Public Sector Funding

Jeremy Corbyn Excerpts

Wednesday 23rd March 2011 Westminster Hall

[Jeremy Corbyn (Islington North) (Lab)]

I congratulate my hon. Friend on securing the debate. Is the real problem that the Government do not appear to understand the role of the voluntary sector? It is often professional, well run, well organised and extremely hard-working. It brings in lots of money from charities and other places, but it absolutely relies on basic core funding in order to succeed. The Government seem to confuse it with charitable good works in small towns, and that model simply does not apply to complex, urban areas such as the one that I represent.

[Barbara Keeley]

Indeed. That is right, if there is an urge, as the Minister has said, to discuss partnerships between Government, business and civil society. I talked earlier about employee volunteering from business in the voluntary sector. That has to be arranged, however, because there is a big, wide cultural gap between the private sector and the voluntary sector. We cannot just leave a new business volunteer to flounder in an organisation. I used to arrange business volunteering as part of a job that I did in the past. I know that someone needs to be the link in-between, so I very much agree with my hon. Friend.

The Minister described one strand of action for the Government as

“encouraging more social action in our communities”.—[Official Report, 28 February 2011; Vol. 524, c. 132.]

How on earth is that going to happen if we cut away the infrastructure of organisations such as TimeBank?

--- Later in debate ---

[Jeremy Corbyn (Islington North) (Lab)]

I hope hon. Members will accept that the maths that I have done are correct. Four-minute speeches would get us all into the debate. Are you, Mr Amess, in a position to impose a four-minute limit?

[Mr David Amess (in the Chair)]

Not officially.

[Jeremy Corbyn]

I look forward to your unofficial imposition of a four-minute limit.

I welcome this debate and congratulate my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) on securing it. The voluntary sector is very important in our society. It is important for community cohesion and for newly arrived communities, and, in inner-urban areas such as the one I represent, it is a crucial part of the social fabric of both local government and health services. It is highly professional, efficient and well organised, and stressful for those who work in it. I am president of Voluntary Action Islington, formerly Islington voluntary action council, and a trustee of several local organisations, including Hanley Crouch community centre, Elizabeth House and a new-ish group called Light Project International, which provides weekend and after-school activities for young people, so I am acutely aware of and involved in the valuable work done by the voluntary sector.

The voluntary sector has always been a combination of a small amount of general fundraising from events and collections, and much larger funding from local health authorities, local government, various charitable institutions and, occasionally, business donations. That is complicated, and we should have regard and respect for those people who manage community centres and local organisations, and spend an inordinate amount of their time stressing over funds, staff and conditions, and funding applications. They spend a fantastic amount of their time completing funding application forms. An industry has grown up, with professional fundraisers offering to complete application forms and to fundraise for fixed fees or a proportion of the funds raised.

We must think through the efficiency of having highly skilled community centre managers spending sometimes 70% of their time on fundraising activities, which obviously diminishes a centre’s day-to-day work. A clearer, more defined role for local government and local health authorities in supporting and funding over a much longer period would be much more efficient. The current system is not efficient.

I have been involved in voluntary sector organisations in my constituency for a long time, and in a previous incarnation I was chair of community development in Haringey council. We developed community centres, particularly for minority ethnic communities, disability groups and others, as a way to bring in people in partnership with local authorities and health authorities. I strongly support the voluntary sector, but am sanguine about its role.

When I hear the Prime Minister talking about the big society, there seems to be a complete disconnect between my experience in inner urban London and what the voluntary sector means there, and the vision that he seems to have of fairly well-off retired people donating money to run a library and so on in a community with highly skilled people with time and money on their hands. That is not the reality of life in my community. If the council closed a library, which fortunately it has not done, and offered it to the local community to run, it would not happen, not because people do not value the library—they absolutely do—but because they do not have the time, the money or the skills necessary to do it. If we want to maintain the social fabric of our society, we must be prepared to put public money into voluntary organisations with the add-on benefit of community usage and all that goes with that. However, as my hon. Friend the Member for Worsley and Eccles South said, that core funding is essential.

Another point for the Minister, which I hope he will answer seriously, is the operation of the transition fund. As with every other community in the country, mine faces enormous cuts in local government expenditure and less grant money from the health authority, as well as less money from London Councils. There are great difficulties. The Government established the transition fund, but I have concerns about it. I received a good brief on it from Gerard Omasta-Milsom, director of Islington Peoples Rights, which is a very good voluntary advice agency. He says that to be eligible for the transition fund, applicants must be

“spending… 50 per cent of your total income delivering frontline… services”.

I wish that someone would define what a front-line service is. It is easy to say that we must support people on the front line and not those in the back office, but if a community centre does not have a bookkeeper, a cleaner, a caretaker or someone to repair computers and so on, it does not work. There cannot be a simplistic distinction between the front line and the back office. It is the totality of the service that is most important.

