[Mr. Eric Illsley in the Chair] — Assistance to Communities

[Relevant documents: Thirteenth Report from the Select Committee on Communities and Local Government Session 2008-09, HC 649-1 and Government Response, Cm 7790.]

Motion made, and Question proposed, That the sitting be now adjourned.-(Angela E. Smith )

2:30 pm
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Angela Smith (Minister of State (Third Sector), Cabinet Office; Basildon, Labour)

I was delighted to secure this Adjournment debate on assisting communities and third sector organisations through the recession, and I am pleased to see that a number of hon. Members are in the Chamber to take part. The sector is hugely valued by the Government, and it includes local community groups, a whole range of third sector organisations and social enterprises. The support that such organisations have given in services and advice, together with support from the Government, has been invaluable, especially as we come through a period of international recession.

As the Minister responsible for the third sector, I am proud that in the past 10 years, there has been unprecedented funding for, and investment in, the sector. Since 1997, income from the Government has increased from £5 billion to £12 billion. The sector has also stepped up to the challenge of working with the Government in shaping, designing and helping to deliver public services. If we are to deliver high-quality services it is crucial that they are designed around the needs of the communities and the people they serve.

The third sector plays an essential role in a number of ways, and I will go through them in no particular order. First, the sector is a provider of a whole range of services, from debt advice to counselling. As a result, the sector has become expert in designing and delivering preventive services in the belief that prevention is better than cure. The work follows on from the principle that the service user and citizen should be the starting point for any solution.

We should also see the third sector as an advocate, because it connects people with their communities, and enhances participation and engagement on issues that affect or interest them. The sector makes an invaluable contribution to the British economy that is not often recognised. There are 62,000 social enterprises in the UK, which make an annual contribution of £24 billion to the UK economy and employ 800,000 people. That is a significant contribution and a good example of the way in which the sector is helping the economy to grow.

A recent survey undertaken by the Social Enterprise Coalition showed that social enterprises are performing strongly during the recession, with 56 per cent. experiencing an increase in turnover, and only 20 per cent. experiencing a decrease. That compares favourably with the position for small and medium-sized enterprises, of which 28 per cent. have experienced an increase in turnover, and 43 per cent. a decrease. For all those reasons, the sector is today regarded seen as intrinsic to British society. There are 870,000 civil society organisations in the UK, and that partnership, which has evolved over the years, is crucial in tackling the challenges that we face as we work through a period of economic downturn.

There is no doubt that the recession has had an impact on the third sector. It is difficult to quantify that impact, because the situation is complex. Because of the diversity of the sector, different organisations are affected in different ways. Some organisations have seen a rise in demand for services, particularly employment services or, as I mentioned, debt advice. Some charity shops on the high street report increased trade, as people trade down from higher-value items. Other organisations have reported far greater difficulties in obtaining donations, with increased competition for those donations, while some bodies report a decrease in demand, with cultural or leisure activities doing less well.

Additionally, the third sector faces financial pressures caused by rising costs as well as a potential fall in donations. I say "potential", because there is evidence that donations do not necessarily fall during a recession, although they slow down as people become more selective about the causes to which they donate. A Charity Commission survey in August last year showed that most charities were reporting no change in most income streams. In the recession of 1991 to 1993, two thirds of voluntary and charitable organisations reported an increase or no change in income, with only one third reporting a decrease.

A recent survey by the National Council for Voluntary Organisations reported that charity leaders are now more positive about the UK economy than they were when surveyed two years ago, and that 27 per cent. expected their organisation's financial situation to improve over the coming year. Only 8 per cent. planned to cut the number of paid staff in the next three months, while 7 per cent. planned to reduce the services that they offer.

There is much positive news, but we know that it remains tough in the third sector. There are regional variations in how hard the recession has hit communities, and the current level of additional investment is unlikely to be maintained. That has put pressure on staff in some organisations, who are working longer hours to try to ensure that they provide the best service possible. Concerns about funding obviously affect confidence in job security. The services, advice and help provided by the sector could not be achieved without the dedicated support of staff and volunteers, including trustees.

We should not see the recession as being only about challenges and difficult times with no light at the end of the tunnel. Over the years, third sector organisations have adapted to many policy changes and developments, and they have weathered previous recessions. Some organisations have emerged even stronger, and it seems that when faced with adversity, they can step up, innovate and continue to campaign for social change. When we in the Government have to make difficult decisions, the sector is crucial in lobbying, campaigning and making its voice heard. That can be difficult for the Government, but civil society is not something with which we are concerned only during the good times. We must be even more alert, and enable the sector to do what it does best during the tough times.

The challenges for the sector in weathering the storm include ensuring that organisations demonstrate the social benefit of their services, and how that provides value for money. The social return on investment model, developed with the support of the Office of the Third Sector will be helpful in that respect. Demonstrating success is not easy, and using a model that shows the social impact and effectiveness of the work of the third sector in the community, and quantifying that impact, will be crucial. Recessions make us all think differently and force difficult and tough decisions. If we are to get something positive for the sector out of this situation, we will do so by examining organisational models and proving the sector's social and environmental impact.

It is time to get the partnerships right. Pressures on the funding environment for the third sector are creating a need for new ways of working. That could mean joining up with other third sector organisations to bid for contracts as part of a consortium, merging with like-minded organisation, or reinvigorating a partnership with a statutory funder or with the Government. For example, the refreshed Compact launched in December last year offers a platform from which successful partnerships can be built. Although it is early days, Total Place offers a unique opportunity for the sector to engage in local dialogue about effective local services. Only through collaborative, respectful and genuine partnerships can we achieve more with less.

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Lembit Öpik (Montgomeryshire, Liberal Democrat)

I am grateful to the Minister who, in my judgment, is outstandingly effective and committed to the sector, as was Alun Michael when he performed a similar role.

Is the Minister aware of an organisation called RE:generate, which seeks to work to empower local communities in partnership with first sector organisations? If she is not aware of that organisation, and if time permits, would she be willing to meet with RE:generate, which has a clear focus that is much in line with the thrust and narrative that she and her Government seek to push forward?

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Angela Smith (Minister of State (Third Sector), Cabinet Office; Basildon, Labour)

A number of organisations such as RE:generate do such work, which enables them to engage with the community. It brings people together, gives them a voice and helps that voice to be heard, which can make a difference to the community and whatever population the organisation serves. I would be pleased to hear more about that organisation, and I am grateful to the hon. Gentleman for raising that point.

I would like to say a few words about what the Government have done to help the sector. The Office of the Third Sector had a recession action plan, the Real Help for Communities programme, which was launched almost exactly a year ago and was a Government plan to help the sector through the recession. As part of that plan over 1,500 targeted recession-focused grants, loans and bursaries have been provided through the modernisation fund, the targeted support fund and the hardship fund. Another £500,000 has enabled three new schools for social entrepreneurs to be opened in Yorkshire, Hampshire and Devon, and it has allowed existing schools in the north-west and the east midlands to run additional programmes. The school provides action learning programmes to help social entrepreneurs tackle hardship and make positive changes to their communities. The students I have spoken to about their work are inspirational in seeking to make a difference for their communities-and, in one case, for the world at large. It was most impressive.

The £8 million volunteer brokerage scheme for the unemployed has provided 40,000 opportunities for people to learn new skills and give something back to communities through volunteering. Because the effect of the sector is varied, the action plan included a targeted package of support to sustain organisations through the economic downturn. It has enabled them to support their communities through a range of recession-focused services such as information and guidance on finding employment, support for health and well-being, and increased volunteering and employment opportunities.

I found it really encouraging to visit some of the recipients of the "Real help now" money and see for myself the difference that they have been able to make in their local communities. When I went to Brighton, I met the East Sussex credit union. Many people here today are members of credit unions.

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Angela Smith (Minister of State (Third Sector), Cabinet Office; Basildon, Labour)

I see my right hon. Friend Alun Michael nodding vigorously.

The credit unions support vulnerable people on low incomes who often find it difficult to access mainstream financial services, and many of whom are targeted by loan sharks. "Coronation Street" fans will know that the programme covered that problem. Loans can be offered at as much as 5,000 per cent. interest. Such people are in a bad cycle of debt and deprivation, but thanks to a bursary from the Modernisation Fund, the credit union is considering merging with another organisation so that it can respond better to the needs of local people; it will be better able to reach many of those being targeted by loan sharks.

I did not have to go far to visit the St. Martin-in-the-Fields Connection centre, where I saw the amazing range of work that it does for homeless people. It provides not only shelter and support, including food and showering, cleaning and changing facilities, but training and support for job seekers. More than 5,000 people benefit from its services every year, which makes it the busiest day centre not only in the capital but in the country. At the other end of the country, the volunteer centre in Blackpool has benefited from a grant from the targeted support fund. It has been working to help meet the increased demand for those who want to volunteer, finding good opportunities to add value to their skills.

That is why we launched the action plan. The money is an investment. However, it is invested not only in those organisations that receive it but in the community. It enables the organisations to continue doing what they do best, which is helping the most vulnerable in society through the economic downturn with Government support.

The work involves not only the Cabinet Office; other Departments are doing invaluable work. For instance, the Department for Culture, Media and Sport is investing £5 million up to 2011 in the "Recruit into Coaching" programme, which will recruit 10,000 new volunteer coaches from 70 of the most deprived areas in England, giving priority to 16 to 25-year-olds who are out of work or education. The aim is to offer a pathway to employment, and to increase confidence and skills. DCMS is also providing £3 million to transform empty high-street shops into cultural and community facilities as part of a programme to tackle the recession in the high street.

The Department for Children, Schools and Families is providing a recession package worth more than £3 million to enhance family services. That includes making extra funds available to Relate in the areas hardest hit by the recession, to the Parentline Plus helpline, and to Parent Know How, which provides support and debt counselling to families. Her Majesty's Revenue and Customs has launched a payments support service for small businesses and individuals who are unable to pay their taxes. So far, over 292,000 time-to-pay arrangements have been agreed, totalling more than £5 billion.

The Department for Business, Innovation and Skills has provided a £10 million funding boost to extend the opening hours of citizens advice bureaux this year, and a further £5 million next year so that more people can benefit from its free, independent and impartial advice. The extra funding will allow the bureau network to stay open for approximately 170,000 additional hours, which will benefit about 600,000 extra clients until the end of March 2010 and a further 300,000 next year.

Last year, I spoke at the Citizens Advice annual conference, which was celebrating 70 years of service. It was heartening to hear that volunteers are still the backbone of the service. The value of the work done by volunteers, including its trustees-we sometimes undervalue the role of trustees in such organisations-is estimated to be in excess of £86 million. Those are all good and positive examples of the real efforts that the Government are making to help communities and third-sector organisations tackle the recession.

The Supporting People programme is the biggest source of Government revenue funding for the sector, with more than £13.6 billion invested since the programme began in 2003. The programme is grant-funding housing-related support services, largely delivered by the sector; it is administered by all 152 top-tier local authorities. The economic climate could lead to more vulnerable people facing redundancy and repossession, which will mean an increase in demand for existing services. Through Supporting People, the Government are investing in early intervention and preventive housing services. The recent report by the Select Committee on Communities and Local Government highlighted the fact that, against an investment of £1.6 billion, the programme is delivering a net financial benefit of £3.4 billion each year. Supporting People is helping about 1 million people at any given time. In 2007-08, 41,000 people avoided eviction and maintained accommodation; 21,000 people accessed training and education services; 47,000 people established contact with external services; and 8,000 people gained paid employment.

It is not just about numbers on a page. For every person mentioned, there is a real story. Supporting People has had an impact on people's lives, made a difference and improved things for their families and their communities. In times of financial hardship, we need to continue investing in such services. The removal of ring-fencing for the Supporting People budget means that local authorities can be more innovative and flexible, and can pool budgets to support even more people, with services tailored to meet individual need. As a result, services are not hide-bound or held in silos, and are thus not inflexible. I know that concerns were raised about ring-fencing Supporting People; removing that ring fence was based on sound principles and was endorsed by the Communities and Local Government Committee.

A lot of work is being done to ensure that the third sector is both resilient and is supported through difficult times, but we must also ensure that its future is secured so that it remains in a strong position to continue its contribution to the design and delivery of better public services. We are not yet out of the danger zone brought about by the impact of the recession; tough times will continue for some time to come. However, I believe that the third sector is in a good position to weather that storm, and can prove its value to the community-and to all levels of government. We will continue to work with the sector for the benefit of the community.

