Third Sector Review

Business of the House – in the House of Commons at 11:32 am on 18th October 2007.

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[ Relevant documents: The written and oral evidence taken before the Select Committee on Public Administration on Third Sector Commissioning, HC 540-i to iv of Session 2006-07. ]

Motion made, and Question proposed, That this House do now adjourn. —[Tony Cunningham.]

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster 12:30 pm, 18th October 2007

It is a privilege to open the debate on the third sector review concerning the work of the voluntary sector, social enterprises and many charities throughout the country. I start by putting on record my thanks to the more than 1,000 third sector organisations that took part in the consultation that led up to the review.

The central case that is made in the review is that we must celebrate and protect the diversity of the third sector, which is made up of organisations diverse in their size, so we should support small as well as large organisations, and diverse in their activities, from local volunteer-led groups to those delivering public services and campaigning. To support this diversity, we need Government to play their part, not seeing the third sector as picking up the pieces from failure of Government funding, but as being able to reach out and empower people in ways that Government often cannot do. I acknowledge that Government need to be a better partner in this process—in their funding for third sector organisations, in their understanding of the role that those organisations can play in our society, and in their respect for the sector's independence.

Photo of Ann Coffey Ann Coffey PPS (Rt Hon Alistair Darling, Chancellor of the Exchequer), HM Treasury

I welcome the announcement of a further £85 million for third sector infrastructure development. Can my right hon. Friend give me more information about the distribution mechanism? Will he ensure that smaller community and volunteer-led organisations will get proper access to that significant money?

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

Absolutely. I think my hon. Friend is referring to the money for Capacitybuilders. Those who run Capacitybuilders recognise the need to get the money that they distribute down to the smallest organisations, including the ones that I met in Stockport when I was fortunate enough to visit my hon. Friend's constituency. The Improving Reach programme is designed to get the money to such organisations. I am sure that Capacitybuilders will have heard her remarks.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

Notwithstanding the Minister's reply to Ann Coffey, is it not the case that 68 per cent. of statutory funding still goes to charities with a turnover of £1 million or more, meaning that many small community charities, including many in my constituency in Shropshire, are not receiving statutory funding, despite the fact that they have a great track record in providing the very services that the Government say they want to see provided in the community?

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

The hon. Gentleman makes an important point about the role of small organisations. I merely caution him that we should not get into a mindset that small is always better. There are many large organisations around the country—for example, Age Concern, which has local branches that do fantastic work throughout the country. I take the point that he makes about the need to get money to small organisations.

Photo of Jim Cunningham Jim Cunningham PPS (Mr Mike O'Brien, Minister of State), Department for Work and Pensions

I do not expect my right hon. Friend to give me an answer immediately, but will he look at the situation of Hillfields WATCH, an organisation that deals with issues ranging from asylum seekers to the unemployed and police matters? It is struggling to find funding, and every three years it finds itself in that same situation. Will he give me an undertaking that he will meet a small delegation from Coventry to discuss the matter?

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

I thank my hon. Friend for that. I will ensure that I or the Minister with responsibility for the third sector, my hon. Friend Phil Hope, meets the delegation.

That takes me to an important point about the review. We have announced an £80 million small grants programme precisely for the kind of organisations to which Mark Pritchard and my hon. Friend Mr. Cunningham referred. We all know from our own constituencies that the smallest organisations can make a huge difference to building civil society and bringing people together. I think of an organisation in my constituency, if I may mention it. In Adwick le Street, where I live, Brodsworth cricket club does an extraordinary job of giving young boys and girls a chance to play cricket. That is a way in which the community can come together in a place where there are fewer community institutions than there used to be, given the closure of the pits and so on.

Photo of Fiona Mactaggart Fiona Mactaggart Labour, Slough

On the £80 million fund that my right hon. Friend mentioned, a real concern is the time that it will take to put in place the necessary distribution mechanisms. I know that the community foundation network and the Community Fund in my constituency have a shortfall of previous grants and are not clear when the money will come on stream. Can they be assured that there will be a chance for their experience in distributing grants to be used, without damaging delay?

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

My hon. Friend, who is a former Minister with responsibility for the voluntary sector, makes an important point. We want to use organisations such as the community foundation to help to distribute the money because of their local knowledge about what is needed. Also, we want to ensure—this is an issue for small organisations throughout the country—that the application process is not the bureaucratic and cumbersome process that many organisations complain about.

We need to be honest in this debate. There is always a dilemma for Government between taking the risks of the streamlined process of applying for money—a risk that we should be taking—and the more bureaucratic monitoring processes that sometimes operate. In relation to the small grants programme, it is important that the money gets out quickly. We will help to ensure that that happens, and that it is distributed in the simplest way possible so that small organisations can access it.

In addition to the allocation of resources—the following proposal was in the Opposition's submission in relation to these matters—we are making £50 million available to organisations such as the community foundation as an endowment. That will allow them to build up the resources that they can distribute in future years without having to come back to Government. It will also allow them to get money in from the private sector and other organisations in the community that might want to contribute. Community foundations do a fantastic job, and an independent source of money will make a difference to them.

On the subject of what happens at local level, I want to deal with asset transfers from local authorities to small organisations. Issues of funding and stability of funding—three-year funding is important—are crucial to the health of small organisations. When I was Minister with responsibility for the third sector, I was struck by what asset transfer can do for local organisations. I visited the Goodwin centre in Hull, which has transformed part of the city because it was given an asset which gave it the financial stability that many third sector organisations do not have.

We have made available £30 million to help to fund innovative projects in this area, but more work needs to be done. We need to encourage local authorities to see voluntary organisations not as the enemy, as they are sometimes seen, but as an ally in helping to improve local communities. Of course, people can raise issues of accountability when assets are transferred to community organisations, but projects such as the Goodwin centre in Hull show how those issues can be dealt with. The people who run the centre are elected by the local neighbourhood.

Photo of Philip Davies Philip Davies Conservative, Shipley

Does the Minister agree that one of the problems is that such organisations often secure very short-term funding, which is often taken away just when they have got up steam on a particular project? Glory projects are often funded, but ongoing good work, which makes a big difference in local communities, does not seem to attract funding. Will he indicate whether the funding that he has outlined today will address the problems that charities face?

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

The hon. Gentleman has made two important points. First, he raised the issue of stable funding, which is why we have introduced the move towards three-year funding. We are driving that process through central Government, and when local authorities are examined on how they spend their resources, for the first time one of the issues will be whether they fund third sector organisations for a number of years or for just one year at a time. Secondly, he raised the question whether funding is for innovation or for the core part of what third sector organisations do. I do not have an easy solution to the problem. It is partly about having stability in Government programmes so that we do not keep introducing new programmes, but it is also about establishing an awareness among funders that the issue involves not only funding new projects, but funding existing good projects.

Photo of Siôn Simon Siôn Simon Labour, Birmingham, Erdington

Will the Minister take this opportunity to encourage the Tory-Liberal leadership of Birmingham city council to take a more enlightened and creative view on asset transfer to local community groups rather than, as a cynic would say, taking a protective, defensive view of its funds and assets, squeezing what it can out of the Government and not passing funding on to particularly deprived local communities, such as mine?

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

My hon. Friend has made his point in a characteristically eloquent way, and I am happy to agree with him. The issue is important around the country. When I have visited my hon. Friends' constituencies, I have found unused assets and a frustration in the local community that such assets cannot be deployed for the purposes that people want to use them for. In such cases, local communities sometimes feel that there is a blockage in the local authority.

Several hon. Members:

rose —

Photo of Norman Baker Norman Baker Shadow Minister (Cabinet Office)

The Minister has, of course, made the correct choice.

On the previous intervention, the Minister's introduction has been characterised by good sense, and there is a degree of common purpose across all parties. It may be that local authorities in particular areas—I have no idea about Birmingham—are not performing as well as we might like, but I hope he agrees that there is both good practice and bad practice among councils controlled by all parties. We can best make progress by approaching the matter with a common purpose, rather than trying to make partisan points.

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

My hon. Friend Mr. Simon was making a point about his specific experience, which is absolutely legitimate. There is an issue about culture change across the piece on the way in which third sector organisations are treated and the way in which they contribute to our society. There is a big issue about culture change for both local authorities and central Government, and I freely acknowledge that all parties need to engage in that task.

Several hon. Members:

rose —

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

Norman Baker referred to my introduction, which I fear that I will not get through if I keep giving way.

Photo of Mark Lazarowicz Mark Lazarowicz PPS (David Cairns, Minister of State), Scotland Office

It is certainly a good thing to be non-partisan, where we can, but it is difficult when we consider the record of Liberal Democrat councils up and down the country. My authority is run by a bizarre Liberal Democrat-SNP coalition, which inherited a three-year programme of funding for local organisations. Local groups are having their three-year funding programmes scrapped. They think that they have secured the certainty of three-year funding, but then they find that their budget has been cut.

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I find it galling that a member of a party that has had free run in Scottish politics until the last round of elections, still can only deal in negatives. as one of your constituents it is this negativity and refusal to admit to mistakes made while holding the reins of power that pushes me further and...

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Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

My hon. Friend has described a serious case. The community groups that he has mentioned should examine the Compact. I am sure that my hon. Friend Phil Hope, the Minister with responsibility for the third sector, will be happy to discuss the matter with him.

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Education), Shadow PC Spokesperson (International Development), Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Health)

Will the Minister accept the entirely non-partisan point that there is a problem with short-term funding for staff and for professional development? Many voluntary organisations seem to spend February and March either rushing around looking for bits of money or giving professional staff notice, which is not conducive to the proper development of the sector.

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

I agree with the hon. Gentleman, who has made an important point about stability of funding. Although there will always be cases in which voluntary sector organisations must search for more resources, the annual cycle of looking for such resources seems to be a barrier to efficiency that saps the energy of many organisations.

The second message from the review concerned the way in which the third sector can transform people's experience of public services in a diverse range of areas from youth services to drug rehabilitation. Again, the issue is culture change. In the course of the review, I have learned that we will make change happen and get local councils and other agencies of government to work with third sector organisations by helping those organisations to understand the contribution that third sector organisations can make.

When I visited Manchester, I was struck by the work of Sunderland Home Care Associates, which part of the city has taken on. It is an employee-run organisation in which elderly people are looked after in their own homes. The commissioners of services in Manchester saw the impact of what Sunderland Home Care Associates was doing and realised that it was not a fluffy organisation, but a serious, professional one that could make a real difference to people. That led them to take on Sunderland Home Care Associates and to form an alliance. That is why the review discusses the training programme for the 2,000 most important commissioners of public services. Helping those commissioners to understand the role that third sector organisations can play is important, which is why we are building on it in the review. We are also making new finance available for third sector organisations through the Futurebuilders fund to allow them to help to deliver public services.

Photo of Andy Reed Andy Reed Labour, Loughborough

Much of the funding for social enterprises and co-operatives goes through bodies such as the regional development agencies. Will the Minister extend the offer of training throughout the civil service to organisations such as the RDAs, which are in an excellent position to deliver services on the ground? As he has said, third sector organisations can transform the delivery of public services, which is especially true of co-operatives working at a local level, where real people can deliver real services rather than using large bureaucracies or, as is sometimes the case, private sector companies that are located miles away and have nothing to do with the locality.

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

My hon. Friend has made an important point. My hon. Friend the Member for Corby, who is the Minister with responsibility for the third sector, has said that he met the RDAs yesterday. We are making finance available to the RDAs to promote social enterprise, which is important.

On the role that social enterprises can play, some of the most inspiring people whom I have met in the third sector work in social enterprises, large and small. I am thinking of Tim Smit who runs the Eden Project, which is an extraordinary project that has done amazing things for Cornwall. I am also thinking about small social enterprises in my constituency that help disabled men and women and people with learning disabilities.

The Government do not create inspiring social entrepreneurs, but we can help or hinder them. Part of the task for the Government is finding new ways of helping to finance social enterprise. That is why we are interested in the idea of a social investment bank, which would create a new stream of finance for social enterprise. That is also why £10 million is available to pioneer different ways in which social enterprises can be funded.

Government needs to be a better customer of social enterprise. Again, that is partly about culture change—convincing those who commission services that social enterprises in areas such as recycling or waste management can compete with large private sector organisations and that the safe option is not necessarily always to go for the conventional option of a large private sector conglomerate. I am thinking of, for example, ECT, which provides recycling and waste services.

Photo of Mark Pritchard Mark Pritchard Conservative, The Wrekin

The Minister mentioned commissioning. Will he say on the record that in that commissioning of services there will be no discrimination against faith-based organisations, whether Muslim, Jewish or Christian? Some people have expressed concern to me that, because their organisation is faith-based, some commissioning agencies—whether local authorities or the RDAs—might discriminate. On the record, what, in the Minister's view, should occur in such a situation?

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

I fear that the treacle of bipartisanship is flowing; I agree with the hon. Gentleman. I am not in favour of faith-based organisations proselytising through public services, but the reasons that bring people to provide such services should not be a bar to their doing so. I am happy to put that on the record.

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

I want to make a bit more progress; perhaps later I shall give way again.

By working with the sector, the Government need to do the best job of championing social enterprise and what it can do for our country. Only one in four people knows what social enterprise is; that is a bar to young people coming into social enterprise, to the financing of it and to people buying from it. That is why we set up the social enterprise ambassadors programme, in which 25 very high-profile names—some of which I mentioned—will go round the country talking about social enterprise and what it can do for communities.

The review's fourth message is about volunteering. Youth volunteering, in particular, can bring together different groups, allow people to express their values and help them to build careers in later life. As hon. Members will know, in 2004 the Government set up the Russell Commission to carry out a review on youth action. As a result, the independent charity v was established. Already, v has created more than 200,000 volunteering opportunities for young people, including a number of full-time opportunities. It has also helped 415 projects run by voluntary organisations and partnered with companies such as ITV, T-Mobile, and MTV. The partnership with this last is interesting: MTV helped to promote the charity, and with Oxfam set up the Oxjam music festival, which was run by more than 12,000 volunteers. The concerts did great things for the people who came and for the young volunteers who helped to set them up. We are investing further in v, as we believe that it can create hundreds of thousands more volunteering opportunities.

A range of intergenerational volunteering issues need to be addressed. Such volunteering is important in helping to bring young and old people together. A big issue in many communities up and down the country is about a feeling that goes both ways: young people's suspicion of the old, and elderly people's fear of the young. I want us to make further progress on finding ways to bridge those divides through volunteering.

The public sector can do a better job of taking a lead on employee volunteering. If we are to persuade the private sector to release its employees for volunteering in our communities, we—starting with the civil service, then going further—need to do better in showing that we are giving people time off so that they can volunteer in their communities.

Photo of Rob Flello Rob Flello PPS (Rt Hon Hazel Blears, Secretary of State), Department for Communities and Local Government

Does my right hon. Friend agree that one way of changing the culture, particularly in respect of local authorities, is for there to be a good, strong scheme for local authority staff to volunteer in local charities? In that way, they would understand better what local charities, local organisations and the third sector generally have to contend with at the sharp end—when they are putting in bids or dealing with health and safety issues. Local authority staff would then have a much better perspective, and that would help the culture change.

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

I agree with my hon. Friend, who makes an important point. There is an all-party commission on volunteering led by Baroness Julia Neuberger, and I hope that it will consider the issue that he has raised. Such secondments and the mixing of people from local authorities and the voluntary sector are the way to break down the barriers and suspicions I mentioned earlier.

The fifth and final message from the review is about third sector organisations' ability to be advocates for social change. It is important to understand why that is important. Third sector organisations often speak up for those who have the least representation in our society. Examples from the past few years show what such organisations can achieve: the work of charities campaigning for respite care for disabled children; the efforts of such organisations as Carers UK to speak up for the rights of carers; and the achievements of Scope in changing attitudes and legislation on disability on behalf of disabled men and women. In recognition of such roles, the principle of advocacy and campaigning was set out in the Compact established in 1998. However, the review found that many organisations—and I saw this myself—are deterred from advocating and campaigning.

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

I shall give way in a minute.

Such organisations are deterred partly because of the perception of the rules, and partly—we need to be honest about this—because they fear that if they are funded by the Government, they might endanger that funding by criticising the Government. As the Charity Commission said in April 2007:

"We are aware from our work with charities that trustees sometimes exercise a considerable degree of self-censorship in undertaking campaigns, and may not be aware of the extent to which they can campaign".

That is why the Charity Commission has issued a new briefing document on campaigning and is reviewing its guidance. We all have a responsibility to make people understand what that is and is not about. It is not about charities supporting political parties. As the Charity Commission says, and as was clear from the Charities Act 2006, which I took through the House of Commons,

"a charity must not support a political party or candidate."

Furthermore, as I have said many times, the law does not allow—and nor should it in future allow—charities to be set up for political purposes. The issue is about organisations being able to campaign to change the law.

I hope that all hon. Members will support charities' right to advocate, partly because we all have our own personal experiences of charities that we have worked with. I include Greg Clark, who has expressed concerns about the issue of charity campaigning. I have discovered that he is a prominent supporter of the campaign by the charity Garden Organic to change the law on the planning classification of gardens. On its website, that charity says that one of its purposes is

"to campaign where we can make a real difference."

It urges its members to take action—to

"write to the minister for housing and planning...sign the petition on the Number 10 website" and

"make a donation to help us continue lobbying for change".

The website also pays tribute to the hon. Gentleman's work on its campaign, and he paid tribute to the help that he received from the charity with his private Member's Bill last year.

My position is that, whether or not I agree with Garden Organic, I defend absolutely—

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

Will the hon. Gentleman hear me out? I defend absolutely Garden Organic's right to campaign without fear of being struck off because of an ambiguity about the rules or about whether for one period campaigning was a dominant part of what it did. From the review, I know that others in the sector feel uncertain about the rules.

I hope that the hon. Gentleman and Opposition Front Benchers will, on reflection, listen to the voices of the sector on the issue. The point was put eloquently in a letter to The Guardian, which I know the hon. Gentleman reads, signed by, among others, the Royal National Institute for Deaf People and Shelter. The letter stated:

"We would ask the Tories to support the proposals in the third sector review, which will allow charities, irrespective of their size, to tackle injustice by means of campaigning."

I shall give way to the hon. Gentleman, but I warn him not to make a historic mistake on this issue. Charities all around the country remember what things were like in the 1980s and 1990s. Admittedly, he was not a Conservative Member then, so perhaps he should be let off. However, charities remember what it was like when Oxfam felt that it was not allowed to campaign on certain issues and when organisations funded by the Government lived in fear that, if they campaigned, the funding would be withdrawn. The hon. Gentleman needs to take great care not to repeat the mistakes of the past.

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office)

I suggest that the right hon. Gentleman avoids the historic mistake of damaging public confidence in our charities—especially by eliding an argument to make a further and more damaging point. Garden Organic is a charity set up to promote organic gardening. Campaigning for a change in the law is part of its activities, but that is neither its sole nor its dominant purpose. The Minister failed to say that he intends to allow charities to be exclusively devoted to political campaigning; that is very different from allowing charities to campaign politically in support of their charitable purposes.

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

The hon. Gentleman is absolutely wrong about that. Let me put it on the record again, because he was obviously not listening to what I was saying. I am not in favour of organisations being able to set up for what is called a political purpose simply to campaign to change the law.

The question is what charities think when they are conducting their activities and trying to fulfil their charitable purposes—as Garden Organic was doing by supporting the hon. Gentleman's private Member's Bill and organising petitions and letter-writing campaigns. In those periods of intensive campaigning, do people think to themselves, "Hang on a minute. Is this a dominant activity? Is the Charity Commission going to say that this is not allowed? Will this endanger our charitable status?" My position is that they should not live in that fear and that that kind of healthy democracy—that independence and ability to speak on the part of charities—should be allowed and protected and made absolutely clear. The Charity Commission itself said, in the April 2007 document that I mentioned, that some of the wording has been confusing. That is what this is about. The hon. Gentleman has been saying that it is about politicising charities and supporting political parties. That is nonsense. He is in completely the wrong place on this, because every charity up and down the land knows that this is about its right to speak and have its voice heard.

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office)

The Minister has not been listening to what I said. I did not suggest that he wanted to allow the setting up of charities whose purpose was political. Will he confirm, however, that his view is that a charity should be able to devote 100 per cent. of its resources to campaigning politically—yes or no?

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

No, that is not my view. The key point is that any activity that an organisation undertakes must be in pursuit of its charitable purposes, as set out in the Charities Act 2006. I want to give other Members time to speak, but this debate will run and run. I think that the whole House will note the attitude of Conservative Front Benchers. There is an opportunity for Mr. Maude to distance himself from the hon. Member for Tunbridge Wells, and I hope that he will, because charities throughout the country will be listening and asking, "Has the Conservative party, which has talked about the great role in society of charities and voluntary sector, really changed or is it just superficial?" On the basis of what the hon. Gentleman has said they will conclude that it is pretty superficial.

Photo of Anne Snelgrove Anne Snelgrove PPS (Rt Hon Ruth Kelly, Secretary of State), Department for Transport

There is a clear dividing line between party politics and campaigning on various issues, and we must state that very clearly. My right hon. Friend cited the example of Oxfam, but does he agree that it is far harder for local charities and groups to campaign on local issues because they fear that their grants will be cut by their local council? Will he give a clear message to local councils that that campaigning is indeed in the spirit of the 10-year review?

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

My hon. Friend makes the fundamental point. Lots of small organisations with small amounts of funding think to themselves, "Are we really able to criticise the local authority or will we have that funding taken away?" I see that in my own area. Protecting their right to campaign is very important.

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

What a range of choice. I give way first to the right hon. Gentleman.

Photo of Francis Maude Francis Maude Shadow Minister (Cabinet Office)

I am puzzled to know how the Minister's proposals will make any difference to his argument that organisations may fear that their grants will be cut if they campaign. How will that be changed by what he is suggesting?

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

In two ways: first, by the Charity Commission being absolutely clear about what is and is not allowed; and secondly, by the other measures that we are taking to strengthen the support for local campaigning through investment by Capacitybuilders. [ Interruption. ] The right hon. Gentleman says that that is completely different. This is a question of attitude. It is about whether one thinks that campaigning to change our society is a fundamental part of what third sector organisations are able to do or that such campaigning is illegitimate. If that is what Conservative Front Benchers think, that is entirely their decision.

