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Duchy of Lancaster

Volume 488: debated on Wednesday 25 February 2009

The Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster was asked—


1. What representations he has received from charities affected by the collapse of Kaupthing Singer and Friedlander. (257848)

On behalf of the Labour Front Bench, I offer our sincere condolences to the Leader of the Opposition and his family on the tragic loss overnight of their son, Ivan. The House will have an opportunity to offer its thoughts and prayers after this Question Time.

I have received correspondence from affected charities and met representatives of the Save Our Savings group of charities on 27 January.

I think it would be appropriate, on behalf of my colleagues on the Liberal Democrat Benches, to extend our sincere condolences to the Leader of the Opposition.

The Parliamentary Secretary knows that, in addition to the thousands of individuals who stand to lose considerable sums of money in Kaupthing Singer and Friedlander, 27 charities collectively stand to lose some £50 million of investment. Does he agree that such a loss to those charities will be a considerable financial burden and have a significant impact on them? Will he therefore agree to redouble his efforts to ensure that the charities, as well as individual investors, have their funds returned in full?

The hon. Gentleman knows that a process of administration is taking place and that a compensation scheme is available for smaller organisations that count as retail depositors. I have agreed to meet a delegation of Members of Parliament to discuss the matter further, and I will be happy to have him along if he wishes to be included in that delegation.

I join colleagues in sending condolences to the Leader of the Opposition and his family at this sad time.

Only four months ago, the Government said publicly to residents in Hampshire that Naomi House children’s hospice in our area would continue to receive support at a difficult time, when it had lost money through the collapse in the Icelandic banking system. Why has that promise of help now been withdrawn?

I do not accept that the Government made a promise of financial help to Naomi House in particular, but efforts are being made. I have had discussions with the Minister of State, Department of Health, my hon. Friend the Member for Corby (Phil Hope) about Naomi House to try to broker a local solution with the strategic health authority. Discussions are continuing in relation to Naomi House.

I know that many hon. Members are deeply saddened by today’s news about the Leader of the Opposition.

The Parliamentary Secretary has already mentioned the process of administration that is taking place with Kaupthing Singer and Friedlander. Many of the depositors with savings above the £50,000 financial services compensation scheme limit have had their deposits returned to them in full. In addition, the Government are fully covering deposits through the online Edge accounts. Why are those depositors being treated so generously when the 27 charities stand to lose every penny of their £50 million of savings? Will the Parliamentary Secretary add my concerns to those of other hon. Members when he meets Treasury colleagues—hopefully—to take up the issue on behalf of those who have raised anxieties?

It is important that we do not get into too much scaremongering and talk about charities losing every penny. A process of administration is taking place and, although it takes time, it is not the case at this stage that those charities have lost the sums of money that were invested in the bank.

I draw the hon. Lady’s attention to the words of the head of lending at Charity Bank. He said:

“Any charity that has funds stuck with Icelandic Banks, and is watching its cash flow slowly drying up, is unlikely to be an attractive proposition to a commercial bank in current market conditions. We are part of the banking sector but as a charity we also want to be part of the solution.”

I therefore encourage charities to look elsewhere also for opportunities to cover any shortfalls while the administration process is under way.

On behalf of the Conservative party, I thank the Parliamentary Secretary and other hon. Members who have expressed sadness at the death of Ivan Cameron. His was a tragically short span of life, but one filled with a great deal of love. I am sure that my right hon. Friend the Member for Witney (Mr. Cameron) will draw strength from the House’s condolences.

Until now, the Treasury has done nothing for a significant number of charities, which have lost money in the Icelandic bank failure, so charities such as Naomi House face having to cut back their good work just when it is most needed. Let me make the Parliamentary Secretary an offer. We support the principle of a short-term Treasury loan fund to help sound charities, which face genuine hardships as a result of lost bank deposits. Will he work with us to develop cross-party consensus on a measure that will have minimal cash-flow impact on the Treasury and deliver real help to a vital sector of society?

I welcome the hon. Gentleman’s interest in the matter, but we need to separate the budget from the issue of help in the short term. I have already made it clear that there are attempts in the case of Naomi House to look at brokering a local solution. Those discussions are ongoing and we will be carefully monitoring the situation of charities more generally.


The Government recognise the role that volunteering can play in personal and professional development. Earlier this month, the Government announced a programme to provide access to around 40,000 work-focused volunteering opportunities, which is in addition to the Government’s £925 million Train to Gain scheme, which is available to build the skills of staff and volunteers.

