Voluntary Sector Funding — Question for Short Debate

– in the House of Lords at 4:23 pm on 24th November 2011.

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Photo of The Bishop of Ripon and Leeds The Bishop of Ripon and Leeds Bishop 4:23 pm, 24th November 2011

To ask Her Majesty's Government what action they will take to support the work of publicly funded voluntary groups in deprived areas in the light of cuts in local authority budgets.

Photo of The Bishop of Ripon and Leeds The Bishop of Ripon and Leeds Bishop

My Lords, the voluntary sector in our society is effective, innovative and massively underfunded. The other day I was standing in a Leeds street discussing with community leaders why there were no riots or disturbances in the city in August this year. There was a good deal of sensible discussion about the key points of what had happened in the summer. But the point upon which people agreed was that the immediate presence on those restless evenings of the youth workers who mingled with young people gave expression to their authority and calmed nerves. Some were directly employed by the city, but more were members of a variety of organisations, many of them publicly funded and many of them faith-based, which run or have run youth work within the city. One of the community leaders said, "If this happens next summer, there won't be the youth workers to provide confidence for the young people of Leeds".

Those issues are key to a discussion of the work of voluntary groups in deprived areas. So much work is done by this collaboration between local authorities and voluntary organisations. I am sure that the Minister, when he replies to the question, will want to affirm that work. Yet, there is now such a massive threat to so much of it. I take as an example Thrive West Midlands, which is a faith-based infrastructure organisation in Birmingham founded by the Church Urban Fund, which has worked with the city to obtain continued funding for daycare centres for the elderly. That fits so well with the social care debate that we have just been having.

There has been some success, but, for example, the Weoley Castle Community Project has had to pull out of direct daycare making two staff members redundant because of a failure of funding. The impact on the elderly in situations such as that is immense. Individuals suffer and those individuals are often among our most deprived citizens. I know that we face cuts, but it should be for those of us who can afford it to bear the weight of those cuts; not those under most pressure already. There would be no great loss if the dustbins of our comparatively well-resourced suburb were emptied fortnightly rather than weekly. Many of us could afford higher council taxes, yet the pressure is always on the weaker members of our society.

To its credit, Manchester City Council has tried to ring-fence homeless support, but the Booth Centre for the homeless there has had a £40,000 cut from DCLG which means that it is unable to bear the burden of homeless people coming there because of the closure of other advice centres.

Leeds has a good record of collaboration with the voluntary sector through Third Sector Leeds and I pay tribute to the collaboration that we try to express in the city. Yet we have seen cuts, for example, to English as a second or other language provision, which helps people to integrate more fully into our exciting multiethnic society. This has made it all the more difficult for asylum seekers and refugees to be served and helped as we try to support them through charities such as Meeting Point in Armley. That means that the volunteer provision is often unused because we cannot find premises or expenses. There are volunteers who would like to be involved. It is becoming true that some of them cannot afford to be so.

The examples could go on, and I know that the Minister, as a good Yorkshire inhabitant, will want to respond to the particular pressures that we have in the north. Hope Housing in Bradford writes of the increase in clients becoming homeless because of higher rents in the city. The Association of Chief Executives of Voluntary Organisations points to the probable closure of Oxfordshire Children and Voluntary Youth Service, which has placed 3,100 young people in volunteering positions. We know that closures such as those mean a waste of talent, energy and commitment and yet we have not yet found a way to circumvent it. It is not impossible. Philanthropy and generosity have remained remarkably buoyant during the financial squeeze. There could be tax encouragement to make that philanthropy more effective, but philanthropy is not enough. There needs to be some specific ring-fencing of government money, public money, for areas such as mental health, where charities struggle as mental health issues grow, with increasing homelessness and fear. There need to be incentives for money to be directed to areas of most need, and to those organisations which use most volunteers. Earlier in the day, we thought of how there could be incentives for firms which have most apprentices as they seek to provide facilities for the Government. There could be a parallel in direct incentives for those who use volunteers. It is no use exhorting local authorities and then squeezing the amounts they have to work with in the voluntary sector.