2:48 pm
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Alun Michael (Cardiff South and Penarth, Labour)

It is a particular pleasure to serve under your chairmanship, Mr. Illsley. You and I shared a fairly chaotic room with another half dozen MPs when we first entered Parliament, although things have become more orderly as the years have passed. Those others included Rhodri Morgan, the former First Minister of the National Assembly for Wales.

It is a pleasure to speak in a debate initiated by my right hon. Friend the Minister. She comes from the voluntary sector, and she worked with me on voluntary sector matters in opposition. She has a good sense of the contribution that the sector makes, and also of its potential. I commend her on the efforts that she has made since taking over her current role to encourage greater participation and engagement by those in business and elsewhere in support of the third sector.

I am pleased that my hon. Friend Tom Levitt is sitting next to me, although he will not be with us in the House for much longer, given his decision to stand down after the election-at his young age, that is a total disgrace. It is appropriate to pay tribute to the leadership that he has provided as chair of the all-party group on the community and voluntary sector. His time as chair has been excellent, and the group has looked much more widely at the sector. I have a feeling that those who intend to continue as Members after the general election will hear from him in a variety of ways as he pursues other activities, although I am sure that those activities will not be far from the heart of the voluntary sector.

I want to say two things about the mutual and co-operative model and its potential, to which the Minister has already alluded; as a Labour and Co-operative party MP, it would be surprising if I did not do so. The financial sector has come through a climate in which the mutual banks and building societies have survived, while other models were damaged. Although support for the co-operative sector is very strong among Labour Members, an appreciation of the model has spread throughout the House. It is always welcome to see an idea that might have appeared radical in the past becoming mainstream and embedded. Not surprisingly, I think that the co-operative movement will always stay closest to the Labour movement, which understands it well, but cross-party agreement on the value of the sector is not to be despised. I hope that we will hear positive messages from Mr. Hurd when he makes his speech.

In the run-up to the last comprehensive spending review, I carried out a study for the Treasury and Cabinet Office that demonstrated the enormous potential of co-operative models. I hope that that is not gathering too much dust and that it is still checked regularly by the Cabinet Office to determine whether that potential is being fully utilised. In recent years, we have heard suggestions about how things that are important to many people can benefit from the experience of co-operative governance-if I may put it in those terms. Supporter ownership of football clubs has particular salience when we see some of the stories going around. Until now, second-rank clubs might have been taking that route, but it would not be surprising if we saw some of the most high-profile clubs going down that avenue in future.

The Minister referred to the strength of credit unions. As small community-based unions-they are sometimes a little fragile-become bigger and turn into organisations with a greater capacity to offer loans and reasonable financial arrangements to some of the poorer people in society, as well as people in general, such as employees of local authorities and others, they have tremendous potential.

When we were carrying out the study to which I referred, we went with Treasury officials to look at the situation in Plymouth. The advantages of a critical mass of organisations working on a co-operative and community model were striking, because of the way in which they reinforced and supported each other. In that sense, it is important for the Government, and the Minister and her team, to nurture the development of co-operative and community-based models in an area, because people can start to learn from each other and develop greater professionalism. Innovative voluntary sector models can sometimes be a little fragile. It can be a lonely life for those "charismatic nuts", as they used to be called, who start to develop new models to respond to community needs.

Some of the lessons to be learned by the public sector from the co-operative and governance models of the past are striking. I refer particularly to our visit to Homerton hospital in Hackney, which is right at the heart of one of the most deprived communities in the country. I was particularly struck by the way in which the chief executive, the director of nursing and the clinical director talked about how much closer they felt to the community that they served as a result of a wide range of members of the local community engaging in the foundation trust. We should be innovative so that we are open to the public sector learning lessons from community-based and co-operative models.

Another particularly attractive model is community ownership of wind energy. I have made the point to Ministers with responsibility for energy that if the implementation of wind energy is done to a community from outside, because there are often objections and people say, "Not in my backyard." However, the model changes if the community owns the model. In Awel Amman Tawe, we saw members of a group promoting community energy sitting outside their local authority's planning offices with placards that said not, "Go away wind energy", but, "Give us our wind turbines". In fact, they failed with the local authority, but won their case on appeal, such was the strength of local support. There is a different situation when a community feels that it is in charge and able to take things forward, rather than that people from outside it are doing things to them.

Another model that has enormous potential, and that could also receive great cross-party support, relates to the future of British Waterways. I was a waterways Minister, so I am conscious of the financial investment necessary to deal with the backlog of repairs. There has been significant investment over the past 10 years, and the UK now has a less fragile and vulnerable waterways system. Significant developments to the waterways have included an extension of the network and interesting investments from the Heritage Lottery Fund and elsewhere, which have been productive.

People love water and the waterways, but the importance of the canal system goes beyond that. It has social and economic benefits, through the tourism and leisure industry, and environmental benefits as a green link into the centres of our greatest cities as a result of our industrial heritage. Many people are very passionate about the waterways sector and want it to thrive. The chair of the all-party group on waterways, my hon. Friend Mr. Laxton, has said that he intends to spend more time with his canal boat after he leaves this place, in which he has been a passionate advocate for the waterways.

We have an opportunity, as highlighted by British Waterways in "Setting a new course", which was published in November 2009, to take the waterways into a third-sector model. I describe that as a sort of National Trust for the waterways that would preserve the benefit of the waterways, just as the benefit of our national parks and areas of outstanding beauty is preserved. The model could continue to do what British Waterways has done well over recent years-exploiting the land associated with the canals for economic development or, in some cases, housing-and it could certainly realise benefits for the finances of British Waterways.

A third-sector model would give people an opportunity to engage with the waterways in the way in which volunteers engage with the National Trust. In a sense, the waterways belong to the British public because they are publically owned, but, with a third-sector organisation like the National Trust, there would be a greater sense that the ownership was personal, so people would be more engaged and able to work more productively as volunteers. It would be possible to develop a form of accountability to the wider public, which would be beneficial to the community and to the waterways in particular. I hope-and I think that this is suggested by exchanges in the Chamber, and questions that Labour and Opposition Members have put to Ministers- that that is an idea whose time has come. I commend it to the Minister as an opportunity that, without partisanship but with positive engagement from Ministers in different Departments, could be carried forward and become productive.

I want to comment on the way in which we provide information to our citizens. I was very pleased to hear what the Minister said about the work of Citizens Advice. I have been involved with it for many years and am honorary president of my local citizens advice bureau in Cardiff. I am also pleased that the service is increasingly working with others, such as the Consumer Credit Counselling Service, to avoid duplicating activities, and to use expertise so as best to target the people who need help.

Most recently there has been work with StartHere, which is an innovative approach to make it easier for people who need information to get it, including those without the technical expertise to search for it on the internet. I encourage Ministers to think further about how StartHere can be used to enhance the public service. I am pleased to say that recent meetings with Ministers in several Departments have encouraged me to think-some five years after some of us sat around in the imaginatively named PSX(E) Cabinet Sub-Committee, which looked at the use of IT within Government, and Ministers started to get excited about the fact that the model makes it easier for people to get information-that several Departments are seeing the benefits of such an approach. Indeed, I have a meeting this afternoon with the Department of Health to talk about that, and I had a meeting with Work and Pensions Minister a few days ago. In particular, my right hon. Friend the Financial Secretary to the Treasury, who has responsibility for carrying forward broadband Britain policies, has placed a great deal of value on the ease with which people can use StartHere to get information that they need.

An evaluation project early last year that looked at the use of StartHere in association with a number of citizens advice bureaux, as well as a couple of prisons in London, demonstrated enormous value in opening up access in such a way. At a time when those who are digitally literate can gain much information from the internet, we need to be careful that those who lack such expertise can get access. An example from the project was the fact that prisoners who were given the opportunity to go online, or to use a kiosk with StartHere loaded, went to StartHere, because of its simplicity. It is highly complementary to directgov, and co-ordination among Ministers is needed to build on what has happened already. For instance, the Ministry of Defence, through the Royal British Legion, is making use of StartHere in relation to the families of service personnel. I have already referred to Citizens Advice and to the use of the system in prisons. The idea needs to be seized for the benefit of the public whom we serve.

I want to underline the contribution made through volunteering. I have chaired a group on employee volunteering for Volunteering England over the past couple of years. The extent to which employer-assisted volunteering has started to develop is striking. As I was coming back to the issue after a 10-year gap, I was impressed by the way in which personnel departments and people involved with corporate social responsibility in some of our largest companies had seized on the importance of volunteering. There was a time when employer-assisted volunteering meant identifying a community centre and going to paint the same room again, as an exercise for a team from the company. Companies have now gone well past that rather naive approach to volunteering towards a sophisticated approach in which they understand that giving people the opportunity to volunteer enhances their skills and abilities, and what they bring into the company. That is therefore a win-win situation for the company, the community and the individual.

I pay tribute to the Government for their work on encouraging such activity, including the relevant commission work that has been done in the past couple of years, and to Volunteering England and the Wales Council for Voluntary Action, which give leadership on volunteering, for the fact that volunteering is not standing still. In the 21st century, volunteering is as modern and important as ever. It is also an activity and contribution to society that is being positively and imaginatively developed in the 21st century. The Government have a part to play in providing active support, and it is particularly important to start with young people. Organisations such as the Prince's Trust do a tremendous job of engaging young people, as do many youth organisations such as the Scouts. They do a terrific job by encouraging responsibility and contributions by young people. However, we can never do too much to promote the appreciation of volunteering by Government and society, and to encourage the development of models for the future.

Finally, I encourage the Minister and the Government to take forward-and indeed accelerate-the work of the Compact. That concept was suggested by the commission on the future of the voluntary sector in England, which was chaired by Professor Nicholas Deakin in the late 1990s. It was also a recommendation in "Building the Future Together", a document for which I had responsibility for the Labour party, and that the Minister had a significant role in writing. The concept is that there is no equality of arms, so to speak, between Government and its institutions, and the voluntary sector, so there is a need for the relationship to be mediated and overseen in some way.

There have been positive developments over the past 10 years since the Compact was brought in, such as the appointment of a commissioner for the Compact. However, more needs to be done to bed that in effectively and to develop a methodology that ensures that consideration of the voluntary sector is balanced properly with the pressures for value for money that the Office of Government Commerce and the Treasury promote for every Department and agency.

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Nick Hurd (- Shadow Minister (Charities, Social Enterprise and Volunteering), Shadow Minister; Ruislip - Northwood, Conservative)

I congratulate the right hon. Gentleman on his speech. He makes an important point about the Compact. He might be aware that the Minister herself recently transferred funds that were committed to charities, without any consultation, and admitted to the House of Commons that she was in breach of the Compact. Does the right hon. Gentleman regret that decision, and what powers would he like the commission for the Compact to have had in that context?

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Alun Michael (Cardiff South and Penarth, Labour)

The hon. Gentleman raises an important point. If decisions are taken in breach of the Compact, it is important that that should be acknowledged, and it is also important that, over time, the issue becomes better understood in Government. Given my ministerial experience, I must say that sometimes a point is reached at which decisions must be taken and when, contemplating the alternatives, one thinks, "I wouldn't have started from here." I must say that I have some sympathy for Ministers who find themselves in a corner, without even knowing the particular circumstances to which the hon. Gentleman refers. It is important for Ministers to be willing to admit to any failure to adhere to the Compact. Over time, that needs to become more embedded in the system so that Government Departments know what they have to do. One problem I encountered with a Government Department was when officials insisted that they were talking about funding when they were actually talking about a contractual arrangement with the sector. They are not giving largesse, but procuring a service from the sector, and, in those circumstances, they should treat the sector with the same respect that they would give a private company or a corporation.

The hon. Gentleman's intervention allows me to say that while the Government have taken us in the right direction, the principles of the Compact and the ways in which it is enforced need to be developed over time. As I was saying before his intervention, there will always be a tension between taking on big contracts to conserve money-we have seen that with the Department for Work and Pensions-and taking on small contracts, which smaller voluntary organisations can contract into. That is not very different from the pleas that we hear from small businesses. When I was Minister with responsibility for rural affairs, I heard a lot about contracts being too big for smaller companies to be able to bid into. There is a real challenge for the Government to get things right in terms of value for money, which of course must be a massively important consideration. Moreover, they must recognise that voluntary organisations, and small, local community-based organisations, can provide value for money if the circumstances are right. There are some Government Departments that understand that and some that still do not, which is why the Compact, as a way of mediating across Government Departments, is extremely important.

