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Assistance to Communities

I was delighted to secure this Adjournment debate on assisting communities and third sector organisations through the recession, and I am pleased to see that a number of hon. Members are in the Chamber to take part. The sector is hugely valued by the Government, and it includes local community groups, a whole range of third sector organisations and social enterprises. The support that such organisations have given in services and advice, together with support from the Government, has been invaluable, especially as we come through a period of international recession. As the Minister responsible for the third sector, I am proud that in the past 10 years, there has been unprecedented funding for, and investment in, the sector. Since 1997, income from the Government has increased from £5 billion to £12 billion. The sector has also stepped up to the challenge of working with the Government in shaping, designing and helping to deliver public services. If we are to deliver high-quality services it is crucial that they are designed around the needs of the communities and the people they serve. The third sector plays an essential role in a number of ways, and I will go through them in no particular order. First, the sector is a provider of a whole range of services, from debt advice to counselling. As a result, the sector has become expert in designing and delivering preventive services in the belief that prevention is better than cure. The work follows on from the principle that the service user and citizen should be the starting point for any solution. We should also see the third sector as an advocate, because it connects people with their communities, and enhances participation and engagement on issues that affect or interest them. The sector makes an invaluable contribution to the British economy that is not often recognised. There are 62,000 social enterprises in the UK, which make an annual contribution of £24 billion to the UK economy and employ 800,000 people. That is a significant contribution and a good example of the way in which the sector is helping the economy to grow. A recent survey undertaken by the Social Enterprise Coalition showed that social enterprises are performing strongly during the recession, with 56 per cent. experiencing an increase in turnover, and only 20 per cent. experiencing a decrease. That compares favourably with the position for small and medium-sized enterprises, of which 28 per cent. have experienced an increase in turnover, and 43 per cent. a decrease. For all those reasons, the sector is today regarded seen as intrinsic to British society. There are 870,000 civil society organisations in the UK, and that partnership, which has evolved over the years, is crucial in tackling the challenges that we face as we work through a period of economic downturn. There is no doubt that the recession has had an impact on the third sector. It is difficult to quantify that impact, because the situation is complex. Because of the diversity of the sector, different organisations are affected in different ways. Some organisations have seen a rise in demand for services, particularly employment services or, as I mentioned, debt advice. Some charity shops on the high street report increased trade, as people trade down from higher-value items. Other organisations have reported far greater difficulties in obtaining donations, with increased competition for those donations, while some bodies report a decrease in demand, with cultural or leisure activities doing less well. Additionally, the third sector faces financial pressures caused by rising costs as well as a potential fall in donations. I say "potential", because there is evidence that donations do not necessarily fall during a recession, although they slow down as people become more selective about the causes to which they donate. A Charity Commission survey in August last year showed that most charities were reporting no change in most income streams. In the recession of 1991 to 1993, two thirds of voluntary and charitable organisations reported an increase or no change in income, with only one third reporting a decrease. A recent survey by the National Council for Voluntary Organisations reported that charity leaders are now more positive about the UK economy than they were when surveyed two years ago, and that 27 per cent. expected their organisation's financial situation to improve over the coming year. Only 8 per cent. planned to cut the number of paid staff in the next three months, while 7 per cent. planned to reduce the services that they offer. There is much positive news, but we know that it remains tough in the third sector. There are regional variations in how hard the recession has hit communities, and the current level of additional investment is unlikely to be maintained. That has put pressure on staff in some organisations, who are working longer hours to try to ensure that they provide the best service possible. Concerns about funding obviously affect confidence in job security. The services, advice and help provided by the sector could not be achieved without the dedicated support of staff and volunteers, including trustees. We should not see the recession as being only about challenges and difficult times with no light at the end of the tunnel. Over the years, third sector organisations have adapted to many policy changes and developments, and they have weathered previous recessions. Some organisations have emerged even stronger, and it seems that when faced with adversity, they can step up, innovate and continue to campaign for social change. When we in the Government have to make difficult decisions, the sector is crucial in lobbying, campaigning and making its voice heard. That can be difficult for the Government, but civil society is not something with which we are concerned only during the good times. We must be even more alert, and enable the sector to do what it does best during the tough times. The challenges for the sector in weathering the storm include ensuring that organisations demonstrate the social benefit of their services, and how that provides value for money. The social return on investment model, developed with the support of the Office of the Third Sector will be helpful in that respect. Demonstrating success is not easy, and using a model that shows the social impact and effectiveness of the work of the third sector in the community, and quantifying that impact, will be crucial. Recessions make us all think differently and force difficult and tough decisions. If we are to get something positive for the sector out of this situation, we will do so by examining organisational models and proving the sector's social and environmental impact. It is time to get the partnerships right. Pressures on the funding environment for the third sector are creating a need for new ways of working. That could mean joining up with other third sector organisations to bid for contracts as part of a consortium, merging with like-minded organisation, or reinvigorating a partnership with a statutory funder or with the Government. For example, the refreshed Compact launched in December last year offers a platform from which successful partnerships can be built. Although it is early days, Total Place offers a unique opportunity for the sector to engage in local dialogue about effective local services. Only through collaborative, respectful and genuine partnerships can we achieve more with less.