My Lords, I am delighted to be at the Dispatch Box to respond to this debate and I welcome the noble Baroness, Lady Prosser, to the Front Bench. I do not think that this is her first foray, but I welcome her none the less. First, let me thank the noble Baroness, Lady Pitkeathley, for her speech and for chairing the Select Committee on Charities. The noble Baroness has a wealth of voluntary sector experience and expertise and is a strong and persuasive advocate for it. I always enjoy and learn from her speeches on this subject and indeed when she speaks on carers. I thank the members of the committee for their knowledge and expertise as well as all those who gave evidence for the report. As the noble Lord, Lord Rooker, mentioned, I welcome in particular the decision of the committee to hear the voices of smaller charities, with round-table events in Cardiff, Manchester and London. The result is a wide-ranging and thoughtful report which informs the debate and helps us to set the agenda for our future work on the civil society strategy, which I will talk about later in my speech.
I apologise that we were able to publish our response to the report only just before the Christmas Recess, and I know that this has upset many noble Lords who have spoken in the debate. This was due in part to the ministerial changes resulting from the general election and in part to ensure that our response could dovetail with our plans for the development of the civil society strategy.
As the noble Baroness, Lady Warwick of Undercliffe, mentioned, civil society is a vital part of our society, playing a hugely important role. Charities sit at the heart of civil society and we should celebrate our charities for all they do to benefit the public. We are fortunate to have a charity sector that is resilient and continuing to grow. The Charity Commission has noted an increase of 40% in charity registration applications over the past three years, and the sector’s annual income has grown by £5 billion over the past two years to an all-time high of £74.4 billion. The noble Baroness, Lady Pitkeathley, said that this growth has come at a time of economic uncertainty, which makes it all the more impressive. However, we appreciate that the overall picture masks the fact that some charities have struggled to adapt to the changing economic climate. Those which have been historically reliant on funding from the public sector have perhaps been the most affected.
It is hard to single out particular charities for special mention given the scale and diversity of the sector and the sheer amount of good work that charities are doing, supporting those in need in every community in all parts of the country. However, I want to pay tribute to the work of the charities that have responded to last year’s terrorist attacks and the Grenfell Tower fire. They have worked tirelessly to raise and distribute significant funds to victims, survivors and next of kin, and give support to those in need. They showcase many of the selfless qualities that we see across civil society, mobilising resources quickly and helping people at the time of greatest need.
We have seen the huge impact that those in the public eye can have in mobilising support and raising the profile of charitable causes. We owe a special debt to the Royal Family for their unstinting support for a huge range of charities and causes. We have recently seen the difference that can be made in mobilising the young when Prince Harry and the Duke of Cambridge speak out.
I also want to mention the significant contribution of the chair of the Charity Commission, William Shawcross, as he completes his term of office. As my noble friend Lady Jenkin mentioned, he has led a major transformation programme at the Charity Commission, turning it into a modern, effective regulator. Like her, I was pleased to see that the significant progress made by the Charity Commission was recognised by the National Audit Office in its most recent update report in November. The noble Baroness, Lady Pitkeathley, naturally asked when we were going to get the new commissioner, and several noble Lords mentioned the impartiality of the new commissioner. The new chair of the Charity Commission will be announced in due course. I know that that is a maddening thing to say but in this case “in due course” means really shortly.
As for impartiality, the recruitment process for the new chair follows the Cabinet Office Governance Code on Public Appointments, including its principles of fairness, merit and openness. Under the code, any significant political activity undertaken by an appointee in the last five years must be declared. This is defined as including holding office, public speaking, making a recordable donation or candidature for election. The new chair will be the best person for the role and will be expected to be independent and impartial.
Turning back to the committee’s report, I shall address three of its central themes—funding and commissioning, advocacy, and trustees and partnerships —before I conclude by saying a few words about the Government’s forthcoming civil society strategy. The first theme relates to funding and commissioning. Overall, government funding for the sector remains relatively stable despite fiscal pressures. According to the NCVO almanac, government funding for the sector has increased from £14.6 billion in 2012-13 to £15.3 billion in 2014-15, the most recent year for which figures are available. Funding is split almost 50:50 between local and central government and more than 80% of funding is earned through contracts. The ratio of government funding through contracts, as opposed to grants, has remained relatively stable since 2010.