There needs to be a greater fairness in the allocation of local authority funds. It is those under most pressure which face the most substantial cuts. So I looked at the authorities with the maximum cut of 8.8 per cent in 2011-12. I began to feel that there might be a personal vendetta in this, because they were most of the places in which I have lived and worked-places like Knowsley, St Helens, Doncaster and Manchester-whereas those with the small cuts are the places where I go on holiday: Dorset, Rutland or West Sussex. The most challenged include some London boroughs: Hackney and Tower Hamlets. For the most part, however, the cuts to local authority funding represent a significant transfer of money from the north to the south. That can only widen the north-south divide which plagues our economics, and which I am quite sure the Minister regrets.

There are a variety of ways forward. I have tried to suggest some of the possibilities. I look forward to hearing proposals from others who speak, and to hearing which of those directions the Government will follow in fulfilling their desire to encourage both volunteering and voluntary groups in their contribution to our society.

Photo of Lord Rennard Lord Rennard Liberal Democrat 4:32 pm, 24th November 2011

My Lords, it is six months since I was in the very beautiful cathedral of Ripon, speaking to the synod of the diocese of Ripon and Leeds in its debate on the big society and the role of the church. I welcome the debate this afternoon. In many ways, it will mirror that debate last June, which can still be found on the very good diocese website.

The discussion in the cathedral that morning actually reminded me of rather more political gatherings in many ways, as it revolved around what first seemed to be simply a technical amendment. The main motion said:

"This Synod welcomes the opportunities for the Church's contribution to the common good represented by the Big Society".

The amendment that was carried changed this wording to say:

"This Synod recognizes the opportunities for the Church's contribution to the common good represented by the Big Society".

The difference between those two positions reflects a dilemma faced by many people, communities and voluntary organisations. This is a dilemma about, on one hand, the principles of the big society, which some of us have always called community politics and some may call the good society, and, on the other hand, the practicalities of recognising the need at present to reduce government expenditure.

My invitation to speak at the cathedral arose from the fact that earlier this year I had been asked by the Association of Chief Executives of Voluntary Organisations to chair a commission looking at the role of the voluntary sector in the big society. By the time we reported in May, I had met more than 60 charities and voluntary organisations working in many different parts of this country.

I would say that all of them and indeed all the members of the commission-they came from different backgrounds in the voluntary sector, all the major parties and the church-agreed principles about the big society that are relevant to our debate this afternoon. They all recognised that power and responsibility are shifting in our society; that individuals and communities now have more aspiration, power and capacity to take decisions and solve problems themselves; and that we all need to take greater responsibility for ourselves, our communities and each other. However, just as these principles were commonly agreed, so were the dangers clearly seen that cuts in local council budgets risk undermining many of these principles.

Although the charities and voluntary organisations that I met were very realistic about the country's economic problems, many of them feared genuinely that they would suffer disproportionately from cutbacks and that this would particularly affect their work in many of the most deprived areas of this country where their efforts are most needed. This resulted in a debate in our commission about how far local authorities could or should be directed to provide services directly themselves or via the voluntary sector. We concluded that it was not compatible with localism to direct local councillors in this way, but we all agreed on the need for much greater transparency in the way in which local councils decide to provide services directly or via alternatives involving the voluntary sector, and how they calculate the costs and benefits of these different approaches.

Frequently, we came across problems arising from government expenditure decisions being taken at different levels and based on a far too narrow a consideration of the costs and benefits to that particular part of government in isolation-what they often call a "silo" mentality. We also saw the application very often of too much short-term consideration, which prevented proper evaluation being made that might otherwise have justified some of the expenditure that was being reduced.

Early on in my role as chair of the big society commission, I was challenged on the "Today" programme about whether promoting big society values and the role of the voluntary sector in general was simply a question of spending money and that doing that was not compatible with making the savings in public expenditure that everyone knows are presently required. As ever in my experience, it is always to rebut a charge with a clear and specific example. I was able to quote in the programme the case of what was then Age Concern in south Staffordshire, an example of where funding a voluntary organisation actually led to savings in public expenditure. It was working with seven hospitals to look after older people prior to admission and again as soon as they were ready to come out. By helping to prepare these older people for going into hospital, and helping to support them at the earliest possible time for returning home, their stays in hospital were of a much shorter duration, and of course they were much happier to be in their own homes for more of the time.

