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Voluntary Sector and Social Enterprise

Volume 737: debated on Thursday 21 June 2012

Motion to Take Note

Moved by

My Lords, I am delighted to have the opportunity today to introduce a full-length debate on the voluntary and social enterprise sector. Whether it is care for the elderly, support for people with disabilities, the provision of housing, advocacy, magistrates dispensing justice, protection of our wildlife or conserving our built heritage, the voluntary and social enterprise sector is at the centre of it. In this Olympic and jubilee year, the efforts of volunteers will be showcased in a way that we can all hope will leave a lasting legacy.

I am looking forward to the contributions of noble Lords from all sides of the House, and I declare a non-pecuniary interest as the chair of the England Volunteering Development Council.

We have come to use the expression “third sector” to embrace a whole gamut of activities from the voluntary sector: social enterprise, mutuals, co-operatives, community interest companies and a host of arrangements which no longer fall into the neat, old-fashioned public/private split.

The voluntary sector and what we now call social enterprise have been around for centuries. In my part of East Anglia, the medieval guilds were as much about welfare as they were about trade. In recent times, we have become used to vital services being delivered by the voluntary sector, the WRVS Meals on Wheels service being a great example. However, today’s picture is very complicated indeed. Many services previously provided by the public sector are now being carried out by voluntary organisations and by social enterprises which have spun out from their original public services.

A significant number of large charities have created social enterprises to generate income for them, and some social enterprises, such as housing associations, now have commercial arms that generate income which is ploughed back in to help fund their social objectives. Most of the tens of thousands of these organisations are very small indeed, and have every intention of staying that way. Support has grown up in the form of a number of umbrella bodies such as Volunteering England, Community Service Volunteers and Social Enterprise UK.

What truly defines this sector is that it is full of people who have identified a need, and have set out to fill it. If the Government did nothing at all, this sector would still exist—philanthropy and concern for humanity have existed since the dawn of time—but to really maximise its impact, what government at all levels does, and does not do, is important. So I want to use today as a chance to think about some of the ways in which the Government can nurture the sector by genuinely recognising and promoting the enormous contribution made by volunteers and by those who have chosen business models which put society before profit.

Every year, more than 20 million people across the UK volunteer around 100 million hours and the estimated economic impact of their activity is in excess of £40 billion. The impacts are virtually incalculable. The YMCA alone estimates that it impacts on half a million young people every year. I particularly want to talk about volunteers rather than charities because my fear is that Government are putting too much emphasis on giving money, as opposed to giving time.

It is funny that many people do not really think of themselves as volunteers; they just get on with it. For example, carers, many of whom are very young, carry a huge responsibility. Tens of thousands of people volunteer as an integral part of their faith. People who run heritage railways or arts organisations do not consider themselves as volunteers but enthusiasts. Last week, I chaired a meeting at which former Olympic athlete Dave Moorcroft was talking about the Join In project and he mentioned the athletics club where he started his career. He spoke of someone who had volunteered there for decades, who, when complimented on his volunteering, said, “I'm not a volunteer, I work here. I just don't get paid”.

It is worth reflecting on the nature of volunteering, and the language that we use to describe it. A case study highlighted by the CSV demonstrates this really well. A London hospital which had had little success in its general appeal for volunteers, began to make more specific calls: for example, it asked for Bengali speakers to help patients, which resulted in people coming forward very quickly as they could see that they were needed. Understanding motivation is really important when we think about volunteering in the context of unemployment. Charities and social enterprises are marvellous at providing paid employment for those who have particular employment challenges: for example, ex-offenders, long-term unemployed, and people with disabilities and mental health problems.

The Sue Ryder organisation runs a scheme for ex-offenders which costs £50,000 a year to run and places around 100 people a year in its shops as a pathway to get them back to work. As it costs more than £40,000 to keep someone in prison, that is massively cost effective. For many others, it is a great thing to use volunteering as a way of keeping people engaged and ready for work. However, I have real concerns about making volunteering a conditional part of receiving benefits. That comes with enormous problems. The idea of forced volunteering is anathema to much of the voluntary sector. Perhaps bespoke social enterprise companies would be a better way of providing such opportunities if the Government believe that conditionality is right.

Understanding more about attitudes to volunteering is really important at a time when more public services are being delivered by voluntary organisations, charities and social enterprises, either because it is a deliberate policy or as a response to cuts. We need to know what volunteers think about job substitution and whether they feel that their good will is being taken for granted.

We do not know much about public attitudes to services provided by volunteers. It is important that recipients do not see themselves as somehow receiving second-rate services because they are no longer being delivered by the local council or health authority. The services are often better. We need to ensure that there is no kind of stigma attached to being seen as the beneficiary of charity either through an individual act of volunteering or through a charitable organisation. I am not aware of much research that has been done in this area but it is highly relevant to public attitudes and to the attitudes of the organisations that commission services.

One aspect of recent public service cuts is that people are stepping up to ensure that the things they value, such as libraries, continue to exist. Volunteering is a free gift from the volunteer, but not a free good to society—professional staff are needed to manage volunteers. In order for third sector organisations to thrive, they not only need to feel valued but to be supported. We know that these organisations and individuals thrive when supported by high-quality information, training and advice from local and national infrastructure bodies. The role of these organisations in offering support, sharing good practice and building partnerships is essential. The national survey of volunteering showed that 31% of regular volunteers said their volunteering could be much better organised, and 28% said there was too much bureaucracy.

I know that the Government are committed to getting more people to volunteer and with modern technology it is easier than it has ever been to match people’s enthusiasm with organisations, but it does not work as well as local volunteer centres which offer face-to-face advice and match up individuals with the right organisations. It is very costly for charities to deal with unsuitable volunteers and demotivating for the individuals.

It is also important that the Government understand that volunteer organisations do not have limitless capacity to take on volunteers. They often need some element of professional guidance and back up. A recent survey carried out by the Lloyds TSB Foundation showed that half of all small to medium charities have seen an increase in interest in volunteering, which is only to be welcomed, but a third of them were unable to cope with the demand.

The social enterprise sector is one of the most exciting developments of recent years, although it has existed in various forms for centuries. If you have ever bought a copy of the Big Issue, or been to the Eden Project or shopped at the Co-op, then you have supported a social enterprise. A recent report from Social Enterprise UK highlighted how social enterprise is contributing to the economic fight-back in many of the most deprived communities, in a way in which neither the public nor private sectors have been able to do. The report showed how social enterprises are being run by younger people than seen in the traditional SME sector, have a higher proportion of female directors and more directors from black and minority ethnic communities.

One thing that social enterprises and the voluntary sector have in common is that they are being held back by conventional public sector procurement practices. There are a number of reasons for this. Risk aversion is one of them. Lack of knowledge and understanding is another and the dreaded “economies of scale” another still. But these have to be overcome if our third sector is to continue to thrive, and the benefits of sustainable and innovative alternatives to conventional services are to be realised.

Earlier this year my noble friend Lord Newby took the Public Services (Social Value) Bill through this House and I pay tribute to him for that. Public bodies will now be required to consider how the services they commission might add value to the well-being of their areas. In practice, this could mean that mental health services could be delivered by organisations actively employing some people with a history of mental health problems who really understand the services that they are delivering. Housing providers could create jobs for the long-term unemployed in housing management and catering contracts could include use of local suppliers. It is not about spending more, but about thinking how you spend to give more local impact.

I hope that the Government will undertake to work with public sector commissioners to implement the Act when it comes into force in January, as it could transform the way in which services are delivered. We have to stop being scared of small-scale providers—in many areas they are being frozen out by large contracts. I was really pleased to hear about Oldham, where special efforts have been made to allow microsocial enterprises to compete using an organisation called Community Catalysts. All sorts of stories have emerged from there, including one about two women who were fed up with working for a large impersonal domiciliary care organisation. They set up their own social enterprise and care for 15 people in a highly personal and flexible way.

The Government last week announced that they are making £19 million available to support social enterprises and will be placing lead officers in all the major departments to take the lead on the work. That is to be welcomed. Will the Government now consider a similar approach for the voluntary sector? It is always a problem for any government to deal with issues which cut across departments but it is imperative that all parts of government think about how they can make a difference. For example, the Home Office could make the new portable criminal record checks free for volunteers. The DWP still needs to work on clarifying the impact that volunteering has on the payment of benefits. We really need the Treasury to think again about the VAT regime. The Sue Ryder organisation told me that one of its hospices typically pays £44,000 a year in VAT while an identical NHS operation would get 57% of that back. The changes to health services need to be mindful of the role of third sector providers, through including them on the health and well-being boards, and ensure that Monitor effectively carries out the fair play field review.

There is so much evidence about what the third sector in all its glorious complexity delivers. It delivers where no one else does and often does it better. Beyond the matter of service delivery comes the impact on society where contributions are made by individuals whose motivations are rooted in the place where they live. The impact of volunteering and of being involved in social enterprise—two related but different activities—is marked both for providers and for people who receive the services. Where public services have spun out to become social enterprises we often see much increased levels of productivity because individuals are more motivated by being able to concentrate on what they care about and in knowing that the profits that they make are desirable because they are reinvested.

The impact of volunteering on the well-being of the volunteers is well known, especially after retirement when an estimated quarter of people report that they volunteer. The third sector contributes so much in so many ways that it is difficult to value enough their contribution in creating the cohesion, the social capital and the trust that we all need in order for individuals, communities and society to thrive—but value them we should. I beg to move.

My Lords, I congratulate my noble friend Lady Scott of Needham Market on setting out so clearly the complex scene within the voluntary sector. I am sure that other speakers will highlight particular aspects but there are one or two areas that I want to mention. My noble friend commented on whether volunteers are valued for the service they give as much as they would be if they were working in the public sector. Her comments prompted me to turn my mind back to when I delivered meals on wheels in my local village—which, unfortunately, is not now done by volunteers, although state provision is doing it very well—and to reflect that it has lost the local link that people had in the village. They knew the person delivering the meal and would talk to them about their family. It is a sign of the times, although I am glad that in some areas such meals are still delivered by volunteers.