Photo of Fiona Mactaggart Fiona Mactaggart Labour, Slough

Does my right hon. Friend agree that one of the ways in which he can protect the independence of small local voluntary organisations is his proposal to encourage local authorities on three-year funding? I remember back to 1990, when Tory Wandsworth council, with no notice, completely cut the budget for Battersea law centre. It was only because a small charity that I was involved in gave it £4,000 that it had a big enough breathing space to continue fundraising, and since then it has raised some £10 million for advice in Battersea. There needs to be a framework for ensuring that local authorities have longer-term funding for small voluntary organisations such as the law centre.

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

My hon. Friend is absolutely right. Stability of funding is crucial and we want to make progress on that.

Photo of Andrew Tyrie Andrew Tyrie Conservative, Chichester

The Minister helpfully explained that he is in favour of an extension of taxpayer support—that is, providing taxpayers' money for campaigning activities through tax relief. He has denied that a charity can be set up and run exclusively for campaigning purposes. Will he now say whether he supports the setting up and running of a charity largely for campaigning purposes?

Photo of Ed Miliband Ed Miliband Minister (Cabinet Office) and Chancellor of the Duchy of Lancaster

No; these decisions are a matter for the Charity Commission. There are 13 charitable purposes, and that is what matters when an organisation is set up. The regulator must decide whether it meets the charitable purposes set out in the Charities Act and provides public benefit, and the question is then whether, in pursuit of those charitable purposes, it can campaign. We need to be absolutely clear that charities are able to campaign to further their charitable purposes. We need politicians from all sides—I hope that Conservative Front Benchers will think again—whether local or national, to understand, celebrate and respect that right to campaign.

I believe that Members in all parts of the House will take pride in the compassion, dedication and diversity of the third sector—the 600,000-plus people who work in the third sector, the 20 million people who volunteer, and the estimated 35 million people who donate money at least once a month. They are a testament to a willingness to take action for a fairer Britain. Over the coming years, the conclusions of this review point to how we can support their efforts.

Photo of Francis Maude Francis Maude Shadow Minister (Cabinet Office) 1:07 pm, 18th October 2007

It is probably more than six years since I took part in a debate from this Dispatch Box, and the old cliché about one's opposite numbers looking younger as the years go by turns out to be true in this case.

Until the last five minutes or so, I appreciated the measured and temperate tone in which the Minister opened the debate. These matters should not be the subject of intensely partisan debate, and for the most part they are not, as in his third sector review, with which Members in all parts of the House would agree. We do not need to describe such bipartisanship as treacle, exactly—honey, perhaps, I might say, without getting too cloying. It is important that these matters are properly discussed, and I am grateful that we are finally having this debate.

It is a pity that the review was released if not under cover of darkness, then on the eve of the recess, through a written statement. That is not quite in tune with the pledges made by the Prime Minister when he took office. It may not be quite so groundbreaking a document, useful though some of it undoubtedly is, as that which was foreshadowed. It does not have the heft or depth of the report led by my right hon. Friend Mr. Duncan Smith, "Breakthrough Britain", which is very detailed, substantive and well researched. One or two items in it are already finding their way into Government policy. As they are good ideas, we welcome that.

Everyone pays lip service to the desirability of greater involvement of the voluntary sector in social action and social enterprise, but lots of questions are prompted by that bland statement. We are concerned about the independence of voluntary and third sector organisations from Government, as that independence should be a matter of crucial importance. It is inevitable that where an organisation is getting a significant part of its funding from the public sector, in one form of another, issues are sometimes raised about independence. None the less, independence is crucial. It is interesting that it is not until one reaches page 87 of this 100-page review that one finds any reference to third sector organisations being independent of control by the state, and even then, it is a hidden-away statement on regulation:

"Organisations in the third sector are independent of control by the state or by any other external agent."

Such organisations should be independent. That is important, because that independence is part of the basis on which they have the public's trust. We all value what they can achieve in social action, not only because they are often more efficient and therefore deliver more for the taxpayer's pound than direct Government provision, but principally because they tend to be closer to the people and communities that they aim to serve, and because they can be more directly and more immediately responsive to people's needs, more innovative and less constrained in what they do. Crucially, they are also more likely to be trusted by their users than are the organs of the state. We will come back to that point.

The issue of independence is thus central to the effectiveness of the sector. There are broader philosophical arguments for independence to do with the dispersal of power and influence, and the vigour and vitality of civil society. We can explore those on another occasion. Our concerns about the erosion of the independence of voluntary sector organisations are serious. I would like to spend a moment on this.

The review referred to the principles of the Compact:

"The 1998 Compact on relations between Government and the Voluntary Sector in England, jointly published with the sector and the Compact Codes, provide a framework to guide partnership working between the state and the third sector...The Commissioner for the Compact is now taking forward the implementation of the Compact principles and will champion their dissemination and application across Government."

The Compact principles are important.

It was slightly ironic that just before the review containing those splendid words was published, both the chief executive of the Commission for the Compact and the commissioner resigned without any explanation. As far as I know, those posts have not yet been filled, so it would be useful to hear some amplification about how the assertion that the Commission will take forward the application of the principles will be fulfilled. We also need some explanation of why, only a year after it was established, both its chief executive and the commissioner have departed. The departures are unexplained and some voluntary sector leaders, such as Debra Alcock Tyler of the Directory of Social Change, have expressed their dismay. She has said that

"we have to wonder what's going on—it's actually very destabilising."

Stephen Bubb, chief executive of the Association of Chief Executives of Voluntary Organisations—ACEVO—has been damning in his assessment of the effect of the Compact:

"Many people in the voluntary sector are very strong supporters of the compact, but this is a 1997 document"

—it is actually from 1998—

"that has not been moved forward in any real tangible way."

He also says:

"I'm afraid to say there is a real problem with the level of cynicism among charity chief executives about the compact and how effective it can be. The number of charities that simply don't bother to use it is growing."

It is significant that even the National Council for Voluntary Organisations, which has been the sector's leading advocate of the Compact approach, now appears to question its effectiveness. Its chief executive, Stuart Etherington, has said:

"we need to seriously consider how we can strengthen the Compact. Is it time to consider the possibility of giving the Commissioner formal legal powers to make adjudication stick? Or to identify appropriate sanctions for those that don't comply?"

In reality, the principles of the Compact, which are important, are, in far too many cases, simply being ignored; they are honoured much more in the breach than in the observance. Full cost recovery, prompt payment and multi-year funding, all issues that have been raised in this debate, are simply not happening on anything like the scale envisaged. The dependence of third sector organisations on the state has increased rather than lessened, through the increased use of contracts rather than grants, with strict constraints on what can be done with the money—quite apart from the absence of the positive sides of the compact. That increase reflects a mindset that sees using the third sector as a means of outsourcing Government activities rather than as empowering people to find different and better ways of helping people and communities.

On the funding announcements in the third sector review, the starting point must be a recognition of the hit that the sector has already suffered at the hands of this Government. In the Prime Minister's last Budget as Chancellor alone, the rate of gift aid tax relief was cut from 28p to 25p in the pound, a cut of more than 10 per cent.—the annual cost to charities is in excess of £70 million. Characteristically, that was not a change mentioned by the then Chancellor in his speech, nor did it appear in the Red Book—it was in the fine print; as so often, the bad news was hidden away. It was also not in the Treasury's Budget notes, nor was it mentioned by the Minister who was then responsible for the third sector or in any office of the third sector communication.

Photo of Mark Lazarowicz Mark Lazarowicz PPS (David Cairns, Minister of State), Scotland Office

Just to be clear, is it the right hon. Gentleman's policy that tax relief should be given at a rate higher than the level of tax being charged?

Photo of Francis Maude Francis Maude Shadow Minister (Cabinet Office)

If I may paraphrase what my right hon. Friend Mr. Cameron said yesterday, if the hon. Gentleman wants to discuss our policies, let us have the election and let the manifesto that the Minister has been slaving away trying to write be published. We will then have the debate and let the people choose. If that is what the hon. Gentleman wants, bring it on.

The change that I referred to has been made, with the resulting £70 million hit to the charitable sector, and that is on top of the effect of the abolition of tax credits on investment income, which costs charities about £250 million a year. That figure does not even include the cost of abolishing tax credits for voluntary sector bodies that do not have charitable status, which were not even covered by the transitional relief arrangements. Against that background, the £80 million small grants programme looks like thin gruel.

A report from the Directory of Social Change highlights the importance of serious, stable grant funding:

"We believe that as part of enabling the voluntary sector to flourish, and trusting it to do its work effectively, government needs to provide more unrestricted funding through non-prescriptive programmes, especially at local level."

It goes on to warn that exactly the opposite is happening:

"Sadly, the reverse seems to be the trend at the moment—funding programmes are becoming exceedingly prescriptive and more rationalised into larger pots for 'strategic' relationships with fewer larger organisations operating at a national level... many small local grant programmes are being phased out, and it is unclear how local voluntary activity and representation will be included and funded as part of Local Area Agreements—there is a real risk that these will lead to less involvement for voluntary sector organisations at the local level as well."

Even where grant programmes survive, they are failing to deliver stable funding for voluntary groups. According to the Charity Commission more than two thirds of all funding agreements were for one year or less, and fewer than a quarter were for more than two years. The Government are failing to deliver on their promise of extending the funding. We support that promise and I think that it would engage support across the House.

Another obvious part of the background to funding decisions is the effect of the raid on the lottery. The first raid on the lottery for the Olympics was announced in June 2006 and removed £410 million from the lottery good causes, including £213 million from the Big Lottery Fund. Then they came round again in March to take another £675 million out of the lottery good causes. According to the Minister, the funding settlement

"protects both existing programmes and future resources for the voluntary sector."

That is a bit disingenuous, because the protection applies only to the funding that voluntary organisations get from the Big Lottery Fund. The funding that the voluntary sector gets from other lottery distributors, such as the Heritage Lottery Fund, Arts Council England and Sport England, will not be exempt from the second Olympic raid. According to the NCVO, cultural, sporting and heritage charities will lose more than £100 million as a result.

On the issue of public service provision, concern has been expressed in many parts of the sector about monopoly commissioning. Everyone is now in favour of diversity of provision, and monopoly commissioning is a concern. A look at offender management services and employment services illustrates that concern.

The centralised management of many public services means that commissioning decisions are taken a long way away from the local contexts in which voluntary sector providers are often best able to demonstrate their strengths. Another disadvantage of centralisation is that services tend to be commissioned on a national or regional basis, effectively excluding medium-sized and smaller voluntary sector organisations which lack the immediate capacity to take on contracts of that size.

There is also a tendency for centralised commissioning to generate a "we know best" attitude from the state, specifying in excessive detail not only what services should be delivered, but how they should be delivered. That tendency to be over-prescriptive is a problem across the procurement of services in much of the public sector and it severely limits the scope for innovation and diversity, which is often the best reason for involving voluntary organisations in the first place.

By opening up the delivery of public services, but not the commissioning side, the Government are programming a clash of cultures into the system. As long as top-down control systems are the norm, public sector managers will attempt to conduct their relationship with voluntary sector providers according to the same rules to which they themselves are subject. There are no easy answers as this is very complex territory, but I urge the Minister to look further at the issue.

The saga of the way in which the Department for Work and Pensions has treated voluntary sector bidders for contracts under the pathways to work scheme is illustrative. The tendering process for phase 1 of the scheme was aborted less than three hours before the original deadline for tenders in February, as a result of the Government revising the specifications at the shortest of notice. A new deadline was set for 25 April, requiring significant additional resources to be devoted by the bidders. When the results of phase 1 were announced, only two of the 16 regional contracts went to the voluntary sector, both to the same charity, which is the largest in the employment services field.

Stephen Bubb of ACEVO—up to that point a strong supporter of the Government's approach—said that the voluntary sector had been

"comprehensively stuffed" by the DWP's procurement practices. He added:

"There is huge anger in the sector with what seems to be serious problems with the process. This is a natural area for the talents of the third sector. We have been doing some brilliant work and it is implausible that hasn't come through in the tendering process. The Government has said it wants the sector to play a bigger role in delivering public services, but there is a huge gap between that rhetoric and reality."

Many employment charities that had been delivering services to the long-term unemployed will now be reduced to the status of sub-contractors to the private sector firms running the main contracts. That will significantly reduce the margin on the services they provide, threatening their financial viability.

Another example is the Offender Management Act 2007, which will centralise the commissioning of probation services. We opposed that Bill, which made the Minister abandon his usual efforts to be non-partisan and throw around accusations of betrayal:

"The Tories had a chance to show they mean their warm words about the role of the sector. Instead, they betrayed those words and opted for opportunism."

There are shades of "his master's voice" in those remarks. However, it was clear just who was betraying whom when a coalition of charities working with offenders was formed to oppose the centralising provisions of the Offender Management Act. Members of the coalition include the Prison Reform Trust, The Prince's Trust and Crime Concern. A spokesman for the Prison Reform Trust highlighted the threat to small charities:

"It's one thing to go after a vibrant, mixed economy, it's another to structure it in such a way that only certain people can compete...Regional commissioning is appropriate for some services, but the bulk of work is very local in nature and anything that would risk squeezing out the small charities and community groups has to be guarded against."

There is a simple, broad point here. New Labour has from its outset had an extraordinarily centralising and controlling approach to government. Any idea that that approach might change with the new Prime Minister would have been incredible to any seasoned observer, as it was always clear that he was the big clunking centraliser at the core of new Labour. It was always certain that once he got his hands on the job that he had craved for so long, those tendencies would be wholly unconstrained. I have always thought that his approach was summed up by the worst of all phrases from the new Labour lexicon—"earned autonomy". When translated, that means, "You can do whatever you like, as long as we agree with it. You have no real autonomy or freedom, and you are always on the end of a lead, with master ready to twitch the string at the least sign of independence." That is why so much of the Government's language on the third sector does not ring true.

It is in the nature of the third sector that it should be diverse, dispersed, vigorously independent and capable of innovation. A voluntary organisation's strength is its closeness to its service users and its ability to provide a much more personal, responsive, differentiated, flexible and swift service than the traditional organs of the state. That independence, the allowing of which requires trust and optimism from the Government, is key. But I am afraid that it is and has been under threat from, or has been eroded by, the Government.

Parallel to that is another development, to which the Minister devoted a little time. One does not have to be a conspiracy theorist to find it a bit sinister. It is the orchestrated campaign, which occupies several pages in the review, to widen significantly the ability of charities to undertake campaigning, both political and otherwise. The Minister tried, in a very unsophisticated way for someone whose intelligence and integrity I respect, to make out that our approach is that charities should not do any campaigning at all. That is absolute nonsense. We think that the law as it stands is very sensible. It allows campaigning if it is an ancillary activity. The Minister is suggesting that it should be allowed to be the dominant— [ Interruption. ] Well, he pretty much did suggest that. We will check Hansard, but my recollection is that he did say that. He ruled out campaigning as the exclusive activity of a charity, but he did not rule out its being the dominant activity. That would change the law, because the case law clearly says that charities can campaign, but not to the extent that that is their dominant activity. This is well-trammelled territory. The Charity Commission, no doubt completely spontaneously, has revised its guidance twice already, in a way that it says will broaden the scope for such campaigning. It is currently consulting—again, no doubt completely spontaneously—on a third such redraft.

The review published by the Minister quotes a report of Baroness Helena Kennedy's advisory committee. By a curious circularity, that report quotes the Minister himself, who said:

"It is massively in the interest of politicians to champion your"— that is, the third sector's—"campaigning role".

That quotation was not quite accurate, as diligent research by my hon. Friend Greg Clark managed to elucidate. There were no dots appearing to show an excision in the quotation, but what the Minister actually said was:

"it is massively in the interests of progressive politicians to champion your campaigning role."

I consider myself to be a progressive politician, and I consider my party to be a progressive party, but I wonder whether that is what the Minister had in mind when he used the phrase "progressive politicians". Perhaps he would care to help me out on this. He is maintaining an uncharacteristic silence.

This is a curious development. In the review, all of it was presented in the most anodyne way. However, it should be clear that the proposal is enormously controversial, for two reasons. First, political and party funding, and therefore campaigning, is the subject of continuing discussion between the parties under Sir Hayden Phillips' chairmanship. We read in this Monday's edition of The Independent of the Government's intention to introduce unilaterally legislation that would restrict what political parties can spend on political campaigning, out of money that has been raised voluntarily from the public. This would inhibit the ability of political parties to engage in political campaigning, which is what they exist to do; it is their raison d'être. Incidentally, it was interesting that we read about that proposal in the newspapers—so much for the Prime Minister's much-vaunted undertaking that there would be no spin and briefing in newspapers, and that any proposals would be announced in the House of Commons, rather than spun in the newspapers.

We know that the proposal arises from the Labour Party's own financial difficulties; but none the less, that sort of proposal has enormous general implications for a democracy. At the same time as the Government are planning to restrict what parties can do by way of political campaigning, they are also explicitly planning to expand what charities can do by way of political campaigning. It may be completely coincidental that both of those things are going on at the same time, but it is a remarkable coincidence.

Photo of Norman Baker Norman Baker Shadow Minister (Cabinet Office)

I am trying to establish in my own mind where the Conservative party is on this issue, and I have a genuine question about it. For example, in the case of hunting—a partisan issue that is largely associated with one party or another in the mind of the public—does the right hon. Gentleman agree that the Royal Society for the Prevention of Cruelty to Animals should have been free to campaign against it?

Photo of Francis Maude Francis Maude Shadow Minister (Cabinet Office)

It was, it is and it did. I am not sure what point the hon. Gentleman is making. We are not seeking to change the law.

Photo of Francis Maude Francis Maude Shadow Minister (Cabinet Office)

With respect, we can see what the Government are seeking to do, as the Charity Commission revises its guidance for a third time in a way explicitly designed to widen the scope for charities to engage in campaigning. That is very explicit. On the one hand, this amazingly joined-up Government have a proposal to limit what political parties can do with regard to their primary purpose, which is political campaigning, while on the other hand they are explicitly seeking to expand charities' capacity to engage in political campaigning—having already massively expanded what sitting Members of Parliament can spend out of taxpayers' money on promoting themselves. That is an extraordinarily partisan way to carry on with major implications for our democracy.

However, there is a much wider and more powerful reason why the Government would be wise to abandon that course. To go down that path would be to imperil further the independence that should be such an important characteristic of the public's perception of what makes a charity special. Public support for charities through donations has already stalled. We believe that it would be devastating for the whole sector, especially the majority in the sector, who have no desire to campaign at all, merely to provide services— [ Interruption. ] I totally appreciate that no one is going to be compelled to campaign as a result of what the Government are proposing. My concern is for the majority in the charitable sector, who want to get on with the job of providing charitable services to those who need them. I am concerned that their ability to do so will be damaged because their perceived independence and high public purpose will be constrained if it becomes possible for campaigning to be the dominant part of what a charity does. I urge the Government not to go down that path, because in doing so they could do immense damage.

It is good that we are having this debate, and it is good that we have not totally broken out into violent agreement on all subjects. There is much in the review, as there was in our own study, that repays further consideration. I hope that the strong difference we have on this issue will not get in the way of our working together sensibly to get what everyone should want: a third sector that is vibrant, vigorous, diverse, genuinely independent, and able to provide services that people in so many parts of our country desperately need.

Photo of Christine Russell Christine Russell PPS (Rt Hon Beverley Hughes, Minister of State), Department for Children, Schools and Families 1:36 pm, 18th October 2007

I would like to begin by paying tribute to my right hon. Friend the Minister for the Cabinet Office and the Parliamentary Secretary to the Cabinet Office, my hon. Friend Phil Hope. Both have a long-standing commitment to the voluntary sector and are true champions of volunteering.

As hon. Members have said, voluntary organisations and community associations play a central role in the areas that make up the quality of our lives. Volunteers come in all shapes and sizes. They are young people with lots of energy and enthusiasm, and they are retired people who have a lifetime of experience and knowledge to pass on to those in need. It is significant that employee volunteering is growing, as employers, such as the Bank of America in my constituency, realise the benefits of volunteering to the personal development of their staff.

I was doing some research in the Library yesterday, and I came across a report by the Institute for Volunteering Research, which estimates that 22 million people throughout Britain are involved in volunteering. That ranges from neighbourly acts of kindness to people devoting their whole lives to the service of others. The strength of the voluntary sector in Chester and throughout Cheshire is immense. I have a report by Cheshire Councils for Voluntary Service, which was commissioned by the National Council for Voluntary Organisations, and it is called "the hidden power". It describes the extent and the value of local voluntary and charity groups throughout Cheshire. It is estimated that there are 2,900 voluntary and community associations throughout the six districts of Cheshire, spending £113 million, which is quite staggering. They involve 70,000 volunteers, and reach out to 1 million people. That is just one county.

The extent of volunteering is vast and encompasses many people who are engaged in the health and social care sector, whom we value so much. I also pay tribute to all the young people who volunteer. In my city, hundreds of students at the university are involved in mentoring schemes and do much valuable work. We must also acknowledge the groups who support conservation and environmental projects, and all those, including faith groups, who came together under the umbrella of Make Poverty History to campaign for alleviating poverty in developing countries.

We do not always give credit where it is due to the people who spend all their spare time running amateur sports clubs and arts organisations. We also often overlook those who serve our community by working as magistrates, school governors, special constables and Army reservists.

As someone who has long been involved in voluntary work, I could probably speak for hours, but I know that many other Members want to contribute to the debate. I shall therefore focus my comments on what I consider to be perhaps the third sector's greatest strength: its ability to reach people who are so often beyond the reach of the traditional public services.

Before I was elected to the House in 1997, I worked for Mind, the mental health charity that helps give a voice to people with mental health problems and learning difficulties. I recall how challenging life was in the 1880s— [Laughter.] It certainly was challenging then, but I meant to say the 1980s and the 1990s—for those who had spent years in long-stay psychiatric hospitals and how difficult it was for them to cope with life in the community. In those days, the provision of community care and support services was patchy to say the least. As well as spending much time trying to get the public services—the health service, local authorities and housing providers—to work in partnership, I also spent an inordinate amount of time going round with the begging bowl, trying to ensure that the organisation for which I worked could continue its good work in the next financial year.

No one has mentioned it yet, but one of the great achievements of our Government in the past 10 years is the supporting people programme, which now helps more than 1 million vulnerable people each year attain or maintain independence through providing housing-related support services. T. S. Eliot wrote:

"Home is where one starts from."

If one does not have a roof over one's head, everything in life—finding a job, enjoying good health, maintaining relationships—is more difficult. The undoubted success of the supporting people programme is built on the efforts of the voluntary sector, especially housing associations.

