Charitable Sector

Baroness Morgan of Drefelin Excerpts

Tuesday 5th October 2010 Lords Chamber

[Baroness Morgan of Drefelin]

My Lords, I thank the Minister for securing this debate and for his opening remarks. I know that he has a strong personal interest in the charity sector and, through his other life in business, a strong record of supporting very important charities—not least the one that I held dear to my heart for many years, Breakthrough Breast Cancer. I know that we understand each other across this Table and I agree very much with him that our country is blessed with a strong, vibrant and diverse charitable sector. I, too, believe very much that it is the lifeblood of our civil society. Without our voluntary and community organisations, I would argue that there would be simply no civil society.

Such is the importance of this matter, as the Minister has already explained, that we simply have a most amazing and dazzling array of expertise and knowledge of the sector speaking in this debate, so I am greatly interested in the contributions of noble Lords. I, too, particularly look forward, as the Minister has said, to the many maiden speeches that we will hear from the new Members of your Lordships’ House who are speaking. I am very excited about that too—seven maiden speeches really must be a record.

The figure that I have for the number of charitable organisations is slightly higher than the Minister’s, so perhaps we should check our references. I would say that we have around 200,000 charitable organisations operating in the United Kingdom, covering a diverse range of subjects from specific health support charities through to international environmental groups. These organisations bring together an equally diverse range of individuals who are passionate about the causes that they work for and dedicate many hours, as we know, in the pursuit of their organisation’s mission. Within the charitable sector there are literally millions of people who volunteer as part of their daily lives. I know this, as I have worked alongside volunteers and been a volunteer, and that the motivations behind volunteering are as many and as varied as the people who volunteer.

While that number has remained relatively stable over the past 20 years or so, I am pleased that there has been an increase in the amount of money and in the number of people making financial donations to charitable organisations. That is extremely welcome. For years, the charity sector has agonised about how we continue to drive up support for charities, but we are becoming more financially generous as a population. For example, the Charities Aid Foundation found that, last year, £81 million was donated to charity by half a million employees through the payroll giving scheme, Give As You Earn. That is an increase of around 153 per cent from the 1999-2000 figures; that must give us cause for great optimism in these extremely challenging times.

As I have said, I have spent my life in the charity sector and I have a personal and a professional understanding of the demands that the voluntary and community sectors face daily. Like many here, I, too, have experience not only of the previous Government but of the previous Conservative Government, so I have a good back story, but funding is pretty much always the biggest issue that concerns the voluntary and community sector. I will dwell on that matter today, but I also know that capacity is a major issue for the sector and that my noble friend Lady Royall, the Leader of the Opposition, is very concerned about that too. She will talk about it in her remarks later.

I turn to the Government’s plans for the sector—to the big idea and to the big society. I welcome the coalition Government’s interest in the charity sector and in the voluntary and community sector, and the emphasis that the Government are placing on the challenge. I have been listening carefully to what the voluntary and community sector has to say on this topic. Some Tory campaigners during the election campaign found it very difficult to describe on the doorstep what the big society was about, but this is not a problem that we might experience in this place. We know that it is not a new idea and that it is not rocket science, but there is curiosity about what the big society means in practical terms. This is absolutely right, and I am sure that the coalition Government welcome that interest.

Many charitable organisations are rightly enthusiastic about expanding their service delivery and continuing with the new Government the close relationship that they developed under Labour. That is absolutely right. At the same time, the sector has legitimate concerns about the funding and capacity for taking forward this big idea. March 2011 is the cut-off date for many charitable organisations currently receiving government funding, and it is a very worrying time for them. The Government have asked local authorities drastically to cut spending, in an attempt to manage the deficit, at a pace that we would argue is reckless. But that is what local authorities are being asked to do. Community and voluntary organisations are expecting council budgets to be reduced by 30 per cent. Volunteering England has noted its concern that, in London alone, Greenwich council is proposing cutting its voluntary sector budget by 50 per cent and Croydon council by 66 per cent. The proposed cuts will have a devastating effect on community and voluntary organisations, many of which will face the loss of important programmes, possibly in their infancy, and even their total extinction. The reality of cutting budgets with no bridging policy is that many organisations will disappear, which will be a great loss to our society. When in government, we valued the sector because of its innovation and closeness to service users as well as its extremely important advocacy role, challenging us and saying difficult things to us but also helping us to improve government policy.

It is a fallacy to think that volunteering is free. Volunteering England has stated that volunteers often need training and certain expenses to be paid, which is fair enough. Inclusive and high-quality volunteering is achieved only by funding to support volunteer managers and co-ordinators who recruit, train, and support volunteers and with funding to support the volunteering infrastructure. That is essential. Without careful consideration and support in going forward, after-school clubs, domestic violence charities, rape crisis centres, parenting programmes, projects to tackle youth crime and support schemes for isolated older people are all at risk.

If community organisations and charities are not to be affected by the funding cuts, it is likely that even so they will be caught by the Government's proposed rise in VAT. According to the Charity Tax Group, the rise in VAT will,

“increase the irrecoverable VAT burden of charities by at least £150 million per year”.

This will hit smaller charities disproportionately hard. Then there is the unfolding tragedy for medical research charities when the Government no longer match what charities invest in medical research, risking a new brain drain in British science and the economic impact of that. There is also a very real fear within the sector that it will be left to deal with the fallout of the Government's public sector policy, which will result in reduced benefits and an increased likelihood of social problems requiring attention.

The one stop-gap for this that we heard about is the promised big society bank—and I am very grateful to the Minister for telling us more about it today. But the use of dormant money in bank accounts to generate funding for the charitable sector is not a new idea. It is a very good idea; the Labour Government included a similar concept in the March Budget, with their proposals for a social investment wholesale bank. The big society bank proposal is, however, still significantly short of funds for the purposes of financing the sector. The Government advise that funds will be made available from April 2011 of about £60 million to £100 million, although I look forward to being corrected on that, as it is less than the amount that charities will need to cope with the rise in VAT, let alone to cope with the new challenging funding environment. What impact assessment have the Government made of the spending review on the voluntary and community sector and the services and support that that sector provides?

I shall finish shortly. The Labour Party has a long and proud tradition of volunteering and collective action. Our party was born of trade unions, friendly and mutual societies and the co-operative movement. From the very beginning, we have seen people join together in a common endeavour to press for social justice, from women’s suffrage to the right to a minimum wage. We have achieved positive social change through the strength of conviction of our members and communities coming together. These achievements are bound by a belief in civic responsibility and are motivated by our core values of solidarity, reciprocity and mutuality. That is what makes a good society, not maintained by voluntary action and charity alone but based on strong partnerships where markets are held to account and civil society thrives.

I look forward to the debate today and, yes, to learning about the practicalities of what the charity, community and voluntary sector wishes to do. I hope that the Government will build on the commitment that our Government made, not least the doubling of investment in a sector to promote innovation and closeness to service-users, to add value to all the volunteering and giving that our society does and to add capacity and value to the great work that our voluntary, community and charity sector does for us in this country.