My noble friend also raised the important question of why a person joins in the first place—why do they feel there is a need which will cause them to volunteer? Sometimes it is because they had a relative who has been ill or perhaps some type of family problem. Others are particularly interested in wildlife or in community in the wider sense. I suspect that, in the first instance, many volunteer simply because they want to do something to help. My noble friend was right to say that sometimes it is just a matter of determining how they go about becoming involved as a volunteer. My noble friend has explained that issue clearly so I will not go down that line again.

There were difficulties even before this period of austerity. For many charities, the number of new, young volunteers coming forward has been insufficient to replace those who are leaving because of age, ill health or, in some cases, a feeling that they are not appreciated. What a terrible thing it is for these people to feel they are not appreciated. However, I am sure that in this jubilee year—which has been, and will continue to be, a wonderful experience for so many—we can chalk up another success. Younger people have come forward to help organise and run fun jubilee celebrations. They have discovered that volunteering was not only fun, challenging and hard work but also uplifting and rewarding.

Social enterprise organisations—there are some 62,000 of them in Britain today, contributing more than £24 billion to the economy and employing nearly 1 million people—are a new form of non-profit-making companies. This has the potential to become an important way of providing services at sensible prices while creating job opportunities for people who are willing to work for a reasonable reward. There are, however, a number of stumbling blocks to which I should like to draw the Minister’s attention.

Health and safety occupies a particular position in our national life—I wonder whether there has been a radio or television comedy show in the past 10 years that has not had a dig at it. In principle, health and safety is very important; consider, for example, the improvements to car design that were instigated partly by the need to reduce accidents. However, it can also be abused: examples include bans on playing conkers in the playground and the astonishing announcement made by the Royal Mail in Doncaster only last week that it would not deliver mail to a certain area in the rain because a postman had fallen over and been hurt. Where is it leading us?

The next big concern, which my noble friend touched on, is CRB checks. I am glad that the coalition is committed to reducing the number of such checks. Many older people who have been involved in charities for years were insulted and upset when they were asked to have a CRB check. They felt that they were no longer considered trustworthy. It appeared that no limit was placed on the number or purposes of these checks. I know that it was also a big expense for the voluntary organisations.

Perhaps I may also touch on the position in the City of London. The City of London Corporation is supporting the Big Society Capital social investment fund and that is to be encouraged. It is giving grants of £15 million a year through the City Bridge Trust and is very anxious to help and support those who are willing to volunteer.

There is a range of other organisations that I could mention but I will single out just two. The first is our churches, a national organisation which has parishes everywhere. I am deeply concerned, however, about the way that our churches are perceived. People sometimes say to me that they are only for those who are Christian and pray in them, but that is not so. The churches are a welcoming house for everybody and I hope that this role develops in the coming years.

The second group which I should like to cover is those who volunteer to help our police forces. In Leicestershire, we have 174 police volunteers within three local policing units and 290 special constables who give over 79,000 hours of service. They are unsung heroes. They are not always seen as volunteers, as many regard them as part of the force, but they are, in fact, volunteers.

I touch, finally, on the work that we in Leicestershire are doing with young people. Leicestershire has many clubs for young people, and why are these clubs important? It is because they welcome young people and give them opportunities. From there, they can grow to become much fuller citizens and, ultimately, go on to help others themselves.

My Lords, I congratulate the noble Baroness, Lady Scott, on providing us with this opportunity to debate issues involved in voluntary service and social enterprise. I am sure that most of us have been actively involved in them through our political lives, have enjoyed the work and continue to do so. However, the noble Baroness defined what she thinks is voluntary, and perhaps it is being exploited. I wish to draw attention to the dangers that are beginning to develop as voluntary labour is brought into the commercial sector and is governed by contract, not community feeling, and profit. That is an important issue for us to consider.

Problems are developing with a big pool of unemployed people being asked to do voluntary work, whether it is voluntary in the sense that you agree to it, as the noble Baroness, Lady Scott, said, or voluntary in the sense of military service when you are told that this is what you will do. When I see the pool of the unemployed and the mandatory work policies being brought in by the Government—and all Governments have been involved in some part of welfare to work—I worry that the schemes that are developing at present are putting greater pressure on unemployed people to volunteer.

A classic example of that happened quite recently under London Bridge, where a number of young people were dumped in the most difficult circumstances. It was during the jubilee celebrations, and they did not enjoy the wonderful experience that the noble Baroness, Lady Byford, has just referred to. To that extent, I want to address my remarks to the kind of development that is occurring in the name of voluntary contribution. In that case, it was people who were providing marshalling services at the Queen's Jubilee, which was a very important thing to do. Some were paid very lowly and some were given no pay and had to face the pressures applied in the name of the voluntary community. First, they were told, “Please come on this—we’ll pay you”, then when they got on to the bus were told, “No, we’re not going to pay you”. Secondly, they were told, “If you don’t do this, you’ll lose your benefit”. A third factor was the incentive that they would probably get a job at the Olympics site at £8.70 an hour, which is quite interesting because that was part of the contract.

My concern is that this is now all about contracts and subcontract work. It is no longer a case of people working voluntarily in the community, but of saying to people, many of them young, “You’ve now been involved in this long-term. You’re going to be offered a job that you can’t refuse”. It is almost like the Mafia kind of contract: “I’m going to offer you a contract that you can’t refuse”, and so you go into the system and work. I will stick to the one case that I am on about; it concerns a company called Close Protection UK that had the responsibility to train these people—not to pay them—and to put them on to go and do marshalling services. That system is now being considered for fire marshalling work at the Olympics site, but I will come back to that in a second. The people got on the bus and suffered a number of indignities. I do not have time to go through them, because a lot of people want to speak in this debate, but clearly they did not have food or access to toilet facilities. It was a damp site to take a tent to as it was pouring down with rain—we all know the amount of rain there was then. Nobody seemed to care at all about those conditions, but we should be concerned if more and more people are being put into that situation when hoping to get from welfare to work. We should not just exploit them by saying that the work is unpaid.

My worry is that the contract given to this company by the London authorities and others to bring in people to work as marshals was for £1.5 million. If that is the case with work experience, why was a condition not laid down in the contract that all the workers has to be paid a certain amount, as is the requirement for the Olympics? If that is not done, companies are more likely to make more profit by using people who are not paid. That is the concern beginning to develop around the exploitation of voluntary labour. Since there have been many reports in the papers, let me say that I have interviewed a lot of the young people who were involved in this and I have a lot of examples of what they said went on that night. It is true that there have been other examples of those who thought that it was a good experience, so there is some dispute, but it is important to find out what really went on.

With the development of these schemes, I worry that the big companies are getting millions and millions of pounds, as we recently saw with A4e. I think that the Government are already offering £2 billion to get these people off work—they are to be paid in some cases but not in others. There is a requirement for training, which sounds like a few hours a week of NVQ and is not very satisfactory. Basically, it means that these people are then pressed into playing a role. I think we are all aware of A4e, which is now involved in trying to show the numbers it got into jobs. In reality, fraud was involved and cases are under way. It is not limited to that company; it is the process of the contract work that is involved.

Let me take this example. Prospects, a private company, had a contract. It was in fact a non-profit company even under Labour, when it dealt with Ofsted. It then turned itself into a mutual company so that it could make profits and has made something like £11 million this year. The motivation then becomes not to public service but to the profitability of that investment by private companies. What begins to concern me is the conflict between the public interest involved and the private interest that is motivated by securing a profit. When the contract was given by a public authority to Prospects, it then had to go to a charity, Tomorrow’s People, which became involved. It then rakes up the people for the south-west area and then goes to another body on another subcontract. They are the ones that have basically exploited the situation.

I do not have the time to go into all those difficulties, but they are now going to be offered the job of fire marshals—we are replacing firemen with fire marshals at the Olympics. I am worried about that. I have written to the Home Secretary. I have written to LOCOG, which set the contract. I cannot go into all the details of the replies but I can tell you that LOCOG is doing nothing about it; it is confirming the contract. If we are going to put our young people in the hands of these people, what we should be saying is, “Have we not got a responsibility for governance?”. The lady who is in charge of this company has been done for perjury; she has had a number of companies. You would not trust any company with her, frankly. But now the inquiry is under way, we will see what the real facts are.

In conclusion—looking at the time, before the noble Baroness gets up to remind me; as I understand it, you can go to 10 minutes but I am not doing that.

I am sorry to interrupt the noble Lord but this is a time-limited debate. As it makes clear on the Order Paper, Back-Bench contributions are limited to six minutes.

I apologise. I took advice; obviously I got the wrong advice, but I will not exploit that situation. This whole business now means that a massive pool of cheap labour is going to be exploited, and now G4S even wants to buy the police and replace them with this kind of labour. We had better start looking at what is happening with the exploitation of people. I hope we can have a public debate about it. We have started it thanks to the noble Baroness, Lady Scott, and I am obliged to her, but I would like to get into the details of the issue perhaps when there are fewer people here and I can have a longer time to develop the argument.

My Lords, I will take a very different tone from the noble Lord, Lord Prescott, because I want to talk about the advantages of volunteering and social enterprise, rather than complaining about them. I have spent most of my working life with young people, many from very poor homes, and I can tell you that the impact of volunteering on their lives has been empowering. It has enabled them to develop their CVs, get jobs and gain confidence, which is so much needed.

I thank my noble friend for initiating this debate. It is a hugely important topic, as she has outlined. Charities, voluntary organisations, third sector organisations, social enterprises, mutuals, co-operatives—there is a virtual continuum of organisations that undertake some trading but operate for social benefit rather than private profit. I want to concentrate on the social enterprise element of this debate.

