Voluntary Sector Funding

Lord Wallace of Saltaire Excerpts

Thursday 24th November 2011 Lords Chamber

[Lord Wallace of Saltaire]

My Lords, I thank the right reverend Prelate for introducing this debate. I also welcome the noble Lord, Lord Wood, on what I think is his first speech from the Front Bench. I give him a particularly personal welcome. I think that I first met him when I was asked to give a seminar with some colleagues in the Treasury. I was especially nervous because my daughter was going to be one of those who would be listening to us speak. I have to say that, from my knowledge of his role as a special adviser in the Treasury, he was always very warmly spoken of by the officials. For a special adviser, that is an unusual and considerable compliment.

We are discussing a very serious and broad matter today. I want, if I may, to go a little wider than the brief that I was given in terms of what we are all facing. I, too, remember the Faith in the City initiative. Certainly, in the Bradford diocese, I saw this as a Church of England initiative to try to persuade the congregations in the better-off parts of the diocese that they were part of the same community as those in the worst-off parts, and they needed some persuasion. It was an extremely worthwhile exercise, but it required to be done. I am very conscious, in respect of the Leeds diocese, that the richest street in West Yorkshire, according to the Yorkshire Post, is less than two miles from Gipton and Harehills, which is one of the poorest and most deprived estates. My wife and I spent an afternoon some two months ago with the West Yorkshire Police going around and looking at how neighbourhood policing works in Gipton and Harehills.

It is not that we live in a country in which the two sides are very far apart but they do not interact enough and we have unfortunately lost our sense of mutual obligation. The rich do not provide enough in terms of philanthropic giving and resist paying their share of tax. That is part of the problem which we need to address. The gap between the public’s reluctance to pay higher taxes and the public’s expectation of high-quality services is something with which the previous Government struggled. The media, above all the Daily Mail, feed the expectation that you should have lower taxes and better quality public services. We constantly read that the wicked National Health Service is depriving us of a new cancer drug costing only £25,000 a year per person. We are also told that that is not our fault, we do not need to contribute to that and somehow the state should provide it. Only one party has included a commitment to raise taxes in its manifesto in any recent general election campaign and that was the Liberal Democrats in 1997 and 2001. I remember my Labour friends saying in 1996, while I was writing the party manifesto, that this would be a disaster. It was not a complete disaster. I suggest that all parties should educate the public with regard to the fact that in an ageing and highly unequal society we cannot expect to have lower taxes because demands will rise, not fall.

Part of the problem we face is due to the fact that after 2001 the Labour Government accepted a substantial increase in public expenditure on welfare and social support but did not increase taxes proportionately to pay for it. That is why we went into deficit from 2002 onwards, leaving a structural deficit, the consequences of which this Government are now struggling with. Along with implementing very painful cuts the coalition Government are focusing on tax avoidance and tax evasion to ensure that the better off pay their fair and proper share of taxation. I hope that we have the active support of the Opposition in this.

In addition, the Labour Party believed that the state should take over more and more of the functions previously undertaken by the voluntary sector and that services should be provided only by trained and vetted professionals. Long-term problems arise when a voluntary sector is too dependent on the state. However, I am told that only 20 per cent of society organisations depend on state support but that some 50 per cent of public support for the voluntary sector comes from local authorities and 40 per cent comes from central government. I very much support what the right reverend Prelate said about co-operation between civil society organisations and local authorities, not dependence. We all face the long-term challenge of raising public and private funds to pay for social welfare. The public funds will come not from a shrunken state but, sadly, not from a much larger state because the public will not pay out taxes amounting to more than 50 per cent of their gross national income. Therefore, we need to seek a partnership between taxation and philanthropic giving in this respect.

We also believe that central government should not direct what local authorities and schools do too directly and too intrusively. Surveys have shown that some local authorities have cut into support for voluntary organisations much more than others. Liverpool and Sheffield in particular have cut into this support while others have managed to maintain it, and one or two have even increased it. There is substantial evidence that local authorities working in partnership with the voluntary sector have been successful in managing cuts and actively protecting the funding of certain groups. That is something which we, in our capacity as citizens, should all be concerned with. The churches, of course, play a major role in this area, including in providing funds for some of these bodies. Community foundations also have a role to play. I am about to visit the Leeds community foundation to learn more about how it operates.

Voluntary organisations that are also social enterprises can provide funds. I was rather distressed to find one body in Bradford with which I have had some contact cutting back on its income-generating activities because it felt that these were not core to its activities, whereas generating income from what you do while providing social objectives is a highly desirable development.

We certainly need to encourage philanthropy. I have a particular feeling of aggression against the bank for which my father worked for 40 years, which paid for my secondary schooling, and which had a very old Quaker philanthropic tradition. Those who run that bank today have entirely lost that tradition and in some ways seem to have lost any sense of moral shame about the large amount of money they earn and how little of it they give to charity—living offshore, avoiding taxes offshore and denying any sense of responsibility towards the society from which they emerged. We have to turn that around. All of us from all parties have to turn that around.

Central government is doing what it can to help these bodies through the transition. The transition fund, which was mentioned, was intended to be for one year and will not be renewed. There are a number of other activities. The Big Society Capital fund is getting under way. Its interim committee has just made the first grant and we are therefore not leaving everyone to sink or swim afterwards. A new fund of £20 million will also be available for bodies providing advice, and a number of things are in place to help us through the very difficult transition.

While we are conscious of the real difficulties that current cuts are bringing to voluntary organisations, as they are to a range of other essential services, the Government are working to provide what assistance they can through the transition. However, how we see the direction of travel is for support for local organisations to come, as far as possible, through local authorities. That is the appropriate way forward. Central government grants for local activity should not be what one would want in the long term. Again, I am aware of one or two useful organisations in Yorkshire that have been dependent on central funding. That is difficult for local organisations and involves them in the organisation of very complicated contracts. The long-term funding implications of that relationship are something that we will all have to work through as we go on, and as we come—we hope—out of the current crisis.

Meanwhile, the Government are funding the training of community organisers. We have started a national citizen service, we have a new Community First fund for communities in disadvantaged areas to help them take action to improve their lives, and we are working across a range of different voluntary activities by assisting them and their funding to enable people to take greater responsibility for their own communities and their own lives.

As a Liberal Democrat, I think of not precisely a big society but a responsible society. I think that part of what has gone wrong with this country over the past two generations has been that people—again supported by the media, rather too uncritically—have begun to talk about their rights and not about their responsibilities. The noble Lord, Lord Glasman, has written quite powerfully on this, so it is not entirely a single partisan point. We need to get back to a society in which we all recognise our responsibilities to each other, including our financial and philanthropic responsibilities. I hope that that is common ground among us. I know that it is part of the message that I learnt as a choirboy in the Church of England.

House adjourned at 5.14 pm.