I thank my hon. Friend for that. Given that we will need between 80,000 and 100,000 volunteers for the Olympics and 70,000 for the Commonwealth games, as well as more volunteers if we get the rugby and the football, is it possible to develop, through a national vocational qualification or the diplomas, a more professional volunteering system for people at school?

There are already a number of volunteering initiatives in schools, which have been highly successful. My hon. Friend will be aware that the Government have invested a great deal in volunteering for young people through the v programme. His suggestion about qualifications is an interesting one that we should explore further.

Volunteers are the backbone of our society. Some organisations, such as the Scouts and the Guides, are experiencing great difficulties in getting people to commit to help. What more can the Government do to support efforts to establish regular volunteering as a social norm?

The Government are doing a great deal to encourage volunteering, including through our investment in the v programme for young people and the up to £10 million that was announced in the recession action plan to support volunteering for people who might become unemployed during the recession. I feel quite strongly that volunteering is a positive thing, not least because there were not many jobs in south Wales when I left university in 1982, in the depths of a different recession. For me, volunteering was a way to gain new skills and an opportunity to get into employment.

My right hon. and hon. Friends will be aware not only of the high levels of deprivation in Stoke-on-Trent, but of the fantastic work that the voluntary and third sector does and the extremely committed people who are part of it. However, a lot of the professionals, as well as the helpful and keen amateurs who are part of the voluntary and third sector, have been telling me recently that they are facing difficulties not only in identifying what funding is available, but when it is available, as they often discover that it has already gone because it was not advertised very well. What reassurances can my hon. Friends on the Front Bench give me that the funds that are made available, which are fantastic, will be advertised in a much more robust way?

We are in the process of developing a brand new portal of information about the funding that is available to voluntary organisations, the details of which we hope to announce in the near future. In my hon. Friend’s area of Stoke-on-Trent, the grass-roots grants programme—the innovative £130 million Government programme to get grants to small organisations—is investing more than £700,000. I recently announced some changes to the rules to make it easier for organisations to apply, including through matching funding backdated to the beginning of the financial year.

On behalf of my colleagues and myself, may I join those who expressed condolences earlier to the Leader of the Opposition?

Does the Minister agree that probably the most significant opportunity to promote volunteering in a generation will occur in the run-up to the Olympics? A crucial element of ensuring that volunteers come forward is that they should do so from across the nation—so that volunteers from Scotland, Wales and Northern Ireland come forward to show that the Olympics are here for all the people of the United Kingdom.

I strongly agree with the hon. Gentleman. He will not be surprised by that, as just last week he attended, with me, the British-Irish Council in Cardiff, at which we discussed the voluntary sector and its importance to the whole of the UK, including Northern Ireland, Wales, Scotland and England. He is absolutely right: the Olympics are a one-off opportunity and we should ensure, as we are doing, that we spread that opportunity widely around the United Kingdom, including in Northern Ireland.

I acknowledge the Department’s support for organisations in my local authority area such as vflex, which is working on developing volunteering opportunities, but I would like to emphasise that in the current economic situation young people could well find it even more difficult to find suitable employment. It is therefore much more important than it might have been in the past to ensure that volunteering opportunities exist, so that those young people can maintain their social skills and business discipline. Will the Minister therefore make an assessment of the impact of the economic downturn on young people, and develop policies that will enable volunteering to help to meet those problems?

I can do better than that. I can tell my hon. Friend that we have announced in the recession action plan in the past couple of weeks investment of up to £10 million, in collaboration with the Department for Work and Pensions, to provide access to 40,000 work-focused volunteering opportunities, in particular for young people who find themselves out of work during the recession. Of course, we will monitor closely how that is working, and the impact that it is having on young people and on volunteering.

All of us are now seeing hundreds of people every week in our constituencies losing their jobs, in pretty well every sector of the economy. These are people who never, even in their wildest nightmares, expected to be out of work. They want to remain active, and to continue to be challenged intellectually, and one way of doing that is through volunteering. Will the Minister have a conversation with his colleagues in the Department for Work and Pensions to ensure that, if people can clearly demonstrate that they are looking for work, and accessing websites in an attempt to find work, the number of hours’ volunteering that they can do each week will not be restricted by artificial constraints? It can lead to enormous frustration for people who have lost their jobs and who want to volunteer when they are told by Jobcentre Plus that they cannot do so.