The lack of precision in definition is only one of the hurdles that this sector has to overcome. It is true that in many cases social entrepreneurs are able to operate successfully in situations where the private sector would not be viable. That is their huge advantage. They operate overwhelmingly in poorer areas—another advantage. They attract back into work—often by volunteering, sometimes by paid work—those who have for a variety of reasons been out of work. They are job-rich in an age where technology dominates, and by that I mean that social enterprises create more jobs relative to turnover than standard SMEs. At a time of high unemployment, that is a big advantage. They tend to reinvest their profits locally—another advantage.

The major problem social enterprises face is funding finance. Because of the advantages I have listed, plus the lack of a clear definition, they are regarded by most lenders as little more than charities. Banks seem to believe that lending to social enterprises is akin to bailing out a lame-duck business at best. The attitude is that because it is a social enterprise, it therefore cannot be profitable. The financial sector has not yet developed a robust model for investment in the social enterprise sector. Despite the very welcome recent legislation in the Public Services (Social Value) Act, the Government have not yet provided adequate tax relief for those who invest in social enterprise, in the view of Social Enterprise UK.

The enterprise investment scheme and venture capital trusts are aimed at standard SMEs that issue equity, which most social enterprises do not do. Community investment tax relief is the only form of tax incentive that social enterprises can access and it has a lower rate of tax relief than mainstream schemes. It does not allow direct investment; you have to invest via an accredited community development finance institution. This is more than technical jargon; it is an issue of life or death for social enterprises to be able to get the funding they need. Both the problems that I refer to could easily be removed. The eligibility criteria for the funds concerned also need to be widened.

Another way in which the Government can do a great deal to encourage social enterprises is through their procurement policy. As my noble friend said, the procurement process favours large companies, because the contracts let are often much too large for a social enterprise to tackle and the process is so complex. Public sector procurement needs to take account of social value. The Act that I referred to earlier should enable this to happen because the legal structure is now in place, but the key thing is that attitudes on the part of those letting the contracts in the first place have to change.

It is still a common view that social enterprises are likely to be soft on efficiency and that public sector contracts should go to proper businesses. Social Enterprise UK wants the Financial Services Bill to include a clause to ensure that the two new financial regulators support the development of social investment.

The Government have made a good start. Their announcement last week of additional funding is hugely welcome. They have gone well beyond mere rhetoric and are beginning to examine a comprehensive range of policies across government and to ask every time, “Will this encourage social enterprise?”. Social investment should be at the very heart of the Government’s being. It boosts the economy, reduces unemployment, reinforces localism and increases social mobility.

My Lords, I, too, am most grateful to the noble Baroness for securing this important debate. I am pleased to follow the noble Baroness, Lady Randerson, in talking about procurement.

I should like to ask Her Majesty's Government whether there is a clear evidence base for the use of a mixed market in services for the care of the elderly and of vulnerable adults and children; whether there is not an overreliance on large, private equity-based providers of care; whether more might not be made of giving third-sector care providers preferred status and promoting enduring relationships between those providers and purchasers, provided that outcomes measures are met; and, finally, whether more might not be done by Her Majesty's Government to prioritise their workforce development responsibilities.

Having sat on the board of a not-for-profit adoption and fostering agency, I know how tough the competition for placements is. I would be most grateful to be reassured that the voluntary sector is not being put at an unhelpful competitive disadvantage with regard to large, equity-funded providers. How can we maintain the smallness to which the noble Baroness referred in circumstances of competition with large, equity-based companies?

The Parliamentary Groups for Looked after Children and for Runaway Children, chaired by Ann Coffey MP and Edward Timpson MP respectively, this week launched their report into children who go missing from care, a report made possible by the support of the Children’s Society and the Who Cares? Trust. The first of its five key recommendations was that there should be:

“An independent investigation into children’s homes in England which are failing to manage and protect children who run away or go missing. This is despite spending £1 billion a year on just under 5,000 children cared for in children’s homes averaging £200,000 per child”.

I should declare an interest as I was involved with the report’s production and am an officer of the one of the parliamentary groups involved.

Local authorities now own only 24% of children’s homes and large equity-based companies are the largest providers. From the report’s key recommendations, we can see that this particular mixed market does not appear to be giving value for money and quality care outcomes. I recently met Eva Lloyd, reader in early childhood at the Cass School of Education and Communities at the University of East London. We discussed her book on the mixed market in early years provision, Childcare Markets: Can They Deliver an Equitable Service? The book is to be published on 25 June and is jointly edited by her and Helen Penn. She emphasised to me that the evidence strongly indicates that our model of mixed market for early years provision in the early years area does not give the best value for money. Indeed, we have among the most costly early years provision in the world. This may in part be because we rely so heavily on large, equity-based providers for our childcare.

I contrast this with a non-market approach and the best education system in the world. Finland tops the PISA international charts for education outcomes in literacy, numeracy and science each year. An important aspect of its service is the quality of its teachers. There are 20 candidates competing for each teacher training place. Every teacher, in primary and secondary schools, has a master’s degree qualification. Teachers are trusted. As I understand it, there is no school inspection system in Finland and very loose national curriculum guidance. The analogy perhaps is that each school is like a small enterprise, run by people who are genuinely committed and highly trained by the Government to do an excellent job and who are given autonomy.

The comparison between us and Finland is said to be flawed because our nations are so dissimilar, in particular since Finland has a far more homogeneous population. This is true, but every school class is of mixed ability and I understand there are no exclusions from school. Teachers have to work with the mix of children that is presented to them and they get these fantastic results.

The experiences I describe above lead me to wonder whether we have an overreliance on a mixed market of provision in services for the vulnerable. Should we be looking more at enduring relationships with particular providers and give preferential treatment to not-for-profit providers where they can demonstrate high quality and value for money? Should the Government’s role be more to ensure that the high-quality workforce—the teachers, early years workers, social workers and so on—is available to meet the demand for services for the elderly, children and vulnerable adults, as part of the local and national infrastructure the noble Baroness referred to in her introduction? Do we overprize our system of regulation and inspection but underprize ensuring that there is a high-quality, autonomous workforce available to meet the needs of our children and of our elderly and vulnerable adults? I ask the Minister what the evidence base is for mixed markets in social care provision providing value for money and best outcomes. I look forward to his response.

My Lords, it is a tremendous pleasure to follow the noble Earl, Lord Listowel, who manifests his deep concern with social and educational issues in so many different ways. I also join other noble Lords in thanking my noble friend Lady Scott, with whom I have worked closely on European issues in a spirit of true coalition harmony, for securing this debate on a sector whose immeasurable contribution to our nation’s well-being is so rarely afforded the attention and praise it deserves.

It is with particular reference to Northern Ireland—whose welfare and progress are of special importance to me—that I wish to speak today. The Northern Ireland Executive of course bear the main and direct responsibility but it is surely right that tribute should be paid to the progress of the voluntary sector in the Province during this important debate. The largest charity in this sphere in the Province is the Northern Ireland Council for Voluntary Action—NICVA, not a very attractive acronym—which works on behalf of more than 5,000 voluntary groups. It represents the sector to government and provides support and assistance to individual groups. It is therefore well placed to assess the current health of the sector in Northern Ireland and provide practical recommendations on the best way forward in these difficult economic times. The council’s most recent State of the Sector report shows that more than 27,000 people are employed in the Province’s social sector organisations, of whom 80% are women. Together with almost 190,000 unpaid volunteers, they form a substantial part of the Province’s workforce. An annual income of £741 million is balanced against expenditure of £720 million, underlining the very thin margins on which these vital institutions operate.

The feeling in Northern Ireland is that the worst may yet be to come: 14% of organisations predict that they will have to reduce staff numbers in the coming year. Where well endowed institutions and very generous people could previously afford to give generously, they are now having to count every penny. Donations from the general public, which have amounted to £220 million a year, are now falling.

The question for government and the voluntary sector now is how to give services, and the people who depend on them, as much protection as possible. Voluntary groups which can strengthen their position by coming together, sharing resources and widening their spheres of operation can now secure support from an initiative called CollaborationNI, which helps organisations to ensure that scarce resources are used to their fullest advantage. One notable example is called Will to Give, a charity promoting legacy giving, with the bold aim that one day everyone will make a donation to charity in their will. Smaller charities can now advertise and promote their work under the Will to Give banner. Organisations with no experience in this area can learn from well-established fund raisers and donors can support a wider range of causes. My faltering voice may suggest that I should hasten to sign up to Will to Give—forgive me.

The Northern Ireland Executive are allowing charity consortia to bid for contracts together, ensuring that available funds are distributed among a larger number of organisations. The Executive are working to reduce their bureaucracy. As the Northern Ireland Assembly’s Public Accounts Committee noted recently in its Report on Creating Effective Partnerships between Government and the Voluntary and Community Sector, the,

“wide range of Government departments, agencies and other public bodies”

has led to,

“over-bureaucratic, disproportionate and risk-averse approaches”.

The Northern Ireland Audit Office has recently made its recommendations to address those issues, and its best practice principles will be enshrined in a concordat between the Executive and the sector—it seems that my signing up to the Will to Give cannot come a moment too soon.

Many of the problems that confront the voluntary sector in the Province are unique to Northern Ireland, which of course bears the scars of its recent history. The recipients of the largest private donations in the Province are organisations connected with religious denominations, so long and so tragically divided among themselves. This is perhaps the area where the greatest scope for improvement can be found. Although people may still feel divided by the history, they must be united in their present endeavours. Working together, they can develop solutions that cross political and sectarian barriers. NICVA has recently helped groups ranging from the West Belfast Suicide Awareness Support Group on the Falls Road to the Shankill Women’s Centre, enabling them to deliver better services in difficult areas.