We recognise that grant funding can remain an important source of funding for some charities, as the committee’s report highlights. There has been a significant effort in central government to strengthen our grant-making processes to ensure that grants are properly managed and taxpayers’ money is being used effectively. Grants will continue to be an important part of the funding mix. Following on from that, more than 260 small and medium-sized civil society organisations were supported by our £18 million local sustainability fund, to help organisations secure the long-term future of services aimed at vulnerable and disadvantaged people. The evaluation of that fund is being published today and shows the positive impact that funding focused on sustainability has had.
We have also done much to improve commissioning practices, although we accept that there is still more to be done. Our work to date has included promoting the Public Services (Social Value) Act, working with the Commissioning Academy, which has trained more than 1,400 public sector commissioners, and working with small and medium-sized charities to identify barriers that are preventing them accessing the public services market. The noble Viscount, Lord Chandos, talked about social investment and social impact bonds and I hear what he says. Our focus on social investment and social impact bonds is expanding a range of innovative funding mechanisms that reward impact and positive outcomes, leverage in other sources of finance and can be more sustainable by recycling funding. Also, our work so far on the public services programme has given us important insight into the issues relating to the public service market. This will feed into the forthcoming civil society strategy. We still intend to appoint a VCSE Crown representative and they should be in post soon. Our commissioning academies also continue and the next wave has just got under way. We remain fundamentally committed to the Public Services (Social Value) Act and continue to implement the recommendations of the 2015 review carried out by the noble Lord, Lord Young.
In relation to advocacy and campaigning, the Government recognise and respect charities’ important role in speaking out on behalf of their beneficiaries. The transparency of lobbying Act, which was mentioned by many noble Lords, does not stop charities campaigning in support of their charitable purpose in a non-party-political way. The purpose of the Act is to ensure that there is transparency where non-party campaigning influences election outcomes. Despite not being able to take forward legislation to implement the review of my noble friend Lord Hodgson, we remain keen to work with charities to shift the perception of the legislation, and encourage them to continue their important campaigning work. My noble friend will know that Cabinet Office Ministers are responsible for this. I am sure they will want to consider his points and I will make sure that they hear what he has said.
The third area of the report I want to focus on is trustees and governance, which was mentioned by the noble Lord, Lord Shutt of Greetland, and others. We all owe a debt of gratitude to charity trustees, who perform a vital voluntary role, as the committee’s report recognises. We agree with the committee about the importance of the trustee role. As the noble Baroness, Lady Scott of Needham Market, mentioned, in 2016 the Office for Civil Society established the Skills Exchange Alliance with business and voluntary sector representatives to support growth in the quality and quantity of employer-supported volunteering, including encouraging more people to become charity trustees. The noble Baronesses, Lady Pitkeathley, Lady Scott of Needham Market and Lady Warwick of Undercliffe, all talked about more work needing to be done in supporting trustees in their role and in improving trustee diversity, particularly growing the number of young people who are trustees. We heard from the noble Baroness, Lady Scott of Needham Market, about the successful Suffolk Young Trustee Programme—a good example of how to encourage the young to get involved.
We also know that small charities can find changing regulation particularly challenging. This year the general data protection regulation comes into effect, and I welcome the work of the Information Commissioner in providing a dedicated helpline service for small organisations, including charities, and an updated SME toolkit to reflect the requirements of the GDPR. The Fundraising Regulator, working with a number of other partners, including the Institute of Fundraising, is also developing simple guidance, specifically aimed at small charities, to help them better understand the new GDPR requirements.
Last year we established the Inclusive Economy Partnership with charity and business leaders. It is bringing together business, civil society, faith groups and government to help address some of the key challenges facing society. Partnerships, including those that cross sector boundaries, will be a key theme in the forthcoming civil society strategy. Many noble Lords talked about this. We all realise how important it is that there is some joined-up thinking across the whole sector to help charities move forward and to help them through the difficult time that many of them are having.
On the theme of partnerships, I welcome the leadership role shown by the charity sector in establishing several working groups to take forward the committee’s recommendations. As my noble friend Lady Jenkin mentioned, there is also potential for greater collaboration between like-minded and mission-oriented charities, which work tirelessly for their beneficiaries. It is when we all work together that we can deliver real, long-lasting social change.
I will now address points that were raised in the debate, before finishing on civil society and what we are doing to make sure that we listen to the recommendations that have been put forward by the committee.