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Adrian Bailey (West Bromwich West, Labour)

My right hon. Friend makes a very important point. Does he also agree that one of the problems of small service providers from the third sector trying to meet a large contract is that the time for tendering is often so short that they do not have time to work with other groups to put in place the consortium that is necessary to meet the requirements of that contract?

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Alun Michael (Cardiff South and Penarth, Labour)

My hon. Friend makes an important point. Again, there is a tension between expediency and the delay that can occur in getting arrangements out so that people can seek to make a contribution. He is right that that needs to be brought into the equation. It is a question not just of value for money and the importance of financial constraints, especially in straitened times, but of getting the balance right. The voluntary sector-and the third sector generally-should be seen as having a specific and beneficial contribution to make, and systems should be designed to get the best out of them. I know that my hon. Friend the Member for High Peak is likely to make some comments on precisely those issues in his contribution. Rather than going further into them now, I will leave them for him to develop. I think that we are saying the same thing about the importance of developing the right systems and ensuring that they are thoroughly embedded in both central and local government for the future.

I very much welcome the debate, as we rarely get the opportunity to speak about the voluntary sector as such. It is significant, however, that the voluntary sector gets referred to in departmental debates going right across the Government these days. I welcome my right hon. Friend the Minister's introduction to the debate. As has been the case on many previous occasions, I hope that our debate will demonstrate cross-party support for the future development of the third sector and innovative approaches to making the most of its contribution.

3:14 pm
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Tom Levitt (High Peak, Labour)

It is a pleasure to serve under your chairmanship, Mr. Illsley, and to speak yet again alongside my old friend the Minister. We joined the all-party group on the voluntary sector in 1997, and we both became Home Office Parliamentary Private Secretaries at the same time. Whereas she has gone on to stellar things since then, I am fulfilling the role of sweeper. Nevertheless, it is a great pleasure to have this opportunity to contribute to the debate and to speak after my right hon. Friend Alun Michael, who came to my constituency in 1994-even before I first came to this place-to work with me on voluntary sector organisations.

One of the cheap tricks that we have in the House is to stand up in such a debate and reel off a list of worthy organisations in our constituency. I will not sink to those levels, mainly because I did so the last time that we debated this issue, so it is all on the record anyway. The other thing that we do is to pop into Westminster Hall, make an intervention and disappear again. We have already seen an example of that this afternoon. I will not give the hon. Gentleman the pleasure of naming him for the record.

One gets an idea of the importance of this sector from the fact that there are roughly 250 registered charities in every constituency in the country. On average, almost 100 social enterprises operate in every constituency, and I wonder how many there would have been 10 years ago. About three quarters of our constituents take part in voluntary activity at some time or other every year.

The third sector potentially includes everyone and can benefit everyone. Those benefits come from not just the outcomes but the act of being involved in the inputs as well. Taking part in a voluntary activity in a third sector organisation is very much part of what being a member of society is all about, and it is what makes communities work. When we talk about the third sector, we are talking about not just individual volunteers, voluntary organisations, community groups, co-ops-as my right hon. Friend mentioned-social enterprises or any of the not-for-profit sector, but the whole range of things together. Given the values that they espouse and the benefits that they bring, all of that is part of a concerted movement of communities to engage in democracy. It is the way in which people can change things and the way in which communities can influence the services, environment and atmosphere of the very places in which they live. As I said in the debate on the Sustainable Communities Act 2007 (Amendment) Bill, this is about acknowledging that democracy is something that is 24/7-it does not happen only at election time-and that we should therefore hold it dear, not just in the party political way but in how communities work.

So much has changed over the past 10 years. My right hon. Friend talked about the funding. Some £11 billion has gone from the Government into the sector in one form or another, but that money is not going into a black hole. It is creating opportunities, procuring services and delivering socially beneficial outcomes. The money that the Government give, added to the support given to charities through the taxation system, is still only a part of how those organisations are funded. The very act of giving-the volunteering of one's wealth, as well as one's time-is part of the whole process of engagement about which we are talking.

Qualitative changes have also taken place within the wider sector, however. Not only is there more money than previously, but some third sector organisations operate far more professionally and the forms that they take and the activities in which they engage are more varied. That professionalism is no bad thing, and the creation of some larger, super third sector organisations would have been no bad thing either, because they would not block the emergence of small community organisations, which are being generated all the time. How many community organisations form as a result of local residents' campaigns and then become formal organisations, lobbying politicians and even, after a time, delivering the very services for which the residents campaigned? There is room for both the large and the small in the third sector.

I think that we have seen this new relationship, which has generated so much of the funding, because the third sector's benefits have been recognised through the commissioning of services. When we set up the Compact in, I think, 1999-I was there at the launch-we set out a memorandum of understanding between the public sector generally and the third sector and voluntary sector organisations. Given the growth in commissioning over the years, that understanding has changed and professionalism has come in, and it has therefore been necessary to refresh the Compact. I very much welcome the refreshed Compact. Indeed, the whole third sector has welcomed it. It was produced in December 2009 and has aspects relating to formal partnerships and the commissioning of relationships between public sector and third sector bodies.

Why might a public sector body want to take on a third sector organisation as a partner? In this age, when we look for quality services, a third sector organisation can provide local knowledge and information, and respond to local needs. For example, it can provide time, which public sector organisations often find themselves stretched to provide, to personalise services in social care. Of course, although I would never, and we should never, regard the third sector as the cheap option, it cannot be denied that there is cost-effectiveness-ways of spending money better but not necessarily spending less-in using third sector partners and delivering on a common cause. That has been recognised by local and central Government, as evidenced by the refreshed Compact.

There have been challenges along the way, however, regarding the capacity of the third sector to engage not only in delivering a service, but in the bidding process in response to a tender to provide a service. Full cost recovery was an early issue, and it has perhaps still not been wholly addressed; nevertheless, we have come a long way. I remember that when my hon. Friend Fiona Mactaggart was the Home Office Minister with responsibility for the third sector many years ago, she said something very memorable: third sector organisations have to learn to say no. They have to be able to recognise when they are being asked to do something impossible, and then say no and not take on the commission or deliver the service. Otherwise, the possibility of full cost recovery is jeopardised, advantage is unfairly taken of the good will of the third sector organisation and the volunteers concerned, and the organisation's mission is endangered. Protecting an organisation against mission creep, while maintaining its financial viability and core activities, is the responsibility of trustees-as my right hon. Friend the Minister mentioned-but all those elements are fundamental to the identity and sanctity of the third sector organisation. Commissioning must therefore never be an excuse for exploiting third sector organisations.

Although we acknowledge that the changes taking place have led to attempts to address each of those issues, we recognise that there have been other changes in service delivery. Local authorities, for example, have increasingly looked to private sector organisations to commission services. The Department for Work and Pensions looks for both private and third sector organisations to deliver support for long-term jobseekers on a payments-by-results basis. One trick that we seem to have been missing is that private sector organisations have as much reason as the local authority or central Government to seek cost-effectiveness, personalisation and the local appropriateness of services. There is absolutely no reason why private sector organisations that deliver services either on behalf of or in parallel with local authorities and central Government should not also look for third sector partners, to provide those nuances.

There will be problems, and my right hon. Friend the Member for Cardiff, South and Penarth touched on some of these aspects. Although there is little formal commissioning of services from the third sector by the private sector, there are huge opportunities for more of that to take place, to the mutual advantage of both partners. Particularly interesting is the way in which some private sector organisations engage with charities such as Pilotlight and even VSO, and provide opportunities for managers in business to get some life experience by working with third sector organisations. They see those organisations as a resource and pay on a commercial basis to get training, experience and enlightenment.

If, however, we are going to make the most out of the relationship between the private sector and the third sector, a number of problems need to be tackled. They include the same attitudinal problems that there were at the beginning of public sector commissioning: the possible mistrust and misunderstanding of what the other partner is about; the private sector perhaps having rather more demanding expectations regarding capacity than the public sector; and scepticism about whether so-called amateurs could ever deliver a professional service, which we know they of course can.

I see other opportunities for third sector organisations, given some of the changes that the Government have brought about in recent years. We have seen a bit of hesitation, but the way in which health services are scrutinised has changed over the years. We have set up local involvement networks. LINks bring local authorities' scrutiny procedures and appropriate third sector bodies into the health service to scrutinise, advise and assist in the improvement of services. That would not have been possible a few years ago, but the local authority scrutiny process has matured over the years and is now capable of providing that service.

The third sector bodies that were involved in the community health councils-some of which were better than others, which is why changes had to be made-are now engaging in the LINks process. Why, therefore, can we not consider using that process in other public services that are not delivered directly by local government? An obvious example is policing. My right hon. Friend Mr. Blunkett wrote a document for the Home Secretary-I was pleased to be involved in the research and writing-advocating the involvement of the third sector locally to scrutinise the policing of communities at a grass-roots level. I am much more interested in a LINk-type process of community engagement through voluntary sector organisations and community groups than I am in the development of a police authority scrutiny procedure. However, I welcome the fact that many chief constables now come before local authority scrutiny committees in a way that perhaps they never did before.

My right hon. Friend the Member for Cardiff, South and Penarth mentioned volunteering. I do not think that it is possible to talk about volunteering these days without talking about V, a brilliant organisation set up by the Government to foster and promote volunteering among young people. It currently works with about 500 volunteer and community partners throughout the country, opening up 900,000 opportunities for young people to volunteer. V has funded more than 1,300 projects since 2006, and through its support, more than 500 people have set up their own social action projects to meet needs that they have identified in their communities. Every month, young people looking for volunteering opportunities on the V website run 72,000 searches, and online applications to volunteer have increased 200 per cent. in the past year alone.

One thing that V does effectively is to bring in funding from other sources, including £42 million from the private sector. Match funding from more than 120 corporate partners in the past year alone has produced an extra £84 million for youth volunteering. In my constituency, 200 young people have been involved in the V Inspired project. Last week, I was delighted to attend with my right hon. Friend the Minister a celebration of youngsters in Derbyshire-well, it was actually country-wide-who had received V talent certificates for intensive volunteering. One constituent of mine, Rosie, spent 30 hours a week for 45 weeks working under the oversight of Connexions with the police, local authorities, the youth service and others to ensure that young people in her community were not left to drift but were provided with something to do.

I remember the Prime Minister saying that the voluntary sector provided a voice for the voiceless. Many national campaigns have their roots in the voluntary sector and the third sector generally. We should admire the tenacity, effectiveness and professionalism with which such groups mount their campaigns. People are encouraged, perhaps more so than before, to campaign locally, whether by lobbying their council, signing online petitions or through other measures. It is important that campaigning remains a key activity for the sector.

That, of course, is the point at which we remember that political parties are third sector organisations in terms of how they are set up. We do not receive gift aid, but perhaps that time will come. Nevertheless, campaigning is central to the work of the sector. I urge Mr. Hurd to come on board and say that campaigning is not only a legitimate but an essential activity for third sector organisations, and that we should never return to the situation in the early 1990s, when organisations such as Citizens Advice were told that if they did not stop lobbying for the law on various issues to be changed, they risked losing their grants from central Government.

In another example, which I have given before, Save the Children was delivering services in Iraq as part of the rebuilding work after the 2003 war. The charity was critical of the conduct of both the American and British Governments in their military activity there, and as a result, it lost its funding from the American Government. However, it continued to receive funding from the British Government on the grounds that it was doing what it was asked to do and fulfilling the terms of its contract. In general terms, we welcomed rather than criticised the fact that Save the Children had used its position to campaign.

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Nick Hurd (- Shadow Minister (Charities, Social Enterprise and Volunteering), Shadow Minister; Ruislip - Northwood, Conservative)

Will the hon. Gentleman give way?

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Tom Levitt (High Peak, Labour)

Briefly, in the hope that the hon. Gentleman will say yes to my question.

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Nick Hurd (- Shadow Minister (Charities, Social Enterprise and Volunteering), Shadow Minister; Ruislip - Northwood, Conservative)

I am more than happy to place on record my profound belief in the value of the voluntary sector's advocacy role. I took a private Member's Bill through Parliament almost entirely because it had the support of a national network of organisations driven by exactly the same energy and vigour that the hon. Gentleman mentioned. I am a strong believer in the advocacy role of charities and the sector. We propose no change to the regulation in that context.