The Vital Links project, funded by the European Union, runs a series of policy forums designed to encourage co-operation among the various organisations. The problems caused by poverty, ill health and poor education do not discriminate between those whose lives they ruin. In working together, groups and organisations in the voluntary and social sector are striving to ensure a peaceful and prosperous future of Northern Ireland. In Alexander Pope’s words:

“In faith and hope the world will disagree,

But all mankind’s concern is charity.”

My Lords, I join other noble Lords in congratulating the noble Baroness, Lady Scott, on having secured this debate and on the illuminating way in which she introduced it.

The advent of a so-called age of austerity is an invitation in the industrial countries to think again about how we live. Rather than simply talking of a return to growth, with its premise of endless consumption, we should be considering more profound social goals. In place of austerity as a negative value we should be talking of sustainability, both economic and environmental, as a positive one. There is a great deal of discussion at the moment—rightly, in my opinion—about rebalancing the economy in terms of manufacturers and finance. However, we should also be discussing how to rebalance the economy in terms of social and moral objectives.

I do not really like the somewhat crummy term “big society”, which seems to be an ad man’s notion, but there is no doubt that we should be thinking creatively about how civil society can be revitalised. To me this does not mean denying the importance of the state or of markets; it means working creatively with them. Following the noble Baroness, Lady Randerson, I shall concentrate on social enterprise rather than on the voluntary sector as such.

Social enterprise is conventionally a Cinderella when it comes to funding. The challenge today is to try to mainstream it. One can define a social organisation, at least roughly, as a firm in which surpluses are created for directly social purposes rather than the desire to maximise profit for owners or shareholders, which of course does not mean that such organisations cannot themselves be very profitable. According to official statistics, there are about 62,000 social enterprises in the UK, most of them small. However, some very interesting recent research shows that there are probably five times as many so-called hidden social enterprises. These are nominally for-profit enterprises in which social and environmental purposes loom large and which reinvest a substantial part of their surplus to achieve these purposes. In other words, there is a large hidden stratum of socially and morally motivated companies beyond the orthodox measurement of social enterprises.

Hidden social enterprises, the research shows, have superior growth patterns compared with organised businesses. In the research in question, each of them created nine jobs on average in a two-year period compared with six for straightforward smaller enterprises. Interestingly, twice as many hidden social enterprises have been set up by women rather than men. As the researchers observe:

“This research places entrepreneurs exactly where they should be—at the centre of the debate on the way business moves forward after the financial crisis”.

Can all this be mainstreamed? It can and should, and we should be thinking of the large corporations here, not just the small ones. Take the example of the fast-food corporations, which pay only a tiny amount of the costs that their advertising and the resultant changes in diet have in the population. Obesity is a global trend which is directly integrated with advertising that is aimed initially at children in this country and elsewhere, and it is the National Health Service and other state-based organisations that have to pick up the costs. The fast-food companies themselves should be obliged to cover more of those costs through taxation, as is happening in some parts of the United States at the moment; but surely it will also demand more active, energetic and farsighted business leadership from the larger corporations too.

In conclusion, social and environmental concerns should become a driving force also for big companies so that it is integral to what they do and is not just hived off to a tiny department of corporate responsibility that has been set up purely for public relations purposes. Companies that are in the vanguard—and we have quite a lot of evidence of this from farsighted corporate strategies—might find that such an outlook increases their own survival value.

My Lords, I, too, express my thanks to my noble friend Lady Scott for initiating this important debate. The coalition agreement pledged to support the creation and expansion of social enterprises, mutuals, co-operatives and charities in public service delivery, and I am delighted that the Government are delivering on this commitment.

It is important for us to understand the scale of the third sector. In my home city of Newcastle upon Tyne, with a population of 290,000, there are 2,300 voluntary and community groups. One-third—some 800—are registered charities. These large numbers confirm the potential of the sector and, as importantly, the demand for their services. Some organisations are big with lots of contracts and experienced staff; others are of medium size, and tend to be more dependent on grant aid; but the largest number are small organisations with low income levels, often working in neighbourhoods.

As the Government are issuing more work through contracts, the ability and capacity to bid has become more important, and this is where the big and experienced organisations have an advantage. The consequence is that larger organisations that cover the whole country are stepping in. These companies can afford to bid and lose, promote loss leaders and use other income streams to repay loan finance.

What steps can the Government take to enable smaller community groups to compete? The best-value statutory guidance published last autumn, together with recent legislation on social value, requires that consideration be given not only to economic value but also to environmental and social value. This will maximise the additional benefit created beyond the simple provision of the service. As has been mentioned, the social enterprise sector has long campaigned for public sector procurement to take account of social value. This legislation should therefore prove important in enabling the sector to compete successfully for public sector contracts. The big challenge now is to make that happen and to ensure that social value becomes a key component of commissioning. That will require that social enterprises, local government, the voluntary and community sector and central government raise awareness and share good practice. I have been particularly impressed, in the north-east, by the social enterprise framework that has been developed and supported by all the social enterprises in the region. Good leadership is emerging.

As for growth and development, Pricewaterhouse Coopers is offering mentoring support from senior staff, and Teesside University has appointed a social entrepreneur-in-residence. Northumbria Water and the CBI are also undertaking work to bring more social enterprise into the supply chains of big companies. On funding and access to finance, the Northern Rock Foundation is leading a piece of work on access to finance for the sector and has already identified investment readiness as a barrier to growth. Business support seems patchy at best, with enterprise agencies generally not having expertise in this area.

Real businesses show what can be done. In County Durham, a social enterprise is designing and manufacturing collections of home and outdoor-living products. The first collection has been designed in conjunction with Durham prison by two designers-in-residence at Northumbria University. The aims are to change public perception of the quality and style of products produced in prison and to build opportunities for offenders, both in custody and back in the community, to gain employment.

What can the Government do more of and what can local authorities do, too? The Government can help to grow social investment by ensuring that social investment tax reliefs are as attractive as mainstream investment schemes. They can learn from the experience of the Work Programme, launched in late 2010. Nationally, it was expected that the voluntary and community sector would get around a third of the contracts but they got only 20%. The reasons seem to relate to the complexity of contracting and the potential for delayed funding. The Government can make sure that their intention—integral to the NHS reforms—that social enterprise and voluntary organisations could offer bespoke services in their local areas is delivered.

We have heard reference in this debate to the VAT issue, which is a matter of serious concern. I give a further example. I understand that if one housing association provides shared services to another, VAT becomes chargeable on that transaction. Maybe the Government will take the VAT issue seriously.

Local government and councils must ensure that cuts to voluntary sector organisations are not disproportionate compared with those that the council itself faces. It is right that councils can be challenged if they are. Councils should not follow EU procurement procedures when they are not required to do so. They should not use formal contracting when commissioning would be satisfactory or go out for retendering for just one year of support, doing so only weeks before a contract is due to start. Councils need to help upskill the sector with capacity-building teams, by helping them with IT, office space and collaborative budgeting, and by assisting transition where it is needed.

Finally, there is enormous potential for the voluntary sector and social enterprise to deliver growth. That potential should not be underestimated by the Government. I hope they will give it due consideration.

My Lords, a couple of years ago we had a couple of good debates about the role of the voluntary sector. The subjects for debate referred more to civil society than the voluntary sector but people seemed to take the view that we were free to talk about more or less whatever we liked. That was a couple of years ago, so the noble Baroness, Lady Scott, is to be greatly congratulated on bringing us back to the subject, especially considering the prominent place that the voluntary sector has assumed in the Government’s thinking about the direction of society. I am taking it that the subject for debate today gives us a similarly free hand as to what we talk about.

ACEVO, the Association of Chief Executives of Voluntary Organisations, says that a social enterprise is an organisation that trades for a social and/or environmental purpose and reinvests its profits in support of that social or environmental aim. As we have heard, a well known example is the Big Issue, the magazine that is sold for £1.25 to homeless vendors who then sell it for £2.50, achieving the social return of increased income and independence. The Annual Survey of Small Businesses UK 2010 estimated that there are approximately 68,000 social enterprises in the UK, which contribute at least £24 billion to the economy and employ an estimated 800,000 people. ACEVO would argue that it is unhelpful to draw a hard and fast distinction between charity and social enterprise. All charities need to be enterprising in their outlook, particularly in challenging economic times, and many pursue social enterprise models.

In a sense, social enterprise is something that an organisation does, rather than something that it is. For example, the charities Catch22 and Turning Point work with the private company Serco to deliver an anti-reoffending pilot at Doncaster prison on a payment-by-results basis, in which payment levels depend on the extent to which reoffending is reduced. This is replicating a social enterprise model in which investors are rewarded when a programme achieves targets. If this is what a social enterprise model is, I would have to flag up dangers. Just to be clear about my own position, institutional and ideological, I have 40 years’ experience of working in charities, great and small, ending up as a vice-president of RNIB, having been chair for nine years at the beginning of this century. I am also president of a number of others, declared in the register of interests, and have been president of others that I helped to found back in the 1970s but which have recently either merged or, sadly, folded.

I am thus a great believer in the big society, pace the noble Lord, Lord Giddens, as an expression of the voluntary effort that goes to make it up. The voluntary sector can add much in specific expertise and commitment to the comparatively blunt instruments that the state often has at its disposal, but it should not be contingent on a rolling-back of the state. We need them both; they are interdependent, as the noble Baroness, Lady Scott, made clear. We need the state to remedy the deficiencies of civil society in caring for the vulnerable and providing basic health, education and other services for the population at large. Some Ministers seem to base their view of what constitutes a healthy society—or a healthy economy anyway—on such a rolling-back. Thus the noble Lord, Lord Sassoon, said:

“As the Government, we have to continue to reduce the burden of the state. If we do that, the economy will flourish”.—[Official Report, 22/3/12; col. 1031.]