The funding to help 3,000 people a year in this way was £500,000 per year, but it saved the NHS around £3 million per year, as these people were in hospital for a much shorter period. It saved £6 for every £1 spent. However, shortly after the programme, I was asked not to use the example again because the £500,000 funding had just been cut-an example of short-termism and the silo mentality. That approach in how decisions over public expenditure are taken needs to change.

The Association of Chief Executives of Voluntary Organisations, known as ACEVO, has given me many similar examples, not all of them based on local authority cutbacks but where the same issues arise. When I was chairing the commission, I spoke to many charities and voluntary organisations that needed professional support and help with things such as the cost of maintaining premises. They explained to me that these organisations could exist only with some significant help from the public purse, especially in low-income areas, but by undertaking the work that they did they could often cause significant savings to be made in the long run to the public purse. The common problem, they explained, was that the haste in which the Department for Communities and Local Government had agreed cuts in local authority budgets meant that some local authorities were able to make their cuts in the required time only by making them disproportionately at the expense of the voluntary sector, and probably also at the cost of additional expenditure to the public purse in future. Of course, some but by no means all local authorities saw the voluntary sector as a softer target in any event.

The Government's transitional fund helped that problem to some degree and was a welcome £100 million for a year, but it was for one year only and against cuts that the NCVO estimates at about £3 billion over four years. One of the projects that I visited, the Liverpool Lighthouse project, benefited from the transitional funding. It raised substantial funds itself but also explained that it was simply not realistic to expect it to continue all its activities so successfully in future without continued significant public support. I saw for myself how it was succeeding in helping to educate young people who would otherwise be skipping school, often beginning a life of crime, at great expense to their neighbourhood and to all of us if they follow routes leading to imprisonment. The project was helping to get people off drugs and out of criminal activity through volunteering so that they had at least the prospect of gainful employment. However, the long-term value of such projects is not properly factored into how public expenditure decisions are made at present.

In our commission report, Powerful People, Responsible Society, we called for much greater transparency in how local authorities fund the voluntary sector and how they decide on the best long-term providers of services. Many local authorities are very sympathetic to these points; they want to see a rapid and massive rollout of community budgeting to reduce the problems of allocating expenditure by one part of government without taking into account the effect on other parts. Voluntary organisations always want the Government to help them to co-operate better by sharing services without the unfair imposition of VAT bills if they cross-charge services to each other and try to get best value for money. Above all, there needs to be much greater respect between government at all levels and the voluntary sector.

The compact between the government and the voluntary sector was refreshed at the end of last year. It will help and it must be fully implemented next year, and local authorities should all adopt the recent best-value guidance setting out the reasonable expectations that the voluntary sector can expect in its dealings with them. I hope that the impact of cuts to the voluntary sector will be closely monitored, especially in deprived areas, and that this subject is one to which we will return in future.

Photo of The Bishop of Derby The Bishop of Derby Bishop 4:43 pm, 24th November 2011

My Lords, this is a very vital topic. I echo a lot of what the noble Lord, Lord Rennard, said and offer the Minister a perspective from the grass roots. I have been talking to colleagues I work with in deprived areas in Derbyshire and, especially, in the city of Derby. We all recognise and accept the need for what we call cuts-a reduction in expenditure-but the plight of voluntary groups funded by local authorities is a very powerful litmus test of how these cuts might be made and what the priority should be around public funding of social welfare.

The Government have called us to have this vision of the big society, in which we all co-operate, so that the capacity that we lose through the cuts can be compensated for by an increase in voluntary endeavour and activity. That is a very great challenge, especially to those in churches and the voluntary sectors. But let me offer some perspectives from those trying to rise to that challenge.

First, many of my colleagues say that the voluntary sector is taking a disproportionate cut of the reductions in expenditure that local authorities are making. In Derby this year, community grants by the local authority are to be reduced by one-third, which is a massive cut in the voluntary sector investment. The voluntary sector generates enormous resources. I saw a statistic the other day that the Church of England contributes something like 23 million hours of voluntary work a month to the working of our society.