Brexit was mentioned by several noble Lords. The Government will of course continue to assess the impact of leaving the EU on charities and social enterprises, which includes access to future funding. Officials in DCMS are working with colleagues across government to inform plans for future funds, including the UK’s shared prosperity fund, and to ensure that charities are fully considered.
Several noble Lords, including the noble Baronesses, Lady Pitkeathley and Lady Warwick of Undercliffe, mentioned time off for charity trustees. Many public sector organisations and businesses already run impressive volunteering programmes, in the absence of a statutory requirement to provide time off for voluntary duties. This is a matter for individual employers, although we would always encourage them to treat such requests sympathetically.
My noble friend Lord Hodgson talked about the problems with the Royal Albert Hall. I will take his views back to the department but I am afraid that this is a matter, as we know, for the Charity Commission as an independent regulator of charities. We welcome the Charity Commission’s attempts to resolve this long-standing and complex issue and the referral of the case to the charity tribunal to consider specific points of law. I agree that this should bring sunlight on to some tricky legal issues. The point about references to the tribunal is noted.
The noble Baronesses, Lady Prosser and Lady Scott of Needham Market, the noble Lord, Lord Rooker, and my noble friend Lady Jenkin all mentioned core costs. I hear what all noble Lords have said and I think this will come up in the civil strategy. We have to remember that at the moment we are in a time of fiscal constraint, as we know, and price is likely to remain the dominant factor in contracting decisions. But I hear what has been said and this is an important matter. Most noble Lords brought this up in their speeches, which means that we need to take this further and make sure that we listen to what everybody is saying.
Support for small charities was, again, brought up by several noble Lords, including the noble Baroness, Lady Barker. The Government are committed to supporting small charities to become more independent, resilient and sustainable. We encourage all small charities to make their views heard during the civil society strategy engagement. We will work with partners, including the Foundation for Social Improvement, to deliver expert training opportunities for small charities over the next three years.
My noble friend Lady Jenkin talked about the need to explore new funding models. We are already doing this and exploring a new range of funding models. We will take this forward in our civil strategy review.
My noble friend Lord Grade and the noble Baroness, Lady Barker, talked about websites and social networks. Websites and a social media presence are, as we know, a good way for charities to demonstrate their transparency and public accountability. The Charity Commission has done much in recent years to improve the information that is publicly available on the online register of charities and it has recently consulted on changes to its annual return, which would further increase charities’ transparency. We note the committee’s recommendations that funders take account of charities’ transparency when considering requests for funding.
Our civil society strategy will provide a clear vision for the Government’s work with and for civil society. The strategy will reaffirm the value that we place on civil society and explore what more we can do to support its work in building a stronger and fairer society. It will be developed through open dialogue and debate. We are working towards launching opportunities for civil society and beyond to share their views on how government can best support civil society to realise its full potential, and help solve the most pressing social challenges we face. This will involve online and face-to-face engagement activity over the coming months.
All speeches today have mentioned the fact that your Lordships feel that the Government have not responded properly and have taken a long time to do so. All I can say is that in the short time I have been involved in this our Minister, Tracey Crouch, feels very strongly about it. From the meetings I have been in at DCMS, this really is at the forefront of the department’s thinking. The speeches that we have heard today mean that I can take some really powerful things back to the department, which I assure the House I will do.
The strategy will be a vehicle through which we can build on the idea of the shared society, which the Prime Minister has advocated. I think that we will consider ways of tackling all the burning and everyday injustices in society. At its core, the strategy will focus on the following challenges: it will articulate the Government’s vision for civil society in a way that reaffirms the value they place on its role; it will unlock civil society’s potential by addressing the challenges it faces through non-financial governmental intervention; it will set a new framework for effective collaboration between government and civil society to solve the most pressing and complex societal issues. Following a period of dialogue and debate with the sectors, the civil society strategy will be published later this year.
The committee’s report, Stronger Charities for a Stronger Society, has been extremely helpful in setting out a number of challenges. Some of these we are taking forward through our existing programmes and others will form part of the engagement on our civil society strategy. I reiterate our gratitude to the committee for its comprehensive and extremely helpful report. It has helped shape the agenda for the future of our work with civil society. This afternoon we have had a good debate about a vital sector and, once again, I thank all noble Lords for their participation.