The Cheshire and Wirral Partnership NHS Trust, which provides mental health services across the Wirral and Cheshire, is committed to developing closer links with voluntary groups, which provide a wide range of therapies and social activities such as shopping expeditions for service users.

Hon. Members will know that mental illness accounts for 40 per cent. of all incapacity benefit claimants. Voluntary organisations such as CHAPTER, which works in Chester and Ellesmere Port in collaboration with the mental health trust, make a huge contribution to helping people with mental health problems get back into employment. The reason for their success is that, again unlike many public sector providers, those voluntary organisations can tailor their support services to meet a person's individual needs.

I want to focus on voluntary work that has transformed the lives of those who live in our more deprived neighbourhoods through involvement in neighbourhood management regeneration programmes. The key to the success of those programmes is having local people—the volunteers—in the driving seat. The community activists and volunteers live in the area and know what the priorities are. They also know the problems, and the solutions that would be best for their communities. Let me give two local examples.

In the Lache estate in my constituency, 20 volunteers, who are all local residents, sit on the neighbourhood management board. They are actively involved in making all the decisions about allocating the £1.8 million of Government funding. They have established a youth forum to ensure that young people's concerns are heard and acted on. The volunteers are also turning a disused piece of land into a community allotment and running a fruit and veg co-op. One of their most exciting activities is being trained by one or two professionals to run a community radio station. That will not only showcase all the individual talent on the estate but provide information for everyone who lives there.

Photo of Rob Flello Rob Flello PPS (Rt Hon Hazel Blears, Secretary of State), Department for Communities and Local Government

To pick up on the point that Mr. Maude made earlier, does my hon. Friend agree that, if the community group, which is doing some fantastic work, decides that it wants to raise its area's profile and run a campaign, it should not be constantly looking over its shoulder to ensure that it is not contravening regulations on campaigning? Surely it should just be able to get on with it.

Photo of Christine Russell Christine Russell PPS (Rt Hon Beverley Hughes, Minister of State), Department for Children, Schools and Families

I agree absolutely. Such groups are the best advocates of what is needed in local communities.

Another example from my constituency is the Blacon estate. Community activists there have played the pivotal role in the success of the neighbourhood management pathfinder, which has been acknowledged as one of the best in the country. The residents have become so empowered and skilled that they are overseeing an ambitious master plan to provide a new centre for the estate—new shops, new community facilities, improved open space and employment opportunities. I was a local councillor for nearly 20 years, and I know that, for far too long, the public sector adopted the "we know best" attitude. However, cultures and attitudes are changing. Now that many of our regeneration programmes are starting to wind down, we must ensure that the local area agreements that are established to continue the good work acknowledge and use the skills and experiences that community activists and voluntary organisations have built up.

As other hon. Members have said—many have left the Chamber—we must ensure that, as we move further down the commissioning path, the large national organisations do not squeeze the smaller, perhaps more localised, specialised voluntary organisations out of the bidding process.

Briefly, I want to mention the valuable contribution that social enterprises and credit unions make. I see my hon. Friend Anne Snelgrove on the Bench behind me. I remember being in the Chamber about 12 months ago when she was making an impassioned plea on behalf of her constituents who were facing the prospect of a miserable Christmas after the collapse of the Farepak Christmas trading scheme. In my constituency—and, I suspect, in many others—the local credit union played a vital role in reaching out to those people who had lost all their savings.

Photo of Madeleine Moon Madeleine Moon PPS (Jim Knight, Minister of State), Department for Children, Schools and Families

Does my hon. Friend agree that one of the most powerful things about the third sector is its capacity to be flexible? I well remember that in Bridgend the credit union was especially helpful in reaching out to meet the needs of Farepak victims, with a voluntary sector housing association giving them a direct grant of cash. That allowed the credit union to take them on as new members without a record of credit history, which enabled them to take out a loan and give a good Christmas for their families. Not one of those new applicants to the credit union defaulted on their loan, and the money is now used to expand financial advice to the most vulnerable people in my constituency. That flexibility is the real power behind the third sector.

Photo of Christine Russell Christine Russell PPS (Rt Hon Beverley Hughes, Minister of State), Department for Children, Schools and Families

I absolutely agree with my hon. Friend. I have seen in Chester how the credit union can reach out in a flexible way to all those people who are excluded from our financial services sector.

Photo of Anne Snelgrove Anne Snelgrove PPS (Rt Hon Ruth Kelly, Secretary of State), Department for Transport

My hon. Friend has been generous in mentioning my campaign on Farepak, which continues to this day. The credit union in my constituency has also played an important role, but the £5,000 that we needed to underwrite the loans to Farepak customers was itself underwritten by three companies in my constituency, which provides a different model from the Bridgend model. We often underestimate the impact that local companies have on the voluntary sector and on volunteering, underpinning local charities and not-for-profit companies.

Photo of Christine Russell Christine Russell PPS (Rt Hon Beverley Hughes, Minister of State), Department for Children, Schools and Families

Yes. To continue the point, I want to put in a plea to local authorities regarding small social enterprises. When local authorities plan redevelopment schemes, they all too often overlook the fact that small social enterprises are often displaced by new developments. I am thinking of the little companies in my constituency that were literally under the arches. One can now find high-class stabling for the racehorses in Chester and, as happens in other cities, the space under the arches has been used for smart cafés and bistros. Local authorities are good at saying, "Yes, we need to allocate sites for affordable housing"—well, perhaps not all local authorities, but my local authority has been quite good at doing so—but affordable units for small social enterprises are also important. My other point about local authorities is that they need to have flexible planning policies. Too often they turn down applications for socially beneficial businesses to go into units, saying, "Oh, this is a retail unit, so you can't change the use to a launderette", or something like that.

Finally, I want to put in a good word for the 7,000 charity shops throughout Britain, which are run by an army of volunteers and raise more than £500,000 a year for the third sector. It sounds as though I am having a jibe against local politicians, but too often we hear them saying, "Oh, this is terrible! The increasing presence of charity shops is a sign of economic decline." I say to that, "Rubbish! It is a sign of how robust the third sector and voluntary organisations are." Not only do charity shops raise a lot of money for the third sector; they also raise awareness of the charity. I am sure that a number of hon. Members present will have received the same invitation from Barnardo's that I have. They will find me behind the counter in my local branch of Barnardo's on "Make a Difference Day", which I believe is 27 October.

The voluntary sector has gone from strength to strength over the past 10 years, but there are still too many people in our affluent society who feel marginalised and isolated. We need a clear vision for the future. One vision that I should like to offer is to use the example of the children's centres that have been rolled out across our communities. They have done an immensely important job of bringing together under one roof all those public services and voluntary organisations that care for, help and support children and their families. As we move further into the 21st century, I would like every community to have a volunteers centre. I am not talking about spending lots of money on bricks and mortar—we could use the village hall, the church hall or the school that has closed down. However, we need a place where all the volunteers can share resources, meet and network. That would be a good model for the future.

Photo of Norman Baker Norman Baker Shadow Minister (Cabinet Office) 1:57 pm, 18th October 2007

Mr. Maude began by saying that this was his first Front-Bench outing for some time. Having taken a break from the Front Bench, I can tell him that it is also mine. Last time I introduced a debate it was on nuclear power. I am happy to say that, whatever the treacle or honey that characterises not the bi-partisanship, but the tri-partisanship or even multi-partisanship in the Chamber today, I am sure that it will be considerably more than it was on nuclear power on that occasion.

I generally welcome the direction of the Government's policy on the third sector. I am prepared to be proved wrong by the passage of events, but they seem genuine in their wish to make the issue a priority and to move in the right direction. I particularly welcome the publication of "Third Sector Review: Final Report" in July 2007, which has a number of sensible suggestions. Of course, the proof of the pudding will be in how far the Government take matters forward and deliver. The right hon. Gentleman was right to be slightly sceptical about the consequences of the compact in 1998 and about how far that has taken us. However, I believe that the Government are committed, although time will tell.

I particularly welcome the move towards three-year funding. That is essential in giving stability to the voluntary sector. I shall say more about funding in a moment. I also welcome the small steps being taken on the ground, which we do not often hear about. I refer in particular to a small piece in Whitehall and Westminster World earlier this month, which said:

"Jobcentres will be working more closely with the third sector after signing a new partnership agreement.

Citizens Advice Bureau...and Jobcentre Plus, who share a common customer base, announced their commitment to closer working at CAB's annual conference".

That is the sort of initiative that is quite useful and which leads to action on the ground that will improve matters for the population at large. More such initiatives will be welcome.

I do not need to dwell on the importance of the third sector. All shades of opinion in the House recognise the sterling work delivered by charities, social enterprise units and others in our constituencies and throughout the country. The world would be a poorer place without the people who work voluntarily to staff the charity shops mentioned by Christine Russell and to deliver innovative projects such as the Eden Project, to which the Minister referred and which I have visited. It is a splendid effort, and a much better testament to the millennium than the dome; it has lasted considerably longer. I hope we can take it as read that we all have a great deal of time for the third sector and recognise the good work being done on the ground.

An interesting aspect of this issue is the relationship between the third sector and the statutory bodies, be they councils or central Government. On 25 July, the Minister said that

"government needs to be a better partner: respecting the third sector's ability to make a difference but never abdicating our responsibilities to fund public services".

I agree with him; that was exactly the right statement to make. There is a feeling, however, among some third sector organisations, that the Government want them to deliver public services. That might be because of a genuine wish to devolve in order to involve communities on the ground, and I understand that. I accept that that is a good motivation. Nevertheless, there is a danger, of which I am sure the Minister is aware, that if we go too far down that track, we will end up with uncertainty over delivery, either because the necessary funding is not in place or because accountability processes and democratic involvement are missing. That is not a criticism of the third sector. I am merely making the point that we need to put in place mechanisms to address those shortfalls, although not in a way that will make things more bureaucratic for small organisations seeking to respond to the challenges that are out there.

Many third sector organisations have no wish to participate in the delivery of public services. The National Council for Voluntary Organisations warned in 2001 that many voluntary groups had

"absolutely no inclination to participate in the delivery of public services at all".

Nor should they have, and the Government are not forcing them to participate. None the less, we must be cognisant of the fact that there is not a one-size-fits-all answer. Each organisation is different. Indeed, the diversity of the sector is one of its strengths.

Photo of Madeleine Moon Madeleine Moon PPS (Jim Knight, Minister of State), Department for Children, Schools and Families

Is the hon. Gentleman aware of how proactive the Welsh Assembly Government have been in ensuring that many areas of work are devolved into the third sector? That has been very positive in helping the sector to grow and helping the services to become more flexible, creative and innovative. It is a positive example of how services can be delivered in a partnership between the public sector, the private sector and the third sector. Perhaps England could follow Wales's example of working in partnership in this way.

Photo of Norman Baker Norman Baker Shadow Minister (Cabinet Office)

I do not disagree with the hon. Lady's direction of travel, or with the fact that we can learn from Scotland and Wales. Devolution in the UK over the past 10 years has been successful in allowing diversity to provide different solutions that can subsequently be rolled out more widely. The option for the devolved Administrations to devise their own solutions is better, for example, than imposing the poll tax, which was a way of rolling out trial solutions in times gone by.

If more public money is to be spent on our behalf by the third sector, on public or quasi-public services, it will be important to examine the accountability of the sector to ensure that the money is being well spent. There is a tension between the handing over of powers and moneys under a devolutionary arrangement to escape the heavy hand of local or central Government and ensuring that the money is well spent. Local government is subject to considerable controls, as it should be, to ensure that the money is properly spent. An audit process exists, as well as targets. There are too many targets at present, but the Government are now abolishing some of them. There is also the Standards Board for England, and a range of other processes to ensure that local government acts properly in carrying out its statutory functions.

Those standards are not applied to the third sector in the same way, and I am not suggesting that they should be. That would be too bureaucratic. We should, however, flag up the fact that the devolution of more services and money to the third sector could produce problems. They might be rare and sporadic, but I have no wish to see the third sector compromised, or to see confidence in the sector shaken. We need to examine the system of accountability that applies to such arrangements.

One method of accountability might involve a Select Committee on the third sector. I think that policy has been advanced by the Conservatives in the book by Mr. Duncan Smith, and it has some merit. The Government's view, as I understand it, is that the Public Administration Committee is the appropriate body to analyse how the third sector is delivering services. On balance, I think that that view is probably right because it is sensible to look at the delivery of those services as one cohesive unit rather than separating them off, which would result in the cross-referencing that we would have under a separate Committee. Nevertheless, the issue needs further consideration.

We also need to consider further the subject of funding. The three-year funding programme is undoubtedly the right way to go. At the last Cabinet Office oral questions, I raised the issues of the uncertainty of core funding, and of the bureaucratic form-filling necessary for so many organisations in order to qualify for grants. Some organisations do not succeed in getting the grants. A great deal of the form-filling for applications for money takes place within a limited time and many of the applications are unsuccessful. That represents a tremendous drain on the personnel resources of small organisations, so a move towards three-year funding is absolutely right.

Will the Minister comment on the question of core funding? There are undoubtedly problems relating to such funding, and in some ways they are getting worse. Local authorities in particular do not find the prospect of providing core funding attractive. It is the same with the lottery fund, which wants to fund particular, cutting-edge projects that will deliver something new or something related to a particular section of the community that is seen as disadvantaged. That is all very laudable, but the consequence is that the voluntary organisations in my constituency and elsewhere are able to get funding for innovative ideas but not for the two or three key personnel without whom the organisation could not function.

Photo of Rob Flello Rob Flello PPS (Rt Hon Hazel Blears, Secretary of State), Department for Communities and Local Government

Does the hon. Gentleman agree that this is not only a question of the core administration? Third sector organisations often have particular skills that need to be upgraded and honed continually. The training costs involved in improving and perfecting those skills are often not funded by the very organisations that require and use the skills.

Photo of Norman Baker Norman Baker Shadow Minister (Cabinet Office)

I agree with the hon. Gentleman.

We also increasingly need to consider the skills involved in filling in application forms. That might sound facetious, but it is an important point. People need training in how best to get through the system to secure the money that their organisations need.

The citizens advice bureau in my constituency is an illustration of the core funding problem. I recently received a letter from its chairman, Michael Bell, who said that the local authorities across East Sussex are threatening to replace the bureau's core funding with the commissioning of particular services through competitive tendering in the marketplace, and that fixed costs would then have to be spread across specific projects. At present, there are fixed costs to cover core funding available from the various district councils in the county. That will be a retrogressive move, but such arrangements will become more and more common. I do not pretend that there is an easy answer to the problem, but I would like to hear the Minister's views on the matter.

Another problem with the funding for third sector organisations is the diversity of its supply. In one sense, that is a strength, because the organisations are not dependent on one particular body; that would be a dangerous relationship. On the other hand, that diversity of funding results in a huge amount of work to secure pockets of money from here, there and everywhere. For example, according to the National Audit Office report published in August this year, Mencap received £155 million in the last year for which figures were available, and that money came from 532 different sources. That must have involved a huge number of attempts to get money. Some of these bodies must spend more on internal organisation than they would wish. They want to deal with their client base, and with the people whom they are trying to help, and too much of their time is spent on trying to secure funding.

Photo of Madeleine Moon Madeleine Moon PPS (Jim Knight, Minister of State), Department for Children, Schools and Families

Does the hon. Gentleman agree that that is where organisations such as the Bridgend Association of Voluntary Organisations in my constituency play such a critical role? BAVO does a great deal of the central work, organising training courses across the voluntary sector and organising the database available to the whole voluntary sector within my constituency. It also organises the capacity training to fill in those application forms, so that individual small charities do not have to spend a great deal of time training and capacity building. It is done by a central organisation that brings all the voluntary sector organisations in to receive that training, experience and expertise.

Photo of Norman Baker Norman Baker Shadow Minister (Cabinet Office)

That sounds like a reasonable way forward. It is perhaps a good practice model that could be rolled out in other areas of the country. I hope that the Minister will help to make the third sector aware of good practice such as that and will encourage local authorities to provide the requisite training. There could well be a role for the Government to lead by good practice and making people aware of what is happening elsewhere in the country.

I wish to deal now with the campaigning element of third sector organisations, which was a matter of some disagreement across the Front Benches earlier. Although I thought that the speech of the right hon. Member for Horsham was very thoughtful—it included a number of interesting and sensible points—I have to say that he got hold of the wrong end of the stick when it came to the issue of campaigning. He seemed to raise a spectre that does not really exist and I failed to understand his concerns. As I understand it, there is already a regulator in the Charity Commission and there is already legislation in force. I am not aware that Ministers intend to introduce new legislation—they will perhaps tell me if they do—so the difficulties that the right hon. Gentleman mentioned do not apply.

Photo of Norman Baker Norman Baker Shadow Minister (Cabinet Office)

I will give way in a few seconds. I am sure that the right hon. Gentleman is genuine in his approach, but I fail to see why he is so concerned. Let me provide him with one example before he intervenes. There is a problem now in that voluntary sector organisations and charities are concerned that they cannot go too far. They are worried about the consequences and about their ability to deliver their own mandate because they fear that the Charity Commission might come down on them like a tonne of bricks or that they will be ruled against by the Advertising Standards Authority or whoever. The Royal Society for the Prevention of Cruelty to Animals—I am vice-president and declare my interest—was advised that it was not open to it to campaign for the total abolition of experiments on animals. I believe that that is entirely wrong, irrespective of whether we agree with the policy. Surely the RSPCA, as an animal welfare organisation, should be able to campaign on that issue.

Photo of Francis Maude Francis Maude Shadow Minister (Cabinet Office)

No one is arguing that charities should be unable to undertake any campaigning. The hon. Gentleman says that I am making more of this issue than is justified. The Minister, in response to my hon. Friend Mr. Tyrie, said that he did not want a change that would enable charities to devote all their time to campaigning. There was some question about whether he accepted that it might be a dominant part of what they did. In fact, the review says:

"The Government can see no objection—legal or other—to a charity pursuing that purpose"— a charitable purpose—

"wholly or mainly through political activities".

It is not therefore an issue that we are blowing up out of proportion and it is not completely consistent with what the Minister said.

Photo of Norman Baker Norman Baker Shadow Minister (Cabinet Office)

The Minister will have a further opportunity to deal with that particular point and that quote at the end. My understanding is that it is perfectly possible to be highly political—on an issue such as hunting, for example, which strongly divided the House— without being party political. That is a key difference for me, suggesting where voluntary organisations should go in this respect. In my view, they cross the line if they come out and say, "We believe in this policy, so you should vote for this political party". That would be quite wrong, but saying, "We believe in this policy" is entirely appropriate. I do not see the problem there.

I want to raise another issue about campaigning, as it is a barrier that needs to be dealt with. I have already mentioned my RSPCA role and I should also mention that I am president of the Tibet Society. In that role, I have become aware that a great deal of unnecessary bureaucracy has been forced on it as a consequence of its concerns about the Charity Commission and what it is able to do without being rapped over the knuckles. The same applies to Greenpeace and other organisations. The Tibet Society has had to separate itself into two parts. There is the Tibet relief fund, which campaigns in a completely non-political way—in terms of the categories of the right hon. Member for Horsham—to provide sustenance and support for the Tibetan community in exile in India and elsewhere. Then there is the Tibet Society, which might be regarded as having a more political role in arguing about the Chinese occupation—an illegal occupation—of Tibet. Because of concerns about how that might be interpreted, a dual structure has been created within the society to ensure that no rules are broken. I have to say that all this is unnecessarily bureaucratic. It costs money and it gets in the way of spending the money that has been raised for the Tibetans. Resources are being spent artificially to meet what may be unfounded concerns about how the Charity Commission might respond to the society's work. I very much hope that, as a consequence of the review, that sort of unnecessary distinction, which costs time and money to voluntary organisations, can be dispensed with. I would therefore go in the opposite direction to the right hon. Member for Horsham in that regard.

Let me briefly mention a small, technical point about how the Government are dealing with the third sector. Given that some 70 per cent. of moneys available to voluntary community organisations comes from the local level and that these organisations are not national statutory bodies, there is an argument for the Department for Communities and Local Government rather than the Cabinet Office to deal with the third sector. There may be a case for the Cabinet Office carrying out a one-off review of the third sector, but I am not personally convinced that the Cabinet Office is the correct location within the Government to carry out such a function. It would fit much better with the DCLG. There are problems with the Compact and with the delivery of good works on the ground. We know that the Compact is not being honoured by all local councils. It would be easier to deal with those problems if the function were situated in DCLG rather than the Cabinet Office. I will not lose any sleep if it stays where it is, but I wanted to argue the point in this debate.

The right hon. Member for Horsham raised the issue of the Commission for the Compact. I am not aware of the history either, but it seems unfortunate to lose Angela Simpson and then John Stoker. As has been put to me this week, it can be unfortunate to lose one leader, but losing two looks like something else! Perhaps the Minister will respond not on the diversion that I have just suggested, but on the Compact commission. Seriously, we need to know what happened and we want some assurance that any problems will be sorted out. We must have confidence in the future direction of that body. I would also be interested to know whether the Minister sees it as having a different function or moving in a different direction from how it has been viewed up to now.

Finally, I want to say a little more on the social enterprise side of the issue, which the Minister mentioned in his contribution. I agree with him that it is a very important aspect of the third sector. He mentioned the Eden Project. As he may know, the social enterprise coalition would like some clarification from the office of the third sector as to what it is doing to ensure that the distinctive business needs of social enterprises are represented in the Government's enterprise strategy and framework. There seems to be some uncertainty about that, so it would be helpful if the Minister dealt with the point when he sums up.

For some time we have had a "green Ministers" Committee, an official Cabinet Committee, which has looked into the Government's policies across government from an environmental point of view. I believe that it has been useful in identifying good practice and eliminating bad practice. It would be nice if the ethos of social enterprise organisations and businesses could be rolled out across government in order to achieve best practice in Government Departments. It could improve their dealings with Cafédirect, for example. I am not convinced that there is the same cross-government commitment to support that ethos and such social organisations as there now is to support good environmental practice. The Minister might address that point.

In general terms, however, the Government appear to be on the right track. As someone who criticises the Government not infrequently, I feel that it is important to say when they have got things right, and I think that they have, by and large, got them right so far in this regard. However, I am willing to be proved wrong in due course by the right hon. Member for Horsham.

Photo of Charlotte Atkins Charlotte Atkins Labour, Staffordshire Moorlands 2:20 pm, 18th October 2007

The Government's partnership with the third sector is a success story, as we have backed up our policies with proper state funding to enable the voluntary sector to flourish. Total public funding has doubled from less than £5 billion in 1997 to more than £10 billion in 2005. Gift aid is now worth £750 million a year to charities, up from just £100 million in 1997—so much for the Opposition's commitment to gift aid.

