supervising good governance, which it has never had previously, with regard to investment decisions. I would like to hear more from the Minister about the steps to ensure that that new competence will be adequately delivered.

In sum, the Bill creates precedents that undermine freedom of expression and the freedom to campaign. It unintentionally creates a new hierarchy within human rights, undermines the integrity of our foreign policy, and shows a cavalier disregard for rights at home and for international law. It is quite a list. It should never see the light of day, but I am a realist and I realise that what will happen is that it will need profound revision so as not to damage the very freedoms it wrongly claims to protect.

Gaza: Humanitarian Situation

Lord Wood of Anfield Excerpts

Thursday 8th February 2024 Lords Chamber

[Lord Wood of Anfield (Lab)]

My Lords, I will specifically ask about the Government’s decision to suspend funding for UNRWA after the very serious allegations of involvement by UNRWA staff in the horrific attacks on 7 October. I have four questions for the Minister. First, did the UK Government see any direct evidence provided by the Israeli Government, and was that the basis of their decision to suspend funding? Secondly, at the time, the Government said they were temporarily pausing funding of UNRWA

“whilst we review these concerning allegations”.

Can the Minister update us on what the review has shown? Thirdly, why did the UK suspend funding in advance of the investigation or its conclusions, rather than deciding, as France, Switzerland, the EU, Denmark and lots of others have done, to wait for its findings? Fourthly, is it right to axe funding for UNRWA when the catastrophic humanitarian situation in Gaza relies so heavily not just on the aid it provides but on the physical infrastructure and logistical services that it provides for almost all other aid agencies?

Protocol on Ireland/Northern Ireland (EUC Report)

Lord Wood of Anfield Excerpts

Monday 13th September 2021 Grand Committee

[Lord Wood of Anfield (Lab)]

My Lords, as a member of both the former EU Committee of this House and the current European Affairs Committee, I want to start by thanking not just my noble friend Lord Kinnoull, who has led both committees with skilful even-handedness and good humour but, as he did, the staff of both committees. Their professionalism and excellent work are on show in these two reports, particularly over a period as challenging as that experienced since the onset of the pandemic, and testify to the calibre of those on whom we rely so much here in this House.

The core insight of the June 2020 report was simple: that there is a clear contradiction between the protocol’s rule that EU customs legislation applies in its entirety to Northern Ireland, and the Government’s long-standing and continuing claim that the protocol, which they co-authored, would guarantee “unfettered market access” for goods going from Northern Ireland to Great Britain. It is a contradiction between the reality of a signed treaty and the political claims that continue to accompany it. The contradiction is still worth noting, not to re-run the Brexit debate nor to score points, but because only by understanding that it is a contradiction and that trade flows both ways between Northern Ireland and Great Britain cannot remain unaffected or unchanged by adherence to the protocol will we be able to distinguish real, lasting solutions to the current impasse from illusory solutions.

Once we understand the fundamental nature of the protocol in that respect, a few things about the way forward become clear. First, the problems of the moment are not merely differences of interpretation or implementation; they are more fundamental, and the ultimate compromises required on all sides to achieve a durable solution will be correspondingly greater. Secondly, there is no solution to the problem that can be engineered by simply dismantling the protocol. It was an essential pillar of the Brexit agreement for both the EU and the UK sides, in complex ways. Simply scrapping the protocol would have knock-on consequences for Northern Ireland, the UK and the EU, and for stability, democracy, borders and trade, that would make things considerably worse for all rather than better. Thirdly, it becomes clear that the current phase of delicately fudging the protocol with a litany of grace periods subject to shifting deadlines offers short-term respite but cannot provide a way out of the impasse.

The truth is that the multiple problems of the operation of the protocol, which the report of the sub-committee of the noble Lord, Lord Jay, has done such an excellent job of conveying, did not arise out of the blue during the implementation phase; they were baked into the treaty the Government signed. The Government know this to be the case, as do Northern Irish unionists, whose opposition to the Brexit deal was crystal clear from the outset and who now oppose the protocol for the same reasons they opposed it before it came into operation.

The protocol made Brexit technically doable by accepting rules that changed the commercial arrangements between Northern Ireland and Great Britain. That is the nature of the beast to some significant extent, whatever tweaks to the protocol might be achieved in the months or years ahead by the noble Lord, Lord Frost, and his team. I make this point because it is important for a Government demanding changes to the protocol, as our Government have done now for some months, to be candid and transparent about what the true negotiating space is. I am not clear that that is the case at the moment.

