Clause 5

Part of National Insurance Contributions Bill – in a Public Bill Committee at 5:00 pm on 7th December 2010.

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Photo of Stella Creasy Stella Creasy Labour, Walthamstow 5:00 pm, 7th December 2010

My hon. Friend makes a good point, which I want to come on to, because if nothing were to change, ceteris paribus, what would happen with the voluntary sector’s long-term growth trajectories and why would the policy impact on them? I also want to look at the impact that the big society might have on some of the figures. The most crucial thing about what my hon. Friend has just said is that the majority of people who work in the voluntary sector are women, and the majority of people who will be affected by public service cuts will be women. The voluntary sector, therefore, is a growth area of the economy, and one in which some of those who will lose their jobs in the public sector may well seek employment. That is why looking at how we can make taking on those people an attractive proposition for charities is a crucial issue for our economy and, indeed, for the families of those concerned.

To return to a point that I made this morning, many of the people who live in Walthamstow who will be disproportionately affected by the Government’s cuts work in the public sector and, judging by my surgeries and the people who come to see me on an almost daily basis now, they are women. Only yesterday, the entire inclusion support service for the speech and language therapy centre in Waltham Forest came to see me about the fact that they have all been put on redundancy notices. My conversation with them was not only about how they represent themselves within that employment process, but about whether they could set themselves up to provide that service, which is what the big society at its best may mean. That is why excluding such people and organisations is a remission that the Government should correct by supporting the amendment. If they agree to the amendment and state clearly that they want charities involved in the start-up business, the Government would put down a marker on the importance of the voluntary and community sector for job creation.

It is worth looking at the figures for the birth and death of businesses—my right hon. Friend the Member for Delyn gave some earlier—and putting them in the context of the charitable sector. Last year alone, 51,000 new businesses were put together in London, but 55,000 fell. Considering that 5,000 new charities are created and registered every year, albeit nationally, and that many of them are small organisations with two or three employees at most, the impact of working with the charitable sector to increase employment could be substantial. That is another reason why I return to the question of the evidence. I am disappointed that the documents to which we have had access—I accept that we may not have seen some of the modelling—show that the role of the voluntary and community sector has not been analysed and that its impact has not been understood.

I have, however, asked the National Council for Voluntary Organisations for its opinion. It is keen for the amendment to be agreed to, and with good reason. Its model of the possible impact of extending the national insurance holiday to new charities—I return to ceteris paribus and what we know at the moment, as opposed to the impact and incentive that policies based on the big society could create for charitable start-ups—estimates that the amendment could generate an additional 2,500 or so charities. Obviously, its estimations are based on models of rough data, but looking at the charitable almanac and at what organisations are setting up in what sectors, the NCVO thinks that there could be a national insurance bill of about £1.7 million. Crucially, that excludes London and the south-east, and one of the reasons that we are so keen to see London and the south-east benefit from some of the proposals is that nearly 40% of the charitable and voluntary sector is based in London and the south-east.

The Minister mentioned bodies in the charitable and voluntary sector that may be trading bodies. I want to say a little bit about the concept of what it means to be a trading body, because having worked in charitable and voluntary organisations, I know that that is a complicated question to ask of them, and with good reason—because of they way in which they operate. Some 40% of charitable and voluntary organisations that he may want to benefit will actually be excluded by his geographical divisions, so I ask him to think about that. If he included London and the south-east, NCVO calculates that that would mean an additional 1,200 new charities every year. They would be start-ups, not existing charities. It would also mean two to three more jobs per organisation.

The amendment is not a sideline issue. It is fundamental to how such schemes could generate jobs, and that is even before we get to the impact of the big society. If the big society is about rolling back the state and allowing communities to organise services and suggest proposals for how they are not only run but delivered, helping the voluntary and community sector to take advantage of it will be absolutely key. I am concerned that under the current proposals, deliverers from the private and voluntary sectors could compete to run services, with private sector delivery organisations having an edge over the voluntary sector because of the costs that they deal with as a result of being able to access the exemption. Voluntary and community organisations would not necessarily be able to do that.

One challenge is about what constitutes a trading body. Again, that point concerns how voluntary and community organisations work. I appreciate what the  Minister said about how constituency MPs spend a lot of time with different community and voluntary groups. However, if those MPs reflect on that experience, they will recognise that such groups are a mishmash of volunteers and paid employees, and that both services and advice may be provided.

As someone who comes from a community and co-operative background, I welcome the potential behind the ideas that surround the big society to enable co-operatives—such as the one that I mentioned earlier when I spoke about inclusion services—to be set up and to involve employees as well as users in the direct delivery of services. However, that would create a complicated model for how things are done, and unless the legislation makes it clear that those organisations would be able to access the scheme, and that the national insurance holiday would apply to them, they will not apply for it. It would be confusing for those 240 employees, in terms of whether or not those organisations would be eligible.

Such a move would have the unintended consequence of pushing charities and voluntary sector organisations to be more commercial, rather than encouraging the charitable and voluntary aspects that the big society, at its best, tries to tap into. This is about a collaborative approach. When organisations work with the people they serve and with the local public sector—whatever might be left of it—they can deliver all sorts of benefits to a community.

I urge the Minister to include the amendment and avoid such complications, and make it easier for charities and voluntary organisations to be part of both job creation and public service delivery. If he does not, the risk is that the over-complexity of the scheme will mean that those organisations that other Departments are desperately encouraging into service delivery will not get a starting handle. Those of us who care about the charitable and voluntary sector are sympathetic to the need to make it easier, rather than harder, for charities to contribute to service delivery in a local community. I hope that the Minister will look again at the concept of a non-trading organisation, and at the nature of the voluntary sector and how it is expected to grow in years ahead. I hope that he will accept the amendment.