As I said earlier, I recognise strongly and personally how important volunteering can be at a time of economic downturn. We are working closely with the Department for Work and Pensions to ensure that there are no restrictive rules to stand in the way of people who want to volunteer as a way of gaining confidence and skills and of making good use of their time if they happen to fall out of work. In addition, our recession action plan is offering a brokerage service to create 40,000 additional volunteering opportunities for people who become unemployed.

Social Entrepreneurs

I associate myself strongly with the words of the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Cardiff, West (Kevin Brennan), who has spoken for all of us.

The social enterprise sector goes into 2009 with unprecedented strength, but we believe that it could be stronger still. That is why we are ensuring that social enterprises have access to the help that my noble Friend Lord Mandelson is providing for the business community, and why social enterprises will benefit from the help for the third sector that was announced by the Prime Minister a week or two ago. It is also why I have set an objective for our policy of growing the social enterprise work force by 25,000 over the next couple of years.

I am grateful to my right hon. Friend for that response. I certainly agree that small businesses that are social enterprises are one way of using the skills of those who are being made redundant in the work force, and of getting them back in order to lead the recovery. Will he tell the House what funds the Government are putting in to meet the targets that he has identified?[Official Report, 3 March 2009, Vol. 488, c. 5MC.]

I thank my hon. Friend for the work that he does to champion this agenda. The number of those in the social enterprise work force has grown by some 25 per cent. over the past 10 years, and that has not happened by accident. It has happened because we have doubled the public income going into the third sector—into social enterprises, voluntary groups and charities—up to £11 billion over the past 10 or 11 years.

If we want to grow the social enterprise work force still further over the years to come, however, we shall have to back that commitment with investment, rather than cuts. That is why we are providing £250 million-worth of investment through Futurebuilders, and why the Department of Health will provide £100 million-worth of investment funding through its social enterprise fund. It is also why the Department for Children, Schools and Families will route money through social enterprises into organisations working with young people, and why my right hon. Friend the Secretary of State for Communities and Local Government has announced her intention to set up an organisation to champion the social enterprise agenda. We believe that social enterprises can grow, but not on their own. The Government must do their bit to help.

When I talk to people about setting up new social enterprises, I also ask them about the use of a community interest company as a suitable legal vehicle for their business. I am surprised by how few people still are aware of their existence and suitability. I know that company law is another Department’s responsibility, but will my right hon. Friend commit to ensuring that advice is available on the existence of community interest companies, and on how to set them up?

My hon. Friend is absolutely right that community interest companies are a very effective way of getting social enterprise work up and running in communities up and down the country. They are quick and easy to set up and inexpensive, because standard memorandums are available. The legislation that underpins community interest companies was brought into effect in 2005. Already there are about 2,500 of them up and down the country. Three years into the policy, it is a good time to see whether we can make it easier still to set up such companies, so my noble Friend Lord Mandelson will shortly commence a review of the regulations to consider whether the caps on equity and dividends are right. We can then guarantee that we are making it as easy as possible to get these companies set up. We will do everything that we can to promote them.

We all support social entrepreneurs, and I commend the Government for the extra resources that they are putting in at this difficult time, but has the Minister noticed, as I have in my area, that there can be a lack of co-ordination and collaboration between different organisations in the third sector, sometimes leading to duplication and waste? Does he ever challenge social entrepreneurs on this issue, and if he does, does he think that they are getting any better?

There can be challenges of co-ordination between public agencies, but there can also be such challenges between social enterprises and other voluntary groups. That is partly the inspiration for the £16 million of funding that we announced in our third sector action plan a week or two ago, which will make it easier for charities and voluntary sector organisations to get the advice that they need in order to come together. May I say, though, that it is important for local authorities to play their part. A survey a week or two ago provided quite a lot of feedback about the track record of different authorities and how well they are doing to support social enterprises. One of the conclusions was that local authorities in some parts of the country could do a great deal more. I am sure that that is a shared political agenda between us.

In the north-west, there is an organisation called Wheels2Work, which assists young people in particular who live in remote rural areas who do not have their own transport and where there is no public transport to access training, employment and further education. Unfortunately, the Northwest Regional Development Agency is ending its generous grant to that organisation at the end of this financial year. That means that it will have to withdraw all those scooters from the young people who are able currently to get to work, training and so on. Will the Minister look at that and give some encouragement not only to me in seeking to help them, but to the Northwest Regional Development Agency to continue its funding?