Of course, both the EU and the UK Government need to shoulder responsibility for some aspects of the current state we are in. The EU has clearly acted inflexibly in some respects. In particular, as the July 2021 report shows, the supplementary customs declarations required for moving goods from Great Britain to Northern Ireland are not suited to the regional supply chains where the risk of goods moving into the EU single market is low, but the problems of the UK Government’s position are more serious, because they continue publicly to demand “interpretive” changes to the protocol which are in fact substantive alterations to it. Their rhetoric, such as that on unfettered access, continues to fuel unrealistic notions that a revision of the protocol can get rid of all commercial restrictions on trade between Great Britain and Northern Ireland. Yes, more flexibility on the part of the EU is required, but getting rid of contradictory ambitions is a more pressing requirement on the part of the UK Government.

In the short term, I am sure that Members across the House will welcome the idea of grace periods on existing terms of trade being extended to allow more time for discussion on the timetable for introducing the protocol’s provisions. From the standpoint of stability, it is obviously far from optimal to have unilaterally declared grace periods that keep getting extended. However, given the position in which we find ourselves—the DUP withdrawing from North/South Ministerial Council, and the threat possibly to withdraw in the near future from the power-sharing structures altogether —the extension of grace periods as a temporary measure last week by the Minister, the noble Lord, Lord Frost, was a necessary move, and one that looked to be co-ordinated, at least in some tacit way, with the European Union.

However, extending grace periods on SPS rules, agri-food certification, customs declaration arrangements and so on is not a long-term way out of the current mess. Indeed, while, in the short term, the greater risk is that differences over the protocol threaten peace and devolved power-sharing arrangements inside Northern Ireland, the longer-term danger is that the fudges required to delay the protocol and avert these threats never get unblocked—a situation in which the temporary fixes become permanent simply because the politics do not exist to go any further. It is a world in which grace periods, extended serially, would become the norm—governance by grace periods, if you like.

There may be a temptation for many to think that this would not be such a bad place for Northern Ireland to be in eventually; after all, the world is full of impasses with interim arrangements whose fundamentals never get sorted, because political moves beyond the interim are unmanageable. It would be a mistake, however, to contemplate this as a durable future state of affairs for Northern Ireland, in part because the UK signed an international treaty, of which the protocol was a key aspect. Avoiding its implementation as part of a long-term political strategy would do immense damage to the UK internationally. More importantly, it would be a very bad outcome for Northern Ireland. In the medium term, investment in Northern Ireland requires the economic, institutional and political certainty that continuously extended short-term grace periods just cannot provide. It is also crucial for Northern Ireland, especially given its history and the intricate web of bespoke institutions, rules and understandings on which the Belfast agreement was built, that the arrangements on which economic and social life depend continue to enjoy basic consent. That is not the case at the moment, but it has to be an ambition if the protocol is to enjoy long-term confidence.

We already know something about what the solution to the protocol might look like: it will be messy, complex and please no purist on any side. What we do not know is whether those party to bringing this solution about will have the political courage to make the compromises required. However, we do know something about the political conditions that will be conducive to a successful outcome. They will require the Government to reject the dangerous idea, suggested by some on their Back Benches, that the protocol can be abandoned without thereby creating serious consequences for stability, democracy and prosperity in Northern Ireland. They will require those in Northern Ireland who are passionate about the union to work within, rather than outside, the multiple structures established since the Belfast agreement. They will also require the EU to seek resolution through long, patient negotiation rather than through taking legal action. I hope we can all agree that, whatever our party and whatever our view on Brexit, we will do whatever we can to make all those conditions come to pass.

UK and EU Relations

Lord Wood of Anfield Excerpts

Thursday 24th June 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, in the negotiations last year we made proposals to try to fix the problems to which the noble Earl refers. They were rejected by the European Union. We were able to agree better arrangements in negotiations with the EEA—with Norway, Liechtenstein and Iceland—which is an indication of what could have been possible. I have seen the proposal for a visa waiver agreement. I do not think it consistent with our requirement to retain discretion over our own immigration arrangements. We are actively working with all the member states to find solutions in how they operate their visas for touring performers to see if we can reduce the burdens that way.

[Lord Wood of Anfield (Lab)]

My Lords, the Minister wears two hats. The first is that of chief negotiator, wherein he rightly calls for trust, pragmatism and compromise. This is the hat of a relationship builder and deal maker. The second hat is that of the Minister for Post-Brexit Affairs, wherein he writes editorials to the Mail on Sunday saying that drastic action may be needed in response to EU intransigence and telling the EU that it needs

“a new playbook for dealing with neighbours.”