However, the reality is that, beneath that, much voluntary endeavour is small-scale, fragile and vulnerable. It therefore needs to have a bigger frame and a set of priorities to help the volunteers and those offering the funding make the right decisions, because my colleagues tell me that at the moment energy is going into survival rather than serving the people who the organisation was set up to serve. They say that we are having cuts in public sector spending and in the voluntary sector but that there is almost no evidence of private investment. The result is what one of them calls a feeding frenzy for funds. The experience is that the lottery is becoming the arbiter of social welfare and making big decisions about that. I do not think that it was set up for that. Who should be making decisions about priorities in social welfare?

I welcome, as do my colleagues, the response of the Government in a lot of commendable initiatives on red tape, a national citizen service, community organisers, best value for local authorities and the notion of the compact but, on the ground, it feels as if all those things are calling energies into process and inward-looking negotiation. They are taking energy away from engaging with the need of people on the street, just at the time when the capacity of the voluntary sector needs to increase.

This is having two results. First, people are becoming frustrated. This week in Derby, Action for Blind People demonstrated in the streets and collected petition signatures against the cut in its local authority funding. These were not disaffected youths in Leeds on a Saturday night in the summer. It was Action for Blind People-a main-line charitable enterprise, using local authority funding, whose people are frustrated and angry at the dilemma they are suddenly thrown into, when all their good work looks like receding because of the way that the cuts are being managed. They are saying that volunteers are not being encouraged but being alienated. That is the message which I pick up from people working in deprived areas. The volunteers who we want to encourage to populate the big society are, at the moment, not being encouraged but being alienated-not just by the size of the cuts but by the higgledy-piggledyness of it, really.

The other factor is, of course, that need is increasing rapidly. Some of your Lordships will have seen in the Times this week some articles about human trafficking. Our church is involved with a project called Restore in inner-city Derby, which works with prostitutes. In recent months, besides working with girls who are on the streets, there is an increasing challenge to work with the issue of trafficking, which is coming into our city in a very disturbing way. This requires greater resource and greater engagement-and the kind of policy view, as the Times draws our attention to, which we must look to Government and local government to have. We cannot just leave volunteers to increase their capacity against these odds.

What can we do? There is a primary responsibility on those of us in the voluntary sector to step up and make our contribution, as my right reverend friend the Bishop of Ripon and Leeds said. In our own diocese in Derby, we are sponsoring a movement called "growing community" in the city of Derby. We have taken an initiative to bring together faith communities, voluntary groups and the local authority to see how we can create a new kind of infrastructure to care for people in need in our cities, given the new circumstances. We are looking for a partnership and giving priority to jobs, micro-industries, self-support schemes, food banks, the homeless and the poorly housed. My point, when I ask what the Government can do if we are trying to get organised like that, is to strengthen our arm on priorities.

The Government say that they have a commitment, which I commend, to a fair and equal society. The question is: what does fair and equal mean? Does it mean more than our great concern today with human rights? I suggest, and I ask the Minister to comment on this, that it also means a concern, especially for people in deprived areas, with what we might call "social rights"-rights to access to jobs, housing and an environment that is secure and not threatening.

In the big picture, when we use the word "government", both nationally and locally, we have to do some hard thinking about priorities and the rights that we desire people to have to flourish in their human lives. That would provide a framework of context within which the groups could make a contribution and get organised. Small and vulnerable though we are, if there were a framework to direct our energies and priorities and to encourage local authorities to have public strategies for social welfare, then we would know what we were trying to achieve and how we could all work together.

Best value, which is important and which the Government rightly invite us to inhabit, is not simply an audit of processes and their effectiveness; it is about the markers of making a difference in the lives of people in our most deprived communities. Surely the markers should not just be decided by agencies like the lottery-there ought to be a richer and more thought-out framework and sense of priorities and values that the Government encourage, and that local authorities negotiate with partners both voluntary and private in their areas. If there were clearer priorities and a sense of direction, we might get more private investment and local authorities might be able to be shown to be more accountable for what they were doing, rather than getting criticism for making cuts but not being seen to offer many positive alternatives.