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Tom Levitt (High Peak, Labour)

I am pleased to hear that. The hon. Gentleman will remember that the leader of his party, Mr. Cameron, said at one time, "If you want to know what a Conservative Government are going to do, look at what Conservative local authorities are doing." The hon. Gentleman will also be aware that when Conservatives took over the organisation of London Councils, one of the first things that they did was to decimate the programme of grants to the third sector. I hope that he can reassure me either that his leader was wrong to say that we should look to Conservative councils for leadership or that the Conservative councils were wrong to pull the rug from under many local voluntary organisations. Perhaps he will come back to that later if he does not have an answer now.

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William Cash (Stone, Conservative)

I am fascinated by the hon. Gentleman's excellent speech, but I ask him to consider this. The voluntary sector and all the tremendous organisations in that sphere are focused primarily on concern and compassion, and on providing opportunities outside the country's power structure. What I hope to discuss if I catch your eye, Mr. Illsley, is the essential distinction conferred by trust and charitable status. The state and political parties are interested in power, but social care, voluntary contribution and compassion are provided outside the power structure. It is a difficult line to follow, but that is why a lot of problems arise about what is, or is not, political from the point of view of charity law.

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Tom Levitt (High Peak, Labour)

I am grateful for that fascinating intervention. I will read it carefully in Hansard tomorrow. The hon. Gentleman seems to be suggesting that there is a compassionate charitable side and a state power side, and never the twain shall meet-one shall not influence the other. It is about influence. No one is suggesting that the third sector should run the country, but it has the right-and, indeed the obligation-to seek to influence how it is run. That is the heart of the issue.

I welcome what the hon. Member for Ruislip-Northwood said in another Committee on which we served together a few weeks ago, and which dealt with a statutory instrument on exempt charities. I have praised him once and will praise him again for taking the right line on that matter and for welcoming the Government's initiative under the Charities Act 2006 to move away from the concept of exempt charities, which undermines the status of charities.

Was the hon. Gentleman a little surprised to hear, therefore, that Michael Gove was trying to put the original clause 42 back in the Children, Schools and Families Bill? The exempt charity ruling was rightly removed from the Bill by the Secretary of State for Children, Schools and Families, because it was unnecessary to the achievement of the good things in the Bill. The only reason for putting it back would be to remove the public benefit test from independent schools. That test was refined in the 2006 Act and, as I recall, it had widespread support. I do not understand why the hon. Member for Surrey Heath wanted to put the exempt charities provision back in the Bill, as it went totally against the advice of the hon. Member for Ruislip-Northwood.

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William Cash (Stone, Conservative)

I had direct experience of this matter when a new school was created in my constituency when I first went there in the early 1980s. The assisted places scheme, as it was called in those days, enabled people who otherwise would not have been able to get into that school to do so, to its enormous benefit. It is now one of the best schools in the region. That matter is tied up with the exempt charity status. We must ensure that people can benefit from such opportunities.

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Tom Levitt (High Peak, Labour)

I am not sure how the exempt charity status reflects on that matter. Labour has taken a different route, which is to make all our schools excellent so that people do not have to make the somewhat artificial choice of entering the narrow confines of the independent sector, rather than being in the big wide world of the state sector.

I will conclude in a moment, but first I want to mention a few topical issues. I welcome what the Minister said about music licensing and PPL in Question Time in the House yesterday. It is important that musicians receive the payments for the performance of their music to which they are entitled by law. However, everybody, including musicians' representatives, must recognise it would be unfortunate if that had a financial impact on the smallest amateur-I do not use that word disparagingly-groups in the country, particularly at this time. For example, it should not affect people who like to have the radio on in the back of the charity shop. The Government are only playing the role of honest broker in this matter; it does not relate to tax or to any Government measure, but to a court ruling. I hope there can be an agreement between the sector and the music industry that will minimise the impact on those who are least able to pay. I understand that that might be only days away.

I welcome the news that the Department for Culture, Media and Sport is not rejigging the distribution of lottery funding and that it will continue to reflect both need and where the bids come from, rather than seek an artificial evenness. Equality of opportunity does not have to depend on equality of treatment. It is important that the most vulnerable areas are helped whenever possible. Lottery funding, particularly through Reaching Communities, has been incredibly valuable. Later today, I will be celebrating the impact of Reaching Communities on Gamesley in my constituency, which has received £250,000 over three years. We are keeping our fingers crossed that there might be more on the way. That funding has gone into the heart of that community, not to impose or change it, but to enable, empower and enrich it, and to help it celebrate the best of what is available.

I know that the Minister takes an interest in NHS charities, so I hope the assurances of the Department of Health are true that the storm in a teacup a few weeks ago over the future independence of NHS charities was just that-a storm in a teacup. I hope that NHS charities will remain financially independent, while being embedded in, and part of, the NHS. It is almost impossible to be treated in hospital and not come across a volunteer working in the NHS or a facility funded by a charity. That could include anything from the scanner through to the tea shop and florist.

Finally, I do not think there is anything the third sector cannot do. It is varied and versatile, and can adapt to changing circumstances, demands and relationships. I have every confidence that it has a bright future in all its forms, including social enterprises, co-ops and community groups. As chair of the Community Development Foundation, I would like to have said a lot more about communities. I think that there is momentum in the sector. The way in which it looks for relationships has enabled it to grow. Despite the funding relationship that we have discussed, it is probably more independent of Government than it has ever been in its attitudes and in its belief in where it can go. It has a very fine future.

I was hoping to continue speaking until my right hon. Friend the Member for Cardiff, South and Penarth returned to the Chamber, which was quite a challenge to set myself and I will not try to meet it. He mentioned football clubs being taken over by their supporters. I can think of only one major club to which that applies. I had the pleasure of going to see it on a hot night in Barcelona last summer. The Barcelona players have the word "UNICEF" emblazoned across their chests. They celebrate not a fat-cat company that puts money into the club, but the third-sector organisation to which they give £1 million a year. I look forward to the day when our football clubs wear similar badges with the same pride. That is the pride we all have in our third sector.

3:48 pm
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Adrian Bailey (West Bromwich West, Labour)

I welcome the comments that hon. Members have made, and it is a pleasure to sit under your chairmanship, Mr. Illsley.

Like my right hon. Friend Alun Michael and the Minister, I am a Labour and Co-operative Member of Parliament. I have had a long association with and commitment to the co-operative and mutual sector. Although that informs my basic philosophical position, I will extend my comments to the wider remit of the community and voluntary sector.

The Minister's opening speech referred to the enormous growth in the third sector's impact on the economy. We could not have had such a debate 15 years ago because it could not have been couched in the same terms. We could not have spoken about the significant impact the third sector was having on the delivery of services, nor the contribution it was making to the country's economy. She gave figures showing an increase from £5 billion to £12 billion. In my Government office region of the west midlands, the contribution is assessed to be £3.3 billion and the sector has between 44,000 and 50,000 employees. Notwithstanding the huge social benefits that the sector brings to the area, there are also considerable economic benefits.

That is the case for a number of reasons, one of which is the public recoil from the privatisation excesses of the '80s and '90s, and the gradual realisation that the propriety form of companies delivering services, or the alternative of public sector organisations providing services, did not sensitively and specifically meet the whole range of needs within the wider community. Although there were models of mutuality and co-operation for people to exploit, they were often not well understood and under-utilised. There was no driving philosophy within the Government or the civil service to give the support necessary to enable those models to reach their full potential. I do not for one moment think that, more than 10 years after the Government came to power, we have reached that full potential, but huge strides have been made.

The Minister has outlined some of the initiatives that have taken place to help development. However, it is also important to note hon. Members' contributions through private Members' Bills. Many of those were introduced by Labour and Co-operative Members, but there were others, including at least one from a Conservative Member. Those people pioneered private Members' legislation that has helped the development of different corporate models that, in turn, have helped the third sector. I would particularly like to mention the community interest company and, of course, the asset lock, both of which have enhanced the legislative framework necessary to assist the development of third-sector organisations.

I did some research into the economic impact of third-sector organisations on my local authority. Although that impact is almost impossible to quantify, it is interesting to note that, in my local authority of Sandwell, there are 478 third-sector organisations, of which 312 are registered charities. In our representative roles as Members of Parliament, as we carry out our daily constituency tasks, I think we all see the incredible work that is carried out by not just volunteers but professionals within the sector to meet the needs of the local community.

At this time of economic problems and recession-the Minister referred to this-third-sector organisations have a hugely strategic role to play. Two particular difficulties-it is the classic double whammy-for third-sector organisations have resulted from the recession. The rise in unemployment and the associated problems that go with it put an additional strain on voluntary and charitable organisations within an area and, over and above that, many such organisations are dependent on contracts from public sector organisations, which are having to squeeze their expenditure to meet tougher spending regimes in order to reduce public spending and the so-called financial deficit. Third-sector organisations are suffering in both ways, as a possible source of income is diminishing, but they have to meet increased demand on their services.

The Minister outlined the measures that the Government have taken, which clearly show that they recognise the difficulties faced by such organisations. Those measures are, of course, very welcome. This is not a special plea but, as the West Midlands Regional Committee's report highlighted, we have suffered disproportionately in my area of the west midlands, largely because of our historical dependence on the motor industry, which has been badly hit. We have also suffered because we have comparatively low skill levels. Unemployment has been higher in the west midlands than in other regions, and we have had all the associated problems that go with that. The west midlands is at the forefront of facing such pressures.

May I make a few comments about the Compact and the issues outlined by my right hon. Friend the Member for Cardiff, South and Penarth and my hon. Friend Tom Levitt? Many of those issues have been covered already. Obviously, there has to be a balance between value for money and the ability of small third-sector organisations to provide a service. The Compact was considered to be a good way of raising awareness of the issues and providing the right sort of framework and culture that would benefit both sides of the equation. However, there is a feeling-and perhaps a fear-within the third sector that, under pressure, there might be a process of resiling from the sort of principles under which the Compact was devised.

Hon. Members have mentioned the difficulties that small third-sector providers face when they try to meet the requirements of large contracts and there is a short time for tendering. However, there is also a fear, which is supported by evidence, that third-sector providers are disadvantaged in the tendering process by an approach that puts cost ahead of value. Some of us who were in local government 20 years ago remember the difficulties that compulsory competitive tendering brought, when the only criterion for awarding a contract was cost. That relates to the old question of how to balance the cost and value of something. The most cost-effective contract often does not provide for the best value.

There is a feeling that such contracts are now being negotiated purely on the basis of cost, and that the third sector is being disadvantaged by a private sector that can sometimes use the contract as a loss leader, and can then either change the terms or simply not deliver on the necessary quality to do the particular service adequately. The Government need to consider that in the development of this particular Compact.

There is also a fear-or a robust complaint-that there is an unequal partnership. The statutory provider can renege on a contract, whereas the voluntary sector would be in trouble if it did so-that issue should be looked at. Regional Action West Midlands has told me that it is developing a regional procurement framework to be implemented by public sector organisations that would provide a standard framework for that particular tendering process throughout the area. That would provide a template that would be easily understood by the third sector and would remove some of the disadvantages of working within a time frame so that it can compete effectively. I ask the Minister to look at that as a way of taking the agenda forward.

In conclusion, the third sector has come an enormously long way in the past 10 to 15 years. It is no longer regarded as an amateurish add-on to the services provided by the public sector, but seen as a more effective, sensitive and specific way of delivering services that the public sector is not always best placed to provide. It is thought of as infinitely better at providing services in many areas than the private sector. However, the third sector still suffers from some disadvantages. We still need to monitor and work with it to ensure that, over the coming years, its full potential is realised for the benefit of not only the economy, but the services that people need in our local communities.

4:01 pm
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William Cash (Stone, Conservative)

It is a pleasure to serve under your chairmanship, Mr. Illsley. The matter we are discussing is so important that I am sorry that the debate is taking place in Westminster Hall, rather than on the Floor of the House. For me, the matter is fundamental to the kind of society in which we live.

Were I to attempt, probably with some uncertainty, to identify the category into which the so-called third sector fits, I would first have to ask what the three sectors are. That has been implied in some of the speeches I have heard this afternoon, but perhaps not quite identified, although we got close to it in an intervention from Tom Levitt. As I see it, there is the state on one hand, which deals with mattes of political power, including the Government, legislation, Parliament, of course, local authorities and all the paraphernalia of administrative law. On the other hand, we have another sector dealing with private ownership, commerce, the marketplace, companies, partnerships, small businesses and many others areas that are as essential to the running of a society as is the state. The division between those two is often prickly, but it is important that we have both, because it is through the Government and the framework of the state, to use that generic expression, that one establishes the rule of law. Therefore, the whole of society is ultimately dependent on that as a means of maintaining stability and good order.