Does he understand that there may not be room for both hats? In strongly criticising the EU to a UK audience for political reasons, Lord Frost 2 may be undermining the work of Lord Frost 1, who actually has to work and negotiate with the EU.

[Lord Frost (Con)]

My Lords, I am afraid I do not see the same inconsistency with the two hats to which the noble Lord refers. My approach has been to tell it like it is and to make sure that what we say in these negotiations is what you get. We believe in saying the same in public as in private, so the European Union is not hearing different things in the negotiations from what it may read in the press. These issues are quintessentially matters of political debate. It is perfectly natural to engage in political debate within this country about them, and I do not apologise for it.

UK–EU Trade and Co-operation Agreement: Meetings of Bodies

Lord Wood of Anfield Excerpts

Thursday 27th May 2021 Lords Chamber

[Lord Frost (Con)]

My Lords, I agree that it is extremely important that all the bodies created under the trade and co-operation agreement should meet and work effectively. I can assure the noble Lord that there has been no lack of activity between me and my EU opposite numbers and our teams during this period, but I agree that it will produce stability when the committees are working properly. We will do everything we can to ensure that there is good transparency about meetings and what is discussed.

[Lord Wood of Anfield (Lab)]

My Lords, when the Minister resumes partnership meetings with the EU, presumably the Northern Ireland protocol will be at the top of the agenda. Can he tell us what his response is to the remark by the President of the European Commission on Monday, that the protocol is the

“only possible solution to ensure peace and stability in Northern Ireland while protecting the integrity of the EU single market”?

As the co-architect of the protocol, does he accept responsibility for its consequences, which were widely predicted, and which now seem to trouble him, too, so much?

[Lord Frost (Con)]

My Lords, the question of the Northern Ireland protocol will, I am sure, be on the agenda of the joint committee when that meets, which should be at approximately the same time—in the first half of June. We have noted the comments of the Commission president earlier this week. The protocol relies on the support of all communities in Northern Ireland, so it is disappointing that there was not more recognition by her of the impact that its operation is having there—but we continue the discussions and hope to be able to find pragmatic solutions.

Covid-19: Debt Collection

Lord Wood of Anfield Excerpts

Thursday 23rd July 2020 Lords Chamber

[Lord True]

My Lords, as the noble Lord will know, action was taken in 2014 in relation to enforcement agents. This is an area under examination. We have recently launched the call for evidence to inform policy, as I mentioned. That will obviously influence the consideration of whether a debt management Bill is a proportionate and reasonable response.

[Lord Wood of Anfield (Lab) [V]]

My Lords, over 1.3 million households are estimated to have built up council tax debts because of coronavirus. They will be counting down the days to 23 August, the day that the bailiffs can arrive—or debt D-day, as the coalition charities have called it—with complete dread. The Government can help to avert this disaster by ensuring that local authorities put in place these charities’ proposals to have sensible schedules for repayment of council tax debts in ways that do not resort to sending in bailiffs. Will the Minister commit today to doing so?

[Lord True]

My Lords, noting the noble Lord’s title, I congratulate him on last night’s events at Anfield—all we need now is for Notts County to get back into the league, where they belong. He asked an important question. Local authorities should be sensitive. Obviously, with Covid, the ban on enforcement visits was imposed. As the noble Lord says, that is currently due to come to an end in August, but I follow him in urging restraint on all in the current situation.

Finance Bill

Lord Wood of Anfield Excerpts

2nd reading & Committee negatived & 3rd reading & 2nd reading (Hansard) & 2nd reading (Hansard): House of Lords & 3rd reading (Hansard) & 3rd reading (Hansard): House of Lords & Committee negatived (Hansard) & Committee negatived (Hansard): House of Lords
Friday 17th July 2020 Lords Chamber

[Lord Wood of Anfield (Lab) [V]]

My Lords, I want to make a few remarks about the emergency stamp duty provisions announced in the Summer Statement. Cutting stamp duty to stimulate the economy is a classic response to a recession. It stimulates not just the housing market but economic activity around house purchases. At least, that is the theory. The evidence on just how much genuinely new activity it stimulates is patchy, to say the least. If you are one of the hundreds of thousands of workers who has lost their job or expects to, this will not make you move house. Most likely, it will bring forward some planned purchases, but I doubt it will stimulate many new ones.

So, what will it do? First, it will reward people for living in the south-east. The Resolution Foundation has called the measure

“a tax cut for Londoners”.