Photo of Lord Wood of Anfield Lord Wood of Anfield Shadow Minister without Portfolio (Cabinet Office), Shadow Spokesperson (Cabinet Office) 4:51 pm, 24th November 2011

My Lords, I thank the right reverend Prelate the Bishop of Ripon and Leeds for giving the House the chance to debate the crucial issue of the work of the voluntary sector in our most deprived communities and how that work is being affected by the economic crisis and the Government's cuts to local authority budgets. Debates such as this shine a light on the plight of those whose voices do not often get heard, and remind us of our duty to show, as the Dean of Norwich said on the 20th anniversary of the landmark Faith in the City report, that our common concerns can be harnessed in the common good.

We all know the vital work that is done by voluntary and community organisations, especially in our most deprived communities. It is work that becomes more, not less, important in difficult economic times such as this, when large-scale cutbacks in funding combine with increased demand among the most vulnerable for the care and community services that these organisations offer. No doubt the Minister will refer in his reply to the need for the voluntary sector to take its fair share of pain in the spending cuts that the current Government are prioritising. I agree. The question is not whether, at a time of fiscal pressure, the voluntary sector should somehow be given wholesale protection from cuts. Rather, the question is whether the cuts meet three eminently reasonable criteria: are they proportionate, are they distributed fairly and are they being made intelligently with regard to the long-run viability of the organisations affected?

I shall start with the scale and proportionality of cuts. About one-third of the voluntary sector's income of £35 billion a year comes from statutory sources. Survey work has shown that the maximum cut to a local authority in 2011, a figure referred to earlier, was just under 9 per cent of income. However, the average for members of ACEVO was 23 per cent of their funding. For smaller organisations it was higher, at 27 per cent of their income. Activities in the voluntary sector that have been especially badly hit are children and youth charities, services for the elderly and disabled, homelessness and housing charities. For some organisations, the cuts have been both disproportionate and catastrophic, a famous case being Oxfordshire Children and Voluntary Youth Services, hit by 90 per cent cuts in its funding and intending to close in March 2012. If we are all in it together, we should all be in it together in roughly the same way-a way that is proportionate to our means and to the importance of activities to our communities and country. The scale of the cuts to the voluntary sector and the absence of proportionality should give us all real cause for concern.

What about the distribution of cuts and, in particular, their effect on deprived communities? Again, it is becoming clear from survey evidence, imperfect as it may be, that the cuts are having more of an impact on organisations in deprived areas than on those in other areas. First, we know that local authority areas where deprivation is higher are experiencing larger cuts in funding, partly to do with the way that area-based grants work. Secondly, since voluntary sector organisations are more likely to be based in these areas-because activity rightly follows need and demand-such organisations are more likely to experience cuts in government funding. Their dependence on state support, compared to other sources of support, means that their activities will be hit more savagely than those of organisations in better-off areas. The result of this variation is that there is now little doubt that the most vulnerable are being hit the hardest. As Dame Clare Tickell, chief executive of Action for Children, said just last month:

"The scale and pace of change, alongside the cutbacks that we have seen over the past year, are unprecedented. We are now seeing the impact in communities across the country-and fear it could result in severe and long-lasting damage to the most vulnerable children and their families as they struggle to cope ... We are at a tipping point".

What about the third criterion, of sensible cuts? Are they being made intelligently and with regard to the long-term viability of the organisations affected? We know that the cuts have cut into the core activities of the voluntary sector. A third of those surveyed reported having to cut the services that they provide. More than 40 per cent have had to make staff redundant.

As the noble Lord, Lord Rennard, has reminded us, given that cuts of this magnitude are under way, the case for a strategic approach to managing their implementation and impact becomes more compelling for a number of reasons. Many charities have no reserves at all to fall back on, or hold very limited amounts of expenditure. If cuts are imposed without strategy and intelligence, they could lead not only to an interruption of services for a few years but to a more permanent scrapping of expertise and networks that cannot simply be replaced when the good times return. Moreover, in a period when demand for these services among the most deprived is rising, cutting the ability of the voluntary sector to meet these needs often simply displaces the need for provision back on to the state. The needs of the most vulnerable are not like a need for luxury goods which we can defer for a bit while we tighten our belts; they are needs that must be met. Cuts to the voluntary sector which shift the burden of meeting those needs on to another part of the statutory funding landscape neither serve the interests of those in need nor help the spending plans of the Treasury.

