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Third Sector (Recession)

Volume 498: debated on Wednesday 28 October 2009

2. What her most recent assessment is of the effect of the recession on the third sector; and if she will make a statement. (295975)

We recognise that this is a very difficult time for the sector, with some parts experiencing increased demand for their services at the same time as having concerns about their financial situation. That is why the Government have provided a comprehensive package of support for the third sector worth up to £42.5 million. The money is getting out there right now to groups who need it. Thousands of grants have been made, and that is supporting the communities that need it most and providing jobs.

I welcome my hon. Friend’s answer; that will be very welcome news to the voluntary sector. However, many funders of not-for-profit voluntary organisations do not recognise the need to cover their core funding in order to make them sustainable for the future. Those organisations want to create income that provides for that. I come across this problem frequently in organisations that I work with in my constituency. Will she encourage funders to bear this in mind in future?

Absolutely. My hon. Friend has a reputation in his constituency for his involvement in the third sector, and the points that he makes are entirely valid. Let me mention some of the things that the Government are doing; I hope that other funders will consider them. Grass-root grants are going directly to smaller organisations—an initiative that has never been taken before, coupled with an endowment process—and that is providing £130 million. That can address the issue of core funding. We also have the community assets programme, providing £30 million across the country for projects involving buildings that are sustainable for the long term. May I direct him also to Communitybuilders, a £70 million programme that was recently opened for applications and has received 1,500 already? That is the kind of programme that the organisations he mentions will benefit from.

We should be concerned that more than 10,000 charities have ceased operating in the past six months, according to the Charity Commission. After two years of consultation, we are still no clearer about Government plans to make gift aid easier and more effective for charities. Instead, we are now getting signals from private meetings that the Treasury actually wants to scrap tax reliefs for higher rate payers who give to charity. This must be the wrong time to be hiding things from the sector. When will the Government come clean on their plans for the reform of gift aid?

The number of charities has reduced, but from talking to the Charity Commission we find that that is about the cleaning up of the charities list. There are charities that have been on the list for some time but have not been functional, or there may have been mergers.

This Government have a proud record on gift aid, and several changes have been brought in.

The hon. Gentleman may shake his head, but it is absolutely true. A number of changes have been brought in to simplify and improve the system and get more money out to charities. I understand the frustration of some charities that want to see change more quickly, particularly on the issue of higher rates, but the problem is that there is not agreement among the charities themselves about the best way forward. We are in talks with the Treasury about how best to address the matter, but the improvements that this Government have made have increased the amount of gift aid going to charities. The number of donations has more than doubled since 2001, when we first started making changes. I understand the frustrations, but we are working with the Treasury to ensure that there are improvements.

Can my right hon. Friend give us any indication of whether voluntary organisations are responding to the Government’s initiatives to get more people into work by increasing the work that they do, so as to benefit from the programmes that have recently been put in place?

The response to the Government programmes put in place during the recession has been remarkable. I am pleased to say that the anecdotal response that we are getting, particularly on grass-roots grants, is that the forms and application process are easier and simpler than they have ever been before. There is an increased number of volunteers, and we are supporting them through a variety of programmes. The evidence is clear that people who volunteer often find a route into work by gaining skills, confidence and connections with employers.