I will of course look at that and see what more can be done to help. We are very clear that the support provided to the business community should be available and must help social enterprises, just like any other business. I am sure that the hon. Gentleman would agree that it would therefore be a backward step to shut down RDAs, which are, of course, at the sharp end of delivering much of this help. I know that he, too, will welcome the commitment made by my right hon. Friend the Secretary of State for Work and Pensions to give social enterprises the right to bid where they show that they can deliver back-to-work programmes more effectively than the Government. That is surely the right thing for us to be doing.

A group of students in my constituency have set up Vanilla Galleries as a way to exhibit their work after they have left college. That is a fine example of a social enterprise. Will the Minister tell us what success he is having with Departments across Government to mainstream social enterprise and co-operatives as a way of encouraging people to move into the workplace? Many examples of such enterprise need the Government to respond positively and see them as a solution, not as a last resort.

That sounds like yet another example of where a social enterprise in one of our constituencies is making a real difference not only to the wider delivery of public policy, but to a large number of young people. We have to ensure that right across Government there is a shared commitment to increasing the number of people who work in the social enterprise sector. Crucially, however, we have to back that commitment to increase the sector’s work force by 25,000 not with cuts but with real investment—investment that is routed through to social entrepreneurs right across Government.

The whole House will agree with the Minister about the importance of social enterprise and the huge contribution that it makes to addressing social problems. It is great that so many people want to commit their energy, skills and drive to this terrific cause. But is not the problem with the growth of social enterprise a lack of access to capital? When does the Minister expect the social investment bank envisaged in the Dormant Bank and Building Society Accounts Act 2008 to be set up, and how much capital does he expect it to be set up with?

I welcome what appears to be a shared commitment. I do not consider that weaning social enterprises off public support should be an objective of public policy, because I think that public support is an important part of the mix, but I also think that it should be accompanied by increased help from the private sector. We now have the requisite legislation in place, but the conversations with banks are more complicated this year than they were last year, because there is a wider agenda for Government to advance. Regulations are now being discussed with the banks, however, and I hope that substantive progress will be made in getting the social investment bank up and running this year.

It is good to hear that there is some progress, but the Dormant Bank and Building Society Accounts Act gained Royal Assent in November last year, and people now expect to see at least the setting up of the framework. Given the effect of the recession on the most deprived areas, is not the answer to encourage more social enterprise by establishing social enterprise zones in those areas? Why do the Government not simply adopt our proposals?

We continue to be open to any ideas that we think would help create a flourishing social enterprise sector, but that policy ambition must be backed by investment. I do not agree with the notion that we should somehow cut the Cabinet Office budget by £100 million, because that would close down 400,000 volunteering opportunities and about 2,500 small local charities across the country which rely on our support. As I have said, we have a complicated argument and a complicated agenda to present to the banks this year, but I am determined to ensure that our conversations about the creation of a social investment bank do not get lost in that wider set of ambitions.

What steps will the Government take to try to ensure that the importance of good terms and conditions for staff, and the importance of trade unions, are recognised by social entrepreneurs?

We think that many of the 25,000 jobs that we want to be created in the social enterprise sector will come through spinning out the work of public servants from the public sector, but if that work is to be conducted effectively in the future, it is clearly vital for the terms and conditions enjoyed by staff working in the public sector to be preserved. My noble Friend Lord Darzai undertook a great deal of pioneering work, ensuring, for example, that NHS staff who wanted to take spin-outs could carry with them important benefits such as pension rights. Protection of that kind will be vital if we are to make this transition effective and good for all.

Civil Service Employment

I send my condolences to David and Samantha. Their loss will be immense, but I hope that they can find comfort in the knowledge that the thoughts and prayers of all of us are with them today.

I do not want to predict what will be in the Budget, but overall we continue to expect and to achieve efficiencies in the civil service. We will create posts in some services, such as Jobcentre Plus, to respond to the downturn, and where possible we will move existing resources to those services.

I thank the Minister for his condolences, which are warmly appreciated on this side of the House and, I am sure, across the whole House.

The National Audit Office estimates that the cost of recruiting civil servants could be cut by as much as 68 per cent. In the current tough economic conditions, private sector firms would have no choice but to follow that course. What action will the Government take to ensure that the NAO’s recommendations are followed?

We are still considering the NAO report, but the hon. Gentleman is right: there has been a digital revolution in how the private and public sectors can recruit staff. I hope that we not only learn the lessons raised in the NAO report, but create some digital solutions that will help drive down costs and ensure we have attractive packages on offer to potential civil servants.