Then, of crucial importance-no less importance than the other two sectors-we have what I prefer to call the voluntary sector. I will not mention the media in this context, although some might argue that they have become the fourth estate, and there is increasing evidence to suggest that the media thinks they are even more important than Parliament. The voluntary sector is vital, and it overlaps with the other two areas in the sense that many charities-I touched on this point in an earlier intervention-are driven by criteria established over many centuries in a very British manner that have now made their way into other countries, more so in the Anglo-Saxon world than elsewhere, whereby charities are driven not only by the state, but by the activity of volunteers. Those charities are not driven entirely by the Church, although it has always played a big role in its interface with charities.

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Joan Walley (Stoke-on-Trent North, Labour)

Would the hon. Gentleman agree with me, with regard to the role and origins of voluntary organisations, that many of them are part and parcel of their local communities, particularly with regard to residents associations, and that people serving on the committees of those associations, of which we have many in Stoke-on-Trent, are the glue that keeps local society working, so it is vital that we give our full support to the voluntary sector for the work it does?

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William Cash (Stone, Conservative)

I could not be more enthusiastic in following up the hon. Lady's intervention, not least because she, too, represents a Staffordshire constituency, and we often find ourselves co-operating for that reason on matters of voluntary activity. There is a considerable overlap and I am sure that she is right.

The voluntary sector includes not only the charitable element, but the amenity element and the protecting element. Some of that work is ad hoc and some is long-term. As the hon. Member for High Peak said, the growth of the big charities is enormously important. I can remember when Oxfam, in the days when I was at Oxford, was based in a tiny office just up the Banbury road. Look at it now. The same could be said of more recently established charities-perhaps it is unfair to describe them as such-including Tearfund, with which I work closely as chairman of the all-party group on water and sanitation in the third world, and WaterAid, which is relatively new. I could not recite them all, and there would be no point in doing so, as there are so many.

Many of those enormous organisations have sub-units, to use a technical term, in each constituency, and that is why there are, as the hon. Member for High Peak said, about 250 registered charities in the average constituency. Some of them are large charities such as Oxfam, Save the Children, Tearfund and the Royal British Legion, with which I also work closely in my constituency, as I do with many other charities. Others are local charities, and some are much older, such as the trust set up by Izaak Walton, who happened to leave some money in his will to part of my constituency. Therefore, there are small, localised endowments, as well as much larger ones, and there is also an overlap with amenity groups, some of which are long-term groups, such as the Madeley Conservation Group, which has done tremendous work in the coalfields, because Madeley was once a coal community.

There are also shorter-term, ad hoc amenity groups, such as those that oppose wind farms. I have four such groups in my constituency, some of which are incorporated and some of which are not-for-profit organisations because they want to have a stable constitution. Others are made up of people who simply get together as an amenity group. I would like to refer to one of the accidental outcomes, although perhaps it is a deliberate problem. It often strikes me that when an ad hoc amenity group protests against a specific local government problem-wind farms are only one example-the people involved get together at a big meeting. An MP such as myself will attend and tell them, "This is what you must do if you want to be effective", which we all have to do. Someone will then get up and ask, "Where will the money come from, and will we need legal representation?" We then have to tell them that they will not be able to protest unless they raise the money. Then they ask, "What about the people on the other side?", meaning the state, the local authority or the Government policy that has driven those who are determined to set up the wind farm. The amenity group will then find that they must raise the money on an entirely voluntary basis. Meanwhile, the state, in the manner of Goliath, provides the QCs and leaders of the argument, such as environmental experts, at enormous cost and therefore has the advantage over David, because the voluntary amenity body is obliged to find the money, and that, importantly, is driven by the volunteer attitude.

The hon. Member for High Peak made that point. It is about attitude, and I have mentioned care and compassion as well. Those people will go out and raise money so that they can pay for what they want to do. I think that there is a strong case for them to be given legal aid, particularly when there is an enormous imbalance between the very big state and the very small amenity society. However, nothing will stop them. They will step up to the plate, just as they do in the other area that the hon. Gentleman mentioned, and on which I have had an exchange with him. For example, in the context of providing care in the community, an enormous number of people do fantastic work, without any expectation of advancement, patronage or financial reward or benefit of any description-this is the fantastic side of this work, and this is what I believe in passionately-but entirely because they believe in the cause in question, or their local community. They are the unsung heroes of Britain, the warp and weft of our society.

The hon. Gentleman mentioned people who go into hospitals. We have had enough trouble with Stafford hospital, as everyone knows-it is a national scandal, not just a local one-but the truth is that an enormous number of people are still going into the hospital to do the kind of voluntary work that he mentioned. That is extremely important, yet it is often taken for granted. The professionalism of the big organisations is complemented by the enormous sense of commitment and compassion that comes from people in villages and towns and in society at large.

We are part of an enormous international voluntary sector. The hon. Member for High Peak mentioned UNICEF, but one could mention another sphere of activity that is entirely spontaneous and which we have seen in the work of Live Aid some years ago, and in our responses to disaster funds for hurricanes, tsunamis, Haiti and so on. Now, of course, other organisations come in on the back of massive television appeals, so the idea of the state being able to solve everything has, by definition, proved not to be true. It is often individuals who come and provide the ballast that is necessary to solve enormous problems.

By the same token, it is extremely important that huge organisations, as well as the local ones, should not become overtly political. We do not have time this afternoon to go into every aspect of charity law, other than simply to refer to the balance that has to be struck. I believe that the charity commissioners are somewhat too restrictive, as they tend to make over-enthusiastic assessments in construe certain activities as quasi-political or political, when, in fact, the dividing line is difficult to achieve. I recognise that, but I think that in respect of schools, academies and things of that kind, there is a tendency for the commissioners not to realise that we need the spontaneity of local volunteers who come together to provide the added value that committed members of local society are able to provide for schooling or other things.

I know that this is a very political question for Parliament, but it is important that unreasonable restraint should not be imposed on people being able to provide for independent schools if they wish to do so, or, for that matter, to provide help so that those who are less well off can get a better education than might otherwise be available to them locally. I do not want to disrupt the cross-party enthusiasm in this debate by spending too much time on that, but the question of mission and of the objects of trusts is an important one, and we must do everything that we can to encourage more and more local voluntary activity.

On the broader front, I was struck by the reference of Mr. Bailey to the Labour and Co-operative movement. I make no secret of the fact that my family were Quakers for many centuries, and were involved in mutual societies. For example, we helped to finance Samuel Smiles. In fact, we found him-my great-great-grandfather, Newman Cash, is reputed to have discovered him in Leeds before he appointed him secretary to the Leeds and Thirsk Railway, which he set up. The Cadburys are Quaker cousins, and so on. There was an extraordinary combination of enterprise and-let us use the word properly-philanthropic thought and attitude. Another example is John Bright and the Rochdale Society of Equitable Pioneers.

The whole concept of this debate is in my DNA, and it is extremely important to the revival of what has been called the broken society. I am extremely glad that my hon. Friend Mr. Hurd will reply to this debate. I know that Conservatives are all supposed to be pin-striped and boss-eyed, or how people describe us. [Interruption.] No, not in this debate, but hon. Members know what I mean. However, there should be no assumption that, just because someone comes from a particular political party, they do not share common attitudes towards helping people at large.

That is part of it: we may have different political solutions, but it is extremely important to remember who created the mutuals and building societies such as the Abbey National, which we founded in the 1870s, and which is now a bank. In retrospect, I am not at all happy about what has happened to the notion of mutualisation, which part of the essence of the voluntary and co-operative movement and all that went with it, including mutuals such as the National Provident Institution, which was founded by William Cash in the 1830s. The fact is that we tried to create things to help people- there were no profits for the people concerned. They had other businesses, and the two things worked together. Barclays is another company that began that way, as did Rowntree's-I could go on to list more.

In trying to recreate the circumstances to repair our broken society, we must look not only at what Government, Parliament and legislation can achieve but at how the spirit of voluntarism described by the hon. Member for High Peak can be brought in. This is not a party question at all; it is about how we, despite our political differences, manage to create in society the means of helping to repair our broken society. I shall just mention drugs and drugs addiction, and the fantastic work that is done by those who work voluntarily to help people who are broken by the terrible scourges of today.

Photo of Tom Levitt

Tom Levitt (High Peak, Labour)

I am sure that there is accord across the Chamber on the points that the hon. Gentleman just made about mutual organisations, Quaker heritage and so on-that is excellent. However, does he not think, given that three quarters of the population engage in voluntary activity in one form or another, and that there are 250 charities in every constituency and so on, that it is an affront to the organisations and community groups that hold our communities together to call them broken? I accept that there are problems in society-he mentioned drugs, and there are others-but the bonds that hold communities together are far from broken. Suggesting that they are is an affront to those people.

Photo of William Cash

William Cash (Stone, Conservative)

I talked about a broken society as a whole. We have monumental problems in society today. I am far from thinking, let alone saying, that those organisations are broken-they are the means whereby society can be mended, to a certain extent, although not entirely, because other measures such as legislation are necessary. The last thing that I would say is that voluntary sector organisations are broken-far from it. They are the means to mend a society that is broken for a variety of reasons, including, although I am not supposed to say such things now, the lack of moral purpose or moral force, which lay at the heart of so much that was good, although there was some bad, in Victorian times.

Photo of Alun Michael

Alun Michael (Cardiff South and Penarth, Labour)

As we do not want to break the cross-party consensus, as the hon. Gentleman said, I shall put my point gently. Does he not agree that allowing the break-up and demutualisation of certain organisations was a mistake by a previous Government? He rightly referred to those organisations being set up with both financial and philanthropic objectives, and therefore being part of the binding together of society in many parts of the country.

Photo of William Cash

William Cash (Stone, Conservative)

If the right hon. Gentleman is inviting me to criticise that Government, I shall do so with great care, because we did an enormous amount of good in promoting enterprise as well. The problems with the trade union movement-if I may come back with that-had led to the necessity of getting things stabilised. However, that is for another debate.

Let us look at the Cadbury and Kraft situation, for example. Although those are commercial organisations, the charitable activities of the Cadbury trusts and things like Bournville, speak for themselves. So many people want and need that kind of society, in which we achieve a balance between the second sector, the commercial marketplace, and the voluntary sector, which comes third in line-I do not like "third sector" as an expression. That aspect of society is based on voluntary activity, and is not driven by a desire for political power or an insistence on one's own way of doing things-basically, that is what legislation is all about, only within the rule of law-but is based on the ability to deliver good and moral force on the ground and to help individual people as well as society as a whole.

On the question of schools, higher education and places of learning, which was mentioned, I repeat that we the voluntary sector very much needs to be involved, for a variety of reasons, which I do not need to go into today. I say the same with regard to the whole question of hospitals and hospital trusts. We have had a terrible time in Stafford, with the Mid Staffordshire trust. What went wrong has been exhibited in many parliamentary debates, in statements by Ministers and now in five inquiries-we still need a full public inquiry-but, leaving that aside, the real problem arose when foundation trust status was granted.

The questions asked by the regulator were all about money and finance-I say "all" but, of the 47 questions posed in the session that led to the granting of foundation trust status, 37 were about finance and accountancy and the rest, a small minority, were to do with patient care. The whole thing got off to the wrong start. If it was to operate as a trust and therefore within the framework of the voluntary environment that we are debating today, one would expect the discussion to be the other way around, with 37 questions on patient care and how to help people, rather than on accountancy, targets and how to achieve such things.

That is the essence of what I am trying to get across in the debate: the tremendous value of the voluntary sector is related to the volunteer element, which is itself about commitment to other people-to individuals, families, the neighbourhood and the community-and can come up in the fields of planning, hospital care, schools or the environment and amenities. However, giving that commitment every single opportunity to flourish is essential. Therefore, I very much welcome the opportunity to take part in the debate, if only occasionally to state the obvious.

4:26 pm
Photo of Colin Breed

Colin Breed (South East Cornwall, Liberal Democrat)

It is a pleasure to see you in the Chair, Mr. Illsley.

