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Third Sector Review

If I may paraphrase what my right hon. Friend the Member for Witney (Mr. Cameron) said yesterday, if the hon. Gentleman wants to discuss our policies, let us have the election and let the manifesto that the Minister has been slaving away trying to write be published. We will then have the debate and let the people choose. If that is what the hon. Gentleman wants, bring it on. The change that I referred to has been made, with the resulting £70 million hit to the charitable sector, and that is on top of the effect of the abolition of tax credits on investment income, which costs charities about £250 million a year. That figure does not even include the cost of abolishing tax credits for voluntary sector bodies that do not have charitable status, which were not even covered by the transitional relief arrangements. Against that background, the £80 million small grants programme looks like thin gruel. A report from the Directory of Social Change highlights the importance of serious, stable grant funding:"““We believe that as part of enabling the voluntary sector to flourish, and trusting it to do its work effectively, government needs to provide more unrestricted funding through non-prescriptive programmes, especially at local level.””" It goes on to warn that exactly the opposite is happening:"““Sadly, the reverse seems to be the trend at the moment—funding programmes are becoming exceedingly prescriptive and more rationalised into larger pots for 'strategic' relationships with fewer larger organisations operating at a national level... many small local grant programmes are being phased out, and it is unclear how local voluntary activity and representation will be included and funded as part of Local Area Agreements—there is a real risk that these will lead to less involvement for voluntary sector organisations at the local level as well.””" Even where grant programmes survive, they are failing to deliver stable funding for voluntary groups. According to the Charity Commission more than two thirds of all funding agreements were for one year or less, and fewer than a quarter were for more than two years. The Government are failing to deliver on their promise of extending the funding. We support that promise and I think that it would engage support across the House. Another obvious part of the background to funding decisions is the effect of the raid on the lottery. The first raid on the lottery for the Olympics was announced in June 2006 and removed £410 million from the lottery good causes, including £213 million from the Big Lottery Fund. Then they came round again in March to take another £675 million out of the lottery good causes. According to the Minister, the funding settlement"““protects both existing programmes and future resources for the voluntary sector.””" That is a bit disingenuous, because the protection applies only to the funding that voluntary organisations get from the Big Lottery Fund. The funding that the voluntary sector gets from other lottery distributors, such as the Heritage Lottery Fund, Arts Council England and Sport England, will not be exempt from the second Olympic raid. According to the NCVO, cultural, sporting and heritage charities will lose more than £100 million as a result. On the issue of public service provision, concern has been expressed in many parts of the sector about monopoly commissioning. Everyone is now in favour of diversity of provision, and monopoly commissioning is a concern. A look at offender management services and employment services illustrates that concern. The centralised management of many public services means that commissioning decisions are taken a long way away from the local contexts in which voluntary sector providers are often best able to demonstrate their strengths. Another disadvantage of centralisation is that services tend to be commissioned on a national or regional basis, effectively excluding medium-sized and smaller voluntary sector organisations which lack the immediate capacity to take on contracts of that size. There is also a tendency for centralised commissioning to generate a ““we know best”” attitude from the state, specifying in excessive detail not only what services should be delivered, but how they should be delivered. That tendency to be over-prescriptive is a problem across the procurement of services in much of the public sector and it severely limits the scope for innovation and diversity, which is often the best reason for involving voluntary organisations in the first place. By opening up the delivery of public services, but not the commissioning side, the Government are programming a clash of cultures into the system. As long as top-down control systems are the norm, public sector managers will attempt to conduct their relationship with voluntary sector providers according to the same rules to which they themselves are subject. There are no easy answers as this is very complex territory, but I urge the Minister to look further at the issue. The saga of the way in which the Department of Work and Pensions has treated voluntary sector bidders for contracts under the pathways to work scheme is illustrative. The tendering process for phase 1 of the scheme was aborted less than three hours before the original deadline for tenders in February, as a result of the Government revising the specifications at the shortest of notice. A new deadline was set for 25 April, requiring significant additional resources to be devoted by the bidders. When the results of phase 1 were announced, only two of the 16 regional contracts went to the voluntary sector, both to the same charity, which is the largest in the employment services field. Stephen Bubb of ACEVO—up to that point a strong supporter of the Government's approach—said that the voluntary sector had been"““comprehensively stuffed””" by the DWP's procurement practices. He added:"““There is huge anger in the sector with what seems to be serious problems with the process. This is a natural area for the talents of the third sector. We have been doing some brilliant work and it is implausible that hasn't come through in the ""tendering process. The Government has said it wants the sector to play a bigger role in delivering public services, but there is a huge gap between that rhetoric and reality.””" Many employment charities that had been delivering services to the long-term unemployed will now be reduced to the status of sub-contractors to the private sector firms running the main contracts. That will significantly reduce the margin on the services they