Public Sector Funding

Guto Bebb Excerpts

Wednesday 23rd March 2011 Westminster Hall

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I congratulate my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) on securing this important debate. It has been very instructive to listen to the contributions made from both sides of the Chamber.

People in Newcastle are concerned about the speed with which the local authority cuts have been imposed and about the impact that that has had on the voluntary sector and support for it. Newcastle is one of the cities that has a thriving citizens advice bureau service, and it served more than 26,000 people last year, but it has now received a 20% salami-sliced funding cut, which is one of the worst cuts to services in the country.

The issue remains very much the speed with which the cuts have been imposed on local authorities, as well as their impact on different regions, particularly urban areas, where cuts to funding to combat deprivation have had a disproportionate impact—for example, in cities such as Newcastle upon Tyne.

[Guto Bebb (Aberconwy) (Con)]

Clearly, all Members in the Chamber share the view that the volunteering sector is important, but while listening to Opposition Members’ contributions I had the strong feeling that we have created an over-dependence on the public sector for volunteering organisations’ funding in the past 10 years. That over-dependence is as much about creating a big state as it is about creating a big society.

Does the hon. Lady agree that many of the best organisations working with local communities—certainly in constituencies such as mine—are free from Government intervention and Government funding? The point has been strongly made that there are bureaucratic issues in volunteering when organisations depend on Government funding. We need to create a society in which people volunteer, but do not depend on Government funding to do so.

[Catherine McKinnell]

I do not agree with the hon. Gentleman’s assertion. I agree that there are some fantastic voluntary organisations that do not rely on any public funding. They are supported, and have to be supported, across the country, and they are warmly welcomed. However, one of the main issues is that the abilities of those organisations are not necessarily distributed in such as way as to target the most hard-to-reach areas, which require more structured funding to support and assist voluntary activities. That point has been made very clearly by my hon. Friends and, indeed, by Government Members.

--- Later in debate ---

[Roberta Blackman-Woods (City of Durham) (Lab)]

May I say how delighted I am to serve under your chairmanship, Mr Amess? I begin by paying tribute to my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) for securing this extremely timely debate. Its timeliness is evidenced by the large number of Members here this morning.

At this time, up and down the country, voluntary and community-based organisations are extremely concerned about their funding situation. Some, sadly, are trying to cope with vastly reduced budgets for next year and uncertainty as to whether they can even continue to operate. My hon. Friend in her amazingly comprehensive contribution, pointed to Labour’s proud record of supporting the voluntary sector—in contrast, I think, to the withdrawal of funding we see from the coalition parties. She used the cuts to TimeBank as an example of how that withdrawal will affect volunteering and volunteering support organisations. I want to speak about TimeBank in a minute or two.

My hon. Friend also emphasised the importance of supporting advice services, particularly in today’s economic climate. My hon. Friend the Member for Makerfield (Yvonne Fovargue) stressed that issue in what I thought was a very passionate contribution. My hon. Friend the Member for Worsley and Eccles South also reminded us, as she often does, of the need to continue to support carers. My hon. Friend the Member for Islington North (Jeremy Corbyn) hit the nail on the head when he said that this Government simply do not understand the nature of the modern-day voluntary sector and its wide range of activities, or the complexity that exists in the neighbourhoods in which it operates or the complexity of the problems that it must face.

[Guto Bebb]

On that point, did not the hon. Member for Islington North (Jeremy Corbyn) highlight the complexity of the funding system put in place by the Labour Government?

[Roberta Blackman-Woods]

Actually, I think the point my hon. Friend made was that the current Government do not understand the nature of the modern-day voluntary sector. That point was emphasised by my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) in her spontaneous but extremely informed—if I may say—contribution. If he will forgive me for saying so, the contribution from the hon. Member for Banbury (Tony Baldry) verified the point made by my hon. Friend the Member for Islington North. Other Members also made useful points, which I will deal with as I go through my speech.