During a lot of my time in this place, I have been involved in Treasury matters or debates concerning financial crises, banks and everything else, so it is a great pleasure to participate in a debate about something completely different. I have enjoyed hon. Members' contributions because they have made me think a lot more about the voluntary sector and the part played by the literally hundreds of thousands of people who make a great difference to life in our communities.

Although Tom Levitt entreated us not to give a great list of things happening in our own constituencies, I will widen my contribution a little to mention Cornwall. I know we go on a bit about Cornwall, because it is still one of the poorest places, but when we look at the money raised there and the amount of voluntary work that is done, in some of the most difficult circumstances, we see that it is also one of the most generous places.

We do not recognise volunteers as much as we should, because they tend to be people who just get on with the job. They do not make a great fuss; they get on and do their bit. They enjoy doing their bit, but they remain important. For example, although we will think about the bad things that happen to a few children, we should also consider the amount of good stuff that is done for children, in particular those who are looked after in our communities. I am thinking of our sports clubs-football, rugby, cricket and swimming clubs-which look after far more children than even some of our uniformed youth organisations. Many people make a commitment to young people through youth clubs and the uniformed youth organisations.

I am amazed how many committees quietly get on with community events, such as organising music and drama festivals, or May fairs and pageants. Many people work in schools, hospitals and such. We often see the same people going from one voluntary job to another, but sometimes it is difficult to give them recognition.

I do not think that many Members could do their job without the amazing expertise and support of our citizens advice bureaux. Sometimes we find ourselves giving each other cases, but we work on many together. The professionalism of the CAB is tremendous, as is the way in which it has helped not only my constituents, but me.

Some people work quietly away in organisations such as the Samaritans. In my area, there is a rather high bridge across the Tamar. Sadly, rather too many people still jump off it, but I know that the Samaritans have prevented a huge number of people from taking their own lives.

Some people save lives around our coast, including those in lifeboat organisations-not only those raising money, but those out on the boats risking their own lives to save the lives of others, who have sometimes been rather foolish-and lifeguards in the summer. What would our Cornish tourism sector be like without people who were prepared, even when it is not terribly sunny, to patrol our beaches and look after people who are jumping in the sea?

We have hundreds of miles of footpaths in Cornwall, and people dedicate themselves to keeping them open. It is a great thing to be able to walk with a purpose, but these people, without any recognition, do things such as cutting down brambles and making certain that gates are open.

Some people visit others in their own homes. We have a tremendous "live at home" scheme that helps to ensure that people are not so isolated at home and to make certain that they are okay. For example, every Thursday afternoon, people will visit others for a cup of tea. Others will regularly visit people in prison, and then there are people who drive Age Concern buses or staff museums-the list goes on. There has to be some way in which we can recognise these people locally or regionally-it will not always be done through the granting of gongs-because they truly make our communities what they are.

Perhaps other hon. Members have experienced, like me, the growing problem that volunteers are beginning to find lots of pressures put on them, including due to considerations of their families and work. For example, if people have to work longer hours and travel further to work, they can devote less time to volunteering than their parents or other family members could. Uniformed organisations and youth clubs, in particular, are coming under real pressure because of people's ability to commit to the time necessary to be involved.

I regret the bureaucracy that has crept into the system. I understand the need for Criminal Records Bureau checks and so on, but they have undoubtedly made a lot of people apprehensive when they have no need to be-I do not mean about the cost-and not only in respect of working with children. Older people in their 70s and 80s who want to visit other people of the same age can become somewhat apprehensive when they asked what they think about having a CRB check, so they might decide that they do not want to participate. It is terribly sad that we have to think about carrying out a CRB check on an 80-year-old lady who wants to visit somebody else for a cup of tea on a Thursday afternoon.

There is now a fear of litigation, particularly in respect of taking groups of children across Dartmoor on the Ten Tors challenge or for training. That is a cause of great sadness. When I did the Ten Tors back in 1962, there were just a few hundred children involved, but now some 2,000 or 3,000 have the opportunity to participate in the challenge of walking across Dartmoor over a certain period. However, ever fewer people are now prepared to take what they perceive as the risk of looking after children, because they fear litigation and everything else that might be visited upon them. We must recognise the three distinct pressures on volunteering that I have set out and get some balance back into the system.

When I talk about volunteers, I am referring to people who do things off their own bat for no money whatsoever because they want to do it. They are part of a particular sector and they face particular pressures. However, let me mention how the Government can support the charitable sector, to which they provide financial, legislative and administrative support, and perhaps co-operation and co-ordination. That sector is also having difficulties, the most obvious of which, at times of recession, is underfunding. Charities are concerned that the things that they are doing that are going well and are well received might be cut, or that they might receive a smaller grant. They are also concerned that the funding that they raise themselves, such as for air ambulances, will be reduced if people's disposal income falls and the sums that they are able to give to their favourite charity are reduced.

In the current circumstances, we have to recognise that everybody will have to cut their cloth accordingly. Some small yet vital charitable organisations that do valuable work will be hit quite hard. The larger charities, some of which have been mentioned, will probably already have their plan worked out, as they will have done their financial planning and got in place their accountants, professional fundraisers and advertising. While those larger charities might suffer a reduction in their overall funding and finances, I fear that we will see a lot more problems at the smaller end, with people desperately trying to keep their organisations going. I hope that the Government recognise that financial support, in one way or another-particularly through local government-is a vital factor in many organisations' ability to operate.

Photo of William Cash

William Cash (Stone, Conservative)

I shall be grateful if the hon. Gentleman takes account of a point that I ought to have mentioned. The creation of quangos, with politically appointed members, can lead to discrimination due to the manner in which those so-called voluntary organisations dispense their patronage. Does he agree that it is important that there is a requirement to ensure that they are even-handed?

Photo of Colin Breed

Colin Breed (South East Cornwall, Liberal Democrat)

I entirely agree. Many excellent, small charities are beavering away with relatively small sums, but if that money is suddenly withdrawn, for whatever reason, they will find things difficult. I hope that such funding will be part of the totality of any future Government policies.

On the legislative side, may I mention an area that is ripe for thought and consideration? Gift Aid is a fantastic way of getting tax back. However, the system has become too bureaucratic in respect of the different rates, even though the ethos, the principle and everything else is correct. Whatever Government are in power after the next election, I hope that they will look carefully at that-not destroy it, but enhance and improve it so that it becomes less bureaucratic and problematic. A little bit of reform rather than radical surgery is needed to help the process and make it less cumbersome.

Contracts for third sector companies and charities have been mentioned. I wholeheartedly concur with Alun Michael about the ability of relatively small organisations to bid for work in rural areas. Their local knowledge will often enable them to do such work, if they are given a little bit of help and support and if the size of the contract is commensurate with their ability to fulfil it.

I often feel that whenever we spend money-whether our own or Government money-the closer the decision is taken to where it is spent, the better the value for money. The further away the decision is taken, the less value is obtained. With much more local decision making, and an ability to support a larger number of smaller local groups to undertake some work, we would get better value for money. We would maintain the fabric of the third sector by giving it the ability to compete properly and undertake such work.

Professionals and amateurs have been mentioned, and there is a story that we must never forget: the Titanic was built and designed by professionals, and the Ark was made by an amateur called Noah. Sometimes we forget that professionalism does not always reside many miles away with a large company.

I also want to mention education and encouragement. Recently, I was greatly encouraged by receiving e-mails from some young people who wanted to join with other young people to do something locally in a charitable context. Whether that is part of the curriculum now, or whether it has suddenly sprung up, there seems to be a real opportunity to encourage young people to get more involved in the voluntary sector. Whatever happens after the next election, I hope that we can continue to educate young people to become more involved in their communities through opportunities to volunteer, because the side benefits that they will get from that are incalculable.

I was chairman of the Prince's Trust volunteers in my area for about five years when it was first set up. Groups of 16 to 24-year-olds from all sorts of different backgrounds joined to together for team building, and that had a massive effect on people who would not normally mix together. They were certainly not the sort of people who would go down the pub together and have a drink, because they came from different backgrounds, but they got the opportunity to understand each other. People from poorer areas mixed with those from more affluent areas, who perhaps had well-paid jobs, and the individuals learned a lot from each other. The unfortunate thing about the volunteers, however, was that it became difficult for younger people to be released for reasonable periods of time so that they could engage in the scheme. That gives us a valuable lesson, and I think that the process should be reformed.

I said that I have been involved in Treasury matters, and the issue of remutualisation has already been touched on. Although the previous Government enabled the mutual societies to become plcs and ultimately banks, they did not necessarily drive that. Subsequently, the financial sector began to see that lots of small building societies were beginning to come together and merge. Although we had had 400, 500 or 600-or even 700 or 800-building societies, it rapidly became clear that 90 per cent. of the business of building societies was being carried out by five of them. That was a significantly different situation, and the great shame, as much as anything else, was that competition was destroyed. There must be a return to a broader operation of the financial sector. The plcs and huge multinational banks that we now have are not necessarily the gold standard, and there must be room for modern mutuals to come back and be encouraged. Perhaps there needs to be greater emphasis on some of the credit unions. I would prefer them to be slightly bigger and to be called community banks, as that would be a far more sensible name. They would be another way of providing a variety of competition in the financial sector.

There must be some thought as to how modern mutuals can be encouraged under a new legislative framework, and become more involved in the smaller end so that we again have a good spectrum. There has been a flight towards size, and although it might have been thought that fewer but larger banks would be easier to regulate, the obvious examples from recent years give the lie to that. We would have been better off by having a much wider range of financial organisations, rather than relying on a small number of large banks.

There are all sorts of potential opportunities for modern mutuals. Football clubs were mentioned, and there is an opportunity for professional clubs that do not want to go down the plc route to begin to develop as a modern mutual so that supporters both near and far can be involved in their club and provide some measure of financial stability. By reducing the mutual sector in all sorts of spheres and making plcs a sort of gold standard, we have lost an awful lot. We need to try and find ways of re-energising the mutual sector.

Finally, as I said at the beginning of my speech, we need to find ways to recognise the amazing work that is done in a voluntary capacity by so many people. Not everybody can get an honour in the new year, but surely we could begin to have a more organised way of recognising genuine service over long periods of time for particular communities. That is what people often like-a little bit of recognition. They have never been paid and have given huge amounts of their time and effort, and sometimes of their own money. We must find a way of rewarding that with some recognition.

4:46 pm
Photo of Nick Hurd

Nick Hurd (- Shadow Minister (Charities, Social Enterprise and Volunteering), Shadow Minister; Ruislip - Northwood, Conservative)

I am still reeling from the shock, as I think I have just listened to a predictably excellent speech by my hon. Friend Mr. Cash that contained no mention of the European Court of Human Rights. I suspect that he will correct that. It was an excellent and passionate speech that reinforced the point made by all speakers in different ways, which is that in this place we do not talk enough about the value of independent civil society to our sense of national wellbeing. Mr. Bailey was entirely right-Members of Parliament are uniquely placed to articulate that point, because we know from our day-to-day work that what we call the third sector is often the glue that holds our communities together. If I think about what would happen if volunteers did not turn up to the Ruislip scouts group, the churches, the Northwood police station or the Michael Sobell hospice, I get a sense of what we would lose, and it something vital. I am also conscious that I represent a relatively lucky community where that glue is strong. As most of us know, there are too many parts of the country where that glue is weak and needs strengthening.

We must think collectively about how to tackle the stubborn social problems that carry such a big financial and, more importantly, human cost. Whether we like the broken society narrative or not, we are all aware that the problems out there are stubborn and expensive. Most of us recognise from our day-to-day work that if we are looking for solutions, the first place to start is often the voluntary sector and what are frequently small organisations that are that much closer to the people whom we are trying to help, and which enjoy a different relationship of trust and therefore a greater capacity to make an impact.

I am sure that we all have our favourite organisations. I am continually inspired by a social enterprise on the edge of my constituency called Blue Sky, which is the only company in the country where someone has to have a criminal record to work there. It does extraordinary work in helping prisoners to work, under contract to Hillingdon council, so that they can prove to a future employer that they can be trusted. It is a critical stepping stone on the journey off the reoffending cycle. That solution works and could be replicated elsewhere if other local authorities contracted on the same model. At the moment, an important political consensus is being developed that we need to try to create more space to allow those kinds of organisations to do their magic.

Political consensus is important, too, in the role that the Government have to play in helping to support the sector and unlock its potential-again, an expression used by the hon. Member for West Bromwich, West-to help more people and to improve more lives. I suggest that that is why we are here. In their role of supporting the sector, we believe that the Government should focus on three questions.