We have to be careful that the payment-by-results model does not turn into exploitation. Volunteering is a wonderful thing—but there is also exploitation, as the noble Lord, Lord Prescott, reminded us. It is the exploitation of organisations rather than individuals that I want to talk about. Small and medium-sized charities such as Action for Blind People or the Shaw Trust may have the specialist expertise that is crucial to get those farthest from the labour market into work, but they can find it hard to compete with large private-sector organisations with deep pockets that can bear the upfront costs and uncertainty of the final outcome for the length of time that it can often take to get such people into work. Prime contractors, whose aim is to maximise profit by cherry-picking those who are easiest to place, are also failing to refer to the more specialised organisations those who need the specialist support that is far beyond their capacity. For reasons such as these, the Work Programme—the noble Lord, Lord Shipley, also touched on this—by which the Government set such store to support for getting into work those whom they have thrown off benefit, is just not working, at least for those whose disabilities have placed them at a particularly severe competitive disadvantage.

During the spring, ACEVO held a series of round tables and spoke with over 100 charity chief executives to hear their thoughts and concerns about the future across the different sectors and beneficiary groups. Common themes emerging included the point that cuts are significantly affecting the vulnerable beneficiary groups that voluntary organisations serve. These cuts are being implemented in a climate of little or no public scrutiny and a local democratic deficit. The devolution of power to a local level is not accompanied by greater accountability. With the scrapping of scrutiny mechanisms such as comprehensive area assessments in the Audit Commission and low levels of public engagement with local politics, there is a lack of accountability for local spending decisions. Charities would love to act as the armchair auditors envisaged by Eric Pickles, scrutinising local decision-making on behalf of their beneficiaries, but local authorities do not make the necessary data and information available. For example, Rethink Mental Illness recently attempted to ask local authorities how much of their social care budgets were dedicated to mental health and received incomplete information, or none, which made it mostly impossible to determine what funding had been allocated to social care of different groups, what evidence lay behind funding decisions and whether, and how, funding had changed year on year. Fewer than 50% of local authorities contacted provided the budgetary information requested.

Consequently, there is the danger of a forgotten Britain developing—a marginalised and underprivileged section of society that will be increasingly affected by cuts but goes largely unnoticed by much of society. ACEVO argues that the scrutiny deficit must be plugged. The Government have undertaken to evaluate the impact of cuts as several of their Bills have passed through Parliament. Charities can help to fulfil that role, but it requires genuine co-operation and engagement from the public sector.

My Lords, I declare an interest as the owner of a consultancy third sector business. I also work in an unpaid capacity with a voluntary organisation called See the Difference, now known as the Giving Lab.

I very much welcome this debate, which is very timely given the huge amount of change and turbulence going on in what I call the third sector. I thank my noble friend Lady Scott for drawing a distinction between charities and social enterprises. I agree with the noble Lord, Lord Prescott, that there needs to be a great deal of clarity about terminology as fuzziness leaves room for individuals to be exploited, which I think is wrong. I am pleased that noble Lords have drawn a distinction in this debate between what is charitable and what is social enterprise. Last year, Social Enterprise UK kindly came up with a helpful definition of a social enterprise. It is a company which trades and earns at least 50% of its income through selling goods and services rather than through contracts in order to generate profits with which to pursue social and environmental purposes. That is entirely different from what a charity does. A charity works with a different skill set in a different way for a different purpose. That is important because much of the public policy which is being made at the moment has at its heart a confusion between social enterprises and charities. More than that, some charities whose traditional sources of income are disappearing are being told that they should become social enterprises. They are facing a lot of challenges in the way that they go about doing that.

The Americans wished upon us the term “not for profit”, which is deeply unhelpful; “not for dividend” is more accurate. Charities and social enterprises can and should make profits in order to do what they do and to be sustainable. Indeed, social enterprises have to make profits. That has a very important implication for social policy. It means that underfunded public sector contracts can no longer be palmed off to the charitable and voluntary sector. I do not think that people in government have understood the importance of that although some people are beginning to do so. I commend to all noble Lords the Public Administration Committee’s report of 2011, which looks at the way in which the big society is being implemented as a public policy by government. The committee was keen to stress that as more and more public sector contracts are outsourced, it becomes more important for government to conduct an audit and accountancy trail about what happens in terms of funding and outcomes for people.

In passing, I mention the article by Zoe Williams which appeared in the Guardian this morning, in which she looks at the future of public service contracts and particularly the naïve notion that small charities will on their own be able to compete either with big charities and big-scale social enterprises or with private companies to take over what are essentially large public sector functions.

I am pleased to see the noble Lord, Lord Hodgson of Astley Abbotts, in his place. He and I have had a number of conversations. I very much look forward to his review of charity law. That report is due to be published soon. We must be clear that although social enterprises are developing and are very innovative and pose challenges to government and the existing charitable sector, charities will go on.

I conclude by mentioning three strategic interventions which I think the Government could and should make in order to help charities and social enterprises emerge from this period of turbulence stronger and more effective. The first is the need for there to be a toolkit which social enterprises and charities can use to determine whether they are investment-ready. There are a number of different sources of investment for those bodies but the people responsible for their governance have hard decisions to make about where to risk the small amount of resources at their disposal. There is a real need for them to have a tool that sets out those business decisions in a clear way that they can follow.

Secondly, charities have always struggled to demonstrate the outcomes they achieve for the people they work with. However, enormous progress has been made by a particular company, Triangle Consulting, which works with a number of different charities and bodies to develop what is known as an outcomes star. It enables charities working in different fields—mental health, drug and alcohol addiction, and older people—to show the outcome benefits for their client group. There is no outcome star for volunteering and, as my noble friend Lady Scott said, volunteering and the encouragement of it are critical to all this development in the future. I wonder whether the Government might look at supporting an outcomes framework for volunteering.

My final point relates to the digitisation of gift aid. The fact that it continues to be a paper-based exercise is holding back charities and social enterprises, and stops them engaging with a new generation of givers. Digitisation of gift aid will be an extremely important step forward for social enterprises and particularly for charities in the future.

My Lords, I, too, welcome this debate and very much thank the noble Baroness, Lady Scott, for initiating it and for providing the opportunity for us all to participate. The diversity of contributions has been wonderful. I shall concentrate, as noble Lords might expect, on the relationships between voluntary sector organisations, charities and hospitals.

As chair of the Barnet and Chase Farm Hospitals NHS Trust, I am keenly aware that statutory bodies can and do extend the reach and impact of their services by working with the voluntary and social enterprise sector. This goes beyond the work with volunteers in hospitals, valued and valuable as they are. I could not agree more with the comment of the noble Baroness, Lady Byford, that it must be absolutely dreadful for anyone to end working for an organisation voluntarily because they are not appreciated. Every year in my trust, I host a party—a celebration to thank the volunteers who help in all sorts of ways around our wards. My next opportunity to do that is in two weeks’ time. I love doing it and I look forward to it.

At my hospital, we work with some of the big voluntary sector providers. An example is our work with Macmillan Cancer Care and Citizens Advice. Working in a partnership between the hospital and these two bodies, we have improved the holistic support that we give to cancer patients. We do so by jointly establishing with Macmillan and the CAB a welfare benefits service operating from Barnet hospital. This supplements the work that we are already doing with Macmillan cancer information, which provides education and support to cancer patients and their families—and, indeed, to our staff.

We are acutely aware at the hospital that while significant strides have been made in the treatment of diseases such as cancer, often what bothers patients at the forefront of their minds are practical issues such as managing the day-to-day reality of household finances while undergoing major treatment. The national cancer patient survey revealed that patients across the country were frequently dissatisfied with access to welfare benefits advice, which is very worrying while they are trying to get better and improve their health with cancer treatment, following their diagnosis.

Our welfare benefits service now provides our patients and cancer teams with expert advice, at both Barnet and Chase Farm hospitals, with visiting CAB benefits advisers supporting them. This has enhanced the support work of our cancer teams because they have been able easily to signpost patients to the service, which has been positively evaluated by patients and our staff. The benefits advisers have also provided training for our staff to raise the awareness they need personally to support the individual and point them to those who can quickly help them with easy access. Bodies such as Macmillan bring flexibility and innovation to the delivery of services, and provide a trusted outreach to cancer patients and their families that public services could not do on their own. We are delighted to be working in partnership with the Barnet CAB and Macmillan Cancer Support because this has been a significant addition to our programme of improvement.

I also pay tribute to many other organisations, including the Alzheimer’s Society. We have worked with this charity to develop our approach to managing and caring for patients with dementia and supporting their families. It has provided us with valuable advice and in fact has supported training for our staff. It is also represented on our dementia steering group and, as such, is able to give an informed out-of-hospital view of how the provision and care of patients with dementia should be delivered.

The final group I should like to mention is Solace Women’s Aid, a voluntary London-based charity supporting victims of domestic violence. It has provided our staff with really valuable training in recognising the implications and evidence of domestic violence.

What all these groups have in common is the ability to bring an additional perspective to the work of statutory services and to provide a focus from the point of view of the users of the services and their carers. They also enable us to reach out to provide services in different and new ways, including potentially side-stepping unhelpful bureaucracy.

As we reform and improve public services, it is important to recognise the contribution that the voluntary sector makes. It is important that medical people provide medical care; financial and other support can come from other areas. I hope that the experience I have described at my hospital illustrates the kind of partnership that benefits users of services and their carers.

My Lords, I thank my noble friend Lady Scott for securing this important debate.

The voluntary sector in the United Kingdom is recognised by many as the third pillar of our economy. I have spent most of my working life engaged in this sector as a volunteer. This has given me not only a great amount of knowledge and experience but personal satisfaction and an insight into the issues and challenges facing the voluntary sector.

I am sure that your Lordships are aware of the wide range of voluntary sector activities in the UK—from registered charities and voluntary organisations to not-for-profit organisations that provide much needed care services, advice and guidance, counselling, vocational skills training and many other important areas of service. On an international level, many of our charities, such as Oxfam, Save the Children, the Red Cross and so forth, play a leading role in saving lives and improving living standards for millions of people.

