Charitable and Voluntary Sector

Baroness Barran Excerpts

Thursday 30th April 2020 Lords Chamber

[Baroness Barker (LD)]

I hope I am—I am working under considerable technical difficulties. I draw attention to my interests as held on the register.

The importance of charities is in their existence not as organisations but as vehicles to help the public and others that they care about. What matters is the services that charities provide which others cannot—not the jobs or the revenue, but the impact on citizens. It is a huge and complex sector with an economy worth £42 billion, and charities that are world-leading in their fields. Charities save, protect, support and enhance lives, and they have never been more needed.

This debate, from which several Members of the House have been excluded by the Government, is inadequate to cover the complexity and the details for the subject, and that is rather unsatisfactory. Therefore my first question is to ask when the Government will set aside time for a proper debate. It is needed. The Government’s approach to charities at this time is fundamentally flawed. Look no further than the statement by a Minister in another place, Oliver Dowden, to the DCMS Select Committee the other day—that the Government had made a “horizontal intervention”, applied to all sectors equally. In other words, the Government thought up blanket solutions for business and just rolled them out. Those business solutions do not apply to many businesses, and certainly not to many charities and social enterprises. Will the Government therefore agree as a matter of urgency to meet representatives of the sector who understand charity law and finance, to come up with changes to the existing package to ensure that it works?

Funding so far has been aimed at supporting the NHS to handle the medical emergency. But now the emphasis, the funding and the planning need to change, moving towards supporting community services. Clearly, mental health services have to stay, but we have to move away from the NHS. We have to start to get all those people who signed up to the GoodSAM app to respond to local resilience hubs, instead of within the NHS. We will not get out of lockdown without a massive reorganisation of public services and social care. We need well-organised volunteering if that is to happen.

I want to say a word about the National Lottery, which has for some years used the voluntary sector to deliver its national priorities but has made little investment in voluntary sector infrastructure or development. That needs to change right now. The lottery has to become a supporter of charities as key players in community resilience. Over the last 10 years, funding for local government and volunteering organisations has diminished. While we have the mutual aid organisations, which are brilliant and enthusiastic, they are working in a vacuum at the moment and are largely unregulated.

We now need to start rebuilding, with local government and the sector, a network of local infrastructure. So my questions are these. When will small charities be able to bid for funding from the National Lottery Community Fund, and will this depend on the timing of funding being released from central government departments? How will the voluntary sector and local authorities be able to ensure that lottery funds are properly targeted and not just another burden or distraction? Will the Minister talk to other government departments to see whether there are specialist pots of money and budgets that can be directed towards charities delivering specialist services?

I want to say a word about the Charity Commission, which has responded by relaxing some of its deadlines for filing documents and so on. That is a very good start, but clearly the commission has to start talking to charities about the unprecedented problems being thrown up for them in the current circumstances. Charities need, for example, immediate advice about insolvency and orderly winding-up, given the circumstances in which they currently find themselves.

Another looming issue that needs attention now is the impact on trustees, many of whom are company directors or members of professional bodies. If they are a trustee of a charity that goes into liquidation, they will have to report that and in future say whether there was any further action. So they cannot risk being found to have acted imprudently, for example by running down reserves. Equally, if a person is a director of a company and has become bankrupt, will they be able to remain as a trustee of a charity? The future impact of the pandemic on the availability of trustees is another potential threat to charities that needs to be looked at now so that the Government can avoid a huge problem in two years’ time.

The attitude of banks to charities is very variable. Some, such as RBS and Lloyds, are very good. They understand charities and work extensively with them. Others do not. They all need clearer instruction to get funding out to where it is needed, because, as others have said in this debate, social enterprises have been hit particularly hard.

On CBILS, can the Minister tell us now or in writing how many charities have made claims under that scheme, how many have been processed, and what their total financial value is to date? Will the Government place a cap on the interest rate for CBILS loans after the initial 12-month interest-free period, as debt taken on under the scheme by charities will be very difficult to repay if a charity cannot increase its income? Unlike companies, charities cannot suddenly hike up the price for their services; nor can they suddenly start acting at scale, because most of their activities are labour-intensive. The small business grant scheme provides £10,000 for small businesses in receipt of either rural rate relief or small business rate relief. However, it is not open to charities in receipt of charitable rate relief. Will the Government extend that?

Deferred PAYE has already been a problem for the voluntary sector and seems set to be so again. The Government announced a deferment period for PAYE to deal with the crisis, but the interest payable is 2.5% on each month’s claims for deferred PAYE. It is cumulative, and at a considerably higher rate than commercial loans. Charities just cannot afford to take that on.