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office)

The hon. Lady may wish to know that if the withdrawal of tax relief on covenants and the advance corporation tax are taken into account, the total tax receipts returned to charities are in fact now £100 million less in real terms than they were in 1996-97—so charities are £100 million down.

Photo of Charlotte Atkins Charlotte Atkins Labour, Staffordshire Moorlands

Even if that were true, it would still leave the figure at £650 million, as opposed to £100 million in 1997. Since 2004, more than £350 million has also been invested in the sector to respond to people's needs through specific programmes. However, I accept the points made earlier that we need to do much more about continual core funding—not just start-up funding—for voluntary organisations. For example, as I think Norman Baker mentioned, citizens advice bureaux in particular are having problems—certainly mine in Biddulph is—with not having sufficient core funding. It provides an excellent service and gets money for particular projects, but it still needs its key work force funded to keep the advice centre going.

The voice of the third sector certainly needs to be heard in order to help change our society for the better. The real test of how well the voluntary sector is working is to take a look at a community and judge how much poorer it would be without the voluntary sector. In Staffordshire, Moorlands—a relatively rural constituency—that would involve first sweeping away all the advice agencies that are so important—Age Concern, the CAB, the Biddulph resource and information centre—and getting rid of the wide range of services, such as voluntary transport, support and expertise, within the Staffordshire, Moorlands community and voluntary services office. They all do an amazing job.

However, I want to focus on the Biddulph resource and information centre—BRIC, as it is known. It is run by Sylvia Rushton, Biddulph's neighbourhood agent, and her volunteers. They provide a friendly drop-in advice and support centre for the most deprived community in my constituency. BRIC also offers a community café, providing a home-cooked, nutritious meal for just £3.25. I met a gentleman there only last week, and it was clearly a lifeline for him; he lives alone, and the staff there not only provide his lunch for him, but they give him a sandwich for his tea as well. BRIC also gives computer access to deprived families and computer training, and it is even moving into the provision of furniture as it responds to the needs of the local community.

Ten miles away in Leek, the Haregate community centre is located on an estate that used to be seen as run-down and rough. That is no longer the case. The local voluntary services have supported residents in running the centre and have helped to develop community pride through such events as local galas, projects to regenerate the recreation ground with equipment, and the planting of shrubs and bulbs, which the community has got involved in. The centre brings the generations together, from the highly successful Sure Start for the early years to music and movement for the over-60s and much more besides.

The Sure Start project, for which I won funding, has transformed lives. I have seen insecure mums with their young children arrive barely having the confidence to turn up. Then they have got involved as volunteers, and before long they start accessing courses and developing skills, which boosts confidence and opens up their prospects. That is good news for the whole family, as aspirations are raised and the children thrive.

Voluntary organisations and charities are central to creating a healthy, vibrant and cohesive society. Two such projects among the many in my constituency are particularly worth a mention. The Honeycomb centre is situated in the delightful village of Longnor. It is a social enterprise and work development centre for people with education disabilities, producing quality garden furniture and craft goods. It works in partnership with Leek college, helping to break down barriers to employment by providing real work for disadvantaged young people in Staffordshire, Moorlands. It recently won an environmental quality mark for using locally sourced Peak District national park timber for its bird tables and rustic benches. So successful has it been in supplying schools and businesses with its products that it has needed a £20,000 extension to accommodate its increasing capacity needs.

The Bridlegate project is located at the mill on the River Hamps at Winkhill near Leek. It is a rural project that accepts students to work with farm animals and on conservation and environmental challenges so that they can build self-confidence and skills and move on to mainstream further education, sheltered employment or volunteering placements. Both projects do a remarkable job on a shoestring, and I congratulate both Ken Weston and Kath Riley who run the projects alongside volunteers.

I welcome the focus in the third sector review final report on the sector's role in campaigning, as it is an important way of providing a voice, particularly to disadvantaged groups. Sometimes it would be much more convenient for local authorities and Government if voluntary organisations did not campaign. They can make life very uncomfortable for elected representatives, but they should not be dismissed as "the usual suspects". Instead, they should be supported as community champions. Nationally, Every Disabled Child Matters has done an amazing job in raising the profile of disability issues and winning Government support for, among other things, vital family respite care.

Photo of Barry Sheerman Barry Sheerman Chair, Education & Skills Committee

Is my hon. Friend's experience similar to mine in my constituency, which is that that campaigning role brings communities alive? If a good environmental campaign is put together to clean up graffiti or rubbish, or to support the local school, it can bring communities to life.

Photo of Charlotte Atkins Charlotte Atkins Labour, Staffordshire Moorlands

Absolutely, because it encourages young and old to get involved—people who otherwise would not necessarily have thought about doing so. There is another project in my constituency that demonstrates how much community support really matters.

Rudyard Sailability has had to campaign just to survive. Its problem is not funding—it raises thousands of pounds every year—but the fact the local authority will not give it planning permission for an essential boat store. It has won a host of awards, and is the Royal Yachting Association's first ever centre of excellence and education because of its leadership in providing sailing for disabled people at minimal cost. It caters for every disability with its accessible passenger boat, its dragon boats and its electrically powered sailing boats, which can be controlled by a finger or a mouth. At present it caters for some 1,400 people a year, but its provision could easily expand as more and more people hear of its amazing work.

Sailability attracts trained volunteers from far and wide. It provides not only competitive sailing, but a range of courses for which volunteers can offer their services. The local Tory council, however, would rather close it down. It wants Sailability to join forces with the private sailing club further up the lake, where there is no wheelchair access, no hoist and no essential boat store. The promised meeting with the sailing club has not yet materialised, but that is probably because the powers that be would prefer not to deal with the strident voice of one Dennis Priebe, one of the mainstays of Sailability. He spends hours, on his crutches, hauling boats out of the lake and putting them back in the lake. He is a very strident advocate for Sailability, and rightly so.

Sailability will not give up its right to exist without a fight. The council has ordered the demolition of its essential boat store, but we will continue to campaign for its replacement. It is essential to protect Sailability's expensive electrically controlled boats from both the weather and vandalism. Sailability will not go quietly; too much is at stake. It gives people with profound disabilities the freedom of the beautiful and tranquil Rudyard lake. It creates aspirations among youngsters like Jibreel Arshad, who hopes that one day he will represent his country at the Paralympics. It attracts families who face the 24/7 struggle with disability, because it enables them to go out and have a good time together. That part of Rudyard lake provides a host of different activities for the whole family to enjoy.

The awful experience that Rudyard Sailability has had with the council over recent years raises a real concern about the relationship between the third sector and local councils. We are told that 99 per cent. of local authority areas are now covered by the local Compact—an agreement between Government and the voluntary and community sector to improve their relationship for the benefit of the communities that they serve—but that agreement was not at all obvious in the council's dealings with Sailability, when it put obstacle after obstacle in Sailability's way.

I welcome public service agreement 21, produced this month. It states that local authorities

"have responsibility for maintaining a good relationship with the local third sector, for capacity-building of the sector at the local level and for the provision of suitable forms of finance for the sector."

The PSA makes some very positive statements about the role of voluntary organisations in local communities in relation to increasing active citizenship, but that will mean nothing if local authorities do not share the vision. The Department for Communities and Local Government and the Audit Commission must support local authorities properly in that role, and also ensure that that is reflected in performance monitoring to hold them to account.

My local district council has just announced a thorough review of locality working with the Staffordshire Moorlands community and voluntary services organisation. It might be thought that there is nothing sinister about that, but immediately after being elected six months ago, the chair of the council launched an attack on village agents because they were unelected, implying that they were a waste of money and got in the way of the elected representatives.

Village agents and their town equivalents, neighbourhood agents, are employed for just 40 hours a month, for £8.64 an hour, to promote meaningful community engagement and involvement. So successful have they been that between January 2006 and September 2007, nearly £570,000 has been brought into local community groups from funding applications directly supported by the work of village agents, community development workers and Staffordshire Moorlands community and voluntary services. In the past six months alone, £136,000 has been brought in. Without such intervention, small community groups in the Staffordshire, Moorlands area would struggle to survive, so are village agents a waste of money? I do not think so.

Recent successes of the village agents project include the transformation of Cheddleton's derelict bowling green from a run-down, vandalised area into a memorial garden. Ongoing work is co-ordinated by Staffordshire Moorlands CVS' hard-working Lesley Savage, who has generated bids for well over £50,000 and inspired grassroots community development work to transform the village's play area.

Another success story is the restoration of the boathouse at Rudyard lake into a museum, by securing funding of £87,000. The community service has also helped to set up a youth forum in Moorside high school, and in doing so has helped to reduce antisocial behaviour in the village of Werrington by some 44 per cent. in just one year.

The work of the town and village-based neighbourhood agents and of the Staffordshire Moorlands CVS development team involves helping communities to set out their priorities. They develop a parish plan, which they then work towards implementing with the statutory agencies. It seems to me that that is real community added value in anyone's book.

However, voluntary organisations face a common problem that arises when they deal with certain local authorities. Local councillors assert, "We are democratically elected. You have no legitimacy because you are unaccountable, minority interest groups." It is true that many voluntary organisations promote their own concerns and the interests of particular community groups, but why not? Surely that is not a reason for saying that they should not be heard. They advocate on behalf of disadvantaged groups, provide a voice for certain communities, and bring different and important perspectives to particular issues. They should be welcomed and not dismissed; they have a right to contribute to the debate and they must be heard.

Good local authorities will welcome input from community groups, as the voluntary sector and councils should have the shared objective of promoting and supporting their local communities in their total diversity. However, my experience is that that does not always happen, and certainly not in my constituency. I hope that the Government will be vigilant in ensuring that local authorities work with the third sector and celebrate its role. Otherwise, their commitment to that sector will be regarded as no more than lip service. That is a challenge that we have to face and deal with.

There has been a very positive environment for voluntary and community organisations over the past 10 years. In the next 10 years, we must consolidate and embed the policy changes that we have introduced, to ensure that they result in genuine and lasting improvements in practice.

Photo of Charles Walker Charles Walker Conservative, Broxbourne 2:38 pm, 18th October 2007

It is a great privilege to speak in this review of the third sector. I promise the House that in my brief contribution, I shall not stray into anything that could be deemed to be partisan. I am sure that I shall be pulled up if I do.

The UK's charitable sector is one of this country's great successes. All of us, wherever we are from, have the right to be deeply proud of it. There is something very British about charities, which do a fabulous job. As Charlotte Atkins so eloquently made clear, they give people an opportunity to engage with their local communities, and they also provide an opportunity for people to engage with the wider world.

I shall not detain the House, but I want to relate a brief family anecdote. My young son was recently part of a team of 196 people who took part in the great north run. Being nine years old, he ran only the two-mile stretch, but the aim of the group as a whole was to raise money for something called Vicky's Water Project, in memory of 28-year old Vicky Buchanan, who, tragically, was killed last year. They were running collectively to raise money on behalf of ActionAid to support the creation of several clean water projects in Ethiopia, which will save many thousands of lives over the next 50 or 100 years. Between them, the young people—actually, they were not all young; some were as old as 76—raised £403,000. People ask how they can go beyond their community to play their part as global citizens to help the wider world, so it is fantastic that we have charities such as ActionAid and Christian Aid that enable such things to happen.

Locally in Broxbourne, we have the good charity Millennium Volunteers. If I am not mistaken, I think that the Government had something to do with setting it up. I get involved in many of its projects, and it does fabulous work throughout my constituency all year round. We also have Groundwork. The hon. Member for Staffordshire, Moorlands talked about getting businesses involved in charity, and Groundwork brings together businesses for team-building days and puts them out in the community doing good work in deprived areas, which is to be hugely welcomed. The charitable sector is a great success story for this country, and I hope that it has a long, prosperous and bright future ahead of it.

I question some of the figures relating to volunteers. Like all hon. Members in the Chamber, I spend a lot of time visiting local charities and attending their annual general meetings. It seems to me that the same people often carry out similar roles for different charities, and double or triple up their roles. People who lead charities say that over the past 10 or 20 years, as people have become busier or had different calls on their time, it has become more difficult to recruit volunteers. I hope that Ministers and our Front Benchers—and we in Parliament collectively—can address that situation and ensure that volunteering remains something that people want to do.

The Public Administration Committee, of which I am a member, has been examining the delivery of services in the public sector by charities. I understand why the Government would like to involve charities in the delivery of public sector services because it might represent an attractive new model of delivery. No doubt many charities are already doing an excellent job of delivering public services, and those that will be brought into the fold will also do so. However, I would like to focus on some possible downsides. This is not a criticism, but a genuine set of concerns.

There is a danger that a form of corporatisation or nationalisation of charities will rob them of the very essence of what makes them so special. A number of charities, many of which are doing a fantastic job, receive more than 90 per cent. of their income stream from local or national Government. The excellent charity Turning Point readily admitted to the Select Committee that 95 per cent. of its funding came from the Government. One must thus question whether it is still a charity, or whether it has more of the characteristics of a corporate organisation. Such concerns are legitimate because the Charity Commission discovered through research last year that 40 per cent. of charities delivering public sector services did not have a complaints procedure. That is worrying and needs to be addressed, because I know that companies delivering services to the public sector must have a complaints procedure so that people can escalate and feed back their concerns.

I am troubled and slightly concerned that large national charities, with their economies of scale, can squeeze out good local providers that are very much in tune with the needs of their local communities. That is particularly true for the charities in my constituency that deal with alcohol and drug abuse. We have two very good niche charities, Chrysalis and Vale House. They take very different approaches to managing substance abuse, but both provide an excellent service. My concern centres on the fact that when contracts to deal with, say, substance abuse are tendered on a countywide basis, small charities do not have the scope, coverage or expertise to bid for them.

Photo of James Duddridge James Duddridge Conservative, Rochford and Southend East

Has my hon. Friend noticed that since primary care trusts got even bigger, there has been a move away from funding micro-organisations? For example, in Southend, the primary care trust used to be contiguous with the borough boundaries, and there was very good cross-working. Now that the PCT is larger, there is a disinclination to commission work from small voluntary organisations and charities.

Photo of Charles Walker Charles Walker Conservative, Broxbourne

My hon. Friend makes a valid point, and I am certainly beginning to come across that problem in Hertfordshire. We have gone from having multiple PCTs to a single PCT, and a number of smaller charities are having their funding cut. It is a concern that large charities win contracts, and as a result squeeze out well-established local providers, who provide a service that is focused on and tailored to the local community. That is not a criticism of large charities and national organisations that provide services, because I am sure that they do a very good job, but we have to make sure that we create a space in which both kinds of organisation can exist.

Photo of Barry Sheerman Barry Sheerman Chair, Education & Skills Committee

Is there not a danger in stipulating who can compete for a particular contract? The third sector is very broad; the hon. Gentleman has talked mainly about charities, but the co-operative movement is part of the third sector. The sector includes a diverse range of large and small co-operatives and charities. There are also charities that do not really act like charities. Public schools have been in that position for a long time; they do not operate like real charities. If we get too tidy-minded, we might restrict the range and diversity of the third sector.

Photo of Charles Walker Charles Walker Conservative, Broxbourne

The hon. Gentleman makes some good points, but we have to make sure that we create space for all types of providers, and that we do not favour a group of larger providers over smaller providers. I am sure that most Members would agree, because we all have small charities serving our constituents and constituencies. Another concern about the growth of very large charities is that it could reduce confidence in public giving. If the public see super-mega-charities getting 90 or 95 per cent. of their money from central Government, there is a danger that they might say, "What's the point of me giving money to charities?" The point, of course, is that although large charities may get lots of money, there are tens of thousands of smaller charities that are desperate for money. We have to make sure that people realise that that option is still open to them, and that there are still many deserving organisations towards which they can direct their money.

People in my constituency are slightly worried that large charities will spend too much time looking towards Government, who fund them, as opposed to towards the end user or client group. Those concerns may be unfounded, but it is my responsibility to bring them to Parliament and to the Minister's attention. We have talked about political campaigning quite a bit today, and I think that there are legitimate concerns about it. Larger charities have taken on the persona of corporate organisations, and it is amazing how many marketing, public relations and public affairs people they now have. My local charities do not have any people of that sort, because all the money that they raise goes on delivering charitable services to the end users, but large organisations have a lot more money to hire those people, who I am sure do a difficult and important job.

Photo of Anne Snelgrove Anne Snelgrove PPS (Rt Hon Ruth Kelly, Secretary of State), Department for Transport

The hon. Gentleman is making a thoughtful speech and has made some good points. I agree with his point about keeping the balance between large and small organisations. However, I ask him to be cautious on the subject of the number of people employed in PR by national charities. Most national charities that I have anything to do with are keen to emphasise that they keep their overheads to an absolute minimum. If they have people in such posts, it is to enable them to raise more money. The hon. Gentleman does the charities a disservice without meaning to by suggesting that they may be wasting money on those posts, because I do not think that they are.

Photo of Charles Walker Charles Walker Conservative, Broxbourne

I thank the hon. Lady for her intervention. I do not mean to suggest that the charities are wasting money, but that constituents looking in from the outside may worry about how their money is being spent. It is incumbent on charities, and important for them, to keep explaining why PR staff are important.

Of course, political campaigning has a role in the charitable sector and I would not want that to be eroded, but all hon. Members have probably been on the receiving end of some fairly aggressive single issue campaigns which basically said, "If you don't support my position, I'm going to withdraw my vote from you." We in Parliament know that there are very few black or white decisions to be made in public policy. Instead, there are many shades of grey in politics. As politicians, we must balance the competing interests of our constituents. I make a plea, more to charities than to my colleagues, to be mindful of that.

Gift Aid is a fabulous mechanism for charities to raise additional money for good works. The claiming back of Gift Aid, though, can be time consuming. I am sure that many people who give to charity never get around to filling in the Gift Aid forms so large sums of money are potentially lost. Will the Government consider allowing charities to report at the end of the year the amount of money that they have received from charitable donations—gifts from the public—and the Treasury to provide a lump sum on top of that to reflect the Gift Aid? That would remove from the donor the responsibility of filling out the forms, and from the charity the responsibility of collecting them. The Government would accept the audited amount and provide an additional 25 per cent. on top of that.

My final point concerns the Olympics. In Broxbourne we are very lucky—we have the canoeing, and we are grateful for that. It will be a powerful tool for the regeneration of Waltham Cross, a fairly deprived area of my constituency. However, I am concerned that quite a large sum that would have gone to charitable organisations is being diverted from good causes to fund the Olympics. We need to be mindful that that will have an impact on the ability of charities to provide services in our communities. The lottery should primarily be for the little extra things that make life worth living—a cricket pavilion, an extra football field—and not so much for core funding. I entirely appreciate the importance of cancer scanners, but those are better left to the NHS to provide, as opposed to the lottery fund.

That is my brief and modest contribution to the debate, and I thank the House for listening so intently.

Photo of Adrian Bailey Adrian Bailey PPS (Rt Hon Bob Ainsworth, Minister of State), Ministry of Defence 2:53 pm, 18th October 2007

I welcome the report. As a Labour and Co-operative Member of Parliament, like the Parliamentary Secretary to the Cabinet Office, my hon. Friend Phil Hope, it gives me great pleasure to speak on a report that recognises the contribution that the co-operative movement has made in the development of the third sector. Looking way back to the Rochdale pioneers in the 1840s, one could say that they were the first inspirational organisation to develop the third sector by providing whole and unadulterated foodstuffs to their members, providing education to their members, and ploughing back their surpluses into the local community. It was an inspiration taken up throughout the country and, latterly, throughout the world.

When the Minister spoke about changing culture, he put his finger on the significance of the report. We are talking about breaking down the barriers between private provision and public provision of much needed services in communities. We are examining innovative ways of providing such services.

The third sector has suffered from a silo mentality for a long time, which is a legacy of the '80s and early '90s when inappropriate privatisation solidified hostility towards the private sector in providing public services. That did nothing for the private sector, because decent and reputable private sector providers were associated with cowboy operators. As a result of that silo mentality, the suspicion arose in the private sector that new business models catering for social and environmental ends were not its priority, while in the public sector both consumers and providers of public services decided that the best way in which to deliver such services was through either local government or national Government agencies. The perceptions arose that charities just provided for certain niche needs that the public sector could not, and that social enterprises were just fringe operations catering for niche markets and were not part of mainstream business activity.

The reality is very different. We have 190,000 charities with more than 20 million volunteers and £27 billion of turnover. Social enterprises are defined as businesses that are formed for social and environmental ends. There are 55,000 of them with a turnover of £27 billion, and they add £8.4 billion to the economy. There is a certain overlap between the charitable and social enterprise sectors, because some charities include social enterprises as part of their charitable structure.

Whichever way one looks at it, the charitable and social enterprise sectors form a significant part of the economy and provide important services. The report is significant, because it recognises that point for the first time. It also recognises that the needs of the third sector have often gone unrecognised and unacknowledged—the third sector has historically been the Cinderella sector. Although I would not embarrass the Minister by describing him as "the handsome prince" or the money that he is providing as "the golden slipper", the report, the importance that the report has been accorded and the money that has been provided will go some way to giving Cinderella the role and recognition that she deserves.

This afternoon I have listened to examples, which I am sure are replicated in all hon. Members' constituencies, in which volunteers in the charitable sector or social enterprises play a role in the welfare of the local community. If one considers the number of people involved—20.4 million—one realises that that body of people is a huge resource of commitment and expertise that is there to be tapped and organised to benefit the local community. The report is valuable, because it outlines how that resource can be harnessed.

There is no doubt that it is difficult to get young people to engage in traditional political processes and that there is a certain alienation from the traditional governmental agencies that provide benefits within communities, but that does not mean that young people do not have enormous idealism, enormous commitment and a desire to change their own communities. By engaging young people in volunteer activities, charities—as I have said, charities may contain social enterprises—not only contribute to the welfare of their communities, but help young people to develop social skills and, possibly, educational skills, which enable them to contribute to a much greater depth as they mature into adults. In demonstrating that to themselves by participating in such activities, they also get an enhanced understanding of the relative roles of citizens, the voluntary sector and democratic Government activity. That must be good for the whole country and democracy. I welcome the Government's commitment to invest more money in improving such capacity; that is essential if such roles are to be developed.

I want to single out a number of issues on which I would like to probe the Minister; the first is that of community endowment funds. Other Members have mentioned groups that have said to them, "We just need a grant for this, but there does not seem to be any charitable lottery or local government funding stream that provides for our specific needs." Despite everything that such groups try to do through all the different agencies within local authority areas, there are still unmet needs.