The first is about what we are doing to make it easier to run a charity, a social enterprise or a voluntary organisation. Mr. Breed was entirely right. We believe that, over time, we have allowed an increasingly dense thicket of regulation, bureaucracy and hidden costs to grow for those organisations. The risk is that that will stifle much of the innovation and creativity that we want; it will turn off exactly the sort of people we want to turn on. It is complicated, because a lot of that stuff is there for understandably good reasons, but we have lost sight of the cumulative effect on the sector. We are determined to thin that thicket. The hon. Member for South-East Cornwall was right, too, to highlight Gift Aid as a place to start. It is undeniably an excessively bureaucratic process. The burden of that administration falls on charities, with a disproportionate part falling on smaller charities, which are struggling.

The second question for the Government is what we are doing to get more resources, both time and money, into the sector. The time bit is crucial. Alun Michael and Tom Levitt were eloquent on that question. I totally agree with the right hon. Gentleman's analysis when he spoke of the potential for more employee-led volunteering, and the need to engage more businesses by structuring their role and inspiring their people to give more time.

What excites me in talking to that community is that more and more businesses see that it is not about public relations or ticking a box on corporate social responsibility. They are doing it because they can see that it is absolutely in their commercial interests to do so; it is about developing their most important assets, which are human. Barclays, KPMG and the people leading on this see that clearly. The challenge is to inspire other business leaders. I shall return to the issue of money later.

The third question, on which I shall focus, is what are we and the Government doing to make it easier for the organisations in that sector to do business with the state? I have been shadow spokesman for just over a year, and everything that I have heard suggests that too often it is a bureaucratic nightmare. To give a specific example, the excellent report by the Select Committee on Communities and Local Government, which we were encouraged to read for the debate and which the Minister mentioned, is deals with the Supporting People programme. The report brings to light a substantial problem-how difficult it is to get the relationship right consistently across the country. The programme is aimed at vulnerable people, and, as the report makes clear, the third sector has a central role in delivery. However, the report shows how difficult it is get it right and make the relationship work.

What comes through-this is the main point that I wish to make-is how complex we have made that environment. The report gives a picture of different practices in different local authorities and Departments, of programmes that one minute are ring-fenced and the next not ring-fenced, of new initiatives that have to be pieced in and made coherent, of new apparatus for decision making, of new local area agreements, local strategic partnerships and regional layers, and of changes being made to the assessment regime. We may convince ourselves that things are moving things in the right direction, devolving power and everything else that we sign up to on a cross-party basis, but I wonder whether we have thought enough about what it means to the environment in which people have to work.

Photo of William Cash

William Cash (Stone, Conservative)

May I make a small suggestion? There was a time when the friendly societies and mutuals had a similar problem, which resulted from their 19th- century origins. The Friendly Societies Acts and the Companies Acts then dealt with the various circumstances that arose. If we were to have a voluntary societies Act or a third sector Act, that could, without increasing bureaucratisation, simply provide a template against which most others could be judged. That could be a way to help make things simpler and more transparent.

Photo of Nick Hurd

Nick Hurd (- Shadow Minister (Charities, Social Enterprise and Volunteering), Shadow Minister; Ruislip - Northwood, Conservative)

That suggestion is an interesting idea, and the main point made by my hon. Friend is something that I am trying to reinforce. We ought to be in the business of making things simpler, but we are making them really hard.

Photo of Colin Breed

Colin Breed (South East Cornwall, Liberal Democrat)

I entirely agree with the hon. Gentleman. One simple way of doing that would be to ensure that there is a sense of proportionality. The problem is that we sometimes have exactly the same rules for Oxfam as for a tiny organisation in a small town. We need a sense of proportionality about the way in which charities are administered and controlled.

Photo of Nick Hurd

Nick Hurd (- Shadow Minister (Charities, Social Enterprise and Volunteering), Shadow Minister; Ruislip - Northwood, Conservative)

I agree. The starting point is a determination that the role of the Government should be to make things simpler.

The report shows how complex the environment is, and how difficult it is for that relationship to work. It is a relationship between two people trying to do something simple and sensible-one person wishing to buy a service and the other wishing to sell or deliver a service. Both of them should be united in their purpose, as it is all about trying to deliver a better outcome to those we are trying to help. The environment in which this simple human transaction is taking place is unbelievably complex.

The problem is that the environment is about to change for the worse. We all know about the state of public finances in our constituencies, and that the funding market for local authorities has been difficult for the past four or five years, but it is about to get even harder, as the authorities know. My local authority of Hillingdon has been very effective in squeezing out efficiencies for the past three or four years-it was recently ranked as the most efficient council in London-but it is now in an environment in which it will have to do the same again. It has reached the point of saying that it cannot necessarily go on as before. It has squeezed the lemon. It almost has to start with a blank sheet of paper and think about what it has to deliver and to open its mind to doing things differently. If that is happening elsewhere, it will present a tremendous opportunity for the third sector, but also a risk and a challenge.

Photo of Tom Levitt

Tom Levitt (High Peak, Labour)

I hope that the hon. Gentleman will return to the question of how to make life easier for these organisations. There is nothing easier than setting up a "Just Giving" webpage, as the Gift Aid is then easily sorted out. I have not heard the hon. Gentleman suggest that charity law needs to be changed, or that the health and safety regime should be relaxed. Neither the hon. Gentleman nor Mr. Breed have suggested changing the CRB rules on the grounds of the requirement for some checks. Will Mr. Hurd be a little more specific about what changes he would make, bearing in mind that he also complains that things are different in different areas, which suggests that centralisation of the regulations is not necessarily the problem?

Photo of Nick Hurd

Nick Hurd (- Shadow Minister (Charities, Social Enterprise and Volunteering), Shadow Minister; Ruislip - Northwood, Conservative)

I have mentioned Gift Aid, but there are specific considerations relating to making the process easier.

The most important point is that there needs to be a serious step back. We need to consider what has happened over the last 20 years as a result of increasing regulation and bureaucracy. We need to look at it in the round, because it is complex, and much of that stuff is there for a reason. There has been some progress in reducing the time associated with making CRB applications, but there is a lot of frustration about the need for multiple applications. There is a desire for things such as a passporting scheme to be considered. However, I want to talk about making things easier, the relationship between the state and the organisations, which want to step up and help to deliver services, and the frustrations that those organisations face.

The report is interesting because of the themes that it brings up. It illustrates some things that seem to be going wrong, and it is frank about some of the difficulties that the Government face-government is hard. There is clearly a lot of effort on giving clearer guidance to local authority commissioners about things such as EU procurement laws and all the excuses that can be used.

The Department is clear that there is still a serious problem at grassroots level. The guidance is still not clear enough and there is a big problem with helping commissioners to differentiate between value and cost. If that argument is won, there is a need to help with the measurement of value. The Minister knows that there is a lot of debate about measuring value, but the simple point is that finding money, whether public or private, will be more demanding when we want to measure value and impacts. The Government can play a role by working with the sector to find mechanisms to help commissioners to identify and quantify impact and value, and that will help in an environment in which the natural human tendency will always be driven by cost. If we believe that there is a distinction between value and cost, the people who are trying to make the process work will need some help from us.

Another theme that comes through in the report is the difficulty of spreading best practice. Some local authorities and commissioners are doing that well. The Compact works well in Merton, which I am sure the Minister and others have visited. There are local authorities that are very clear, nimble, flexible and agile in their dealing with EU procurement law, such as Hampshire and Westminster, which have been cited. We always talk about spreading best practice-it is one of the clichés of the political narrative-but why is it so hard in practice? The report talks about using regional improvement and efficiency partnerships, but I am sceptical about that idea, because another regional layer would be introduced and that would add to the confusion. We already have the Local Government Association, the Improvement and Development Agency and lots of people trying to help but, collectively, they are not making an impact, so that needs some thought.

On the commissioning process and the difficulty of accessing public money, we need to revisit all the things that flow from that, such as reporting, monitoring and accountability. The example that sticks in my mind is of a gentleman who represented a community group in Dorset standing up at a conference, waving a document at me and saying, "I applied for a contract of just a few thousand pounds from my local authority, and I'm having to fill in a 28-page contract. This is bonkers." More dramatically, a social entrepreneur told me that he had received £500,000 from a private sector grant-making organisation on the basis of four agreed desired outcomes. One piece of paper framed that entire relationship. He then got £1 million, which is a lot of money, from a Government Department, but he told me that he wished that he had not, because of what happened next. That Department hired an agency as an intermediary to manage the relationship, and the agency came in and checked his diary, e-mails and phone logs to see what he was doing.

The message that I get, and I am sure the Minister has picked up on this as well, is that our message to the sector is wrong. On the one hand, we say that we love its creativity and powers of innovation but, on the other hand, what we put it through with the contracting and commissioning process sends the message, "We don't trust you." The focus in the House has to be on what we can do to reduce bureaucracy and the flurry of activity in the name of accountability, and how we can introduce more trust into the process of commissioning and procurement.

My last point in that context is about more effective checks and balances in the system. The Compact is clearly very useful, but it is undermined by the fact that it can be ignored with impunity. It is time to get serious about giving the commission a clearer role and recognised authority. Greater transparency, about which we feel strongly, is another important tool in the box. There should be transparency about public money and the terms and values of contracts and grants. That is why our commitment to publish details of all public expenditure over £25,000 will be an important catalyst for driving better processes. Transparency, as we know in the House to our cost, can be a powerful force for change.

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William Cash (Stone, Conservative)

Does my hon. Friend agree that ensuring that he gets the accountability-to use that expression-right in this context does not mean doing so to the extent that the object of the exercise is lost because people spend all their time bean counting and not carrying out the job in question and the supervision that goes with it?

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Nick Hurd (- Shadow Minister (Charities, Social Enterprise and Volunteering), Shadow Minister; Ruislip - Northwood, Conservative)

My hon. Friend touches on a fundamental point: accountability to whom. At the moment, as we know, local authorities feel a tremendous sense of accountability to Whitehall. With the devolution of power, the basis of accountability will shift to the communities that they serve. Transparency is an important tool in that process.

I would like to make a final point about money, which we have not really touched on. Above all else, the sector needs money, because demand for its services will always outstrip supply. As various hon. Members have mentioned, the recession has proved a particularly demanding environment for the sector when accessing money. I see the situation relatively simply, in that there are three main sources of money for the sector.

First, there is public sector money from the opportunity to deliver services. That amount has grown and will continue to grow, because the sector's share of the cake will grow, even if the cake shrinks. Secondly, there is philanthropy, which has struggled to make progress, and we have said that we need a concerted effort to deliver a step change in cultural attitudes to giving. The third pillar is embryonic and small, but it has fascinating potential. It is called social investment, and it is money from sources that are prepared to consider a blend of traditional financial return and social impact. That source is worth about £1 billion, but it could be worth a great deal more. We see an opportunity to connect the social entrepreneur with the strategic capital. At the moment, they are disconnected and speak different languages. For the market to grow, we need a strong intermediary that can make the connection and create the financial products that make sense for mainstream capital.

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William Cash (Stone, Conservative)

I am extremely interested in that suggestion. In a sense, it was what I was referring to. In the 19th century, people created the railways and other things out of nothing. They also created the companies that led to the building societies, the insurance companies and so on. That was driven by the very thing to which my hon. Friend is referring-social investment.

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Nick Hurd (- Shadow Minister (Charities, Social Enterprise and Volunteering), Shadow Minister; Ruislip - Northwood, Conservative)

Our instinct tells us that people are looking for the opportunity to invest significant capital for good, but that process needs help. That is why we have strongly supported the idea of the social investment bank for some time. There has been widespread consensus on that for three years, but we still do not have the bank. When will we get it? On my travels around the sector, I have heard two concerns: first, that the Government do not have a clear enough vision of the potential of the social investment bank or of what it will do; and, secondly, that the Government, in a last-minute dash to be seen to be doing something, might create something half-baked that does not capture the full potential of such an institution.

There is concern that the Government's commitment of up to £75 million of capital is inadequate compared with the capitalisation that the sector feels is right. I would like the Minister to put on record confirmation of the Government's intent. Will the Budget, as promised, make it clearer what model they are considering, and is the £75 million a stepping stone on a journey towards higher capitalisation? We and the sector think that the social investment bank would be an improvement, but there is frustration over how long it is taking to put into place an organisation that could play an important role in connecting social entrepreneurs with the strategic capital that they need.