We are not asking for help because charities have a right to exist, but because they are crucial to the recovery of the economy and the health of the nation. From food banks to first aid at football and cancer research to social care, we know that the Government cannot save all charities, and nor should they. But by taking a look, alongside people who understand the legal and financial issues specific to charities, they could make better use of the limited resources they have already announced. Crucially, they could design another tranche of funding for the autumn, which would enable charities to still be there to help us when we get out of lockdown and the country starts to recover. Charities built this country and made it what it is. We need them to be there to build a secure and healthy future for us all.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

My Lords, I thank the noble Lord, Lord Addington, for securing this debate on such an important subject and at such a critical time for the voluntary sector. I also thank everyone involved in charities and the huge number of volunteers for everything that they have done and will do to be such a key part of the fight against Covid-19.

We have had a varied set of contributions today. I reassure the noble Baroness, Lady Barker, that the limit on the number of speakers was to do with the limits of technology; the Government would have been delighted to include as many noble Lords as wished to contribute to this debate. The debate has provided a valuable opportunity to hear about the many challenges which the voluntary sector is facing during these uncertain times and for me to set out the range of support that has been put in place to help charities to do their important work. I thank each and every noble Lord who contributed so crisply and snappily to this debate for sharing their thoughts and evidence on this topic. I apologise in advance that I will not be able to answer all the questions in the time available, but I will write a letter and of course place a copy of it in the Library.

The noble Baroness, Lady Hayter, painted one picture of the tide going out and what the world would look like without charities, and the noble Baroness, Lady Massey, asked the question without giving us quite such a vivid image. Charities and volunteering are part of the bedrock of our communities, especially in unprecedented times such as these. Whether we are talking about individual acts of kindness, volunteering efforts or more formal charitable work, they all stem from the same thing, which is a desire to solve a range of problems, create opportunities, and give people a chance to contribute and feel valued. Indeed, my noble friends Lady Hodgson and Lady Anelay, the noble Baroness, Lady Sheehan, and the noble Lord, Lord Liddle, highlighted the global role that we play, both as a funder of charities internationally and in international NGOs. I will talk to colleagues in DfID to make sure that I am able to answer a number of those questions.

The noble Baroness, Lady Barker, suggested that I talk to stakeholders in the sector about changes to the package announced. I reassure her that I am in daily contact with civil society organisations large and small—indeed, I should be on call with them right now—about the impact of Covid-19, and I have a weekly call with civil society leaders. That goes on alongside a range of other meetings which senior officials have with charities and social enterprises.

The noble Baronesses, Lady Hayter, Lady Barker and Lady Jolly, the noble Lords, Lord Hunt of Kings Heath and Lord Burnett, and my noble friends Lord Astor of Hever and Lord Black of Brentwood all talked about the incredibly wide range of civil society organisations and how they are experiencing increased demand on their services while at the same time dealing with a reduction in their income, because they are unable to pursue previously planned fundraising or trading activities. In particular, I thank the noble Lord, Lord Harris of Haringey, for the work that he leads at the Institute of Fundraising on increasing transparency and trust in public fundraising.

This situation is forcing many charities to make very difficult decisions, be that reducing services and furloughing staff, cutting into their reserves to keep services running at this vital time, or indeed considering mergers in some cases, as my noble friend Lord Leigh of Hurley described. These organisations have also been co-operating very constructively, as the noble Baroness, Lady Scott of Needham Market, and the noble Lord, Lord Mountevans, mentioned.

I will briefly remind the House of the diversity of the charity landscape before turning to the Government’s announcements, so that we can take those announcements in context. A number of slightly different figures were cited during the debate, but there are around 170,000 charities in the UK, of which almost half, or 80,000, have an annual turnover of less than £10,000. In practice, this means that they are almost entirely staffed by volunteers. A further 58,000 organisations have a turnover of less than £100,000, so 96% of organisations in the sector have a turnover of less than £1 million, and only 4% or 6,000 organisations have income above £1 million. I say this to provide the context in which to consider the funding that we have announced.

The measures aimed at businesses announced by my right honourable friend the Chancellor of the Exchequer in March will go some way to support many charities and social enterprises through this period of uncertainty, particularly those with paid members of staff, premises and trading activities. This includes many of the 6,000 or so larger charities with income above £1 million. I note the questions from the noble Baroness, Lady Thornton, regarding social enterprises. Charities and social enterprises can access the Coronavirus Job Retention Scheme, which allows them to furlough staff and apply for a grant that covers 80% of their usual monthly wage costs.

My noble friend Lord Wei, the noble Lord, Lord German, and the noble Baronesses, Lady Sheehan and Lady Tyler of Enfield, asked about the furloughing scheme and why staff cannot volunteer for their own charities. The purpose of the scheme is to support people who would otherwise have been made redundant. In order to prevent fraudulent claims, we have been clear that individuals cannot work or volunteer for their own organisations. This also protects individuals; if we allowed workers to volunteer for their employer, the employer could effectively ask them to work full time while paying them only 80% of their wages.