Many famous dignitaries are patrons of thousands of charities. Prime examples of course are members of the British Royal Family—Her Majesty the Queen, the Duke of Edinburgh, the Prince of Wales and Prince Harry. The Duke of Edinburgh leads the way with more than 700 patronages, while Her Majesty the Queen has more than 600. Between them, they cover every area of the charitable and voluntary sector, from opportunities for young people to the preservation of wildlife and the environment. The Prince of Wales is patron of more than 400 organisations and of course set up the Prince’s Trust, which last year alone supported 46,000 young people.

It is encouraging to see that the younger generation of the British Royal Family is already very active in the voluntary sector. Prince William is supporting many charities, including Beatbullying, SkillForce, Help for Heroes and many more. Prince Harry dedicates a vast amount of his time to charity work, such as helping with the Lesotho orphans. The Duchess of Cambridge has chosen her charities to work with, and these include Action on Addiction, East Anglia’s Children’s Hospices and the Scout Association.

Other members of the Royal Family are also involved in invaluable charitable work, and there is no doubt that they drive millions of pounds into this sector every year. I praise the generosity of the British people who, in these economically difficult times, increased their contribution to charities by 6.2% in 2009-10, donating an estimated £10.6 billion according to The value of this sector has been recognised by the previous and present Governments through the giving of direct financial support and the gift aid scheme. However, that support has never been enough. The cuts in the recent Budget have squeezed this sector to the extent that many small charities and voluntary sector organisations have had to scale down their activities significantly or have been forced to close down altogether.

According to Karl Wilding, head of the National Council for Voluntary Organisations, in the Huffington Post United Kingdom, the latest estimate based on OBR forecasts is that charities face £1.2 billion of cuts a year until 2015. It is also estimated that, as a knock-on effect, 70,000 jobs will be lost in this sector in the first year. This, no doubt, will have a major impact on the vital services that the voluntary sector provides.

I fully understand the current financial situation that has forced the Government to make some difficult decisions. Unfortunately, this huge reduction in financial support from the Government to the voluntary sector is unprecedented and is having damaging consequences. Due to the important work carried out by the voluntary sector, I believe that the Government should consider the impact more closely and do everything that they can to reinstate the financial support to the voluntary sector for it to continue providing an excellent service.

My Lords, I congratulate the noble Baroness, Lady Scott, on identifying this important subject for debate. The standard of the debate has been very high and it has been varied.

I declare an interest of sorts. After graduating from university, my first two jobs were in the voluntary sector. The first was with the Workers’ Educational Association, as a tutor organiser, and while there I became active in my trade union, then known as ASTMS, which is now part of Unite. I am surprised that no one has mentioned the trade union movement. With 6.5 million members, many of whom work unpaid on behalf of their colleagues, it is the UK’s largest voluntary sector organisation, although it is not typically seen as such.

I think that the voluntary sector is imagined by many people to have developed relatively recently, certainly since the Second World War, but that is not the case, as demonstrated by the fact that the National Council for Voluntary Organisations, the umbrella body for the sector in England, will celebrate its centenary in 2019. According to the NCVO, there are more than 163,000 voluntary sector organisations throughout the UK. As noble Lords have mentioned, the total income for the sector is around £37 billion, with more than a third coming from statutory sources. It is important to point out that, by a ratio of 3:1, that public funding is in the form of contracts for services delivered, rather than straightforward grants.

The effects of public spending cuts on the voluntary sector are already dramatic. A survey by the NCVO in August 2011 found that the sector stands to lose £3.3 billion from the Government over the current spending review period from 2011 to 2016. That is a conservative estimate based on analysis of the Government’s figures published by the Office for Budget Responsibility. The figures assume that cuts will be made proportionately. However, in practice we know that many local authorities have been making disproportionate cuts to voluntary sector funding. Hard hit by cuts in their own funding, councils are putting charities and voluntary organisations that deliver services in the firing line when it comes to cuts. For councils, cutting their own staff means paying redundancy, whereas cutting contracts means that the voluntary sector takes the redundancy hit.

When combined with the wider impact of cuts on vulnerable people and communities, many charities are facing what might be described as a perfect storm of rising demand for services, combined with falling income. As a result, the voluntary sector workforce has been significantly reduced, with the latest figures suggesting a fall of 33,000 over the past year. There are 162,000 registered charities in England and Wales, with another 23,000 in Scotland. They have a combined annual income of more than £60 billion and employ around three-quarters of a million staff. These figures are testament to the power and importance of the voluntary sector.

Social enterprises complement much of what the voluntary and charity sectors do, although they differ from registered charities in that they expect to be revenue-generating from the service that they provide. Social entrepreneurs are establishing businesses that operate to different values. They believe that their business has a moral purpose and they use their entrepreneurial skill to benefit wider society. Traditionally, capital hires labour with the overriding emphasis on making a profit over and above any benefit either to the business itself or the workforce. In contrast, in a social enterprise, labour hires capital, with the emphasis on social, environmental and financial benefit.

My noble friend Lord Giddens commented that the Cabinet Office figure of 62,000 social enterprises currently in the UK was a considerable underestimate, and I go along with that. However, even those 62,000 contribute £24 billion to the UK economy, which is a considerable amount. Some social enterprises in the UK are major players in their sectors, including the Co-operative Group, John Lewis, Welsh Water and Cafédirect.

All that begs the question as to whether voluntary organisations, charities and social enterprises fit into the coalition’s big society project. The voluntary sector has given the big society a qualified welcome, although a number of concerns have been raised, including the impact of public spending cuts, to which I referred, on the sector’s ability to play an increased role in the provision of public services and whether the sector’s independence might be compromised. Some have gone further, claiming that the big society is little more than a cover for the privatisation of public services. Indeed, the union, UNISON, was unequivocal, stating:

“The government is simply washing its hands of providing decent public services and using volunteers as a cut-price alternative … Public services must be based on the certainty that they are there when you need them, not when a volunteer can be found to help you”.

Many noble Lords will have seen in March 2011 the Channel 4 investigative programme “Dispatches”, which concluded that the big society was about,

“privatising the welfare state on a massive scale”.

The programme explored the increasing degree to which the companies Serco, G4S, and Capita are being paid to carry out work previously performed by central and local government. Charities and the voluntary sector, which might like to deliver some of that work, are increasingly unable to compete with those groups, which are making large profits from outsourcing contracts.

When the Office for Civil Society was formed in 2010, one of its first acts was to cut £11 million from existing organisations aimed at encouraged volunteering. The youth volunteering charity, v, lost a further £8 million and almost 100 jobs with the abolition of its schools programme. When you have a stated aim, as the big society does, of seeking to encourage people to become involved locally, where is the sense in cutting experienced organisations and staff who know how to do the job?

Criticism of the big society has also come from within the House of Commons, but the coalition Government are not listening. In December 2011, the Public Administration Committee published a report calling on the Government to re-assess their delivery of the big society by appointing a single Big Society Minister with a cross-cutting brief to ensure that the work involved was consistent between departments. Having received the Government’s negative response, the committee was forced to reiterate its recommendations last month. Perhaps the Minister might enlighten us as to whether, this time, the committee can anticipate a more conciliatory response.

My Lords, I declare a specific interest in this field. I chair DIPEx, an Oxford-based charity. We are currently internationalising ourselves and I will cite this as an example later.

I propose to Her Majesty's Government that they may wish to create a hub in the United Kingdom that would encourage and support other established British charities and social enterprises to internationalise themselves. For decades, through the British Council, with a budget of £600 million, Britain has promoted language and education and our arts and culture. That is good for Britain and good for the world. Many excellent charities and voluntary organisations have already successfully internationalised themselves, but others are struggling to create organisations that spread worldwide with the right disciplines and standards, and many as yet have not realised the vast potential and advantage to be had by becoming international.

Imagine if we were to encourage British charities and social enterprises—large, medium and small—to consider researching other countries with the same issues that they are addressing here, and linking with organisations in those countries to form international organisations. I envision that to be taken on by either a government ministry or the British Council—or even the City of London; it was hitherto the centre for the finance industry but could become a centre for world philanthropy, possibly using the City Bridge Trust, which was mentioned earlier.

To start with, if perhaps 100 charities came forward to internationalise themselves, the hub would create for them access to international legal structures, the ability to set global standards and access to branding, marketing and website publishing. Even if it were to cost an average of £50,000 for each of those organisations, the total cost to make Britain the hub for 100 international such organisations would be £5 million.

Let me cite DIPEx as an example. I am not asking for help: we are going to internationalise ourselves using our own resources. This is what we decided to do. The DIPEx charity has worked closely with the University of Oxford, and with the support of the Department of Health—it has funded us so far with £2 million of the almost £10 million we have raised—to create, a unique online resource. It publishes people’s personal experience of health conditions.

So far, we have covered 70 health conditions, including 10 types of cancer, heart diseases, neurological conditions and diabetes, and life issues such as bereavement, pregnancy and the menopause. The website includes not only the experiences of patients but those of carers, families and friends. On our website, we receive 1 million hits a week and 3 million unique visitors a year. We now know that watching and listening to the experiences of others can have a major impact on a person’s ability to deal with their health challenges through personal empowerment, being better informed and a reduced sense of isolation.

Based on training and support from DIPEx UK, organisations in other countries want us to help them set up parallel projects in their countries. Universities and hospitals in Spain, Germany, Holland, Japan, South Korea, China, Israel, Palestine, Canada and Australia are involved. Together, we will establish DIPEx International as an umbrella organisation to co-ordinate the activities of the group, to collect and publish health experiences worldwide and combinedly to help with fundraising. We have decided to use £50,000 of the DIPEx charitable reserves for this. Oxford would then become an international centre for the highest-quality worldwide health charity. Already as a result of our activity Green Templeton College in Oxford, where we are based, now plans to create HEXI, the Health Experiences Institute, a centre for research into patients’ health experiences worldwide. DIPEx is just one example of a charity doing this.