As my noble friend Lord Livermore reminded us, the average gain if you buy a house in the capital will be £14,200. The average gain in the north-east will be zero.

Secondly, this is a cash boost for buy-to-let-landlords. Experts suggest that the move will certainly lead to greater transfer of buy-to-let properties into limited company structures to take advantage of mortgage tax relief, so that is one activity that will definitely be stimulated.

Thirdly, sellers will win, as they will now be able to renegotiate asking prices to take advantage of the extra cash available to buyers. So, another activity this will stimulate is arbitrage between buyers and sellers. Fourthly, sellers may also win when March comes around, as price spikes occur when the cliff edge of the end of this tax break looms. What happens to the property market after that is anyone’s guess.

Lastly, relatively speaking, first-time buyers will lose, unless they are wealthy ones in London, because the stamp duty proposal spells the end of the period of using the tax to give preferential help to those who have never owned property before. So the stamp duty measures will generate lots of activity and may well pull forward some transactions, but at the price of greater regional inequality, loss of policy focus on promoting home-ownership and first-time buyers through stamp duty tax, and uncertainty and volatility when March of next year comes into view. Is this really where the Government’s fiscal focus should be at a time of unprecedented shocks to jobs, growth and confidence in our economy?

The unintended consequence of this, of course, arises from a more fundamental problem: the stamp duty itself. It is a bad tax. It applies only when a house is sold, so discouraging mobility and first-time buyers, and its cliff edges mean that there are perverse incentives to distort the price and save on tax. The sensible strategy on stamp duty, in my view, would be to abolish it and tax the huge windfalls that come from owning housing property, particularly for the top quarter of our population, in other ways: a housing services tax, for example, as recommended by the Mirrlees commission many years ago. I also see from the newspapers that the Chancellor is passing an interested eye on revisiting a capital gains tax. But I live in hope that perhaps he and the Treasury will be persuaded to use this moment to think about a more sensible general approach to taxing assets, especially housing, in ways that the curious side-effects of this stamp duty proposal suggest are urgently needed.

Beyond Brexit (European Union Committee Report)

Lord Wood of Anfield Excerpts

Tuesday 12th May 2020 Lords Chamber

[Lord Wood of Anfield (Lab)]

My thanks to the noble Lord, Lord Boswell, for this debate. I will ask the Minister five quick questions about the yawning gap between the EU’s and the UK’s negotiating positions on the future relationship. First, the political declaration agreed sets out the basis for the future relationship, but while the European Commission’s position on the negotiations in February adopts the same structure as the political declaration, the UK’s negotiating objectives are markedly different. Can the Minister explain why the political declaration framework was so quickly surrendered?

Secondly, can the Minister confirm whether Gibraltar is included in the territorial scope of the agreement automatically, or will it require, as the Commission believes, the prior agreement of Spain to be included?

Thirdly, the EU sees the future EU/UK relationship being encapsulated in an association agreement, which the political declaration also mentions favourably. Is that the UK’s aim as well?

Fourthly, the political declaration agreed to forge an economic partnership that will be underpinned

“by provisions ensuring a level playing field for open and fair competition”.

Does that remain the UK Government’s explicit objective, as they signed up to in the political declaration?

Fifthly, on state aid, the UK wants its own regime of subsidy control, but everyone accepts that state aid rules will continue to apply to firms in Northern Ireland after transition, as well as to UK mainland firms with employment activities inside Northern Ireland. Will the Minister acknowledge that the UK’s so-called regime of subsidy control will be available and apply to only some UK companies, and far from all?

Finally, we are, as we all know, in the midst of a global crisis of proportions unimaginable just a few weeks ago. With such chasms between the parties on the future relationship discussions, so much attention rightly focused elsewhere and so much catastrophic disruption of our lives already baked into the next 12 months, how can it be anything other than reckless to proceed on the existing timescale for concluding a transition deal?

Income Equality and Sustainability

Lord Wood of Anfield Excerpts

Wednesday 6th May 2020 Lords Chamber

[Lord Wood of Anfield (Lab)]

My Lords, Covid has revealed the injustice of inequality in a savage way. It is a disease that has disproportionately hit the poorest. Lockdown has further exacerbated these inequalities, and remote working is mostly a luxury of white-collar professions. Those on low pay and in the gig economy have little financial option but to carry on working, with all the risks that that brings. Our children are now schooled remotely, but the Sutton Trust shows that huge inequalities exist in the provision of education. However, I believe that there is a Beveridge moment coming as the crisis unfolds—a chance to come together to shape the kind of country we want to rebuild. I make a plea for this Beveridge moment to have four key principles about equality at its heart.