provide, threatening their financial viability. Another example is the Offender Management Act 2007, which will centralise the commissioning of probation services. We opposed that Bill, which made the Minister abandon his usual efforts to be non-partisan and throw around accusations of betrayal:"““The Tories had a chance to show they mean their warm words about the role of the sector. Instead, they betrayed those words and opted for opportunism.””" There are shades of ““his master's voice”” in those remarks. However, it was clear just who was betraying whom when a coalition of charities working with offenders was formed to oppose the centralising provisions of the Offender Management Act. Members of the coalition include the Prison Reform Trust, The Prince's Trust and Crime Concern. A spokesman for the Prison Reform Trust highlighted the threat to small charities:"““It's one thing to go after a vibrant, mixed economy, it's another to structure it in such a way that only certain people can compete…Regional commissioning is appropriate for some services, but the bulk of work is very local in nature and anything that would risk squeezing out the small charities and community groups has to be guarded against.””" There is a simple, broad point here. New Labour has from its outset had an extraordinarily centralising and controlling approach to government. Any idea that that approach might change with the new Prime Minister would have been incredible to any seasoned observer, as it was always clear that he was the big clunking centraliser at the core of new Labour. It was always certain that once he got his hands on the job that he had craved for so long, those tendencies would be wholly unconstrained. I have always thought that his approach was summed up by the worst of all phrases from the new Labour lexicon—““earned autonomy””. When translated, that means, ““You can do whatever you like, as long as we agree with it. You have no real autonomy or freedom, and you are always on the end of a lead, with master ready to twitch the string at the least sign of independence.”” That is why so much of the Government's language on the third sector does not ring true. It is in the nature of the third sector that it should be diverse, dispersed, vigorously independent and capable of innovation. A voluntary organisation's strength is its closeness to its service users and its ability to provide a much more personal, responsive, differentiated, flexible and swift service than the traditional organs of the state. That independence, the allowing of which requires trust and optimism from the Government, is key. But I am afraid that it is and has been under threat from, or has been eroded by, the Government. Parallel to that is another development, to which the Minister devoted a little time. One does not have to be a conspiracy theorist to find it a bit sinister. It is the orchestrated campaign, which occupies several pages in the review, to widen significantly the ability of charities to undertake campaigning, both political and otherwise. The Minister tried, in a very unsophisticated way for someone whose intelligence and integrity I respect, to make out that our approach is that charities should not do any campaigning at all. That is absolute nonsense. We think that the law as it stands is very sensible. It allows campaigning if it is an ancillary activity. The Minister is suggesting that it should be allowed to be the dominant—[Interruption.] Well, he pretty much did suggest that. We will check Hansard, but my recollection is that he did say that. He ruled out campaigning as the exclusive activity of a charity, but he did not rule out its being the dominant activity. That would change the law, because the case law clearly says that charities can campaign, but not to the extent that that is their dominant activity. This is well-trammelled territory. The Charity Commission, no doubt completely spontaneously, has revised its guidance twice already, in a way that it says will broaden the scope for such campaigning. It is currently consulting—again, no doubt completely spontaneously—on a third such redraft. The review published by the Minister quotes a report of Baroness Helena Kennedy's advisory committee. By a curious circularity, that report quotes the Minister himself, who said:"““It is massively in the interest of politicians to champion your””—" that is, the third sector's—““campaigning role””. That quotation was not quite accurate, as diligent research by my hon. Friend the Member for Tunbridge Wells (Greg Clark) managed to elucidate. There were no dots appearing to show an excision in the quotation, but what the Minister actually said was:"““it is massively in the interests of progressive politicians to champion your campaigning role.””" I consider myself to be a progressive politician, and I consider my party to be a progressive party, but I wonder whether that is what the Minister had in mind when he used the phrase ““progressive politicians””. Perhaps he would care to help me out on this. He is maintaining an uncharacteristic silence. This is a curious development. In the review, all of it was presented in the most anodyne way. However, it should be clear that the proposal is enormously controversial, for two reasons. First, political and party funding, and therefore campaigning, is the subject of continuing discussion between the parties under Sir Hayden Phillips' chairmanship. We read in this Monday's edition of The Independent of the Government's intention to introduce unilaterally legislation that would restrict what political parties can spend on political campaigning, out of money that has been raised voluntarily from the public. This would inhibit the ability of political parties to engage in political campaigning, which is what they exist to do; it is their raison d'être. Incidentally, it was interesting that we read about that proposal in the newspapers—so much for the Prime Minister's much-vaunted undertaking that there would be no spin and briefing in newspapers, and that any proposals would be announced in the House of Commons, rather than spun in the newspapers. We know that the proposal arises from the Labour Party's own financial difficulties; but none the less, that sort of proposal has enormous general implications for a democracy. At the same time as the Government are planning to restrict what parties can do by way of political campaigning, they are also explicitly planning to expand what charities can do by way of political campaigning. It may be completely coincidental that both of those things are going on at the same time, but it is a remarkable coincidence.