On the needs of charities and provision for them, I have long felt that in our local society there is a huge desire to contribute to welfare in one way or another; that is reflected in the level of charitable giving. However, all too often there is no local charity to fulfil the desire of people to invest in a charitable purpose. There must be some mechanism that marries the unrealised desire of some people to contribute to a specific charitable end with the range of charitable provision within a certain area to meet that.

I see the community endowment funds as a possible mechanism for that. Like everyone else, probably, I look around my local area and see legacies of historical philanthropy: parks, fountains and even little horse troughs provided by a local donor. We have all seen such things, and I would like to think that that spirit is still alive and well. Through the community endowment funds, we have to find mechanisms through which somebody who wishes to contribute to their local community can do so in a way that fulfils their charitable purposes that are presently not met. I ask the Minister to take up the issue. It is totally in line with new Labour thinking; I have often heard that we must have traditional values in a modern setting.

Photo of Adrian Bailey Adrian Bailey PPS (Rt Hon Bob Ainsworth, Minister of State), Ministry of Defence

My second point— [Laughter.] My second point is about the social enterprise sector. I mentioned the role that co-operatives and the less traditional forms of business model play in meeting social-environmental needs. It is interesting that, basically, the definition of the third sector in the report is about the purpose of a business, rather than its structure. Social enterprises embody a whole range of business models: some are charities, but a subsidiary of some form of social enterprise; others are co-ownership organisations, co-operatives or community interest companies and so on. There is quite a range.

However, a common thread runs through them all, because they all comprise people who not only want to fulfil certain social and environmental ends in the outcome of the business of which they are part, but share certain values. For example, I do not know of any co-operatives engaged in land mine production. Most of them would have a higher degree of community responsibility and ethical concern than one might find in a more traditional proprietor-based business structure. The more that one does to boost knowledge and understanding and to promote those forms of business structure, the more likely one is to fulfil certain community regenerative aims.

Norman Baker observed that the social enterprise sector has requested that we consider the business enterprise and regulatory reform model with a view to enhancing its research into and support for social enterprise within business. I will not repeat everything that he said but merely add that, given the difficulties involved, getting robust statistics to demonstrate the impact that charities and social enterprises have on the economy is an issue that needs to be addressed through the third sector review.

One of the sector's great problems is that, because it operates in so many areas, the departmental overview of its services is fragmented and all too often is not the priority of any one Department. One of the great virtues of the approach taken by the Cabinet Office and the Minister is that they have pulled those together to give the sector the sort of priority that it should have. I look forward to the Minister pushing the agenda with all Departments to ensure that comprehension of the role that it has to play is enhanced.

Photo of Rob Flello Rob Flello PPS (Rt Hon Hazel Blears, Secretary of State), Department for Communities and Local Government

On the question of outputs as against outcomes, does my hon. Friend agree that although it is sometimes easy to have a list of outputs—things that can be ticked off and measured—the contribution that a third sector organisation will make is often a much softer one with an outcome that cannot be measured until several years down the line, which in itself creates a problem?

Photo of Adrian Bailey Adrian Bailey PPS (Rt Hon Bob Ainsworth, Minister of State), Ministry of Defence

I thank my hon. Friend for making that comment. I have in my constituency a charitable trust, the Murray Hall Trust, which works in the most deprived communities to engage people in the educational and training process. Some of its volunteers have become staff and are mentoring people within those communities to try to give them the confidence to train and take on jobs. That approach is bearing fruit, but its full benefit will not be known for many years to come. Although we must have ways of monitoring outputs, they must be sensitive and reflective of the sort of long-term agenda that we seek. We are talking about changing culture and society, and that takes time.

My last point concerns political lobbying. I am a little surprised by the attitude taken by Conservative Members, because in my experience the lobbying done by charities is most uncomfortable for the Government of the day, and as that is not likely to apply to them for quite a long time I do not see why they should be too worried about it. If we are really to have an independent and powerful charitable sector, charities must have the right to lobby politically, and the procedure put forward by the Charity Commission is the correct one.

In a slightly mischievous moment, I picked up the list of early-day motions and found that many are promoted by different charities and that loads of Conservative Members sign them. I am all in favour, but I do not think that one can argue against political lobbying while at the same time being prepared to sign such motions. The hon. Member for Lewes was again correct when he said that we are talking about overt party political lobbying. It is perfectly legitimate for charities to lobby politically for the social and other outcomes for which they were formed.

Many of these bodies bring a degree of practical expertise to Government deliberation, which is necessary in the formulation and translation of policy into legislation. I have seen that in any number of areas, where charities have taken up particular issues because there has been either an unintended consequence arising out of previous Government legislation or a new need that has emerged or has not been appreciated by it. There is a danger that if one seeks to curb the political advocacy of charities, one will restrict the ability of those organisations to influence legislation and policy in a way that is beneficial to the whole community and to the reputation of this House.

I welcome this hugely wide-ranging report—I would not pretend that I have been able to cover all the issues—because it is going in the right direction and is part and parcel of a process by which we expand the recognition and appreciation of the fact that social enterprises and charities are able to deliver services that will transform the lives of millions of our people.

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Education), Shadow PC Spokesperson (International Development), Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Health) 3:12 pm, 18th October 2007

I am grateful to be able to contribute to this debate—I was very anxious to do so. I must start with an apology: I cannot stay for the winding-up speeches because I have an engagement in my constituency. No disrespect is intended to you, Mr. Deputy Speaker, or to the House, because Caernarfon is far away, or, as one wag in my constituency said recently, "The problem with London is that it is so remote from the places that really matter." In his case, what matters is the village of Rhostryfan.

As a Welsh Member, I must be careful about commenting on a report that is so obviously to do with England, but it contains important matters that are of interest to Welsh Members. Some of the recent developments in the third sector in Wales should be of interest to people in this place. It is sometimes said that Wales does not have a very large voluntary sector, but that depends on how we measure things. Wales has a large voluntary voluntary sector and a small paid-for or professionally employed voluntary sector. We have amateurs in the best sense of the word: amateurs who love the cause for which they work.

Wales is sometimes said to be a land of societies and long-winded committees. The 19th century satirist John Ceiriog Hughes said of organising an Eisteddfod, "What you really need is a date, a venue, a list of subjects and a committee." Hon. Members will note that he said nothing about competitors or the output of the Eisteddfod, and that the committee was the important matter. I do not decry committees. In fact, I want to pay tribute to people involved in the third sector—in my constituency, throughout Wales and elsewhere—for their commitment, enthusiasm, willingness to give both materially and of their time and, as the report notes, their willingness to work with government at local and national level, and on a UK basis.

In Wales at least, the common pattern is to have voluntary community organisations. One matter that I wish to explore briefly is the possibility, in Wales and perhaps in England, of some sort of status for local grass-roots organisations that might not wish to register as charities, such as unincorporated association status. There are examples in other countries—I am familiar with Denmark and France, where very small organisations can register as associations. The organisations have charitable purposes, but perhaps do not want to go through the long drawn-out process of registering as a charity. The association status in both those countries provides a minimal measure of formality for those very small organisations and the possibility of extending their existence when the impetus arising from their establishment is dissipated.

In Denmark, for example, there are town and city associations, which run the festivals that are common in the summer. Those associations are small and do not necessarily register as charities. In France I have a friend, Mr. Bernard Le Mer, who is an enthusiast about maritime history, and his association owns an historic sailing boat. It is not a charity as such, but when one member leaves another joins so that the purpose of maintaining the boat is sustained in a way that might not be possible without the association model. He also has an association which is improbably named the Henvic Society for the Promotion of the Importation of Scottish Non Dairy Products—it is a whisky club.

There is a balance to be struck between such small, informal organisations and the opportunities for campaigning that have already been mentioned. I do not want to get involved in that debate and I certainly do not intend to defend the Government, but I noticed from a close reading of the report that it states on page 26 that

"a charity which loses sight of its charitable purpose and allows political activity to take over as the end in itself has gone outside the bounds of what is acceptable for a charity. Whether or not that has happened in any individual case is for the Commission, as regulator, to decide."

That is a clear statement. I have certainly been involved in organisations that are, if not political in the party sense, certainly quasi-political, and have never registered as charities because they suspect that they would fall foul of such a regulation. A long time ago I was involved in the Welsh Language Society, and that has never registered, although it has the charitable-type aim of preserving and extending the use of the Welsh language.

It is clear that some charitable bodies have been wary of political activities and there is a danger that their priorities will be skewed by the funding regime under which they work. We are all aware of that danger and it needs to be constantly reviewed. The Prime Minister wrote in the report that the aim was to make "space and opportunity" for the third sector to flourish, and we can all sign up to that. No one would say that they did not want to make space and opportunity for the third sector to flourish.

My experience of third sector organisations—those involved with mental health, benefits, mental handicap and learning difficulties—is that they are often the most innovative in public sector social policy. They face problems with sustained funding—a point that I made in an earlier intervention. Before I was elected in 2001, I was an adviser to the Welsh Affairs Committee on its long drawn-out investigation of social exclusion. We talked to a large number of voluntary organisations during that investigation, all of which pointed out the problems of chronic short-termism in funding. They often spent February and March either writing notices to their staff or trying to scrabble around for odd bits of money. A three-year funding term would be welcome. Some small community organisations were talking about a five-year period, so that they could develop their services, and the professional roles of their paid-for staff—people could be sent away for training and come back to make a useful contribution, perhaps before moving on to other jobs.

I mention in passing two social enterprises in my constituency as good examples of the contribution that the third sector can make. Antur Waunfawr is a project working with people with learning difficulties. It was set up in the 1970s following a hospital scandal in Wales, which led eventually to the closing of large mental handicap hospitals, as they were called. Antur Waunfawr is a village project with both housing and employment on site, and is now developing other services. The important thing about it is that it is not set apart from the village, but an organic part of it. Local people feel quite happy to call into the garden centre and the café; its open day is attended by many hundreds of people.

The project arises from the community, which is certainly the view taken by its founding force, a man called Gwyn Davies, who tragically died last Friday. He certainly saw his role in Antur Waunfawr as being to root it in its own community. Other hon. Members have talked about projects in their communities, and I think the best such projects share the aspect that they are part of the communities from which they sprung. Antur Waunfawr has developed a recycling arm, which looks much more like an enterprise, or a small business. It recycles furniture and takes away waste paper, including confidential waste, and provides a service to all sorts of local businesses. It is not a not-for-profit organisation. It makes a profit, but that goes back into the business. It is quite hostile to the not-for-profit label, because it makes one.

The other organisation to which I would like to draw hon. Members' attention is called Galeri. It set out to renovate shops in the town of Caernarfon in a manner consistent with its mediaeval, Victorian and Georgian architecture. When it ran out of shops, it built a multi-million pound arts centre on the quayside. It is a fantastic place and I encourage anyone coming to Caernarfon to drop in. It has a very good restaurant and bar; it has a performance space, theatre and all kinds of stuff. That shows how able Galeri was to mutate, change and morph from being a company doing up shops to one that undertook the huge enterprise of building an arts centre. Most people in Caernarfon think that it is owned by the Welsh Assembly Government or the council, but it is actually owned by that third sector organisation.

I shall close with some of my concerns, which are based on funding evaluation and the ability of organisations to network. Last year, an investigation took place into the third sector in my constituency by a group called Menter a Busnes. It concluded that third sector organisations find it difficult to know where sources of funding are—none of its conclusions were surprising—and an increasing number of them are looking to commercial activities to supplement their funding. They tend to run into trouble when they divert their personnel towards commercial activities, rather than the central purpose for which they were set up. None of that is surprising, but this evidence comes from ground level.

As far as evaluation is concerned, fewer than one third of the organisations surveyed had any mechanism for measuring and analysing their social and economic contribution. Only one in three organisations were actually measuring what they were doing. I was involved recently in something called a social audit, which is a new method of evaluation, for Antur Waunfawr. We found that £1 spent by the local voluntary organisation goes further environmentally, socially and economically, especially in rural areas such as mine.

The investigation by Menter a Busnes found that voluntary organisations have few avenues for sharing and learning from other organisations in the same field locally and nationally, and that they are less effective than the private sector at initiating commercial activity, marketing their efforts, recruiting personnel and assessing their effectiveness. Those are all learning points for the future. It was also found that voluntary organisations are not sufficiently familiar with methods of bringing their expertise to bear on public policy, and thus making a contribution to formulating and implementing that policy. A great deal more could be done in Wales and England on that.

Photo of Rob Flello Rob Flello PPS (Rt Hon Hazel Blears, Secretary of State), Department for Communities and Local Government

The hon. Gentleman is making a thoughtful speech, although I am sure that the names of some of the organisations are giving the Official Report writers some difficulty. Do not his findings from the social audit report further emphasise that lack of core funding for small charitable organisations means that they are unable to do many of the things that he outlines?

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Education), Shadow PC Spokesperson (International Development), Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Health)

The hon. Gentleman makes a good point. Antur Waunfawr happens to have grown to a sufficient size to engage in a social audit. It pulled in people like me—I gave a day of my time to it—because it was a thorough investigation, which took qualitative and quantitive evidence from local people involved in the organisation in a long drawn-out session. However, as the hon. Gentleman points out, not all organisations can do that.

I emphasise the third sector's potential to contribute to local life and the local economy and its key role in helping formulate, develop and implement policy. I look to see the third sector grow in my area. The roots are deep and should be nurtured.

Photo of Mark Lazarowicz Mark Lazarowicz PPS (David Cairns, Minister of State), Scotland Office 3:27 pm, 18th October 2007

I am delighted to have the opportunity to make a few comments in this afternoon's important debate, not least because, by the end of our discussion, a total of five Labour and Co-operative Members will have either spoken or intervened. That is no accident because those of us who come from the co-operative as well as the Labour tradition have at the heart of our political philosophy the co-operative ideal of self-help and communities working together to address the needs of their society and area. It is therefore unsurprising that we have an interest in how to extend community self-help, which is behind the thinking in the review.

Like, I am sure, all hon. Members, I am fortunate in having a wide range of campaigning and non-governmental organisations—charities and non-charities—active in my constituency. The headquarters of large, campaigning NGOs, such as Friends of the Earth Scotland, are in my constituency. The headquarters of organisations that provide valuable support to charities and NGOs on the ground are also based in my area. They include Citizens Advice Scotland and the Scottish Council for Voluntary Organisations. I believe that all their staff are full time, but their work assists tens of thousands of volunteers who work in communities in Scotland. To echo a point that was made earlier, it is dangerous to pick out the number of full-time staff in organisations because that does not always take due account of the work of those organisations.

Hon. Members may have noticed that I am wearing in my lapel a poppy from the Poppyscotland appeal, which was launched yesterday in the Scotland Office in Dover house. I am fortunate to have the Poppyscotland headquarters and its poppy factory in my constituency.

That is just a snapshot of some of the headquarters and national organisations that are based in my constituency. I would not even dream of picking out too many local organisations, for fear, apart from anything else, of perhaps offending those that I did not mention. Like all of us, if I were to list the local organisations active in my constituency, we would be here well beyond the 6 o'clock deadline and probably well into tomorrow. I once tried to count how many people were involved in local activity in the third sector in my constituency. I estimated the figure to be certainly well over 10,000, and probably 20,000, with 1,000 to 1,500 organisations, illustrating how much the work of community organisations and the third sector is at the heart of community life and society in all our constituencies.

Community organisations provide a vital role, as all hon. Members know, not just in delivering community services and assisting in their provision, but in giving voice to communities defined by both geography and interest. In many cases, community organisations also help to re-establish some of the basic social bonds that have broken down or to build those bonds that have never been established in the first place. Such organisations play a vital role, and I am sure that we have all experienced that in our constituencies.

Many of the policy areas affecting the third sector in Scotland are devolved. I will not take up the House's time by talking in detail about issues that do not fall within the responsibility of the Minister and the UK Government. There are, however, a number of important areas in which what the Government have done is of great benefit to third sector organisations in my constituency, just as I am sure it will be to organisations in the constituency of Hywel Williams and hon. Members from other constituencies outside England.

Mention has been made of gift aid. Unlike Mr. Maude, I continue to believe that gift aid is a wonderful support for charities. Without that innovation, introduced by the Government, many charities would not be able to do the kind of work that they do. I pay tribute to what has already been achieved not only by gift aid, but in trying to respond to the concerns raised by charities about how gift aid schemes operate.

I was intrigued by the suggestion that Mr. Walker made to make it even simpler for charities to make use of the gift aid regime. I saw the Minister nodding away enthusiastically when the suggestion was made. I am not sure how far his nodding was a commitment on behalf of the Government—perhaps he is not nodding now; I do not know—but the suggestion was certainly interesting. I suspect that it would probably be of particular benefit to small charities that have not started to make use of gift aid, perhaps because they feel that any bureaucracy is too much extra work to bear, so I hope that the Minister will take up that suggestion.

Photo of Andy Reed Andy Reed Labour, Loughborough

This is not a Co-operative matter specifically, but about gift aid and sports clubs. As my hon. Friend said, many organisations are so small that it is not really worth their while to take the scheme forward. One thing that is being promoted is the idea of extending gift aid and working on, for example, junior subscriptions. As he rightly said, tens of thousands of people give up their time to help voluntary sports clubs. One way to make a significant difference would perhaps be to extend any changes that we make to junior subscriptions, which would encourage more people to get involved and to participate, which would benefit them, and would remove some of the obstacles caused by the complexities of gift aid as it stands currently.

Photo of Mark Lazarowicz Mark Lazarowicz PPS (David Cairns, Minister of State), Scotland Office

I am grateful to my hon. Friend for that point. Perhaps I should declare an interest: I am about to fill in the renewals for the subscriptions of two of my children for the junior football groups in which they are involved. He makes a good point. For people who already spend so much time volunteering to support local organisations, any extra bureaucracy is something that they could do without. Anything that makes it simpler for them to attract finance to support their activities is important. My hon. Friend has made a valuable suggestion and I hope that the Minister will nod enthusiastically about it, either now or in his departmental meetings at a later stage.

We have been talking about co-operatives, and many of the Government's measures on co-operatives apply to Scotland as well as to England and Wales. The support for credit unions has also been important. I am fortunate to have in my constituency the headquarters of the Capital credit union, one of the most innovative in the UK. Credit unions have been supported by the UK Government. I also mentioned Citizens Advice Scotland, which is funded by the Government to do work related to money advice and citizens advice. I believe that the Government are still the major funder of that organisation. We have also seen some welcome changes to the rules set out by the Department for Work and Pensions, which will make it easier for people to do voluntary work while still claiming benefits, to a certain extent. All these issues are relevant to my constituents, just as they are to those of Members of Parliament from England and Wales.

I want to suggest to the Minister a way of making it even easier to contribute voluntarily to community organisations in the third sector and thereby be a benefit to society. This suggestion, too, has UK-wide possibilities. We should encourage even more employers to facilitate arrangements for their employees to take time off to contribute voluntarily to local organisations. Many employers already do a wonderful job in that regard and there are many interesting schemes, of which I am sure the Minister is aware, to encourage such activity and make it possible.

Some employers, however, are not as good as they ought to be at encouraging and enabling their employees to take part in voluntary activity in their local society. There are particular problems for small businesses, which find it difficult to allow their employees to have time off in this way, but there must be ways of developing the ability of employers to encourage their employees to take part in voluntary activity. I think that the statutory right still exists for local councillors, justices of the peace, magistrates and some others to take time off to engage in public duties. I am not sure that I would want to apply a parallel arrangement for employees taking part in voluntary activity, partly because the exercising of that statutory right has been problematic, and partly because I would not want to add a complicated regulatory regime to the burdens already affecting employers. However, there must be some way to give greater rights to people who want to take part in voluntary life in the community, and to encourage and facilitate that activity when people face an unhelpful attitude on the part of their employer. I hope that the Minister will think about that suggestion.

I said earlier that it is essential that all sectors of government show respect for the work of the third sector and encourage its ability to provide for the needs of our communities. I mentioned the recent decisions of the Lib Dem-SNP council that now, thanks to the proportional representation system, runs the administration of Edinburgh city council. I must emphasise that I did not raise that matter in a partisan way. Norman Baker knows that I am as non-partisan as he is. I would have made those points if the council were Labour, Tory, Unionist or anything else. I raised the matter because it provides an example of precisely what should not be happening. We know that after years of campaigning and arguing, we finally reached a situation in which the majority of local council funding for local organisations in my areas was being provided on a three-year rolling basis. Organisations had a degree of certainty with service level agreements that were designed to allow them to plan year by year. Then they suddenly found that their funds—what they had thought was their guaranteed three-year funding—were to be cut in the middle of the year. That will not encourage financial stability for local organisations.

In opening today's debate, my right hon. Friend the Minister for the Cabinet Office emphasised how important long-term stability of funding really is, particularly for third sector organisations. I would not expect my hon. Friend the Parliamentary Secretary to get too involved in the internal politics of my city council—though he is welcome to do so if he wishes—but I hope that in his summing up, he will emphasise how important it is for all levels of government to try to work towards a regime in which funding for voluntary organisations is much more secure and much more long-term.

We want to avoid anything that can be debilitating to the work of staff, volunteers, voluntary committees and so forth. They do not want to spend half their time every year running around trying to raise money to keep themselves going for next year. All too often, they have just completed one funding application only to be at it again in respect of the funding for next year. Security of funding is vital to community, non-governmental and voluntary organisations and charities. The more we can move towards such security, the more we will help those organisations to maximise the potential they can offer to their society and community.

Photo of James Duddridge James Duddridge Conservative, Rochford and Southend East 3:42 pm, 18th October 2007

It is a pleasure to speak after such a veritable shopping list has been drawn up for the Minister to follow up. I would like to add a few more items to that shopping list, in my own modest way.

Charity is probably in MPs' blood. If we run through our pockets, desks or handbags, we will probably find a raffle ticket or an invitation to something that we attended last week in our constituencies and neighbouring areas. I am also interested in charity from a legislative perspective, and I sat on the Public Bill Committee that considered the Charities Bill. However, this is not a debate about charities; it is about the third sector.

I am a little bit unsure about the usefulness of the "third sector" terminology. Mr. Bailey talked about silos and the need to break them down, but pulling together a disparate group under the umbrella of the third sector is not particularly helpful. I assume that the third sector is so described on account of the other two sectors—public and private. The Government have passionately tried to merge those two in respect of financing and provision. Even in the pure charities sector, we hear about a lot of merging and about Government provision via charities. Even within the third sector, there are massive differences between a mutual, a co-op and a social enterprise.