I note that many charities have already taken advantage of the scheme—we heard examples today. My quick review this morning showed that from just a very short list of charities those savings will amount to over £125 million in the next few months. Charities can also defer their VAT bills to the end of June, will pay no business rates for their shops next year and may be eligible for the Coronavirus Business Interruption Loan Scheme.

In addition, while charities are already eligible for 80% business rate relief via the charitable rate relief, charity shops and other premises used for retail, hospitality and leisure will benefit from access to the expanded retail discount scheme at 100% for 2020-21. My noble friend Lady Anelay and the noble Lord, Lord Liddle, asked whether I would meet the Charity Retail Association. I would be delighted to do so.

The noble Baronesses, Lady Pitkeathley and Lady Barker, asked whether there were any changes to business schemes to make them more applicable to the charities sector. I am delighted that the Coronavirus Business Interruption Loan Scheme now permits charities and social enterprises with less than 50% of their income coming from trading to apply for the scheme. I will update the House on the new 100% government-guaranteed bounce-back loans when more information is available in early May. The noble Baroness, Lady Thornton, will be aware that grants and loans to address cash-flow problems are being made available by Big Society Capital specifically for the social enterprise sector.

Turning to the measures announced on 8 April, as almost all noble Lords noted, the Government pledged £750 million to the charity sector. This is focused on supporting those charities that are responding to Covid-19 on the front line or providing services that protect our NHS and care sectors, ensuring that charities and social enterprises can continue their vital work supporting the country during the coronavirus outbreak. This unprecedented commitment is in recognition of all the issues raised by noble Lords this afternoon around the unique challenges facing the sector.

Of this, £360 million will be allocated by central government to charities and social enterprises in England based on evidence of service need. The noble Baroness, Lady Finlay of Llandaff, paid tribute to the extraordinary work of hospices in this country. This funding will include up to £200 million of support for hospices, with the balance going to a range of organisations such as St John Ambulance and citizens advice bureaux, addressing some of the advice needs that the noble Lord, Lord Low, rightly noted as crucial in early intervention, and to organisations supporting vulnerable children, food banks, victims of domestic abuse—as the noble Baroness, Lady Uddin, noted—and other critical areas.

The noble Lords, Lord Mendelsohn and Lord Sharkey, and the noble Baroness, Lady Morgan of Drefelin, asked about support for medical research and wider health charities. I know that my colleagues in the Department of Health and Social Care have been liaising with charities in this sector to identify how best to support them. I will confirm with them whether it is more appropriate that they or I meet with the Association of Medical Research Charities, as the noble Baroness, Lady Hayter, suggested.

A further £370 million will support smaller, local charities and social enterprises working with vulnerable people. This is an area that my noble friends Lady Morgan, Lord Kirkhope and Lady McIntosh of Pickering, and the noble Lord, Lord Bilimoria, all referred to. I am surprised at the sense among your Lordships that small charities might get missed in our planning. We believe that this funding will make a significant difference to many of our small but vital charities, which in turn deploy and manage literally millions of volunteers around the country. In England, this support will be provided through the National Lottery Community Fund. Government will allocate £60 million of this funding through the Barnett formula so that devolved Administrations are funded to provide similar support in Scotland, Wales—where the noble Baroness, Lady Wilcox of Newport, cited a number of challenges—and Northern Ireland. This will provide support to thousands of charities on the front line helping vulnerable people affected by Covid-19. The noble Baroness, Lady Cox, and the noble Lord, Lord Purvis, asked about eligibility criteria. As soon as those are publicly available, I will share them with your Lordships.

Finally, the Government will match the public’s generous donations pound for pound—which as of today have reached £35 million—to the BBC’s “Big Night In” fundraising event last week. The first £20 million of government match-funding will go to the National Emergencies Trust appeal. The remainder will go to Children in Need and Comic Relief for onward distribution to key charities in many of the sectors noted by your Lordships, including food banks, homelessness, domestic abuse and, critically, vulnerable children and young people impacted by the pandemic—as referred to by the noble Baroness, Lady Benjamin, and the noble Lords, Lord Loomba, Lord Mountevans and Lord Addington. I am aware that grants from this funding are already going out, with charities having been pre-screened by the funders concerned.

My officials and I have been working with the different appeals and are identifying how we can help co-ordinate the distribution of funds so that charities receive grants quickly and with a minimum of the bureaucracy to which my noble friend Lady Morgan of Cotes referred and, most importantly, so that need on the ground is met. The noble Lord, Lord Turnberg, talked about the role of philanthropists. We are working on plans to talk to and liaise with philanthropists in this sector—the noble Baroness, Lady Prashar, also raised that point.