5:10 pm
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Angela Smith (Minister of State (Third Sector), Cabinet Office; Basildon, Labour)

With leave, Mr. Illsley, I should like to respond to some of the issues raised in the debate. I will happily come back to some of the points made by Mr. Hurd, but I will have to disappoint him because I cannot give him any Budget secrets today. He will have to wait a few days longer for the Budget.

I thank hon. Members for their contributions. The debate has been wide ranging and diverse, which reflects the nature of the sector. We need to look at the third sector as a whole and the report itself. I am sad that no members of the Select Committee were present to debate the report, because that would have been a very useful contribution.

What we have firmly placed on record today is how we as a Government, a Parliament and a society value the third sector-small voluntary community organisations, volunteers and large social enterprises and charities-for the contributions that it makes.

Let me turn to the comments of my right hon. Friend Alun Michael. When I stopped working in the third sector, I went to work for my right hon. Friend. I could say that he taught me everything that I know, but I will not. The points that he made about mutuals and co-ops were timely. He will be aware that my right hon. Friend, the Minister for the Cabinet Office and for the Olympics, and Paymaster General has been meeting a number of people and is driving this agenda forward.

Partly as a response to the banking crisis and some of the issues that have led us into an international recession, the public no longer has an appetite for "business as usual". When engaging with business-whether as consumers, investors or employees-they are attracted to and supportive of a business model that is not the same as it always has been. I was encouraged by Mr. Cash when he talked about the very genuine commitment there is to mutualism and the co-operative movement. In the early days, people who were involved in the co-op movement were regarded as slightly whacky, but now the ideas are becoming far more mainstream in political thinking. It may have taken us since 1844 and the Rochdale Pioneers-over 160 years ago-to get where we are today, but new thinking is always welcome. The ideas of the pioneers are as appropriate today as they were then.

My right hon. Friend the Member for Cardiff, South and Penarth mentioned StartHere, which shows the value of the third sector in bringing together the kind of issues and support that is needed to help some of our vulnerable groups. I would be happy to discuss that matter further with him.

Mr. Breed talked about the value of volunteering. He asked questions about the Criminal Records Bureau and the vetting and barring system. I am not sure whether his example, in which someone goes to have a cup of tea with someone once a week, qualifies. The system is there to protect young people and the most vulnerable people. Society demands that the Government have a process in place to protect people. We need to strike the right balance between giving the protection that Government are able to offer and not creating a bureaucracy that deters people from volunteering. Some individuals may be put off from volunteering by the vetting system, but the majority of people are not deterred. CRB checks have prevented more than 80,000 unsuitable people from taking on jobs or volunteering, which shows how important they are. It may reassure the hon. Gentleman if I tell him that checks for volunteers are free. The Singleton report, which the Government have accepted, strikes the balance between not being over-bureaucratic and not unnecessarily deterring people from volunteering.

My hon. Friend Tom Levitt, like my right hon. Friend the Member for Cardiff, South and Penarth, called on his own knowledge and practical experience of the sector. He raised some policing issues. Let me tell him that the Home Office and the Association of Chief Police Officers have now launched a compact between them. Knowing his commitment to the Compact, I think that he will find that of particular interest. I have to say that I met Rosie, his V volunteer, at the V volunteer awards. I feel passionate about the V volunteer awards and talent awards. I saw young people who have been engaged in the volunteering process for a whole year. Many of them were working in the field of youth justice. Over the year, they gained confidence and an ability to engage. The process made them more ready for employment or higher education. Young people cannot acquire such skills easily; they have to make the effort themselves.

Various Members raised the issue of campaigning. I touched on the subject myself in my opening remarks, but I will need to read Hansard to ensure that I have correctly understood the comments made by Mr. Cash. I welcome the comment made by the hon. Member for Ruislip-Northwood, who said that he believes in advocacy-it was a step on the right road-but advocacy and campaigning are not the same thing. We would all expect third sector organisations to be advocates for their cause, but how far they are able to campaign is an important issue. I hope that he does not get into too much trouble with the rest of the Conservative Front-Bench team after the comments that he has made today.

The hon. Member for Stone, if I understood him correctly, differentiated between service providers in organisations and those who are able to campaign. He spoke of local organisations in his constituency. Next week, I will chair a meeting in the Bulphan area of my constituency that will be attended by local residents whose homes have been flooded and by local pressure groups. Both groups will come together in the way in which he described the groups in his constituency.

It is right for organisations and charities to campaign-I am not talking about campaigning for or against a political party-because they are ideally placed to do so, even, as I said in my opening remarks, when it is uncomfortable for the Government. I use the example of the RSPCA purely because I met an RSPCA inspector this week during my work. RSPCA inspectors do a fantastic job in the areas of animal welfare, homing animals and responding to animals in distress. They are at the forefront of the organisation. They are hugely admired by society as a whole, but because of the work that they do, they become acutely aware of the problems that need to be addressed, and they are not alone in that. The Animal Welfare Act 2006 received the support of many Members across the House because the issues were brought to their attention by organisations such as the RSPCA. There was no party political campaigning, because all parties supported the legislation, and the organisations were justified in their actions.

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Angela Smith (Minister of State (Third Sector), Cabinet Office; Basildon, Labour)

Let me finish my point, and then I will happily give way. I am seeking to illustrate the fact that those who provide services become aware of certain things that need to be changed, and it could be argued that they have a duty to draw those issues to the attention of legislators and to campaign for change.

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William Cash (Stone, Conservative)

The phrase "political purposes", which is the test against which so much of this is defined, is itself extremely difficult to define and will remain so. However, I think that I am right in saying that the RSPCA has occasionally got itself into difficulties in relation to the manner in which it dispenses some of its funds. I am not criticising it, but saying that there have been difficulties. The National Trust, too, has had difficulties in relation to the use of its land. The fact is that political campaigning-without making an absolutely clear distinction with purely political campaigning-quite often overlaps with social campaigning. It is difficult to draw a line between the two. It is not for us to solve that problem in this debate, but I ask the Minister to go away and seek more detail and analysis. I think that she will find that the definition of "political purposes" is becoming more and more difficult to understand.

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Angela Smith (Minister of State (Third Sector), Cabinet Office; Basildon, Labour)

It is difficult; the hon. Gentleman is right. How do we define social rather than political campaigning? Any campaign can be defined as political that seeks to make social change. However, I was trying to illustrate the fact that those who deliver services see what changes are required to deliver those services better, and it is right and proper that they should draw them to the attention of councillors or MPs who can effect change.

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Alun Michael (Cardiff South and Penarth, Labour)

Surely, it is not that difficult. If an organisation has clear charitable objects, any campaigning must be clearly within and consistent with those objects. To constrain that would be wrong. A prime example is the Alzheimer's Society or an organisation dealing with a particular disability. Such organisations provide services to people who cannot have a voice of their own. Surely, we must be protective of organisations that seek to represent the interests of those who are clearly within their charitable objects.

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Angela Smith (Minister of State (Third Sector), Cabinet Office; Basildon, Labour)

That is absolutely right. It is cause for concern when organisations are prevented from campaigning on behalf of the people-or animals-whom they were set up to represent.

My right hon. Friend the Member for Cardiff, South and Penarth mentioned the Compact and the refreshed Compact, which ties into the comments made by my hon. Friend Mr. Bailey. The hon. Member for Ruislip-Northwood mentioned my breach of the Compact. One important thing about the Compact is that it established a framework for the relationship between the Government and the sector. It is important that we embed that through the Government. That does not mean that there will never be another breach of the Compact; it means that the Government must understand the value of the Compact not just to the organisation concerned, but to the Government.

My right hon. Friend and I worked on the issue before I was an MP, when he was a shadow Minister for the third sector. The whole point of the Compact was that it gave a different relationship between the Government and the sector, from which both benefited. The Government see the value of three-year contracts being the norm, for example. It would not be something that the Government were doing for the sector; it would be a partnership relationship and a different way of working.

I am keen for the refreshed Compact to be implemented and monitored, not in a censorious way that says "Your Department's very bad; it's broken the Compact on X number of occasions," but in a way that says, "This is a really good example of Compact working; this works well," and asks why it works well, why the Department thinks it works well and how other Departments can learn from it and use the Compact in a way that works well for them. I have shared the frustrations of the hon. Member for Ruislip-Northwood about spreading best practice on more than one occasion. It does not seem that difficult. If we can get it right sometimes, why can we not get it right most of the time? That is what I am trying to do with the Compact. It should be the normal, common-sense way of working, and all sides should benefit.

My hon. Friend the Member for West Bromwich, West mentioned financial pressures on local authorities that are making meeting the Compact more difficult locally. I met Regional Action West Midlands when I was in Birmingham last week. It is doing excellent work on procurement and working with local authorities. The case must be made to local authorities as well that they can benefit from the Compact. In a tighter spending round, when their finances are more constrained, a framework within which they could work with the sector would bring huge benefits to them as well as to the sector. Having seen RAWM's work on procurement and a new framework, I think that it is well placed to make that case to local authorities in the area.

The hon. Member for South-East Cornwall discussed funding. He is concerned about small local community groups that might find themselves in greater difficulty. I direct him to the Government grass-roots grant scheme, which is aimed particularly at smaller groups. Grants start at £250 and run up to £5,000. His point about decisions being made by funders closer to those receiving funding applies to the scheme, because community development foundations make the awards. As he will know, for many organisations, particularly those that rely on volunteers, that kind of money can make a huge difference. I appreciate that he might not have been aware of the scheme. Some organisations in his constituency might find it useful.

The hon. Gentleman did not take the wise advice of my hon. Friend the Member for High Peak; he referred to work done in his constituency. I think that what he said resonated with every Member here. We all have similar organisations in our constituency. He asked about gift aid. We made changes to gift aid when we came into government. As his shadow Treasury team will be aware, we are looking into gift aid and undertaking research, particularly into the higher rate. Gift aid is worth more than £900 million a year to charities. It is huge. We are proud of the support that we are giving to charities through gift aid.

The hon. Member for Ruislip-Northwood and my hon. Friend the Member for West Bromwich, West mentioned commissioning. We are providing training and support for commissioners and working with the Improvement and Development Agency. The issue relates to the social return on investment model, which we discussed earlier. To respond to the comments of the hon. Member for Ruislip-Northwood, we need to value the social impact of third sector organisations that undertake contracts on behalf of local authorities or health bodies. There are ways to do that, although the idea is still in its infancy. Some local authorities are working it into their contracts.

The key is often to have commissioners who understand the role of the third sector and the wider benefits that it brings in terms of the social return on a contract. That is not just about the narrow confines of what the organisation is being asked to deliver; it is about asking what extra can be gained for the area from the organisation undertaking the contract. That will become more and more important as time goes by, funding becomes harder and people want more for the same money. If a social return can be proved, that is even better. Capacity builders are providing advice and guidance on the issue, and a Cabinet Committee is specifically considering how we can remove barriers to third sector organisations.

I think that I have addressed most hon. Members' points, although I have not yet addressed all the points raised by the hon. Member for Ruislip-Northwood. What can we do to make things easier for charities? The Charities Act 2006 removed many of the obstacles, but we are still implementing some proposals. It makes a difference to be able to reduce bureaucracy. There is still more that we can do. At the moment, I am considering reporting arrangements for organisations receiving funding, whether from grants or contracts. There seems to be so much different information for such organisations. There must be some way that we can narrow down and standardise the necessary reporting to take into account proportionality, which hon. Members have mentioned.

On resources, our support for volunteering has been unprecedented, and it is important to recognise the impact that it has had on society. I mentioned grass-roots grants, which supply finance to small organisations as well as larger ones, and our package of support, which has increased significantly since 1997, particularly recession support.

On doing business with the state-the social wholesale investment bank was particularly mentioned-the Government are absolutely committed to the issue. The responses to our consultation were clear about what kind of social wholesale investment bank was sought. However, we must get the structure and financing right, and we must not make the bank the only route for social investment. The Government will set up the social wholesale investment bank in the best way that we can to leverage social finance into social businesses, but we will also consider how else we can obtain other, private capital. Our initial £75 million commitment is the greatest commitment that any Government has ever made to put social capital into social businesses. We are committed to increasing social investment, because we know that social businesses and enterprises can make a difference by working with the public and private sectors to deliver services and benefits to the community.

Question put and agreed to.

Sitting adjourned.