I want to emphasise two things at the outset. First, in government, as in opposition, Labour knew that the deficit had to be reduced, but, crucially, we would not have cut so deeply or so quickly. Evidence seems to suggest that it is the up-front cuts to local government and central Government Departments that are proving so damaging to the voluntary sector. We know that it is some of our poorest areas with the highest levels of need that are facing the largest cuts. That point was excellently made by my hon. Friend the Member for Nottingham South (Lilian Greenwood), who spoke about the huge impact the cuts to the voluntary sector will have on her constituency.

Secondly, it seems particularly unfair to ask more of the voluntary sector in terms of delivering services and filling gaps in provision, while cutting the resource base of a range of civil society groups. It has led the National Council for Voluntary Organisations to conclude:

“The scale and speed of the cuts affecting the voluntary and community sector are severe and there is a very real danger that the sector will not be in any fit state to contribute to the ‘Big Society’ unless further action is taken.”

I can see little evidence that the Government are taking that further action.

The Government often raise the transition fund, which was mentioned by Members today, as the mechanism for plugging the gap. However, it is restrictive in coverage and demands significant change from a great many organisations—for example, they must become social enterprises—and a huge number of the 1,700 applications are still being assessed. Other funding that may reach the sector in future, such as that from the big society bank, is unlikely to be made available early enough to prevent some organisations from going under, regardless of how useful they are to their local communities, and we heard examples of that today. My hon. Friend the Member for Bolton West (Julie Hilling) made a passionate speech about vinvolved in her constituency and the need for it to continue to support young people’s volunteering. Cuts are being made regardless of how good organisations are at providing services or supporting volunteers.

We have had some indication of what the impact of the cuts will be. The sector receives £12.8 billion from a range of statutory sources, and about 52% of that comes from local authorities. Overwhelmingly, that is in the form of contracts for services delivered, rather than grants. I am not sure that Government Members picked up that point. Although it is difficult to put a precise figure on the totality of the cuts affecting the sector nationally and locally, the available estimates put it at somewhere between £3.2 billion and £5.1 billion. That is a huge sum, and a substantial proportion of the sector’s income from statutory sources. At the same time, giving is £700 million less than its pre-recession level, so the gap is not being plugged by another source. The end of transitional relief on gift aid in April 2011 will cost the sector at least £100 million, and the increase in the main rate of VAT to 20% will cost the sector an estimated £150 million per year. This adds up to a range of cuts and cost-saving measures by the Government that are impacting on the sector’s ability to deliver.

The Government want to encourage more services to be delivered by employee-owned companies, mutuals, co-operatives and social enterprises. Of course, Opposition Members are not against that as a general policy direction, especially as it is one that we started while in government. We are against the rushed withdrawal of funding from organisations without time for them to develop new sources of funding and without a framework to help them to manage the transition from a charity or partner in service delivery with the local council to a social enterprise or something similar. That transition takes time, support and resources.

There seems to be a particular willingness on the part of Government to cut infrastructure organisations such as TimeBank, Volunteering England, local CVSs and similar agencies. Where organisations directly support volunteers, drastic cuts might be very short-sighted indeed, especially when the previous citizenship survey showed a reduction in the number of people volunteering. We need to have more volunteering support organisations, or at least support the ones we have adequately. TimeBank and Volunteering England do an excellent job at supporting volunteer development, so why dismantle tried and tested methods of effective volunteer support in the vague hope that something might become available in future?

We know from the Charity Commission that voluntary organisations employ approximately 780,000 staff, supported by 2.7 million volunteers who help them to fulfil their aims. It appears that the Government want to rely on volunteers more and more, but they do not always recognise that volunteers need to be trained and encouraged. The cuts agenda may put at risk the key planks of support for volunteers.

My hon. Friend the Member for Worsley and Eccles South told us how Labour has supported the voluntary sector. We understand it and value it, particularly its expertise and flexibility, and its ability to innovate. Before Labour left office, we set out radical plans to boost funding for volunteers and to make asset-transfers to the third sector. We designed the social investment wholesale bank, which was ready for launch, and launched the social impact bond. We also supported the move for more mutuals and co-ops. We would like to see the Government building on that agenda, not dismantling it. We do not want to see the sector devastated by unnecessarily deep and rapid cuts, that at worst will merely provide an opportunity for the further marketisation of our public services.