In his introductory remarks, the Minister said that many people did not understand what social enterprise was. If they actually saw social enterprise, or if they knew that Divine chocolate was a social enterprise, or that getting involved in the community and doing things for themselves rather than relying on the state amounted to social enterprise, they would understand it a lot more. However, it is not always helpful when we use this terminology.

I mentioned MPs and their involvement in charities earlier, though last weekend was one of the few in which I did not visit a charity—but Age Concern came to visit me, which was a pleasure. The charities in Rochford and Southend, East tend to be hubbed around RAVS and SAVS—Rochford Association of Voluntary Services and Southend Association of Voluntary Services. I suspect that that is similar to what Mrs. Moon described within her constituency. Such voluntary service associations can be very useful, particularly in overcoming some of the core problems in the charity sector which have been discussed, including those to do with training, long-term finance, the provision of buildings, core funding and having a degree of continuity over time.

One charity particularly worthy of mention in Southend is the Southend Fund. I mention it not because of the good work it does, but because of its structure. It was initially pump-primed with a sum of about £100,000 by a mayoral fund four or five years ago, and that has subsequently been added to by other mayors and mayoresses of Southend. The principle behind the charity is to make micro-donations to small organisations—particularly those that are, perhaps, associations rather than pure charities. Hywel Williams referred to this topic. That is a sensible way forward, not least because it reduces bureaucracy. The Southend Fund does not have any full-time staff; the management of the fund—which amounts to about £250,000—is conducted through the Essex Community Foundation. Very effectively and with little administrative cost, it makes a big difference to organisations such as South East Essex Advocacy for Older People, the YMCA locally, the stroke club and hospital radio. The fund has a major impact without having much bureaucracy.

There has also been a debate about whether small or big is good, and whether local or national is good. In his introductory remarks, the Minister for the Cabinet Office said that small was not always best, but I think that local is best. Norman Baker suggested that Age Concern bridges those gaps by being a national organisation but with local offices.

My hon. Friend Mr. Walker talked about problems to do with funding via the Government and primary care trusts to charities that provide specific functions. I am concerned that the expansion of the PCT in Southend will lead to a decrease in public sector utilisation of local charity provision.

However, I support the idea of a deep relationship between the public sector and the so-called third sector—or, specifically, charities. Charities can be much more effective than the public sector in delivering locally. There is a good example in Southend. The PCT funded "Growing Together", a garden area where people with mental health problems grow produce and sell it on. That is a very effective project. I would like there to be more such funding, rather than PCTs and central Government trying to get a one-size-fits-all solution for the country or a region.

I have a concern about greater Government funding: I am unsure what the tipping point is. Mr. Bailey discussed the funding of charities and whether there is a point when it becomes difficult for organisations to be independent of central Government. I think that that tipping point stands at about 50 per cent. My hon. Friend the Member for Broxbourne mentioned charities that are 90 per cent. funded by Government money. That is too high; such a large proportion of Government funding and influence means that there is too much crossover between the charity sector and the public sector. It also leads to me thinking that some of the people I speak to at the local level have, as it were, two hats on—a quasi-private sector hat to do with the provision of services and another one as an independent volunteer.

I recently met a constituent who wanted more interaction with my local authority, and wanted me to assist. He said, "They only want to consult; I want to be involved." When I asked what was the difference between consultation and involvement, he said, "Three hundred pounds." The point was that one process constituted a consultation for which he would wear his voluntary sector hat, while the other constituted involvement through the same organisation. I think we should be a little careful about some of these arrangements, especially as they affect the smaller charities in our various areas.

As for large charities, I am worried about the extent to which they are taking on a momentum of their own at national level and becoming somewhat detached from their local organisations. I recently saw the post of director of fundraising and finance for a big and reputable national charity advertised in a newspaper. The salary offered was £80,000. While I recognise the need for professionalism, that is a long way from the fundraising activities of the charity in Southend.

The Minister spoke of getting public servants more involved in charities, and there has also been discussion about providing small blocks of time for people in the private sector to become more involved. Perhaps there could be long-term secondments for both civil servants and private-sector individuals to assist charities with some of their core functions—such as finance—which require a large amount of technical expertise, although it is possible that if they went into the charitable sector for only a short time, they might add much more value than if they remained there for a long period.

I was interested to hear about asset transfers to the third sector from both central and local government. I hope the Government will make it much easier for councils to make such transfers, perhaps consulting the asset books to see what is available. We should also take a good look at ourselves as a nation, and ask why the United Kingdom donates only 0.7 per cent. of gross domestic product while America, for instance, donates an amount closer to 2 per cent. I think that part of the reason is the tax system.

Several Members on both sides of the House have mentioned gift aid. It seems sensible to treat all money received by a charity as money that could be subject to gift aid—as having come from earned income rather than other forms of income, and thus subject to tax relief. That would be a bold deregulatory move; it would also be a bold move in that it would give money to charities that our citizens are already endorsing by donating to them, rather than the money being taken in taxation and redistributed either to the general public purse or in the third sector specifically.

Members have referred to lottery funding and concern about the Olympics. I believe that the lottery will become increasingly discredited if we stretch lottery money further and further into provision of public services, and I hope the Minister will state clearly where that development will stop. I also know that many organisations do not support gambling of any kind. Methodist churches, for instance, have problems because nowadays most funding seems to come from lotteries.

I mentioned earlier that I had been a member of the Committee considering the Charities Bill. The Minister in the Committee was very helpful in resolving issues related to trustees, but a number of concerns were expressed about the public benefit test and private schools. We were unable to convince the Minister in the Committee of the merits of our case in relation to private schools, but I can tell the Minister who is here now that there is still concern, despite extensive consultation with the Charity Commission. In Southend, certainly, schools are concerned about the level of provision. Some are concerned about over-provision in the community—which is not necessarily a bad thing—and some about the opposite, but many are simply talking about the legislation and what they should be doing. That is not the point of the operation: they should be getting on with things, in a clearly defined way.

I am especially passionate about charities involved in the international sector. My hon. Friend Mr. Walker mentioned ActionAid and Ethiopia. After a visit to that country, I know that the charity does some fantastic work.

We need to do an awful lot more in the third world, and to raise charities' profile in this country so that it is acceptable for people to donate money. I went to a Methodist church last week, and found that it had a very interesting system. Young children went around and collected money for the third world, but only 80 per cent. of the donations were used to that end. The remaining 20 per cent. was devoted to UK charities, and that seemed a sensible way of overcoming the argument that we should look after people in this country as well as sending money overseas.

Finally, without becoming over party political, I want to enter the fray in respect of political campaigning. I do not approach this matter from a legislative perspective, but I was interested in what the hon. Member for Lewes said about Tibet. He described how an organisation had effectively split into two parts, one to campaign and the other to provide relief. Personally, I should be happy to donate money to both groups, but the hon. Gentleman was using that as an example of how it is inefficient to set up two organisations.

However, I believe that charities would receive more money if that model were adopted more widely. Certainly I should be prepared to donate to a broader group of charities if it were. For example, if I put money into an AIDS charity, I would prefer all of it to be used to provide retroviral drugs; I would not want it to be used to pay for a glossy leaflet, which would simply end up back on my desk, saying that the Government should do more. There is a case that the Government should do more about AIDS, and also a case that that argument should be funded via charities—but personally, I would not want to fund that.

Photo of Anne Snelgrove Anne Snelgrove PPS (Rt Hon Ruth Kelly, Secretary of State), Department for Transport 3:57 pm, 18th October 2007

I also welcome the report on the role of the third sector in social and economic regeneration. I believe that it may be the first 10-year plan to be brought forward in this area, and the fact that it has happened so quickly is very impressive.

Swindon has a thriving and innovative third sector, comprising both local and national charities, and social enterprises. Like many other hon. Members, I want to use local examples to illustrate the richness of the third sector and to describe its successes and the challenges that it faces. The 10-year vision articulated in the report provides local government and national Government with an invaluable opportunity to strengthen the sector and to ensure that it is truly knitted into the fabric of our society, rather than seen as an option or an add-on, as it sometimes is.

Our vibrant Swindon economy provides an ideal British base for many international companies, such as Zurich, Motorola and MAN ERF, which makes articulated trucks. We are also home to Nationwide, the biggest building society and mutual society in the world. Only this week, representatives of that company came to the House of Commons to launch its road safety campaign, "Cats Eyes for Kids". On Sunday, it sponsored the Swindon half-marathon, which in turn raised money for our local Prospect hospice. Nationwide is an excellent local firm that provides local help for local charities. We in Swindon also make the Civic, Honda's latest success story, and Swindon Pressings supplies the bodywork for the Mini.

All those local companies not only fulfil their responsibilities to the national and international communities through corporate social responsibility programmes, but support our third sector through financial help and workplace giving schemes. They also enable their employees to take part in local volunteering. Their activities truly strengthen our local community—as covered in a key section of the report.

As a contrast to our economic success, however, Swindon also has two of the most deprived estates in the country and, as in any town, some individuals and families live in poverty. Health inequalities mean that life expectancy on those estates is as much as 10 years lower than in neighbouring wealthier areas. While our school and college results have improved over the past 10 years, sadly there are those who do not have the high skills required by Swindon's international IT and top management companies. Others are out of work for a variety of other reasons. We are an asylum dispersal centre, and local support for asylum seekers is extremely limited. Drug and alcohol abuse exists in Swindon, as it does in any similar conurbation. We absorb the homeless from surrounding market towns because our third sector makes provision for the homeless, including the young homeless.

I have given a thumbnail sketch of Swindon, because it demonstrates not only its local capacity, but our locality's absolute need for vibrant third sector involvement. Such involvement is not a desirable option, but a necessity, and is not to take the place of the state, but to work alongside it.

Of course, the third sector is ideally placed to provide innovative solutions and tailored local provision. It can move quicker than central and local government. It attracts to its work force, and as volunteers, many gifted and dedicated people who are highly motivated to make their community a better place. By concentrating solely on a single issue or sector, it can see more clearly what needs to be done. I was thus pleasantly surprised by the report's emphasis on the importance of the third sector's role in campaigning and providing a voice, especially to disadvantaged groups. I was pleased about the new funding to promote community participation and the significant sums to back that up.

There is a difference between political and party political. I hope that the capacity building that the Minister has announced will cover local councils and councillors, because I believe that my local council does not have the political maturity to cope with the third sector campaigning or showing dissent. I worry about councils withdrawing funding from organisations that they see as not agreeing with them or having the cheek—as it is perhaps perceived in some cases—to campaign against a council decision. I have lost count of the number of local charities and not-for-profit organisations that have come to me with tales of woe about money being withdrawn, but asked me not to do anything in public because the council had warned them that my intervention would lead to the withdrawal of funds. That is extremely sad and disappointing.

Several hon. Members have mentioned gift aid, but I want to talk about something slightly different: this year's 20th anniversary of payroll giving in the UK. Payroll giving is the most efficient way in which higher rate taxpayers can give to charity, yet only 2 per cent. of UK workers give in that way. Alongside the actions that come out of the third sector report, I hope that Ministers will campaign to promote payroll giving, because it has so much potential to bring the private sector closer to the third sector. In my experience, companies that promote payroll giving go on to promote volunteering and company funding of local third sector activities.

Payroll giving is a simple, tax-efficient scheme that allows employees to give to any charity that they choose through a deduction straight from their gross pay. It takes just half an hour for a company to fill in the two forms required to implement the scheme. There is no tax for the charity to claim back, because the deduction is automatic. Through organisations such as Workplace Giving UK, a higher rate taxpayer can give £25 to charity every month at a cost of only £15. The same donation made through gift aid would result in the charity losing £5.77 through tax.

"The Business of Giving", a report by the Giving Campaign, found that 96 per cent. of companies with payroll giving in place thought that a good employer should offer such a scheme. Some 83 per cent. said that it was simple for staff to join the scheme and 79 per cent. said that it was easy to run. Other findings were that payroll giving improved company image, staff morale, and staff recruitment and retention. Research by Oxfam and YouGov found that a third of British employees would give an average of £9.60 a month through their salary if they knew how to do it. That equates to an annual total of nearly £1 billion. Surely we can help to release some of those funds. I invite hon. Members to join in with workplace giving, because we can donate through our payroll scheme.

Photo of James Duddridge James Duddridge Conservative, Rochford and Southend East

As the hon. Lady knows, I had the privilege of visiting her constituency this summer, and at an event I sat next to the leader of her local council. I am sure that, despite the political divide, he would be distraught if applications were not supported simply because there was a Labour MP. I was about to say that applicants should not be further disadvantaged, but I will try not to be party political. Will the hon. Lady assure the House that she will write to the leader of her local council about the allegations, giving as much detail as she can, so that the council can follow the matter through and make sure that the problem that she describes does not happen? It would be completely unacceptable if it did.

Photo of Anne Snelgrove Anne Snelgrove PPS (Rt Hon Ruth Kelly, Secretary of State), Department for Transport

I am glad to hear that. I have already raised the issue in private. I think that the leader of the council, Councillor Bluh, would be horrified if applications were not supported for the reasons that I set out, but unfortunately other members of his party would not necessarily be as horrified. I have taken up that issue and a number of others. It makes me extremely angry that charities and not-for-profit organisations still come to me with that problem. I will not release those charities' names as a matter of honour, in case they are punished further. They have asked me not to give their names, and I cannot do anything about that unless they give me permission to name them. I hope that the hon. Gentleman will use his influence with the other people in his party.

To return to payroll giving, one company that knows about the benefits of the scheme is Barclays, which has an office and branches in my constituency, and which celebrates 20 years of payroll giving next month. They work in partnership with the charity Leonard Cheshire on its "ready to start" programme for disabled entrepreneurs. Disabled clients receive equipment, training and support, and are matched with a mentor from Barclays. It is an excellent scheme, and at the end of September Swindon became the 27th place in which it has been rolled out.

At the launch, I was inspired by two different things: first, by the enthusiasm of the "Barclays buddies" for the task that they were about to start; and secondly by the description that Liz, a wheelchair user, gave of her business start-up, which was made possible by the "ready to start" business mentoring scheme. Liz now runs a part-time business, offering bed and breakfast to fellow disabled people in her bungalow in Poole. The business is so successful that she has bookings for all but two weeks this year. The business not only allows Liz to be defined by her abilities, rather than her disability, but increases her income and provides her with more independence. Leonard Cheshire's 60 years of experience in working with disabled people, plus Barclays's business expertise, means that they are ideal partners to deliver that important scheme. They are also delivering on an important aspect of Government policy, which is to help people on disability and incapacity benefits back to work.

There are many examples of companies in my constituency that give a strong lead on volunteering and supporting the third sector. I apologise to them for not being able to mention them all. However, as I said before, there are difficulties, and I want to raise the case of a charity that collapsed recently through the local council's lack of support—I am sorry to say that, because I know that James Duddridge will be cross to hear it. There was a good local youth service called Youth Information Swindon, which closed in September this year despite almost universal praise for its work with disaffected and hard-to-reach young people. I give hon. Members my word of honour that I raised the matter in private with the leader and chief executive of the local council as recently as about four weeks ago.

YIS provided support and training for young people aged 14 to 25, many of whom faced social exclusion, and many of whom were not in education, employment or training. Funding initially came from the borough council, as the council felt that it was important to have information and support services for young people in the centre of the town—and good on them for thinking that. However, in March this year, the council decided not to renew the service level agreement. Without the council's support, it was difficult, if not impossible, for the charity to secure enough funding from other bodies to remain sustainable. The charity collapsed in August. I reflect on the sudden pulling of funding, and I welcome the three-year pledge in the report. I hope that the Minister will press councils to take that up as well.

As well as having a drop-in centre in the town, YIS carried out a wide range of outreach work. It ran anger management and "Get Confident" courses for young people that have been praised not just in Swindon, but elsewhere. YIS also ran various workshops that engaged those difficult to reach young people. The young people involved often faced a complex range of social disadvantage and they were given the opportunity to engage in activities in a supportive environment. YIS received many referrals from the probation service, the youth offending team, the youth service and schools and colleges.

Smaller groups like YIS often do not have the funds to employ fundraisers. It is almost impossible to deliver the work of the organisation and secure enough funds to remain sustainable. Greater financial support is desperately needed for community based organisations so that they can continue with their important work. The collapse of YIS leaves us poorer as a community. Now that the people who ran YIS are dispersed throughout the community, it will not be possible to rejuvenate it.

I know that time is pressing, but I want to mention briefly another issue in my town: asylum seekers. We have the Harbour project, which nestles in the shelter of a church in the centre of Swindon. It truly provides a safe harbour for the many people whom it helps. It has been in existence for seven years and an almost incredible number of visits are made to the drop-in centre—3,800 in the year to April 2007, compared with 829 in the same period to April 2003. Those visits are made by people from more than 60 countries across the world, representing many languages and faith groups. There is virtually nothing else for asylum seekers between Reading and Bristol.

That is a difficult group to help and reach. It is not a fashionable group. There is some opposition to such work, and I thought long and hard about whether to give publicity to that work today. The difficulty for the drop-in centre is that one of its major funders had just dropped out. Seeking new funding is always an arduous process for small organisations, and the outcome of applications is far from predictable. In addition, there seems to be less money available and more competition to obtain it. That leaves the Harbour project with the prospect of having to cut activities and abandon new developments. I hope that the 10-year plan will help Harbour remain the strong organisation that it is today, and I challenge Swindon borough council to continue to support that important project.

The charities that I have mentioned will be extremely pleased with the announcements in the report, including the expectation that when Government Departments and their agencies receive their 2008 to 2011 budgets, they will pass on that three-year funding to the third sector organisations that they fund as the norm, not the exception.

I shall finish with some information from Voluntary Action Swindon, which welcomes the £10 million of new investment in community anchor organisations and community asset and enterprise development, but wants the term "community anchor" to be clarified. We need some of the supporting money in Swindon to help us understand how we can use community anchors. I was interested in that aspect of the report, and I hope that we will get some help in that respect.

National Compact week is coming up from 1 to 8 November. All local public bodies, including Swindon borough council, and 44 community and voluntary organisations have signed up to the Swindon compact. The working relationship between the public sector and the third sector has been improved since the launch of the compact in 2005, but it is important to have sufficient resources to implement it and its five codes of practice.

Voluntary Action Swindon has asked me to say that it should be a statutory duty for local authorities to support and fund the local Compact. Both the Big Lottery Fund and Capacitybuilders are keen on funding sub-regional, regional or national organisations' infrastructure or front line. Voluntary Action Swindon is concerned that local infrastructure organisations will lose out in getting funding in that way. At a meeting with me in early September, its representatives pointed out that a balance must be struck to ensure that local groups get sufficient support from local and regional infrastructure. A number of national and regional organisations that are not based in Swindon have scooped up contracts and tenders to deliver services in different areas under the regime of commissioning and public service delivery. Voluntary Action Swindon is concerned that that process will continue, which will drive out small, local charities and not-for-profit organisations.

This Labour Government are working in partnership with the voluntary sector. They have backed up their policies with proper funding from the state to enable the voluntary sector to flourish, and I commend them for that. Businesses in Swindon are also working in partnership with the voluntary sector, and I want to praise them for doing that and to encourage the local council to do more. My call is for the council to do more, for the Government to encourage payroll giving, which is a success story in Swindon and up and down the country, and for Ministers to join the payroll giving scheme.

Photo of Fiona Mactaggart Fiona Mactaggart Labour, Slough 4:15 pm, 18th October 2007

I declare my interests as a trustee of the Mactaggart cyber café, of Commonweal Housing and of various charitable giving trusts—I have been involved in that area all my life. I want to discuss three important aspects of the strategy report, which are voice and campaigning, strengthening communities and creating a healthy environment for the third sector.

Government Members and Opposition Members have had a ding-dong about voice and campaigning, and I am disappointed by the view taken by Conservative Front Benchers and Back Benchers that there is something distasteful about charities choosing to campaign. We need to trust the charitable sector. I do not believe that an organisation such as Save the Children would spend an enormous amount of its money on political campaigning unless it thought that that was effective. Furthermore, I know that my constituents are keen to spend their hard-earned money on that organisation.

It is worth trying to think through where the voice comes from. In the first instance, it comes from the efforts of those charities to meet particular needs. Such charities see when the shoe is rubbing in statutory services, and they realise where the gaps are. Sometimes they invent services to fill such gaps—the hospice movement, the carers movement and the probation service were all invented by the voluntary sector—but sometimes they rightly point to the Government and say, "Shift yourselves. Get active. Do it."

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office)

The hon. Lady is labouring under a misapprehension. We have no intention whatsoever of changing the constraints on campaigning by charities, which, as she has rightly pointed out, Save the Children does effectively and vigorously. We have no plans for change, but the Minister has.

Photo of Fiona Mactaggart Fiona Mactaggart Labour, Slough

The review makes it clear that many charities are held back from campaigning—indeed, charities often silence themselves, because of the present restrictions. We need to create an atmosphere in which they feel free to use their expertise in order to gain changes in the law. It is worthwhile our understanding where their voice comes from. It comes from expertise—for example, bodies such as Citizens Advice provide advice and advocacy—and from a connection with the most excluded people in society, who often do not vote or even manage to make their way to our advice surgeries. The capacity to provide a voice is a critical part of the role of the third sector, and I urge the Minister to do more in that regard.

I am glad that the Minister has proposed in the review the creation of a more permissive atmosphere for political campaigning for charities. May I draw to his attention the fact that the Department for Education and Skills is planning to axe the small but effective community champions fund, which provides £3 million a year to enable individuals to tackle issues around them? It is one of the central Government funds to go to individuals. I have seen it promote initiatives that range from creating the national charity for foetal alcohol syndrome to mums fixing things for their children here.

I am sure that the Minister did not mug up on this before the debate, but I strongly urge him to point out to his colleagues at the Department for Education and Skills how, for example, the community champions initiative can create the activism, volunteering and civic engagement that so many in this debate have talked about. James Duddridge described the issue well when he said that charities are in MPs' blood.

We are politicians; we want to change the world—although some of us want it to go backwards and others want it to go forwards. Nevertheless, we are interested in using politics and social action to achieve an end. In current discourse, many people think politics a rather unsavoury way of achieving social ends, but find charitable action appropriate for achieving them. By getting involved—starting by shaking a tin for poppy day next week or whatever—people become more aware that they have a role in society, that things are not just decided by others and that they can change them. They become more capable of organising things in their neighbourhood, thereby creating a more autonomous society with more powerful citizens. The third sector contributes substantially to strengthening communities through all sorts of voluntary organisations. As MPs, we are interested in civic action and politics and should welcome it when organisations are prepared to use their knowledge, contacts and expertise to run overtly political campaigns for change. Without that, some of the changes that we need would not happen.