First, we need to rectify what has become one of Britain’s largest comparative disadvantages: our long tail of low-skilled, low-wage workers. We have too many workers who revolve in and out of no work and bad work, with no protection or assets, who are told to take any job and climb an escalator of prospects that, frankly, does not exist. It has to stop.

Secondly, we need to redesign our public services to place prevention of life-chance inequalities at their heart. From health care to social care, education to housing and transport to culture, every service should have the goal of pre-empting deprivation at its core.

Thirdly, we must put equality and social justice at the heart of the tax choices we will have to face as we look to pay for our response to this crisis. Germany responded to reunification with a solidarity tax, a supplementary income tax for the wealthiest Germans. I believe it is time for us to contemplate a UK version of this and to grasp the nettle of taxing the sources of huge inequalities in wealth, in particular land and housing.

Lastly, the impact of Covid on the poorest countries is likely to be more catastrophic than in the developed world, but the architecture of international co-operation is now weaker than at any time since 1945. The UK should lead the effort to rectify that and make the assembly of an international coalition for greater global equality a foreign policy priority.

Voluntary Sector Funding

Lord Wood of Anfield Excerpts

Thursday 24th November 2011 Lords Chamber

[Lord Wood of Anfield]

My Lords, I thank the right reverend Prelate the Bishop of Ripon and Leeds for giving the House the chance to debate the crucial issue of the work of the voluntary sector in our most deprived communities and how that work is being affected by the economic crisis and the Government’s cuts to local authority budgets. Debates such as this shine a light on the plight of those whose voices do not often get heard, and remind us of our duty to show, as the Dean of Norwich said on the 20th anniversary of the landmark Faith in the City report, that our common concerns can be harnessed in the common good.

We all know the vital work that is done by voluntary and community organisations, especially in our most deprived communities. It is work that becomes more, not less, important in difficult economic times such as this, when large-scale cutbacks in funding combine with increased demand among the most vulnerable for the care and community services that these organisations offer. No doubt the Minister will refer in his reply to the need for the voluntary sector to take its fair share of pain in the spending cuts that the current Government are prioritising. I agree. The question is not whether, at a time of fiscal pressure, the voluntary sector should somehow be given wholesale protection from cuts. Rather, the question is whether the cuts meet three eminently reasonable criteria: are they proportionate, are they distributed fairly and are they being made intelligently with regard to the long-run viability of the organisations affected?

I shall start with the scale and proportionality of cuts. About one-third of the voluntary sector’s income of £35 billion a year comes from statutory sources. Survey work has shown that the maximum cut to a local authority in 2011, a figure referred to earlier, was just under 9 per cent of income. However, the average for members of ACEVO was 23 per cent of their funding. For smaller organisations it was higher, at 27 per cent of their income. Activities in the voluntary sector that have been especially badly hit are children and youth charities, services for the elderly and disabled, homelessness and housing charities. For some organisations, the cuts have been both disproportionate and catastrophic, a famous case being Oxfordshire Children and Voluntary Youth Services, hit by 90 per cent cuts in its funding and intending to close in March 2012. If we are all in it together, we should all be in it together in roughly the same way—a way that is proportionate to our means and to the importance of activities to our communities and country. The scale of the cuts to the voluntary sector and the absence of proportionality should give us all real cause for concern.

What about the distribution of cuts and, in particular, their effect on deprived communities? Again, it is becoming clear from survey evidence, imperfect as it may be, that the cuts are having more of an impact on organisations in deprived areas than on those in other areas. First, we know that local authority areas where deprivation is higher are experiencing larger cuts in funding, partly to do with the way that area-based grants work. Secondly, since voluntary sector organisations are more likely to be based in these areas—because activity rightly follows need and demand—such organisations are more likely to experience cuts in government funding. Their dependence on state support, compared to other sources of support, means that their activities will be hit more savagely than those of organisations in better-off areas. The result of this variation is that there is now little doubt that the most vulnerable are being hit the hardest. As Dame Clare Tickell, chief executive of Action for Children, said just last month:

“The scale and pace of change, alongside the cutbacks that we have seen over the past year, are unprecedented. We are now seeing the impact in communities across the country—and fear it could result in severe and long-lasting damage to the most vulnerable children and their families as they struggle to cope … We are at a tipping point”.