The International Centre for Social Franchising sees numerous social enterprises whose success has been evaluated and proven; yet, frustratingly, its wheel is constantly being reinvented. These organisations should be replicated in other areas and other countries. The core idea and the accumulated experience should be the starting point for designing and delivering solutions elsewhere.

Today, I merely suggest to the Minister that he asks the appropriate ministry to arrange a conversation with the people involved, to see whether this programme might help the charity and social enterprise field from Britain to make valuable connections and to create new ways to spread aid and services to countries with which we wish to have relations. I propose that the Minister suggests to his colleagues in government that we perhaps arrange a two-day conference where we invite 30 or 40 people from this field who would be interested in helping to take this idea forward. The participants could include, say, five charities; five social enterprises—small, medium and large—the Social Enterprise Coalition; an international consultant in this field such as the Social Investment Consultancy; the Enterprise Bank; Prism the Gift Fund, with which I am also involved; some experienced lawyers in this field; some big UK-based international businesses to help with advice on internationalisation and perhaps funding; the City Bridge Trust; the International Centre for Social Franchising; the Charities Commission; and, perhaps, the noble Baroness, Lady Scott, who promoted this interesting debate. I am sorry that I do not have the resources to research this more deeply. It is merely a suggestion but perhaps noble Lords will feel that it merits further research, discussion and action.

My Lords, I, too, express my heartfelt thanks to my noble friend Lady Scott for securing this important debate and for her excellent opening speech. The voluntary sector has a unique role in reaching out to every area in society—to the most disadvantaged and vulnerable groups—as well as in funding vital medical research. I should like to highlight the voluntary contribution made by three of the numerous charities with which I have been involved over many years, so I declare an interest.

First, I would like to draw attention to Sparks. Last year, medical research charities invested more than £1 billion in the UK. That has had a considerable impact on patient well-being, has brought huge economic benefits and has attracted industry investment. The UK is a centre of excellence for paediatric research and the world’s brightest young scientists come here because of our long-term investment in child health. Sparks, now in its 21st year, is one such medical research charity. It is dedicated to funding medical research into all conditions that affect babies and children, helping to improve quality of their lives and giving families hope when they think there is none. It is the biggest UK funder of paediatric research—ground-breaking research which has the potential to have a global impact, such as research on body cooling, now used as NHS standard treatment to prevent brain damage in babies born deprived of oxygen and at risk of lifelong disability. That is probably the most important advance in neonatal intensive care for babies in the last decade. Sparks’s legacy and contribution to child health is truly significant.

Scientific research needs to continue but there is a decline in young people studying science, so what are the Government doing to ensure that our schools and universities are preparing our children to be the scientists of tomorrow?

During debate on the then Health and Social Care Bill, it was stated that the voluntary sector would be relied on for crucial developments that the NHS and public health faced over coming years. The Sickle Cell Society does just that, by helping to articulate the concerns of people living and struggling with that disease. Even though the Sickle Cell Society community hub was commended, its application for Section 64 funding was turned down, despite the potential for inequality that will arise when the specialist commissioning takes effect. Its proposals would have ensured that the interests of people affected by sickle cell disease continued to be counted. The Sickle Cell Society, its clients and the wider BME communities are concerned about that situation, and I ask the Government to meet interested parties to discuss how the society can continue to support its important work within the framework of the appropriate NHS Commissioning Board authorities.

Although local authorities provide many excellent services, the voluntary sector can offer a number of advantages as it operates with greater independence, which means that it can co-ordinate support from a variety of agencies to get the whole family the help that they need, and can reduce excess bureaucracy. Barnardo’s has done just that for decades. Last year, it helped over 190,000 children, young people and their families in over 800 services, including young people in care, those not in education or training and children of prisoners. Barnardo’s also lobbies and campaigns on behalf of disadvantaged young people, and its evidence feeds into government policy-making. It has secured numerous changes in England, Scotland and Wales, such as to retain savings accounts for children in care. Through its Cut Them Free campaign, in which 103 local authorities have signed up to tackle the evil practice of child sexual exploitation in their areas, it has secured a government publication—a national action plan—on the topic, which is long overdue.

The voluntary sector faces problems due to public sector cuts, but the Government could take a number of steps to support it even in times of austerity. One way is through local authorities’ procurement processes, as they often fail to engage potential suppliers in pre-procurement talks. I ask the Government to consider a standardised application process, which would reduce repetitive procedure and save potential suppliers large amounts of time and money. I also ask them to put together a list of preferred suppliers for certain themes of work.

Another problem is the lag time inherent in payment by results, which could mean six months before payment starts, making it difficult for charities to compete in the private sector for contracts. That means that charitable assets face a high risk. Will the Government explore the use of staged payment schedules to reduce the risk that charities are exposed to and reward achievements and outcomes, especially when working with the most vulnerable?

We must treasure and preserve our voluntary sector, and support the valuable contribution that it makes to our society. As a country, we have a rich tradition of giving and volunteering, and in times of hardship and financial turmoil it is often the only source of help and respite for those in difficulty. Let us ensure that our policies help rather than hinder our voluntary organisations.

My Lords, I thank the noble Baroness, Lady Scott, for initiating this debate on a topic that really goes to the heart of citizenship and all that it means to be a participant in the communities in which we live, as opposed to being a bystander on the fringes. The voluntary sector makes a proportionately greater contribution in Northern Ireland than in other parts of the UK. It has assumed this position for several reasons including the extent of poverty in Northern Ireland, which is higher than in many other parts of the UK, and the weak private sector. Both have been influenced by over 30 years of upheaval and violence. This turmoil has created pockets of severe poverty in Northern Ireland, especially in parts of Belfast, mostly notably west Belfast, resulting from higher levels of unemployment and underachievement in education. The noble Lord, Lord Lexden, has already mentioned the good work done by NICVA, so there is no need for me to repeat that, but I add my words of appreciation and share the admiration that he expressed.

The work of many voluntary organisations touches virtually every section of the community. Among the employed are former prisoners from both sides of the divide, who are unable to find mainstream jobs. Especially in today’s difficult economic environment in Northern Ireland, the sector is a major source of employment. As well as carrying out important work on the ground for local communities, the sector contributes to the development of key skills and working experience, builds confidence and helps to raise self-esteem. The sector is contributing to the strategic focus of the Northern Ireland Executive on accelerating the growth of the private enterprise culture. This is helping to rebalance the economy and reduce an unhealthy overdependence on the public sector. The sector has an annual income of around £600 million, most of which comes from the EU. About 45% of it is public funding, about two-thirds of which comes from the Government’s direct purchase of goods and services from community and voluntary organisations.

The voluntary and community sector, with assets of over £750 million, represents about 4.5% of the Northern Ireland workforce. Most people working in the sector are following a vocation in working to help others, and often go above and beyond what is called for to ensure that help is given where it is needed. The figures represent a significant proportion of people who work to help others. It is a community support system that is fundamental to the economic well-being of communities and their stability. It is important that the Government should be seeking to ensure that the funding is underpinned and sustained adequately.

The sector is suffering, like many other areas, from a tightening of funding sources and faces growing pressures regarding EU funding, which has sustained it over many years. Northern Ireland has come a long way from being classed as having Objective 1 status by the EU, which is a good thing. It is now classed in the reasonably prosperous category. The downside of this is that it does not qualify for many EU funding initiatives, as it did. As the current European Union economic funding programmes draw to a close, Northern Ireland will not attract the same level of financial support from Europe, placing significant pressures on the voluntary sector. Much funding has to be given to support stability in the region through economic regeneration by working together in partnership with the many groups and organisations, by promoting integration as well as providing practical help and by working through initiatives such as the PEACE II programme.

Where assistance may be given is in helping to develop sources of finance for social enterprises, enabling these valuable contributors to continue the work that has already been done, but in doing so we must not supplant one organisation with another. If it fills the breach but at the same time creates unemployment, hardship and social upheaval for workers who have already given much of their lives to supporting the community, it is not operating under the auspices of the big society at its best.

With less government funding available, only those voluntary and community organisations that can exploit opportunities to generate revenue and operate in an increasingly businesslike and innovative manner will survive. The private sector can provide considerable support in achieving these goals by sharing skills and resources with the voluntary and community sector. Government can also help by assisting the sector to source the necessary funding to continue to contribute to local community development. However, the indications are that pressure on public budgets is now impacting the sector adversely and threatening to undermine much of the good work already carried out.

It is imperative that when funding issues are being considered, the special nature of the problems that have beset Northern Ireland are not forgotten, so that a fair distribution can be made to ensure that all the good work is not undone in the need for short-term savings that may have a devastating impact for many years to come, and may in the end cost more to put right.

My Lords, I thank my noble friend Lady Scott for initiating this debate and for her very important opening contribution. Much has been said and written about the big society. I agree with everything that has been said but I struggle at times to understand what the big society really is—or, to put it another way, what the big society does that our voluntary and social enterprise sectors do not do.

Our voluntary sector must be the envy of the world, supporting people, causes and the most vulnerable, and often taking up lost causes and concerns that nobody else, including government, is able to do. We probably have the largest voluntary sector in the world and the largest number of volunteers. As a nation we can be truly proud. Add to that the incredible fundraising that goes on, which again is one of the highest per capita of any country.

We can all see power and responsibility shifting in our society—that individuals and communities have more aspiration, power and capacity to take decisions and solve problems themselves, and that we all need to take greater responsibility for ourselves, our communities and each other.

Two voluntary organisations I know very well are Clare House and Zoe’s Place on Merseyside. Clare House was named after a young girl who was terminally ill, and provides respite care for terminally ill young people and their parents. It needs to raise £3.7 million a year—yes, £3.7 million—just to keep its doors open and offer the same level of service every year. It receives government money of £353,000 from the children’s hospice and hospice-at-home grant, formerly the Section 64 money. It applies for this funding annually. Zoe’s Place cares for terminally ill babies in the most incredibly caring environment. Again, it has to raise £1.3 million a year, and receives £200,000 from the NHS. Where would our big society be without such wonderful organisations?

