My Lords, I start by thanking the noble Baroness, Lady Pitkeathley, not only for introducing the debate so comprehensively but for chairing the committee with experience and wisdom. Much of her expertise was shared by others around the table. She kept us focused and on track when the temptation might have been to drift off at a tangent. I too thank the committee staff, who I think were not in the Box when the noble Baroness thanked them, as well as the specialist adviser and all those who gave evidence. Sometimes their contributions were robust and challenging. Finally, I thank my noble friend Lord Shinkwin for suggesting the sustainability of the charitable sector as a topic for an ad hoc committee. There was total agreement that the title of the report, Stronger Charities for a Stronger Society, reflected what we were all trying to achieve.
I for one learned a lot, not least about the enormous variety among charities. The centrality of the sector to British life, from the smallest kitchen table operation to the largest multinational NGO, is unique in its diversity and complexity. Charities are now responsible for managing assets of value on behalf of local communities and local and national government, whether that be parks, canals or even the local village hall—I know that my noble friend Lord Chadlington, who was on the committee but is not here today, brought his experience to our deliberations as a trustee of a village hall—and for delivering vital public services, whether that be in scientific research or community care. The underpinning foundations of public benefit and the voluntary principle of trusteeship tie together what would otherwise be wildly different organisations. As a trustee of WRAP, Feeding Britain, Cool Earth and until last year UNICEF UK, I have some knowledge of this breadth at first hand.
Of course, the background to the report was the pressure that charities have come under as a result of governance and fundraising issues, reducing the public’s trust and denting the confidence of charities themselves. In the time allotted, I wish briefly to address four issues that were raised in the report: governance, funding, mergers and the work of the Charity Commission.
With all the issues raised around governance, it is a wonder that anyone is prepared to take on the role of trustee, let alone chair. These people—many of us, and all volunteers, let us remember—need support and direction to fulfil their duties to the highest standards. Moreover, we need to inspire a new generation, as other speakers have said. We raised the issue of employers enabling their staff to fulfil these roles, and more should be done to encourage this.
We acknowledge in the report that grant funding has reduced significantly and however much we would wish it to be otherwise, we accept that that is unlikely to change. So an innovative search needs to identify other funding models which will achieve the sustainability we were set up to support. To secure sustainable funding, meaningful and lasting impact needs to be identified. Successful charities know that it is what they do rather than what they say, what they deliver rather than what they promise, that will lead to support from funders. However, outside the scope of this report, there is clearly a need to develop and trial other funding models. Would the Minister consider this and support the setting up of a working group to explore the options?
As other noble Lords, most notably the noble Lord, Lord Rooker, have mentioned, every charity believes that it alone can make a difference. In other sectors, if two organisations can work well together to provide a more effective, efficient and viable service, they do. Mergers should be seen as a success, not a failure, and the charitable sector should be encouraged to merge where appropriate. What matters is for the beneficiaries to get the best service. Government, funders, beneficiaries and whoever else is involved should all encourage this where appropriate.
I turn now to the Charity Commission. The formal role that charities play in our lives makes the regulation of this sector ever more important. The public must have trust and confidence in charities, but as I mentioned earlier, this trust has been dented. We require a robust and effective regulator to maintain it. Our report, government and the sector generally recognise this, which is why they have been afforded such a broad remit. However, as the chairman of the commission has said, both to our committee and elsewhere, the commission no longer has the resource it needs to do the job asked of it. It now regulates 167,000 registered charities in England and Wales. Those charities have a combined annual income of £74.8 billion and gross assets of £265 billion. They are regulated on a budget of £21 million a year by fewer than 300 staff.
Five years ago, amid the scandal of the Cup Trust, the commission was heavily criticised for its failings and for not having been robust enough in rooting out and tackling those who abuse charities. In response the commission, by its own admission, knuckled down and prioritised its investigations work to protect charities and the public, which was what was needed, and it has been recognised as being far more effective in fulfilling that role. Indeed, the National Audit Office recently commended the commission for the significant change it has undergone. At the beginning of that period we all, including the charity sector umbrella bodies, demanded a more robust commission to protect public trust. This is what the public expect.
The key question, which we address in the report, is if we now want the commission to do more, who pays? Our report indicates that if the commission seeks to introduce some form of charge on the sector to pay for some of its work, then it must make clear how it will spend the money. As I understand it, the commission has plans in place to do just that. Now that discussion needs to take place, rationally and objectively, so that we can work in the best interests of charities and the public to ensure that we have a regulator that is funded to meet its wide remit in the best way possible.
I put on record my thanks to Paula Sussex, the former chief executive, and Helen Stephenson, the current chief executive of the commission, as well as to William Shawcross, chairman of the commission, who finishes his term at the end of this month. Over the past five years the commission has changed fundamentally. This has involved hard work from the three chief executives over that period, as well as the commission’s staff, but transformation takes leadership and Mr Shawcross has shown leadership. He joined the commission at a time when its actions—and indeed inactions on notable occasions—were under the spotlight, but as the NAO recognised in its progress report published late last year, the journey has been recognised and appreciated.
As we know, public service is not always easy and we should celebrate and thank those who are prepared to give their energies so willingly and successfully. I place on record our thanks to William Shawcross and I wish his successor, whoever that may be, every success for the future.