My Lords, I refer to my interests as set out in the register. It was a privilege to serve as a member of this Select Committee under the redoubtable chairmanship of the noble Baroness, Lady Pitkeathley, who, as your Lordships have heard, has now been installed as the president of the National Council for Voluntary Organisations. She is therefore formally confirmed as queen of the sector—but then, many of us knew long ago that that was the case.
I welcome the debate today but I will point out, as others have, that it is 10 months since we published this report and we have had five days’ notice of this debate. This rather suggests to me that, in addition to being concerned about the number of Peers in this House, we should be concerned about how we manage our business—how we make use of our time and the talents of the Members of this House. I hope that the Lord Speaker will take that on board shortly.
The report is important simply because the charity sector now plays a crucial—I would say indispensable—part in the way that our society functions. It increasingly delivers essential services for public good—services that even 10 years ago would have been delivered by the public sector. As we say in the report and as the noble Baroness, Lady Pitkeathley, drew attention to, charities provide,
“the eyes, ears and conscience of society. They mobilise, they provide, they inspire, they advocate and they unite”.
As such, I believe that they deserve to be cherished and nurtured because, as the title of the report concludes, strong charities are now a precondition of a strong society. The problem is that, for all the warm words, there are still insufficient signs that the vital role of the sector is even now understood in government. I certainly found the Government’s response to the Select Committee’s report deeply disappointing, as others have said. It does not identify priorities and, more worryingly, does not provide a sense of purpose or direction, a strategy or a way forward.
We must all hope that the forthcoming civil society strategy review delivers a more convincing way ahead. It needs to do that because charities, especially smaller charities, are in danger of being engulfed in a perfect storm of negative developments, all of which the report refers to. We have seen a massive reduction in the level of grant funding for charities, with a consequent loss of autonomy—the freedom to do what the charity believes needs to be done. Those grants have largely been replaced by contracts and, as the report concludes, that shift in the balance of funding will not change and we therefore need to find ways of making it work.
The problem is that charities are having to struggle with, first, very poor-quality commissioning—with catastrophic effects for some, especially again the smaller charities. Contracts are often very short term, so that charities are unable to plan for the future or develop a longer-term strategy, and they often seek to prescribe not just the outcomes but the way in which they should be achieved by particular charities. That takes away the scope for charities to be creative and to innovate. I should remind noble Lords that some of the best public policy ideas of the last 20 or 30 years have derived from the creativity of the charitable sector—but that is being squeezed out by poor commissioning. Many contracts from statutory authorities fail to make sufficient provision, as we have heard, for core costs. Some donors, too, are reluctant to fund anything which does not directly benefit clients. I find it deeply ironic that our state-funded bureaucracies are so reluctant to recognise the need for core administrative costs in others—but they are.
During our work, we also met some brilliant charities of the highest quality. Their leaders told us just how difficult it now is to cope with multiple funders, all of whom seek to impose their own particular audit arrangements and evaluation systems. All of these require additional staff, time and cost, none of which anyone else is keen to fund. They also told us that the social value Act is not delivering its potential and needs to do so.
We also found that contracts are becoming increasingly large because it suits statutory providers to have large uniform contracts. But smaller charities are unable to compete for them and can participate only via subcontracts with the larger charities, so they become dependent upon the big beasts in the charitable jungle. Despite promises down the years to reduce the complexity and the burden of tendering processes, nowhere near enough has been achieved so that, again, especially smaller charities do not have the time and the energy, and the resource and the reserves to compete for those contracts—and, once again, innovation from smaller charities is lost.
I have been struck in recent days, as I am sure other noble Lords have been, by how ironic it is that the Government make it so difficult for small companies and small charities to win contracts in the public sector while they are happy, it seems, to continue to support and invest in very large organisations, such as Carillion, even when the risks are very clear for all to see.
We have heard a great deal about the partnership between statutory providers and the charitable sector. But, like so many so-called special relationships, the reality can be very different. The reality here is that the partnership is not as strong as we would want. That is to some extent evidenced by the failure to involve charities early enough in the design of the services they have to deliver or in changes to policy that affects them. All of us who sat on the Secondary Legislation Scrutiny Committee know just how serious a problem that is. For me, the subtext of the Select Committee’s report is that we cannot continue to heap more responsibility and expectations on the charitable sector while at the same time allowing the environment within which it operates to become more complex, in some ways more obstructive and in some ways more hostile. Someone in government needs to understand that a strong society needs strong charities operating in a supportive environment.