Civil Society

Lord Hodgson of Astley Abbotts Excerpts

Thursday 18th July 2013 Lords Chamber

[Lord Hodgson of Astley Abbotts]

My Lords, I begin by congratulating the noble Baroness on giving us the chance to discuss this important matter and, indeed, on drawing the attention of the House to the multifaceted nature of civil society.

Before I go into my remarks, I have what the police would call “form” on this matter and need to declare some interests. I chaired a task force for the Government that produced a report, Unshackling Good Neighbours, which sought to look at what stopped people volunteering and giving money and what stopped smaller charity and voluntary groups growing. My reward for that was to be appointed the official reviewer of the Charities Act. I produced a report a year ago and here I have to chide my noble friend on the Front Bench somewhat. The report, which contained 100 recommendations, was deregulatory and generally welcomed by the sector but has yet to receive an official response from the Government. It is 12 months now and I have to say to my noble friend that I do not think that that is quite good enough. The sector is anxious to hear whether any of the ideas which I proposed, after consultation, are going to be proceeded with, and the Government need to hurry up. In producing those two reports, I visited many parts of the country and saw at first hand what wonderful work was being done by men and women, often in small groups and with very limited resources, tackling some of the most deep-seated and intractable problems of our society. They deserve our support and encouragement.

I said that I wanted to congratulate the noble Baroness, Lady Prosser, on introducing this debate. I do so, but she will not be surprised to learn that I do not really agree with her analysis of the situation. I will not go through a point-by-point rebuttal but I will say that she completely failed to mention the appalling economic situation that this Government inherited from the previous Administration. There is no way that the charity and voluntary sector can be insulated from that. Indeed, the Government are to be congratulated in many ways on what they have managed to achieve.

I draw the House’s attention to three important aspects of government policy. The first is the coming into force in January of this year of the Public Services (Social Value) Act, which for the first time imposes a duty on commissioners to consider the social, economic and environmental benefits before commissioning a contract. That is a really important way of getting local input and commitment to projects. The second aspect is the changes in gift aid, which have simplified the whole process considerably through the Small Charitable Donations Act. The fact that no donor declarations are needed for smaller amounts of gift aid is really important and helpful to small charities in boosting their ability to raise money and cutting down the amount of paperwork they have to undertake. Last, and most important, is the development of the social investment market, which recent reports suggest grew by 25% last year. This is a win-win situation: more funding for the voluntary sector and the emergence of the UK as a world leader in this whole area of social investment and in the way in which we can carry it out. Those three aspects are extraordinarily important and the Government are to be congratulated on having pioneered them.

My noble friend would not expect me not to have a shopping list of things that the Government should be going on to execute over the remainder of this Parliament. I offer him two or three that he should get his officials to look at with expedition. The first is the rather technical issue of trustee duties. Our trustee law currently makes no distinction between trustees of an ordinary trust and those of a charitable trust. Preservation of capital is exceptionally important in an ordinary trust—you need the capital preserved in your pension fund in order to pay the pension. However, it is perfectly possible for trustees of a charity to spend some capital in pursuance of their charitable objectives. That is an important difference and I hope that the Government will persuade the Law Commission, which is beginning its review of charity law, to begin to undertake a really serious look at this in order to draw a distinction in law between these two types of trust in the future. It would have substantial practical implications and benefits for charities.

The second issue is volunteer and trustee liability. I discovered that there is a perception of risk out there. It is true that some of it is based on myths and some of it is based on completely counterintuitive outcomes to legal cases, which have been well publicised. However, we live in a litigious age and we need to offer our volunteers, trustees and workers in charities and the civil society sector protection and the understanding that the law is on their side when they are acting sensibly. I hope that the Government will continue to look for ways to provide that reassurance. I am sure it will have a great benefit in terms of the readiness of people to volunteer.

The third issue is commissioning. Commissioners tend to be risk-averse. If we are going to find a way to encourage the voluntary sector, we are going to have to provide commissioners with some air cover so that they are prepared to chance their arm, so to speak. We could establish yardsticks that the Government would help promulgate as best practice. The Government would not have to enforce them, but they could be there as a yardstick. These could relate to, for example, the number of tenders that you call for in relation to the size of the contract. You can have only one winner. If you have six or seven tenders, you have to have five or six losers, and all the work and cost that has gone into preparing those tenders is wasted. You could also have yardsticks about the cost of preparing a tender and the cost of monitoring in relation to the size of the contract. All these things would help the charitable and voluntary sector compete more effectively, as it would not be put under undue or unfair competitive pressure.

The last issue is that we are clearly going to see voluntary groups and charities begin to have to form syndicates. They are going to share services with other charities that are providing different expertise to that syndicate, which, of course, brings in the issue of VAT on shared services. Value added tax regulations are a bourn from which no traveller returns and are exceptionally complicated. The Government could do a great deal to help the development of syndicates and to help consortia of smaller groups compete in the brave new world if the VAT situation could be addressed.

Finally, I should like to address the question of failure. We should be prepared to expect and accept that some charities and voluntary groups will fail. The voluntary sector is tackling some of the most difficult and hardest-to-reach areas of our society and not all plans are going to succeed. My noble friend Lord Cope referred to the high failure rate of commercial enterprises and the charitable and voluntary sector is not exempt from similar ratios. Failure is not the same as fraud, but sometimes in the voluntary sector the two are confused. I hope the House will agree that this is not a matter to be defensive about. Indeed, some might argue that if there were not failures that would show that the sector had lost some of its dynamism and its entrepreneurial instincts.