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office)

The hon. Lady and I agree; it is that very connectedness that allows charities to campaign—for example, on social problems—from a position of knowledge, which is essential. We think that that connectedness should remain, which is why we resist the Minister's proposal that a charity should be able exclusively to engage in political campaigning.

Photo of Fiona Mactaggart Fiona Mactaggart Labour, Slough

The hon. Gentleman mischaracterises the proposals, but I shall allow the Minister to explain the extent to which he does so.

The third issue on which I want to focus is the review's proposals to create a healthy environment for the third sector. I welcome the proposed £80 million investment in supporting organisations for front-line charities. Often, the micro-charities that have been so praised in this debate simply do not have the infrastructure to enable them to do all the things that they aspire to do. They require underpinning support, ranging from meeting rooms to IT support and training. The review's proposal is sensible, but I ask the Minister to take care to ensure that, when making the investment, he does not create a self-fulfilling circle of slightly smug organisations that look inwards and not outwards. There is a serious risk. I hear wonderful organisations in my constituency who work with some of the most deprived, marginalised and excluded communities express concern that the council for voluntary service is always using its own rooms so they can never get somewhere to meet, or that the CVS's discussion with the local borough council is a closed loop that does not include small organisations.

It is vital that this investment is used to help people to reach out. I would suggest, for example, that it is used to help develop different models of accountability for voluntary organisations. At present, many of the funding streams are frankly oppressive. If we could find simpler ways of allowing local voluntary organisations to provide appropriate accountability for taxpayers' money, we could make it easier to give money. That is a problem that is worrying Government to some extent. In their innovative proposal to provide endowment funds and community network funds, I read between the lines and become anxious about accountability and processes. The initial paper that was published in June suggested explicitly that there would be £50 million of capital grant in

"endowments for community foundations to make sure they can provide grants in the future for community groups."

That seems to be happening rather slowly, and I am anxious about that because I am keen on making progress as swiftly as possible. There is a good reason for that. At the moment, many community foundations, certainly in Berkshire, are operating through the local network fund. Local network funds will run out in March 2008, which means that foundations will have to have made their final grant-making decisions by that date and from then on will no longer need the staff who make grants. Unless some of these funding streams are in place in time for them to continue, we will lose a significant on-the-ground source of expertise that can facilitate such small, targeted, grant-giving micro-organisations. Community foundations solve problems that are often under the radar of local authorities, often developing witty and intelligent ways of finding funding. I urge that this resourcing should happen quickly.

This is an intelligent paper in terms of providing resources to local organisations. When I speak to charities, I always say, "Find lots of places to get money from. Don't just be a one-legged stool, because otherwise what will happen is what happened to Battersea law centre", which I mentioned earlier. Wandsworth council cut off its grant and it was about to fall over until one of the grant-making trusts that I was involved in gave it a grant. Following that, it developed the capacity to raise money from private law firms, charities and trusts, and has continued successfully ever since without Wandsworth council. It is very important that organisations have sources of income that are as diverse as possible. They should generate their own income through social enterprise, secure grants from charities, get money from the public sector, find sources of money from businesses, and so on. The proposals on funding in the paper will help with that.

There is a particular concern about community assets. Community organisations should be able to acquire assets and use them in order to generate funds. I am sometimes depressed about effective voluntary organisations failing to milk their assets sufficiently well. We should put pressure on them to do that, but, as a caveat, we also need to ensure that where a public asset is put into a community organisation's plans, there is a guarantee about its return to the public if that particular community organisation comes to an end. I hope to be reassured by the Minister who sums up that there are proposals to do that.

I have spoken a lot about the important role that I think local endowment funds can play. One of the reasons why I think that and why I welcome the proposal for that, is that they can generate charitable giving. We need to increase and normalise the degree of such giving in the UK. This proposal will help to do that, but we should examine other proposals that also achieve that. There has recently been much talk in Parliament about the Government taking money off people after they have died, but they should encourage people to give away money before they die. We should urge the Chancellor to examine the model of the remainder trust or living legacy, which is used in the United States, to encourage people not only to retain security in their lifetime, but to give substantial assets to charitable causes.

There are imaginative ways in which we can encourage charitable giving without nationalising. I once heard Darcus Howe powerfully, and in his inimitable voice, say to Ken, when talking about the Greater London council and voluntary organisations, "Don't you nationalise our efforts." He meant that statutory takeover can diminish human effort, which is at the heart of charity. The interesting thing about this strategy is that it is good at avoiding such traps. I urge the Minister to go further down the routes I have mentioned to ensure that in avoiding those traps, the Government avoid some of the little traps in their good strategy that could diminish its effect.

Photo of Andy Reed Andy Reed Labour, Loughborough 4:31 pm, 18th October 2007

I am grateful to have the opportunity to speak. I shall add something slightly different from some of the things that we have heard this afternoon. I am a Labour and Co-operative MP, so I am delighted that so many of my colleagues have had the chance to highlight the benefits of mutualism and the co-operatives. I was particularly pleased that my earlier intervention in respect of the training that is required so that other people start to understand social enterprise, mutuals and co-operatives at regional development agency level has been met with a commitment at a meeting with RDAs yesterday. I am proud of that.

Before I entered this place, I worked as a project officer for Leicester city council and Leicestershire county council working with the voluntary sector. I suppose that I was slightly on the wrong side, in that I was the person who said whether or not it could have its money, but really it was the other way round, because I found myself as the advocate for the voluntary sector in the local authority. I saw, day by day, the enormous power that the voluntary sector could have in economic development. This is not the traditional role but, in economic development and employment initiatives, the voluntary sector was able to reach target groups that large bureaucratic organisations such as local authorities and some private companies could not, particularly when it had European social fund money. The voluntary sector could relate to individuals.

The strength of the voluntary sector is that many organisations probably began because parents could not find provision locally and they got together as a self-help group and things grew from there. This is the source of the innovative approach: people coming together when existing structures do not meet the demands of and changes in society. That is my experience.

Like many hon. Members, I sit on a number of trusts and charities in my constituency. My involvement has meant that people have asked to get involved, and I am delighted to give my time just to allow that to happen. Such bodies range from small organisations such as STEPS, where I am a trustee, to the Rainbows hospice in Loughborough, which is an organisation that has to raise nearly £2 million a year. I dread the thought of waking up every 1 April as the fundraiser, knowing that it must raise £2 million a year just to keep going. However, it does so because of the good will of the people of Leicestershire and the rest of the east midlands. I am proud to support that too.

As many hon. Members know, my specific area of interest is sport. As far as I am aware, the fact that 26 per cent. of volunteers are people who volunteer in sport has not been mentioned. My background in volunteering and sport means that I recognise that there are differences between the areas. The voluntary sector does not necessarily see sport as part of the traditional voluntary sector and we sportspeople do not necessarily see ourselves as part of it. I now chair my county sports partnership. We have brought on board someone from the voluntary sector—from Voluntary Action Leicester—to ensure that its voice is heard around the sports table, and vice versa.

Some research was done recently looking at the volunteer centres around the county and the provision of services. It was highlighted to me that between 16 and 20 per cent. of people who turn up at a Voluntary Action centre looking for an opportunity to volunteer want to do so in sport. However, my own tests show that it is unlikely that those centres have a connection with the local sports clubs that are desperate for volunteers. We need to work to ensure that the voluntary sector in its widest sense understands the needs of volunteers in the sports sector.

It is a two-way process. Part of the problem is that volunteers in sport do not necessarily regard themselves as volunteers; they just see themselves as helpers. I do not regard myself as a volunteer, but then I had a quick think about last weekend. On Friday night I helped to take my son's under-8 football team to watch England under-21s at Leicester City's ground. The fact that a Mexican wave started after 21 minutes sums up the quality of the football we saw, but at least they won. On Saturday, I played my normal game of rugby for the side I have belonged to for 25 years. We now have a second team, so I have been relegated to captain of the second team. There I was, putting out the posts and the pads before the game kicked off. Then on Sunday morning, at church, it was my turn, as it is once a month, to do the cornerstones group—as it is now called, although it is still old-fashioned Sunday school to me. I do not regard myself as a volunteer, but without realising it, over one weekend, I had been helping on three occasions.

Over the last few months I have been working with the Scout Association, and my plea is on behalf of those people who regard themselves as helpers rather than volunteers. The voluntary sector has, rightly, professionalised itself. We need child protection and all the other apparatus that surrounds the volunteer, but we are almost too keen to professionalise the volunteer. When I helped with the Beavers last year, I found that to become more than a helper I had to attend Wednesday evening training courses and a half-day on a Saturday, and that became too much. I just wanted to help regularly, not to become a trained volunteer.

In the discussions that I have had with sports coach UK and the Scout Association, it is obvious that they have started to recognise that people are now only able to give a lower level of commitment. Some 65 per cent. of us now have an atypical working week, so the capacity to volunteer every Friday night, or every Saturday or Sunday morning, is not there for most people. Their work-life balance does not work that way. We need greater flexibility in how people are allowed to volunteer, so that they can become simply helpers.

The Olympics will provide fantastic opportunities for sports volunteering. My sense is that we had a good start. As people know, we need about 70,000 volunteers for 2012, and in the first three months more than 120,000 people registered on the site, so we have more than enough people willing to volunteer. I volunteered myself, and I have received an e-mail and one other communication since. It is a golden opportunity to involve those people who want to get involved, and we need to grasp the initial enthusiasm. I know that there have been discussions and some plans have been made, but we need to move forward and use the time that we have. We do not want to over-train people, but we need to take this fantastic opportunity. People should also be encouraged to volunteer locally.

Sport relies totally on its volunteers. I have mentioned the danger of over-professionalising in another context, and sport is now going through the same process. The Government's idea of introducing 3,000 community coaches is welcome, but it will professionalise things. We have to get the balance right and ensure that when the professional coaches come in, they do not squeeze out the keen amateurs who keep the clubs going in all our constituencies. I am grateful for this brief opportunity to highlight the sports volunteering agenda. The Minister has attended the meetings I chair for an organisation that is a strategic partnership of all the people involved in sports volunteering. We are a positive group of people who want to make things happen because that is the approach we take in sport. People just want to help—to get their teams and their individual athletes out. That is their sole motivation.

I hope that when we talk about the third sector, whether we are talking about mutuals or large charities, we remember that 26 per cent. of volunteers in this country regularly support local sports teams and sports clubs through their efforts. Whenever we think about that, I hope that we ensure that sport is not missing from the agenda.

Photo of Barry Sheerman Barry Sheerman Chair, Education & Skills Committee 4:40 pm, 18th October 2007

I am grateful for the chance to speak; I do not really deserve to because I have been on Committee duty elsewhere, and although I have popped into the debate during the afternoon, I have not been able to hear all the speeches, so I apologise for that.

I am a serial social entrepreneur, and it would be remiss of me if I did not make some contribution, but for all of us who are interested in social enterprise and the third sector, it is rather like the title of the Norman Mailer book "Advertisements for Myself". This is not an advertisement for myself, but I have started about 40 social enterprises, most of which are still going, ranging from the charity that the House of Commons doctor and I started, working in the barrios in Peru—INCA, the International Committee for Andean Aid—to my most recent one, which some of my colleagues will have been bored by, namely an education and environment enterprise in the home of John Clare, one of the most noted English poets of the countryside. I chair a small trust that has bought his house, and we are turning it into a national centre for many things, including education outside the classroom.

Social enterprise is one of my great passions. I wanted to make my views clear to the Minister for the Cabinet Office, He knows them well because he came to talk about the third sector in Huddersfield recently, and attracted a large audience. He outflanked the Queen in one respect. Her Majesty was going to open a new media centre in Huddersfield the next week, but evidently had a secret view, whatever that is, the week before. Social and private enterprise is important in every community and I want to speak about the barriers to it. One of the barriers that the Minister will know of, and of which everyone throughout the country will tell him, is core funding. Often there is a really good team, and people forget that social entrepreneurs are the same as private ones. One can take land, labour and capital and mix them up, but it is the entrepreneur who produces something that makes a difference and adds value. Social entrepreneurs add value that at least matches the value of what is done by private entrepreneurs. I am keen that we see ourselves as entrepreneurs with those challenges.

One of the problems for social entrepreneurs is that at an early stage no profit is made, so there is no margin allowing them to employ people. They often rely on charitable money, a foundation or local authority help to get started. Often it is the kick start, the seed money, that they need. That is similar to the experience for a private sector entrepreneur getting started; sometimes a relative lends money to a new enterprise that starts, for example, in someone's garage, and it grows from there.

There are some very good social enterprises. My hon. Friend Fiona Mactaggart put her finger on it when she said that the secret of any enterprise is not to rely on one specific income stream. If people do, they may find that the income stream disappears at some stage. I will give the House an example. I have built an organisation called Urban Mines, which is a very successful environmental group. Our main income was from the landfill tax, but then the wicked Government changed the basis of landfill tax and prevented anyone from using it for educational or research purposes. Of course, the main income for my group, which employed 18 people, suddenly dried up. The good news is that we could respond because we had built up such a talented team, which was able to go out, find different sources of income and address different markets. Urban Mines is now a leading innovator in technology and science and in understanding contaminated land and recycling and reuse. We survive and thrive as a national organisation that is based in Halifax in West Yorkshire.

Relying on one source of income, especially for core funding, can cause problems. Social enterprises can approach different funders, but they are fond of projects. For example, earlier today I met representatives of HSBC. So many people want to fund a project that one can sell it to them if one gets it right. It adds value to them, the enterprise and the purposes for which one is involved in it. However, they are not keen on core funding, yet that is often what makes the difference. If I were to ask the Minister for help on anything, it would be core funding.

Core funding comes in different ways and I believe that the Treasury could change the tax rules even further to help people who are willing to give to social enterprise—not only to charities but social enterprise more broadly. We should devise new ways of doing that. We have devised a project in my constituency and in the broader area of Kirklees. When I mention Kirklees, people tend to think that it is in Scotland, but it is one of the largest metropolitan authorities in England—in many senses, it is Greater Huddersfield. We have created a Huddersfield enterprise foundation and managed to get some seed money to start it. We ask anyone who has a business idea—in the private or the social sector—to go through what is termed on television a "Dragons' Den". We call ours a pussycats' den.

We sit with experienced business people from social and private enterprise and listen for 40 minutes to the pitch of the person who comes through the door. That is a wonderful innovation and we are trying to roll it out in as many towns and cities as possible. It provides a genuine opportunity for a large range of people of all ages, who have never been in business previously, to form a business, whether social or private. People who apply go before the panel and get about 40 minutes of helpful suggestions. If they get through that stage, one of the finest business plan writers in the country helps them to write a business plan. If they get through that, they go on a residential weekend in a rather nice hotel, where they work with all the other aspirant businesses. If they get through that, we can invest up to £5,000 in their business. It works and it transforms people's lives. Let me give one example.

A young man with a scientific background came to one of our first dragons' dens. He suffers from renal failure and was sick of having his life dominated by dialysis every four hours. He had invented a pack—a small backpack or laptop—that liberates him or anyone suffering from renal failure. It is called Renal Freedom. It means that he can go anywhere—down to London for a business trip or up a mountain—with the rechargeable pack that allows him and others suffering from renal failure to live a full life. That idea has been snapped up and has a wonderful future.

The best organised pitch that I witnessed was made by a young man who could play four instruments and wanted the whole world to be able to play a musical instrument. He was determined to make instruments available and cheap. He had a wonderful coloured catalogue. He had worked out that the cheapest violin one could buy in Britain was £60 but that he could import one from China for £30 and still make a profit. It was the most formidable presentation of the evening. The only slight surprise was that the young man was 15. He has now reached his 16th birthday and can become a company director. He is already flying as a young business person.

But that still only leads us on to our next stage. The next stage is to create our own foundation—I understand that we are not allowed to call it a bank under the banking laws, and the banks are quite sensitive at the moment. We need to reinvent things like the Yorkshire penny bank and the mutual concept. Like many others who have spoken today, I am a Labour and Co-operative Member of Parliament. Having a social bank in each of our communities is something that the Government should help us to stimulate. If we had the backing of certain elements of the financial community and we could give people the opportunity to invest in their own communities, they would see that that investment led directly to social and private enterprises that provide employment.

That is true for all of us who represent towns like mine. When I first became the candidate in Huddersfield, there were a large number of big manufacturers, which were the major employers. ICI employed 6,000 people in Huddersfield 25 years ago. Syngenta, the successor company on the same site, now employs 400. One can go across to David Brown Engineering, to Hopkinsons Engineering or to the manufacturing sector in most towns in this country and see the enormous pace of downsizing. What is the largest employer in my constituency now? It is the university of Huddersfield. Thank God it is there. Thank God for Harold Wilson's decision to give the technical college polytechnic status, which then became university status. It was voted new university of the year, with Patrick Stewart, the fine Shakespearean actor, as chancellor and a useful and exciting university campus, with 23,000 students.

I want to end on this point. If in all our towns and cities we had the combination of investment in higher and further education linked to what I call the new social investment banks, we could make a difference as never before. The one thing that I would like to have seen in the report and that I would like to come from the Minister is some seed money and some leadership in getting the partnership ready to roll out a new social banking system for every community in the country. We have already piloted the system. It works in two ways. People can invest in a social bank, but they do not receive any interest. We found that remarkably attractive. People who do not want to give away £50 will give £50 on the assurance that they can get it back within a month. The amount might be £500, £5,000 or larger—a charitable foundation or local company might even want to give some money to the bank. Perhaps the Government want to give us some seed money. The system means that we can have a social enterprise bank running that can do stuff early on.

I end as I started, I hope on a campaigning note. I love social enterprise. I love the entrepreneurial challenge that it produces. More hon. Members should be social entrepreneurs, and anyone who wants to come to Huddersfield to see how we do it would be very welcome.

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office) 4:53 pm, 18th October 2007

This has been a good debate. For the most part the honey, or treacle, of bi-partisanship has flowed through our proceedings—

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office)

Absolutely—multi-partisanship, not bi-partisanship. However, that is not surprising, because the Minister is a genial man, as we know. He has a sympathetic ear and a reassuring tongue, but we sometimes wonder whether his elbows are quite sharp enough in engaging in his job. It almost seems impolite to mention the performance of the office of the third sector, but I am not sure that it quite lives up to the billing and reputation that he enjoys personally.

The office of the third sector, which was a Conservative idea, was set up to be a strong voice and an advocate of the third sector right across government. Now that it exists, however, it is a meek organisation that is too often ignored. In June this year, the National Audit Office condemned the "baroque complexity" of the present funding arrangements for the public sector. The office of the third sector agreed that that description was a fair assessment of the regime over which it presides. If we look at the Compact—the key bulwark that exists to protect the sector and provide a Government guarantee of fair treatment—we see that it is in meltdown, as my right hon. Friend Mr. Maude said. The chief executive resigned in June, and the commissioner resigned in September.

The further one goes from the Minister's office, the more widely the Compact is ignored. One chief executive of a charity told me that a major public service commissioner had physically torn up the Compact in front of her to illustrate the degree of respect that he had for it. The Compact is toothless, spineless and, as we have heard, increasingly useless when it comes to protecting local charities on the ground. What is the Minister doing about that? The purpose of the office of the third sector is to be strong, to bully people and to bang heads together. It has some way to go before it achieves that. Mark Lazarowicz complained about a three-year funding contract that was taken away after a single year. That is precisely the kind of situation that the office of the third sector was designed to act on.

Let us consider the components involved. Full cost recovery is not a new idea. It was a binding commitment in the 2002 Treasury review, on which I assume the Minister was an adviser before he came into the House. We were promised that all Government contracts would be let on the basis of full cost recovery by 2006. According to the Charity Commission, however, last year only 12 per cent. of charities reported achieving full cost recovery all the time, and 43 per cent. said that they never achieved it. Another key component is long-term contracts. The 2002 Treasury review again promised stable funding, but the Charity Commission says that two thirds of funding contracts are for one year or less.

The office of the third sector is punching below its weight in seeking to make a difference to the culture around the country. It has no clout with its neighbours. Community Service Volunteers was owed £3.7 million by the Department of Health for a contract. It complained to the Minister, but that had no effect; it had to go to the newspapers to make a difference.

My right hon. Friend the Member for Horsham also mentioned the Department for Work and Pensions' pathways to work programme. The office of the third sector exists to protect the interests of the voluntary sector, but only this year we have seen aborted contracting processes costing charities tens of thousands of pounds. Stephen Bubb, who is a self-confessed mate of the Minister, says that the voluntary sector has been "comprehensively stuffed". If even the Minister's mates are telling him that he is not standing up for them, what hope have we?

I was concerned that a number of Labour Members wanted the Minister to visit their constituencies—as if that would make a difference. I have been looking at the written evidence submitted to the Public Administration Committee's hearing on this matter, and I think that those Members should think twice before issuing such an invitation. The memorandum submitted by Women's Health in South Tyneside states:

"We have entered into contracts through the LSC for the training aspects of our work and we are buckling with the bureaucratic demands this places upon us...I would like to add that this organisation which was visited recently by the Minister for the Third sector...has recently had 2 substantial funding streams removed at short notice."

So much for his attention to the interests of the sector!

We need to see a more robust performance from the office of the third sector. Warm words are not enough. One would think that the Minister, of all people, would have the ear of the former Chancellor of the Exchequer, now the Prime Minister, yet we know that £70 million was lost to the third sector at a stroke in the Budget, as my right hon. Friend the Member for Horsham pointed out earlier. There was no mention of it in the Budget statement or in any press release. The Budget was carefully constructed to protect all, or most, of the losers from the consequences, but the one group of people that got no protection at all was the third sector, which the office is supposed to represent.

The office of the third sector has influence without achievement, and we need to improve on that. We had the first Olympic raid, totalling £213 million, in June 2006. The second raid involved the loss of £675 million, £100 million of which was from the charities that the Minister has pledged to protect. The Minister says that grants are important, but as a proportion of the sector's funding, they have fallen from 52 per cent. to 38 per cent.

When it comes to campaigning, the Minister for the Cabinet Office is keen to align himself with the advisory group. I would like further clarification, but he seems to have engaged in something of a climbdown this afternoon.

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office)

It is made clear in the third sector review that

"the Government can see no objection—legal or other—to a charity pursuing" its objectives

"wholly or mainly through political activities".