Another condition on transition fund applicants is that they

“have approved annual accounts that are no more than 12 months old which show that… your total income for that year was between £50,000 and £10 million and”

that

“at least 60 per cent of your total income came from taxpayer-funded sources.”

But £50,000 is quite a lot. We set up a community chest system in Islington, which operated until the Government cuts, and the council has now set up a new but smaller community chest. It gives small grants to new, seedcorn organisations such as new Somali organisations—we have a growing Somali community in Islington. The grant may be as little as £4,000 or £5,000, and in some cases even less. When such organisations are small and have only just come into existence, a small investment goes a long way.

The briefing goes on to say that free reserves could

“pay for your organisation’s total expenditure for no more than six months.”

I do not understand that requirement. Anyone who is running an organisation must have enough money to pay for ongoing costs and redundancy costs for at least three months. I hope that the Minister will tell me two things: first, whether the transition fund will be simplified and will continue beyond this financial year and, secondly, whether, as it has been so vastly oversubscribed throughout the country, he will speak to the Chancellor and obtain more money for it.

As every other part of the Budget seems to have been leaked, there will be no harm done if the Minister tells us exactly what part of the transition fund will be made available to the voluntary sector. It is vital to put money into such organisations and to keep them going. The health, well-being and strength of communities are so important. Removing the seedcorn funding and the basic running cost is damaging, and I hope that the Government will think again about that.

--- Later in debate ---

[Mr Hurd]

I wish to make progress.

The wider context is extremely important. It is not just about TimeBank, or the other organisations mentioned by the hon. Members for Bolton West (Julie Hilling), for Makerfield (Yvonne Fovargue), for Nottingham South (Lilian Greenwood) and for Wolverhampton North East (Emma Reynolds). There is considerable concern in communities across the country about the impact of the cuts.

It would have been nice to have heard more recognition from the Opposition about the economic context, but that fell to my hon. Friends the Members for Banbury (Tony Baldry) and for Warwick and Leamington (Chris White). The fact is that we are spending £120 million a day in interest, and that is entirely unsustainable. A sector that receives £13 billion of taxpayers’ money cannot be immune from the process.

The public hate to see politicians playing the blame game, and I understand that, but nor should we take them for fools. I believe that they understand the basics—that the Labour Government left this country massively over-borrowed and that the coalition Government were elected to sort it out. That means that tough choices have to be made by councils. As my hon. Friends the Members for Warwick and Leamington and for Castle Point (Rebecca Harris) said, some have decided to give priority to cutting internal costs and making efficiencies before making cuts in the voluntary and community sectors. Others have taken a different course for very different reasons.

No one pretends that it is an easy business—it is not—but the Government want to put in place active programmes to help the voluntary and community sector manage the transition. We understand the need for such a transition—from a situation in which too many organisations depend on state income to one in which the sector will have to diversify its sources of income in new ways.

We want to help manage the transition because we see big opportunities for the voluntary and community sector to do more to deliver more public services, and to have a bigger voice at the local level, exactly the point made by my hon. Friend the Member for Banbury. In future, there will be many more arguments about local priorities, and the voluntary and community sector can give a voice to people who often struggle to have their voices heard. The localism agenda will give them a big opportunity. We are obviously very ambitious in our wish to encourage people to give more time and money to help others.

[Jeremy Corbyn]

rose—

[Mr Hurd]

I do not have time to give way.

People will go to charities and the voluntary sector. There are significant medium and long-term opportunities for the sector, but we have to help manage the short-term transition.

That brings me to the transition fund and the specific questions raised by the hon. Member for Islington North (Jeremy Corbyn). Most of the answers are contained in the basic statement. The fund had to be rationed. It had to be targeted on those organisations most vulnerable to a cut in public grant or contract. We took advice from the sector on the criteria. We had to set an income threshold.

We are proud of the progress that BIG fund has managed for us. I visited an organisation yesterday that has benefited from it. The charities’ fund is £100 million, and it was topped up yesterday by £7 million from the Department of Health. That is serious money, and it will help organisations that are particularly vulnerable, or that have more than 60% of income vulnerability to the state, to make the transition.

The hon. Member for Ceredigion (Mr Williams) asked about the big society bank. It is not a panacea for cuts in grant. It is a serious strategic long-term intervention, designed to make it easier for the sector to access capital. I expect between £60 million and £100 million from dormant bank accounts to be released in the third quarter and be made available for deployment. I expect £200 million to come from the four major banks before the end of the year. The balance of the bank’s capitalisation will come from the rest of the dormant bank accounts, once they have passed through the state aid process, but it is difficult to pin that down at the moment.

We are talking about a £600 million opportunity—a serious attempt to make it easier for social entrepreneurs to access capital in this country. It is part of our programme to help the voluntary and community sector play a full role; it will help to build a stronger society, which we want to encourage, and a better partnership between the state, business, the voluntary and community sector, and active citizens who feel empowered to take more control over their lives.