Civil Society and Lobbying

Baroness Scott of Needham Market Excerpts

Thursday 8th September 2016 Lords Chamber

[Baroness Scott of Needham Market (LD)]

My Lords, the noble Baroness, Lady Hayter, has done the House a great service by tabling this debate. I shall confine my remarks to the charity sector and place on record how much I am looking forward to the work of the Select Committee which has been established to look at a range of issues affecting the sector. I declare an interest as a trustee of the Industry and Parliament Trust and as a member of the NCVO advisory council.

Over the last 20 years or so, every set of institutions in this country has come under serious question: the police after Stephen Lawrence and Hillsborough; the Government and intelligence services after Iraq; press abuses through Leveson; and Parliament itself after cash for questions and the expenses scandals.

For charities, more recent concerns about fundraising methods and the questionable governance highlighted by Kids Company and others might not be in the same league, but they have clearly had an impact on public trust. The most recent figures from the Charity Commission show a fall, from 6.7 out of 10 people in 2014 to 5.7 this year. For organisations dependent on public good will for their prosperity and survival, this is worrying.

The debate throughout all this is about whether trust and confidence can be rebuilt through creating new legal and regulatory frameworks or whether it is through the actions of the organisations themselves, especially in changing cultures where bad practices have crept in. Of course, the fact is that you have to have both. My view is that self-regulation should be the preferred option, but always with a robust and powerful regulatory regime as a backstop—the last resort rather than the first. I worry that a Government sometimes make problems look far more widespread and serious than they actually are by proposing draconian regulatory measures. A macho style of government has become all too common.

It is almost certainly a forlorn hope, but in this, as in other areas, sometimes it is best to make haste slowly, not in a spirit of pushing reform into the long grass but because hasty, ill-informed change simply stacks up problems for the future which then require further intervention to put right. All Governments have a tendency to overlegislate, but using new laws as a substitute for good management, high-quality dialogue and thoughtful policy-making simply causes trouble.

In the 25 years since I became involved in local government, I have increasingly seen in the public sector organisations and individuals who are fearful of doing anything new or innovative and who spend increasing amounts of time and money on process and measurement rather than actions. It is not surprising that they have become risk averse because, unlike in the private sector, in the public sector the incentives are all for caution.

I would hate the Government to push the charity sector down that same route. Its very strength is its independence, flexibility and ability to innovate. The public are very clear about what they want. The same report from the Charity Commission tells us that two-thirds of the public say that charities are spending too much on administration. The irony is that measures to improve trust could actually make it worse if the administrative and regulatory burden keeps increasing.

The changing role of the charity and voluntary sector and the growth in the social enterprise sector have blurred what were clear distinctions in years gone by. As more public services are contracted out to the sector, and as the advocacy role becomes more crucial, the relationship between central government and the sector becomes much more multilayered and highly complex.

The 2014 Act has highlighted some of the dilemmas involved in the Government’s relationship with the charity sector and exemplified some rather poor process by government. I speak as someone who has some sympathy with the underlying objectives of that law: namely, that voters should be clear about who is seeking to influence their choice at election times. This is particularly important when it comes to campaigning in individual seats, where targeting national resources on small geographic areas can have a significant impact. At the same time, charities must be allowed to advocate, inform and question throughout the electoral process, as they do at other times. I am very struck by the briefings I have received in which there is a clear divergence of view between the sector and the regulators about how clear the guidance is and how the law is to be enforced. This is clearly not satisfactory.

Most particularly, we need clearer differences between the routine advocacy of particular organisations and the intention of influencing electoral outcomes. In his excellent review, the noble Lord, Lord Hodgson, highlighted this point—and he was right to do so. Governments must be aware that in this area, as in others, charities are simply not going to run the risk of being non-compliant and therefore the so-called “chilling effect” on their activities in the run-up to an election is a real danger. Perversely, a measure aimed at transparency can end up as a gag.

The aspects relating to electoral law with regard to how one defines a member of the public highlight the perennial problem of how we keep regulation up to date. As the noble Lord, Lord Hodgson, points out, the practical realities of how you differentiate between activities aimed at the public and those aimed at committed supporters and members are very difficult in the social media age.

The Act also demonstrates the other hardy perennial: regulatory overkill. By creating a 12-month regulated period, the Government have effectively neutered charities’ campaigning activities for one-fifth of the time and have added significantly to the costs of compliance. I wonder, in parentheses, how we would manage should we move away from fixed-term Parliaments.