Earlier, however, in response to my right hon. Friend the Member for Horsham, the Minister said that exclusively political activities would not be allowed. Does that continue to be his position? If so, what is his position on the use of "wholly or mainly" political activities to promote a charity's interests? Is he still in favour of that? What has changed since the publication of the review in July to justify his backing away from the stated purpose to allow charities to pursue their purpose

"wholly or mainly through political activities"?

I will give way to him, if he likes, so that he can clarify the reason for the change of heart— [Interruption.] Perhaps the Parliamentary Secretary will save his blushes.

I do not know what has happened between then and now, but the Minister for the Cabinet Office has got himself into some difficulty. He should read his own fine print and he should reflect before associating himself too closely with his colleague, Baroness Kennedy. She bases her review on an assertion—no doubt true—that trust in charities

"far outstrips the confidence placed in political parties", but the Minister's answer seems to be to make charities more like political parties. If we go down that road, we are likely to suffer a loss of confidence, which would be disastrous for all the good causes expressed here today.

Photo of Norman Baker Norman Baker Shadow Minister (Cabinet Office)

I seek clarification of what the hon. Gentleman thinks is going to happen here. What does he believe the Minister has agreed to, and what is the worst scenario that is likely to result from the position that he believes the Minister to hold?

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office)

It is impossible to know what the Minister has agreed to; I would like to hear from him. It is clear in the review, as I have already pointed out, that the Government have no objection to charities being "wholly or mainly" engaged in political activities. Today, the Minister says that they cannot be "wholly" political, so I would like to know whether they can be "mainly" political. We would all like to know that. What we do know is that the Minister is putting pressure on the Charity Commission to change its definition. We would like to know more about that pressure.

As I said, the Minister is wrong to associate himself too closely with the review. Baroness Kennedy states that the consequence of not going in this direction is that

"charities will be pushed into a tiny area of traditional paternalistic or benevolent assistance".

What a patronising view that report takes of the contribution of the charity sector! Does the advisory group really dismiss anything beyond campaigning as being "tiny" in its impact or "paternalistic"—a term used pejoratively in that context? If that is the company that the right hon. Gentleman is keeping on this matter, we are right to be concerned about his intentions. He should think more carefully before entering into this territory. He trucks with charities at his peril. As the Baroness rightly said, they enjoy a high level of public trust, much greater than that of political parties, so the last thing that we politicians should do is to undermine the confidence of donors in the charities themselves.

Let me deal with some of today's speeches. We have heard some good and robust ones. Christine Russell, in a cheery and upbeat speech, talked about the extent of voluntary activity in Cheshire. Such activity is typical in all our constituencies. It is constantly amazing how varied and diverse voluntary activity is. The hon. Lady mentioned that she will be in her local charity shop, supporting it to the best of her ability. I am sure that we will all find opportunities to volunteer on "make a difference day".

Norman Baker is impressive in his reading material, as I see that he scrutinises Whitehall & Westminster World. His point about the independence of the sector is key. In a world where there is more contracting with the Government, which I think is a good thing, it is especially important for charities to benefit from buoyant sources of voluntary income. In terms of building capacity and independence, the best source is having a robust flow of funds so that organisations do not always have to kowtow to Government.

Charlotte Atkins talked about the importance of core funding and the citizens advice bureaux. When I was a member of the Public Accounts Committee, we had a hearing with the permanent secretary of the Department for Work and Pensions on the complexity of benefit forms. He pointed out that the DWP now includes the CAB national telephone number on its forms, because they require some interpretation, but of course not a single penny is paid by way of contribution to the CAB for the extra work that that causes it. It is presumptuous to rely on organisations such as the CAB that provide such useful services without reflecting that in their funding.

My hon. Friend Mr. Walker told us about the exploits in the great north run of his nine-year-old son, whom we all congratulate. My hon. Friend also mentioned the amazing sum of £403,000 that that group of people raised, which illustrates the level of commitment that there was. That is a great success story.

My hon. Friend also talked about the importance of volunteering. It is crucial that we have sustained volunteering. Many voluntary organisations welcome one-off incidences of volunteering, but it is the people who are prepared to return week after week who are essential for maintaining services—especially young people, who can continue doing so for many years.

My hon. Friend talked about gift aid, too. I agree that we need to end the paper-chase that surrounds gift aid. It is ludicrous that in the 21st century people have physically to fill in paper forms merely to certify that they are taxpayers. There must be more efficient ways of doing that.

The hon. Members for West Bromwich, West (Mr. Bailey) and for Caernarfon (Hywel Williams) also made speeches. The hon. Member for West Bromwich, West talked about co-operatives. He is right that we should extend our discussions so that we talk about not only charities but co-operatives and social enterprises of all descriptions.

The hon. Member for Edinburgh, North and Leith also talked about gift aid, and I think that at the time one of the Ministers was nodding—I could not see properly because the Dispatch Box was in the way. That was a helpful sign that the representations made to the Government review of gift aid might be sympathetically received. The Institute of Fundraising and its coalition share our view that we should move to a paper-free way of allocating funds.

My hon. Friend James Duddridge made a fluent and passionate speech, largely without notes. He discussed the use of the term "third sector". I sometimes think that that is not the best term. The term "the third world" is now thought to be rather pejorative and patronising.

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office)

Indeed; we do not want to get into a discussion of that, but the third way has certainly lost its way.

We should talk about "civil society", rather than patronise the sector by using terms such as the "third sector". As Mr. Reed said, we should instead be talking of it as the first sector; often people have come together through voluntary initiatives before the commercial or public sector get involved. I hope that that point is merely a question of terminology, and that it does not indicate positions in the pecking order.

Anne Snelgrove gave a thumbnail sketch of the situation in Swindon. It showed how weak the Compact has been in practice. The Compact should protect charities from certain pressures; it makes it clear that they should not be constrained in their activities by unreasonable demands from funders. The Ministers with responsibility for the office of the third sector face the challenge of how to move beyond Whitehall and make a difference in our local authority areas.

Fiona Mactaggart touched on campaigning, which we have thoroughly aired, and finally, Mr. Sheerman made a bravura contribution. Unaccountably, he has now disappeared. Having not been present for much of the debate, and then having entertained us with his account of the amazing number of social enterprises he has created, he has now left us with the impression of that speech but without the ability to congratulate him in person on it. He has obviously gone to create another social enterprise—for which I am sure that we are all relieved and delighted, as he will not now intervene on the wind-up speeches.

It was high time we had a debate on the third sector; it is many years since the last one. It is a bit of a shame that the debate took place on a Thursday afternoon when some Members had returned to their constituencies, but I hope it will not be so long before we have a chance to discuss this subject again.

Photo of Phil Hope Phil Hope Parliamentary Secretary, Cabinet Office 5:10 pm, 18th October 2007

We have had an excellent debate. Members in all parts of the House have made it clear that the third sector is alive and kicking, and all the better for it. All around the country, in every community, it is standing up for people, campaigning for change, creating stronger communities, transforming our public services and building many new social enterprises.

As we heard from all who spoke today, the third sector makes an enormous contribution to our society, to our economy—as we were reminded by my hon. Friend Mr. Reed—and our environment. As one who has worked in the voluntary sector and run a social enterprise, and as one of many Labour and Co-operative Members who have spoken in the debate, I feel privileged to be the Minister responsible for the third sector. Ours is the only country to have such a post.

Last night I had the privilege of presenting the Social Enterprise of the Year award to Divine Chocolate, which makes and sells fair trade chocolate and supports thousands of cocoa farmers in Ghana. It was a great occasion to celebrate the achievements of a growing movement in the sector, which involves 55,000 social enterprises—including many community co-operatives—with a turnover of £27 billion.

I also had the privilege of presenting awards at the Third Sector and Charity Times gala evenings in September. Both occasions recognised the wonderful work of volunteers, voluntary organisations and community groups in every walk of life, up and down the country. Individual volunteers as well as organisations give their time—in some cases, their whole lives—to the service of others. As was pointed out by my right hon. Friend the Minister for the Cabinet Office, the third sector is the glue that binds us together: 35 million people who make regular donations of charity, 20 million volunteers, more than 600,000 paid staff and nearly half a million organisations driven by their values and passionate in their desire to meet people's needs, build stronger communities, give a voice to the voiceless and change society for the better.

The truth is that successful, thriving communities rely on a successful and thriving third sector. We have a strong economy, and our public services, performing better than ever before, are essential to a fair and prosperous society, but they are not enough. For social justice and a sustainable economy, and for every individual to be the best that he or she can be, we require the unique contribution of third sector organisations—reaching out to people whom Government often cannot reach, being flexible, responding to people as individuals with diverse needs, developing new ways of tackling the hard issues that still confront many communities, and driving and energising the campaigns that change our society for the better,

Our vision is simple. It is the vision of a thriving third sector, robust in its independence, growing in size, flourishing in confidence, and becoming stronger in new partnerships with local and central Government. It is that vision that is spelt out in our third sector review, which was published in July this year after the largest consultation ever conducted with the sector. Our vision is of Government action that recognises the needs of the diversity of organisations in the sector and the different roles that they play in society. It is the vision of a new and genuine partnership between Government and the sector—not a one-sided partnership to control the sector or a neglectful partnership that leaves it to sink or swim alone, but a partnership that is about working together to improve people's lives and creating an environment that enables the sector to thrive: a relationship that celebrates the independence of the sector and its right to campaign, and that works with it to achieve common goals.

As I have said, this has been a very good debate. Greg Clark referred to the contribution of my hon. Friend Christine Russell. We heard not only an eloquent description of her personal history of involvement in the third sector, but a moving account of the work of voluntary organisations in the supporting people programme, and the way in which residents were empowered and skilled in her community. Both she and my hon. Friend Mark Lazarowicz spoke of the role played by credit unions—small co-operatives working in local communities and reaching out to people in times of crisis.

My hon. Friend Charlotte Atkins gave a very good description of what often happens in voluntary organisations: a user of a service—her example was Sure Start—becomes a volunteer in that service and may go on to become a part-time employee, making a transition that would not otherwise be possible.

Other hon. Members, such as James Duddridge, mentioned the importance of umbrella bodies and local infrastructure organisations. They provide vital training, support and advice to small voluntary community groups on the front line, and that is why the Capacitybuilders fund included in the review is so important.

Mr. Walker was one of many hon. Members to talk about the importance of volunteering, and I quite agree that it is a critically important part of our civil society. I am especially enthusiastic about young people undertaking volunteering, a subject about which my hon. Friend Mr. Bailey spoke. Last year, the youth volunteering charity v was launched with Government funding, and it has already created more than 200,000 volunteering opportunities for young people all over England. This year, we will launch a new national youth volunteering programme to guarantee provision for youth volunteering across the whole of England.

My hon. Friend the Member for Loughborough reminded the House of the importance of the role that volunteers play in the world of sport, as they do in many other spheres. All hon. Members will be aware that, this winter, many children and young people in our constituencies will be out playing football, rugby or whatever sport it is that they want to participate in, but the referees, touch judges, coaches and people who wash the kit are the unsung heroes of our communities. My hon. Friend is one of them, and they are the people who make it possible for so many youngsters to take part in sporting activities.

I was dismayed to hear my hon. Friend Anne Snelgrove describe how voluntary youth organisations in her constituency were being cut by the local authority. The opposite has happened in my county: statutory youth organisations have been cut and voluntary youth organisations have been asked to pick up the pieces and deliver the same service on the cheap. That is not an acceptable way forward for voluntary organisations at a local level.

My hon. Friend also reminded us of the contribution made by local companies in her constituency, and I am sure that the same is true across the country. She made a point of mentioning payroll giving, which we should do more to enhance. Interestingly, some 370,000 employees donated £27 million through payroll giving in 1997-98, and those totals had risen to 605,000 and £85 million in 2005-06. That shows that more people are donating through the payroll giving scheme, but we could do better in that regard.

My hon. Friend the Member for Edinburgh, North and Leith also mentioned employee volunteering, and I agree that we could do more in that important area. My right hon. Friend the Prime Minister has charged Baroness Neuberger with the task of looking at how public sector employees might improve the quantity and quality of volunteering in their organisations.

I turn now to deal briefly with some of the points raised by Mr. Maude. He mentioned the role played by the Department for Work and Pensions pathways to work procurement, but I need to put him right on a couple of facts. In phase 1, two out of 15 contracts for prime contractors were awarded to third sector organisations, accounting for some £40 million, or 17 per cent. of the total budget. However, the subcontracting story for the other organisations is also very positive, with 164 of the 374 subcontractors coming from the third sector.

That shows that the accusations made by Greg Clark that the third sector was not playing its part in delivering the contracts were entirely wrong. Indeed, we have asked Mavis McDonald, a former Cabinet Office permanent secretary, to conduct a review, and we are working to ensure that we learn all the lessons from the past when we go through the commissioning processes. However, I am confident that we are going in the right direction.

The right hon. Member for Horsham also mentioned the National Offender Management Service. NOMS has allocated some £600,000 a year from next year, over three years, to provide strategic funding for national third sector infrastructure organisations to advise and support a diverse range of voluntary and community organisations that are working with offenders. The criteria and planning of the programme will be developed with third sector organisations, which seems to be a positive development.

We touched a lot on encouraging social enterprises. Norman Baker and my hon. Friend the Member for Loughborough mentioned the importance of social enterprises in the work of regional development agencies. I confirm that I met the RDA chairs yesterday and discussed how they were spending some £6 million of both office of the third sector resources and their resources to ensure that social enterprises feature large in their work through Business Link and to promote social enterprise in their regions and the new integrated regional structures that they are developing.

My hon. Friend the Member for West Bromwich, West described very well the role and history of the Co-op movement, as one part of social enterprise, on meeting needs and campaigning for change over 200 years. Hywel Williams, who is not in the Chamber, described two social enterprises in his constituency that make a real difference to people's lives.

Many people talked about funding and supporting the environment for a healthy third sector. Let me say a few words about gift aid reform. In 2000, the Government made several improvements to the gift aid scheme. The value of gift aid for charities has increased from £135 million in 1996-97 to more than £860 million in 2006-07. I am pleased that there has been a remarkable success story under this Government. In this year's Budget, the Government announced that they would consult the charitable sector on measures to increase the take-up of gift aid. Contributors to the consultation, including hon. Members who are in the Chamber, have highlighted concerns about the system and areas in which they would like improvements. We expect to publish a summary of responses later this autumn. We would expect to discuss any proposals arising from the consultation with the sector ahead of next year's Budget.

Several hon. Members raised concerns about the Compact. I can tell the right hon. Member for Horsham that the commissioner left his post as chair of the commission for personal reasons, because of the time required for the post. However, I am pleased that we have succeeded in appointing an interim commissioner pending public competition: Helen Baker, who is a non-executive director of the commission. I affirm that there is still a strong case for an independent organisation or entity to take operational responsibility for the Compact so that there can be an impartial voice for its successful implementation. We remain fully committed to the Compact. The review announced a continued focus on the Compact as a means to build the relationship with the third sector at all levels of government. We will provide new investment for the commission for the Compact over the comprehensive spending review years, which will be set out later this year.

My hon. Friend the Member for South Swindon mentioned Compact week, which will be at the beginning of November. I hope that that will be another opportunity for central and local government organisations to affirm their commitment to implementing the Compact proposals. There will be an annual review of the Compact in December when Ministers from all Departments will meet the third sector to discuss further progress.

We heard about the importance of the stability of funding and full cost recovery. The hon. Member for Tunbridge Wells was a little negative about that—it is true to say that he was negative about everything. The proportion of Government funding reported as including full cost recovery has risen from 49 per cent. to 57 per cent. The Compact's annual survey shows that the amount of funding based on full cost recovery increased from 25 per cent. in 2002 to 42 per cent. in 2005. Of course, there is more work to be done, but we are demonstrating that we are taking forward work to embed a culture change across Government in the way in which we work with the third sector, including through programmes such as those to train commissioners.

On the three-year funding, I remind the House that as Minister with responsibility for the third sector I will report annually on progress across Government to the Chancellor and the Chief Secretary to the Treasury, who will write shortly to Departments to remind them of the Government commitment that submissions would be made to us by the end of the year on how three-year funding is being implemented, and how it is being cascaded to other agencies.

The hon. Member for Rochford and Southend, East asked a question about the charitable status of independent schools. The Charities Act 2006 makes clear the principle that charities must be "for the public benefit". Independent schools are just one group of charities in whose case the presumption of public benefit is being removed. In any decision on whether charities, including independent schools, are "for the public benefit" and so qualify for charitable status, the key is access. To pass the public benefit test, an organisation has to be accessible to a sufficiently large section of the population. I look forward to the Charity Commission—the independent regulator—producing its final public benefit guidance later this year. Finally, let me turn to campaigning.

Photo of Norman Baker Norman Baker Shadow Minister (Cabinet Office)

Before the Minister turns to campaigning, which I want to hear about, can I point out that a number of Members, including me, raised the issue of core funding, which, with respect, he has not yet addressed?

Photo of Phil Hope Phil Hope Parliamentary Secretary, Cabinet Office

I was aware that time was not on my side, but I will address the issue that the hon. Gentleman raises. There are important points to make on the subject. First, through Capacitybuilders, we have established important core funding for infrastructure organisations, which are not front-line organisations but those that serve the front line. We expect local authorities to use capacity building funding to ensure that infrastructure bodies can provide the core funding that is needed to deliver the training, advice and information that front-line organisations need. That is an important part of the next phase of the funding programme.

I would also say to the hon. Gentleman and to organisations that are interested in the debate that organisations that deliver a service should not distinguish between their service to the public and the administrators who back it up; those administrators are key to front-line service. The money is not project funding, but core funding. When people think about making an application and drawing up a service level agreement, they should ensure that it includes an understanding of the fact that the core is front-line service delivery. If that is discussed, and if the application is made in that way, many of the issues can be resolved.

Also on that point, and on ensuring that local councils promote and fund voluntary organisations in the way that I have described, I should mention the public service agreement targets that were announced recently. In the local government performance framework, one key indicator for local councils relates to their responsibility to promote a thriving third sector. It is those kinds of levers that will enable local voluntary organisations to ensure that their local authority, unlike some examples mentioned in the debate, fulfils its obligation to fund the third sector. Let me turn to campaigning.

Photo of Barry Sheerman Barry Sheerman Chair, Education & Skills Committee

Before the Minister moves on, my hon. Friend Fiona Mactaggart asked a couple of specific questions about community funding networks. If the Minister has time, will he come back to the matters that she raised?

Photo of Phil Hope Phil Hope Parliamentary Secretary, Cabinet Office

It is kind of hon. Members to pick up on the points made that I have not managed to cover. On the subject of community champions, my hon. Friend Fiona Mactaggart made a fair point. I will discuss her concerns with my ministerial colleagues, so that we can think about how the matter can be taken forward. In a debate of this kind, I cannot guarantee any outcomes, but I can tell her that the points that she made were heard loud and clear by Members on the Front Bench. We will do our best to respond positively, where we can.

Photo of Fiona Mactaggart Fiona Mactaggart Labour, Slough

I thank the Minister for that, but I made one other point on a matter in which he does have some power: I wanted to try to accelerate the funding process for the Community Foundation Network.

Photo of Phil Hope Phil Hope Parliamentary Secretary, Cabinet Office

As we speak, we are working hard on the model for distributing community endowment funds, so that we can get the money down to the local level, and so that grants can be distributed from April onwards. We are also working hard on the £80 million community grant scheme. We want to find the appropriate mechanisms for delivering those two funding streams. We want to make sure that those funds are delivered by local organisations that understand the locality, so that the revenue stream that comes from endowment funds and locally delivered community grants directly deliver what local organisations most require. I hear loud and clear the request that we get on with that so that there is no gap and the money can flow from 1 April. I assure my hon. Friend that I will do my best to ensure that that is the case.

On campaigning, I declare a small interest. For example, I attended the Lymphoma Association 21 years celebratory reception in the House this week. The association campaigns for improvements to the treatment of Hodgkin's disease, for which I have just been treated. I think my attendance at the reception was absolutely right, because I would not have benefited from the health service delivering a better cancer treatment service if that organisation had not been in the forefront of running campaigns for transforming our public services.

We should not be ashamed of campaigning. As we heard eloquently from Members in all parts of the House, it is the way that charities can speak up for those who do not have a voice and who feel overlooked. I agree with my hon. Friend the Member for Slough that it is a strange irony that the Opposition say that they want independence for the sector, but when it comes to a voice in campaigning, they do not seem to be quite so keen.

We stated in the review document that we do not want to change the law, but we do want to provide reassurance to charities that they can campaign and speak out without looking over their shoulders, as many feel they must at the moment. It is for the Charity Commission to talk to the sector, as it is doing, about the details of those matters and to prepare its revised guidance. It is already clear from the Charity Commission briefing and the question and answer documents that it issued in April that it recognises, rightly, the issues being raised. It recognises the uncertainty in the current guidance. The questions and answers are helpful and will form a good base for the revised guidance.

Specifically on the question of dominance, the key point is that any activities must be in pursuit of the charitable purpose for which the organisation was set up. Decisions on what is justified will be a matter for the Charity Commission, but it is already clear that the commission thinks that there are cases where it is acceptable for campaigning activity to be temporarily dominant so long as it is in pursuit of charitable purposes. As the commission says,

"it may be that the trustees of a charity have exercised their discretion properly, looked at the range of means open to them, and have decided that for the time being the charity's purposes are most effectively pursued through political activity."

Every charity in the country will have heard the attitude of the Conservative Front-Bench team to the right of charities to speak up. It sounds like a desire not so much to make poverty history, as to make campaigning history.

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office)

We all know that charities are temporarily able to have a dominant campaigning purpose, but should it be permanent?

Photo of Phil Hope Phil Hope Parliamentary Secretary, Cabinet Office

Those on the Conservative Front Bench are shifting position as they speak. They are embarrassed by their position on campaigning and by the Leader of the Opposition, who chose this week to try to make the third sector a political football by describing us—the Government—as undermining the third sector, which is palpably nonsense. Government support for third sector organisations should not be about abandoning them in the guise of setting them free, abusing them by cutting public services and getting charities to do the work on the cheap, or patronising them by emphasising the importance of independence but complaining when they campaign. We want to create an environment in which the third sector flourishes, is independent and develops new partnerships. That is a 21st century approach to a thriving third sector.

Photo of Tom Watson Tom Watson Assistant Whip (HM Treasury), Member, Labour Party National Executive Committee

I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.