What do we know about the Government's strategy for implementing these cuts, especially in our most deprived areas? The first answer is: not as much as we should. As far as I am aware, the Government do not have reliable data on the distributional effects, by local authority, of the cuts on the voluntary sector. Nor have they taken steps to help ensure that the best practice of councils in handling these cuts is spread to other councils. We know that the way in which local authority cuts to the voluntary sector are being handled varies wildly from case to case. Some local authorities are approaching this difficult task of distributing the pain of cuts in partnership with voluntary organisations, observing the compact between the voluntary sector and the Government, while others show little interest in that partnership.

Does the Minister agree that one important action that the Government could take would be to make sure that all local authorities are aware of and complying with the NCVO's best practice guide, as well as observing the terms of the compact, such as giving at least three months' notice when changing funding decisions? Can the Minister also tell us about any plans that the Government have for the renewal in 2012 of the transition fund that was set up for 2011-I believe it was £100 million -to help organisations in the voluntary sector that had been hit by the cuts? Lastly, what are the Government doing to ensure that the Government themselves, and not just the umbrella associations that represent the voluntary sector, monitor the impact of the cuts on that sector, especially in deprived areas?

The effect of spending cuts on civic activity in deprived areas is no doubt of concern to all of us, whatever our party affiliations might be. But there is another, special reason why this Government should care about the long-term effects on the capacities of the voluntary sector: their big idea, the big society, purportedly relies on the health and expansion of this sector, at a time when it is being hit considerably harder than other parts of the institutional landscape.

While the idea of strengthening civic society is of course shared by all, the claim occasionally made by some members of the Government to have come up with the idea has been met with some derision. Their failure so far to respond to the disproportionately severe and long-term effects of cuts to voluntary organisations on poorer areas speaks to two more specific blind spots in the Government's big society agenda.

The first is that they show no appreciation of the importance not simply of inequality in funding but of inequality more generally. The fundamental fact is that inequalities in wealth and income, and levels of deprivation, affect the quality of civic life and the capacity of voluntary organisations. We know that in less well-off areas, you are much less likely to see volunteering. You are twice as likely to be a volunteer if you have graduated from university than if you have no qualifications. One-third of the population provides 90 per cent of total volunteering hours.

The problem is that the laudable desire for a big society is not matched by an understanding of these inequalities or of the more limited capacity for society to be big in poorer areas. Professionals in the sector know it: 83 per cent of voluntary sector chief executives said that they thought the big society would not work well in deprived communities. Sixty per cent of the public agree.

So what is stopping the sincere advocates of the big society responding to this? I think that the answer lies in a second blind spot: the idea that a big society needs a shrunk state to work, when in fact a well functioning civic society needs a supportive state and a Government who understand what factors lead to barriers to participation on the one hand and who build capacity on the other.

A Government who are serious about this would support the big society not just through funding but through helping to skill up the sector, encouraging partnerships and promoting collaborative budgeting et cetera. It is a view that was supported by David Cameron, the Prime Minister, in a speech in 2009, when he said:

"I believe that, in general, a simplistic retrenchment of the state which assumes that better alternatives to state action will just spring to life ... is wrong ... This means a new role for the state: actively helping to create the big society".

Eighteen months in, we are still waiting for some idea of what this more active, constructive role for government might be. As this debate has reminded us today, it is the most vulnerable and most needy in our poorest areas who need imagination and boldness on the part of the Government most of all.

Photo of Lord Wallace of Saltaire Lord Wallace of Saltaire Lords Spokesperson (Cabinet Office), Lord in Waiting (HM Household) (Whip) 5:03 pm, 24th November 2011

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

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

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

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

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

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

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

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

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

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

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

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

House adjourned at 5.14 pm.