What about the third criterion, of sensible cuts? Are they being made intelligently and with regard to the long-term viability of the organisations affected? We know that the cuts have cut into the core activities of the voluntary sector. A third of those surveyed reported having to cut the services that they provide. More than 40 per cent have had to make staff redundant.

As the noble Lord, Lord Rennard, has reminded us, given that cuts of this magnitude are under way, the case for a strategic approach to managing their implementation and impact becomes more compelling for a number of reasons. Many charities have no reserves at all to fall back on, or hold very limited amounts of expenditure. If cuts are imposed without strategy and intelligence, they could lead not only to an interruption of services for a few years but to a more permanent scrapping of expertise and networks that cannot simply be replaced when the good times return. Moreover, in a period when demand for these services among the most deprived is rising, cutting the ability of the voluntary sector to meet these needs often simply displaces the need for provision back on to the state. The needs of the most vulnerable are not like a need for luxury goods which we can defer for a bit while we tighten our belts; they are needs that must be met. Cuts to the voluntary sector which shift the burden of meeting those needs on to another part of the statutory funding landscape neither serve the interests of those in need nor help the spending plans of the Treasury.

What do we know about the Government’s strategy for implementing these cuts, especially in our most deprived areas? The first answer is: not as much as we should. As far as I am aware, the Government do not have reliable data on the distributional effects, by local authority, of the cuts on the voluntary sector. Nor have they taken steps to help ensure that the best practice of councils in handling these cuts is spread to other councils. We know that the way in which local authority cuts to the voluntary sector are being handled varies wildly from case to case. Some local authorities are approaching this difficult task of distributing the pain of cuts in partnership with voluntary organisations, observing the compact between the voluntary sector and the Government, while others show little interest in that partnership.

Does the Minister agree that one important action that the Government could take would be to make sure that all local authorities are aware of and complying with the NCVO’s best practice guide, as well as observing the terms of the compact, such as giving at least three months’ notice when changing funding decisions? Can the Minister also tell us about any plans that the Government have for the renewal in 2012 of the transition fund that was set up for 2011—I believe it was £100 million —to help organisations in the voluntary sector that had been hit by the cuts? Lastly, what are the Government doing to ensure that the Government themselves, and not just the umbrella associations that represent the voluntary sector, monitor the impact of the cuts on that sector, especially in deprived areas?

The effect of spending cuts on civic activity in deprived areas is no doubt of concern to all of us, whatever our party affiliations might be. But there is another, special reason why this Government should care about the long-term effects on the capacities of the voluntary sector: their big idea, the big society, purportedly relies on the health and expansion of this sector, at a time when it is being hit considerably harder than other parts of the institutional landscape.

While the idea of strengthening civic society is of course shared by all, the claim occasionally made by some members of the Government to have come up with the idea has been met with some derision. Their failure so far to respond to the disproportionately severe and long-term effects of cuts to voluntary organisations on poorer areas speaks to two more specific blind spots in the Government's big society agenda.

The first is that they show no appreciation of the importance not simply of inequality in funding but of inequality more generally. The fundamental fact is that inequalities in wealth and income, and levels of deprivation, affect the quality of civic life and the capacity of voluntary organisations. We know that in less well-off areas, you are much less likely to see volunteering. You are twice as likely to be a volunteer if you have graduated from university than if you have no qualifications. One-third of the population provides 90 per cent of total volunteering hours.

The problem is that the laudable desire for a big society is not matched by an understanding of these inequalities or of the more limited capacity for society to be big in poorer areas. Professionals in the sector know it: 83 per cent of voluntary sector chief executives said that they thought the big society would not work well in deprived communities. Sixty per cent of the public agree.

So what is stopping the sincere advocates of the big society responding to this? I think that the answer lies in a second blind spot: the idea that a big society needs a shrunk state to work, when in fact a well functioning civic society needs a supportive state and a Government who understand what factors lead to barriers to participation on the one hand and who build capacity on the other.

A Government who are serious about this would support the big society not just through funding but through helping to skill up the sector, encouraging partnerships and promoting collaborative budgeting et cetera. It is a view that was supported by David Cameron, the Prime Minister, in a speech in 2009, when he said:

“I believe that, in general, a simplistic retrenchment of the state which assumes that better alternatives to state action will just spring to life … is wrong … This means a new role for the state: actively helping to create the big society”.

Eighteen months in, we are still waiting for some idea of what this more active, constructive role for government might be. As this debate has reminded us today, it is the most vulnerable and most needy in our poorest areas who need imagination and boldness on the part of the Government most of all.