In a similar vein, the so-called “anti-lobbying clause” that was proposed and then withdrawn was a classic example of legislation being inappropriately created by government. It really was a sledgehammer to crack a nut, with no real underpinning evidence of the problem it was designed to solve. But the difficulty is that, despite its withdrawal, it has caused a lot of bad feeling and mistrust, and has further undermined what ought to be the proper, constructive relationship between the charity sector and government. However, even more worryingly, and coming back to the point of public trust, it helps to set the tone that somehow the sector is beset with problems which can be managed only when the Government intervene. That is fundamentally wrong.

We are in for difficult times. Recent events have highlighted some very real divisions in our country, which need addressing and which will take a lot of healing. The charity sector is probably better placed than any other to do this, given the centrality of its role in all aspects of our lives. Government needs to work with the sector and not against it.

Queen’s Speech

Baroness Scott of Needham Market Excerpts

Tuesday 24th May 2016 Lords Chamber

[Baroness Scott of Needham Market (LD)]

Like my noble friend Lady Barker, I will speak on the relationship between the Government and the charity sector. It is worth starting with the reflection that charities contribute around £12.2 billion to the UK economy and that on top of the millions of people who volunteer on a regular basis around 827,000 people are actually employed in the sector, which is about 3% of the total workforce of the UK. The relationship between the Government and the charity sector is an important one that the Government should take care to get right. All too often we see a lack of understanding in Westminster and Whitehall about the way the sector works, and a tendency to impose change rather than work with it.

The gracious Speech contained reference to a new statutory framework to be set up to deliver the National Citizen Service. I urge the Government to work very closely with the sector on this, because it will not be easy to get it right. Charities cannot just absorb large quantities of volunteers—they need professional staff to train and manage them. In fact, many charities do not lend themselves to the way the NCS will operate. We want volunteering to be a positive experience. That means that we need to take care to match the individual and the organisation. Local volunteers’ centres can be brilliant at doing this, but they have been closing fast due to funding cuts. The whole point of the big society is that it works best when it is small.

Lately, we have seen from government a strategy of announcement, furore and then withdrawal: the PIP changes announced and dropped, outcry at the anti-advocacy clause, and now sending elements of housing benefit reform back to review. Members have marched through the Lobbies, Conservative MPs go on the airwaves to defend the indefensible, and then the Government change their mind. I am not going to lose sleep over the difficulties that that causes for the Conservative Party, but what troubles me is what it says about the Government’s attitude to the voluntary sector.

Coming back to the anti-advocacy clause, Answers to Written Questions from my noble friend Lady Barker show that the Government could offer no evidence of the use of government grants to fund lobbying activities. I know that it is radical, and perhaps I am naive to expect evidence-based policy, but really—no evidence? Do not get me wrong: charities should be scrutinised and appropriately regulated, but the Government should not give the impression that problems exist where they do not. The damage to the sector in the long term will harm all of us.

The governance of charities is in the spotlight more than it has ever been. That is only right. Regardless of whether charities’ income comes from taxpayers through the award of contracts, or from the philanthropy of individuals currently giving around £19 billion a year, they have a right to expect good standards of governance. The NCVO has done a good job in responding to issues such as inappropriate fund raising, while the collapse of Kids Company demonstrates that no matter how good the cause, or how charismatic the leader, not only do trustees have to take their responsibilities seriously but public bodies need to do more to assure themselves that the standards of governance of those to whom they award contracts is in good order.

Traditionally, charities funded their work through donations and grants. That is still the perception. However, over the last decade that has transformed. Charities earn more of their income—55 pence out of every pound in income now comes from providing services or from trading. There are around 163,000 charities in the UK, with a total income approaching £44 billion. Around £15 billion of that comes from working with government. This was increasing between 2000 and 2010, driven by the voluntary sector delivering more contracts. However, as public spending has reduced, charities are now receiving less.

The last time I spoke about this issue in your Lordships’ House two years ago I expressed my concerns about public commissioning and procurement practices. They tend to be focused more on the way the private sector works and do not tend to favour small local enterprises of any kind. I ask the Minister to ask the Commissioning Academy to take more heed of this. The doctrine of economies of scale is driving out innovation and local flexibility. It increases risk and deters new entrants from the market.

The UK boasts a strong and vibrant civil society. Charities are at the heart of that. This core is incredibly diverse, with an army of volunteers and staff providing help and support to individuals and communities nationally and overseas. If the Government truly want to deliver the aspiration of improving life chances outlined in the gracious Speech, they will not do so without the charity sector.