At this point, I want to commend the National Emergencies Trust for its work. When I last looked, it had already distributed over £22 million to local communities. I note in particular its proactive outreach to black and minority-ethnic organisations, given the terrible impact of Covid-19 on those communities. I have been heartened to see how open the organisations involved are to working together and learning from one another.

More broadly, the British public have been extraordinarily generous in supporting local NHS charities, led inimitably by the wonderful Captain Tom Moore. There have been major corporate donations, too, such as £100 million from Barclays Bank and a major donation from Tesco. Time does not permit me to mention them all, but the national response has been truly outstanding.

I note also the £160 million package of funding for arts charities announced by Arts Council England, supporting important work and securing the future of some of our major museums and arts charities. The noble Baroness, Lady Watkins, raised important points about smaller museums, which I shall discuss with my honourable friend the Minister for Culture. I agree entirely with the noble Baroness, Lady McIntosh of Hudnall, about the role of creative activities in helping young people cope with the impact of Covid-19 on their mental health. The right reverend Prelate the Bishop of St Albans and my noble friends Lord Marland and Lord Wei talked about incentives for giving, including around gift aid. I would be happy to explore those in more detail and to raise them with colleagues in the Treasury.

I stress that this package of support is unprecedented in scale and goes beyond the funding that the Government have made available to other sectors. We will not be able to save every business or every charity, but in response to questions from the noble Lord, Lord Sharkey, and the noble Baroness, Lady Pitkeathley, we will continue to engage proactively with organisations across the voluntary, community and social enterprise sectors, so that we maintain a complete picture of the impact of coronavirus on the organisations and, of course, the people they serve. I will endeavour, on behalf of the noble Lord, Lord Hastings, to liaise with DfE colleagues on his point about university funding.

Lastly, I acknowledge the work undertaken by the leading grant-making foundations, including the National Lottery Community Fund. Many of these have changed their guidelines to make funding more flexible and easier to access. While I understand the concerns of the noble Lord, Lord Purvis, about delays in funding for non-Covid related work, I think he will understand that many funders have had to prioritise in the current circumstances.

On volunteering, we have seen an overwhelming response from the public, expressing their willingness to step up and volunteer to help those in need during this time. We have seen this through local volunteer networks such as the 3,500 Covid mutual aid groups that have sprouted up on Facebook, WhatsApp and Nextdoor, as well as the incredibly important established charity networks, large and small, which have been able to respond quickly and effectively, based on a deep knowledge of their communities and trusted local relationships. Having had a wonderful visit with the noble Baroness, Lady Scott of Needham Market, to her local community organisation, I can tell noble Lords that it is an exemplar of all those things.

The magnificent response to the launch of the NHS Volunteer Responders service is testament to that generosity. Within a few short days, 750,000 people have signed up to lend their support to the NHS and to people in their communities. My noble friend Lady Sater suggested taking time to reflect on how we channel this volunteer energy in future, and I would be delighted to meet her. More broadly, we are working with the sector, including the Voluntary and Community Sector Emergencies Partnership, to support wider volunteering activity and make sure that existing, experienced organisations have the capacity to continue to deploy volunteers where they are needed most. I have a weekly call with half a dozen different local volunteering networks, and I am absolutely blown away by what they achieve.

Finally, we are also grateful to the Charity Commission for its work during this crisis, particularly on the guidance it has provided for charities in difficulty. In closing, I reassure noble Lords that everyone at DCMS has been working tirelessly to ensure that civil society is in the best possible place to get through this unprecedented time. We will continue to work closely with the sector to understand and respond as well as possible. We are all proud to see the work being done at a national and local level by volunteers, charities and social enterprises to support our country at this time.

I congratulate those organisations which have shown incredible agility in reconfiguring their services to operate virtually and collaborating in ways that none of us could have imagined possible. As the noble Baronesses, Lady Hayter and Lady Barker, both remarked, we will need more of this creativity and pragmatism as we plan for the months ahead. If there is one positive thing that we can perhaps take from this incredibly difficult situation, I hope that the spirit of coming together that has been forged during this crisis will strengthen our social ties and sense of connection for many years to come. We have found new ways to be close while having to be physically apart. I think we have all found and understood how each one of us is vulnerable, but also how each one of us can help someone else. We have all adjusted our ways of living and working to an unimaginable extent. Our challenge, and the challenge for those working in the voluntary sector, is to sustain this response.

I spoke recently to the leader of a small charity in Hartlepool who said to me, “We are aiming for our response to be like a candle, not a match.” I think that is a very good goal for us all. In this new social contract, civil society will have a vital contribution to make. I look forward to working with the sector in all its variety to achieve this in the weeks and months ahead.