Public Bodies Bill [HL]

Lord Warner Excerpts

Monday 28th February 2011 Lords Chamber

Moved by

[Lord Warner]

44: Schedule 1, page 17, line 8, leave out “National Endowment for Science, Technology and the Arts.”

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[Lord Warner]

My Lords, in this new mood of enthusiasm for constructive scrutiny, I rise to speak to the amendment standing in my name and in the names of my noble friends which would remove NESTA from Schedule 1. My purpose in tabling this amendment is to find out why the Government thought it necessary to convert NESTA from an NDPB to a charity, and to understand the processes by which they will do this and at the same time safeguard public money and the remit given to NESTA by Parliament.

NESTA was set up in 1998 with a statutory remit to support and promote talent, innovation and creativity in the fields of science, technology and the arts. It does this by leveraging private capital into the next generation of innovative, entrepreneurial businesses, running cutting edge experimental programmes to test new ways in which to solve big challenges of the future, and building an evidence base that provides policy options to promote innovation. Its work has focused on innovation for economic growth, cheaper public services, and in the creative industries. All these seem to be areas where the UK economy needs all the help that it can get.

NESTA has done many good things, and I am a supporter of it. In this connection, I declare my interest as chairman of the Health Innovation Committee for the Young Foundation, which benefits from the generous support of NESTA. However, it is not self-evident to me that most of NESTA’s work is in pursuit of a charitable purpose, as defined in the current Charities Act. What discussions have the Government had with the Charity Commission to confirm that the work of NESTA would be accepted as a charitable purpose, and when did they take place? I am assuming that there will be no significant change of functions, or do the Government have other plans? Will the Minister also tell the House what discussions there were with the board of NESTA about converting it into a charity before Francis Maude made his announcement on 14 October? Was the board enthusiastic about the idea, or did it have problems about being an NDPB, which interfered with the discharge of the role given to it by Parliament in 1998? What other options or alternatives to an NDPB or a charity have been considered by the Government?

Alongside those questions, there are some important issues relating to the substantial sum of public money that would be transferred into a charitable body if the Government turned NESTA into a charity. NESTA is funded by an endowment from the National Lottery, which has grown from the original £200 million and now stands at well over £300 million. Along the way, the National Lottery has given it repayable loans and revenue allocations. NESTA does its work through the allocations, loans and the investment income from its endowment, without grant in aid from the Government. How would NESTA’s funding work in future if it was a charity? Would the current endowment be transferred in total to the charity, bearing in mind that charities can change their charitable purpose? Do the Government have any plans to cut NESTA’s endowment when its status changes? We need answers to these questions before we include in a cavalier fashion a perfectly satisfactory body such as NESTA in Schedule 1 and create unnecessary uncertainty about its future. I beg to move.

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[Lord Taylor of Holbeach]

My Lords, I thank the noble Lord, Lord Warner, for introducing this amendment, and the noble Lords, Lord Dubs and Lord Evans of Temple Guiting, for their contributions, which give me an opportunity to explain how the Government see the role of NESTA. It is government policy to reduce the number of NDPBs and NESTA did not meet the Cabinet Office criteria for remaining an NDPB. However, NESTA and its activities are still considered highly valuable to UK growth and innovation. The Government are clear that they want that work to continue. That view will be widely held throughout the House.

We have no intention of winding down NESTA and its activities. Instead, the proposed reconstitution of NESTA as a charity, with its £329 million endowment held in a separate charitable trust, will allow it to continue its valuable work. Far from halting its activities, establishing NESTA as a charity preserves its ability to deliver its public benefit mission at no cost to the taxpayer. I confirm the analysis of the noble Lord, Lord Dubs, that there is no question of saving the taxpayer money in this matter, since the body is independent of taxpayer funding. We can further distance it from government and enhance its independence by making these changes. It will therefore cease to be classified as an NDPB and as part of the public sector. We have already worked closely with NESTA to develop the detail of this reform. We will seek Charity Commission approval for the proposed new model. This model builds on that successfully used by the Millennium Awards Trust, which similarly derived much of its funding from the National Lottery. We want to build on that model.

Once NESTA becomes a private sector charity, the Government will no longer select or appoint the trustees. The separate charitable trust, which will be created to hold the endowment in the public sector, will have a protector. The intention is for the protector to be appointed by Ministers and for NESTA the charity to be the trustee of the trust. The role and powers of the protector are yet to be defined but they will be based on the Millennium Awards Trust model. This is a very positive step that is being taken by the Government. We firmly believe that this model represents an opportunity for NESTA to continue its success. However, we also believe that NESTA’s current status as an NDPB is by no means a prerequisite for it to continue to flourish. Establishing NESTA as a charity is part of the Government’s wider commitment to hand power to the big society and not simply to rely on central bureaucracy to control public life. The Government’s proposed model reflects this objective while safeguarding the public interest in the large endowment managed by NESTA.

I have been asked by many noble Lords about the nature of the discussions that we have had with the Charity Commission. There was an initial discussion with the Charity Commission last December and there has been an exchange of correspondence since then. This is designed to ensure that the objects of NESTA are charitable. BIS and NESTA itself have carried on these discussions. They are positive and we are confident about their outcome. While there have been no public consultations, officials worked closely with NESTA’s senior management team to develop the charitable option and NESTA consulted informally with its board of trustees, which is supportive of the change in status. NESTA also consulted several key stakeholders. Its staff were informed on 14 October 2010, following the Government’s announcement on public bodies reform. Since then NESTA has held regular meetings with staff to inform them of the transitional process and provide the opportunity to address any questions or concerns that they had.

In a statement released at the time of October’s announcement, NESTA’s chair, Sir John Chisholm, said that the board welcomed the decision and described it as an extremely positive move for NESTA. The statement also contained endorsements from Sir James Dyson and from Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations. Since then, NESTA has written to key stakeholders and engaged with the public via its website and social media sites, giving details of the proposed transition and welcoming any questions regarding the change in status. In the light of these considerations, I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Warner]

My Lords, I am grateful to the Minister for his full explanation. I am still just a shade puzzled as to what will happen if the Charity Commission does not accept that the purposes defined by Parliament meet its requirements as to a charitable purpose. Many of those purposes defined by Parliament have at their heart economic development. Before the next stage, so that we can be absolutely clear, I would like more assurance from the Minister, perhaps in writing, that there is not going to be a slip between cup and lip over this that would damage NESTA and the work that it does. On the basis of an assurance in that area, I beg leave to withdraw my amendment.

Amendment 44 withdrawn.