Many of your Lordships will have received a briefing from the Sue Ryder voluntary organisation, which is also a provider of health and social care. It cares for people with long-term and end-of-life conditions with its community and home-based services, seven hospices and seven neurological care centres. Again, I really do not know how we would manage without voluntary organisations like these or how our NHS and social services would cope without this huge voluntary contribution.

These organisations are not asking for more money. They were delighted when my noble friend Lord Howe agreed to the amendment of the noble Lord, Lord Patel, to the Health and Social Care Act to ensure the production of a fair-playing-field review so that we can understand the obstacles to non-state providers who want to provide public services. VAT and TUPE transfer liabilities are also areas that we should look at.

The voluntary sector is uniquely placed to meet local needs by building up strong community relationships, offering personalised services, meeting local needs and breaking away from the model of one size fits all.

We have heard from my noble friend Lady Barker a detailed definition of a “social business”. To me, it is simply a business which has a social purpose or a social responsibility. What do I mean by that? Let me give you an example.

The Furniture Resource Centre was established in Liverpool in the early 1990s by a pioneering, young-at-the-time social entrepreneur called Liam Black to deal with unwanted sofas that had often been dumped in back entries or, to use the local parlance, back jiggers. It collected them, reupholstered them and sold them. It employed long-term unemployed people and provided training. It approached an enlightened council and suggested a service called Bulky Bob’s—named after one of its employees, Bob. It would collect from residents’ homes bulky items which the council would previously collect and dump in infill sites. The Bulky Bob’s service would allow residents to phone up and a purple Bulky Bob’s wagon would arrive at an agreed time to collect the items. White items would go to a social business called Create, wood items to a charity and sofas to the Furniture Resource Centre. It also opened in the city centre a store called Revive, which sold the refurbished items. It provided not only an excellent service for local residents, but, more importantly, jobs and training for local people. It increased recycling and stopped dumping. Interestingly, Bulky Bob’s, which is self-financing and self-supporting, has expanded to other local authorities with service-level agreements. It also provides a bespoke service of kitting out social housing.

Social businesses and the voluntary sector are realistic about the country’s economic problems. Many fear that they will suffer disproportionately from cutbacks, which will affect their work in many of the most deprived areas of this country where their efforts are most needed. They want greater transparency in the way in which local councils decide to provide services directly or indirectly involving the voluntary sector, and how they calculate the costs and benefits of those different approaches. Let us celebrate the work of the voluntary sector; let us recognise the unique role that it has in our society; and let us work with it to help it continue to thrive in these very difficult times.

My Lords, owing to clerical error, my name was not put down to speak and I am thus speaking in the break, and have four minutes in which to deliver an eight-minute speech. I commend my noble friend Lady Scott both on securing the debate and on what she said. Like, I suspect, everybody else in the Chamber, I hate to think of where we would be without our voluntary sector, because it is still the harbinger of the best values that we have inherited and seek to sustain. It is values-rich at a time when, I am afraid, so much of the commercial world, especially the big commercial world, is values-depleted.

I want to mention the role of small enterprises and voluntary organisations particularly in community life, because I think that many of your Lordships will agree that, in our lifetime, there has been a dramatic decline in the vigour and vitality of community life. It is interesting that that word “community” has the same root as “common”, and it is the communality of our lives that has been so hacked back—the common man, the common law, common sense, common land, common wealth, common fate and common fortune. All those things have been put in jeopardy by the circumstances that we all know well: mobility, work, obsessiveness, a certain degree of excessive individualism and so on. It is the small charity, voluntary organisation and social enterprise which is absolutely integral and central to a revival of the “commons”, as one might put it. They are local, rooted and embedded; they know their patch and are known in it. As was the case in my young manhood, when businesses mostly had those characteristics, you inevitably become part of the community and contribute to it informally. You did not call it pro bono, let alone charitable donation. These local organisations, whether private or not, were so integral to effective community life.

I also want to say a quick word about auditing. A number of comments—for example, from the noble Lords, Lord Giddens and Lord Shipley, and the noble Baroness, Lady Barker—have touched on the performance of business, particularly big business. The Public Interest Research Centre, a charity organisation set up in 1971—I was a trustee for 30 years and am happy to say that it still exists—had an idea whose time may now have come. Its main thrust was social auditing in public companies. I think it is well worth considering, and not just by government, whether it is not now time for us to look at what big companies and business entities, which are often global entities, do by way of social contribution as well as profit-making. I am thinking of things like minority hiring, environmental depletion and so on.

Finally I should like just to give a warning, if it is necessary, against any delusions about how much we in Parliament can achieve in relation to small, on-the-ground charities and social enterprises. I sometimes think that the torrent of laws that spew from this place have inadvertently created an attitude and expectation among people that they do not really need to contribute much and it is all down to government. Well, it ain’t.

My time is up so I shall sit down.

My Lords, first, I congratulate the noble Baroness, Lady Scott, on initiating this debate which, as so often, demonstrated the depth and breadth of knowledge in the House about charities and social enterprise. I first spoke about social enterprises in your Lordships’ House when I came here in 1998, and certainly needed to explain what it was I was talking about. Fourteen years later, I think we can say that with the support of the previous Government, pieces of legislation and, indeed, all-party support, we pretty much all know what we are referring to when we talk about social enterprises, mutuals and co-operatives, and we recognise the important role that these businesses and organisations play in our economy and our civil society.

I need to declare some interests. I am a patron of Social Enterprise UK and was its founding chair in 2001, when it was called the Social Enterprise Coalition. I am very proud of the work of Social Enterprise UK as a national voice for social enterprises. I am a paid associate of Social Business International and its new organisation, E3M, which seeks to ensure an input into the development of social businesses across Europe by capturing the experience of leading social enterprises in the UK. The three Ms are money, models and markets, which pretty much outlines the challenges we face. I am also an ambassador for sport at the trade association for sport and leisure trusts such as GLL, which is one of our Olympic legacy organisations. I have been a trustee of Social Enterprise London, Action for Children, Training for Life and the Jamie Oliver Foundation. I am also a volunteer.

I want to raise an issue about volunteering. The noble Baroness spoke about the importance of volunteers. I agree with her about that but was alarmed—although I many have misunderstood what the noble Baroness said—by the idea that carers are volunteers. When I go home to Bradford tonight and become my mother’s carer for the next four days, I am not a volunteer. I am my mother’s carer and do not regard that as being a volunteer. In this country, we are dependent on our carers and our social fabric would collapse without them. We are in danger of being confused here. When I reflect on the increasing stress and burdens placed on carers by cuts in social services and welfare changes, we have to be careful about our definition. Volunteering is surely also about a choice one makes.

I also have to put on record that there is a small irony here in a debate initiated by the Liberal Democrats about charities and social enterprises. Although many Liberal Democrat colleagues have an outstanding record of support for charities and social enterprises, such as the noble Lord, Lord Phillips of Sudbury, who is indeed one of the House’s undisputed experts, the mover of this debate, the noble Baroness, Lady Scott, and others who have spoken, some have been less enthusiastic from time to time. The noble Baroness, Lady Barker, objected to a health Bill with which I was dealing as a Minister. Having to answer her searching questions about the right to request in the NHS, it struck me at the time that the Liberal Democrats perhaps needed to clarify their thinking about the matter.

I hate to cast a political note into this, but I think I need to say, with respect, to those on the Liberal Democrat Benches that their support for charities—such as that of the noble Baroness, Lady Benjamin, in her role as a children’s champion—is in flat contradiction to their voting record on issues such as welfare reform and legal aid changes.

David Cameron seized the initiative by giving support to social enterprise during his campaign for the leadership of his party. As the then chair of the Social Enterprise Coalition, I was delighted by that and helped—behind the scenes, I have to say—to ensure the success of a Conservative opposition Front-Bench tour of London social enterprises undertaken on a red London bus provided by Hackney Community Transport. I shall resist the temptation to speculate how many of those Conservative Front-Bench spokesmen spent much time on London red buses, but Hackney Community Transport, as people will know, is one of the UK’s biggest and best examples of a social enterprise providing public services.

I was pleased about that because it shows, as is still the case, that the growth of charities and social enterprises need all-party understanding and support. That support translated into two main pledges to support social enterprises in public service delivery in the coalition agreement, which I am surprised that no one has mentioned, so I shall. The coalition agreement, which is how we need to judge the success of the Government’s work, states:

“We will support the creation and expansion of mutuals, co-operatives, charities and social enterprises, and enable these groups to have much greater involvement in the running of public services”,

and, secondly, that they will,

“give public sector workers a new right to form employee-owned co-operatives and bid to take over the services they deliver”.

The Government have made some progress in delivering those objectives. The problem, in true coalition fashion, is inconsistency. We also have to look at an unthinking cuts agenda which is driving the charitable and social enterprise sector into becoming a substitute for robust and thriving public services in a manner sometimes reminiscent of the poorhouse of Victorian times. A playgroup that delivers two or four hours a week of play for a child is not a substitute for a nursery which allows families or single parents to hold properly paid full-time jobs. We need both. The noble Earl, Lord Listowel, was quite right in his analysis of children’s issues.

The Conservatives are also guilty of facing in both directions at once. We have seen enthusiastic support by the likes of Jeremy Hunt for philanthropy and, simultaneously, the Chancellor making a complete mess over tax relief for charitable donations in the most recent Budget. I would be grateful if the Minister could give us an update on exactly where that issue is.

Social enterprise and charities are indeed big business. They are a valuable part of our society and need to be treasured as such. I absolutely agree with my noble friend Lord Giddens when he said that social enterprises should be mainstreamed. The noble Lord, Lord Shipley, perfectly described the importance of the challenges facing social enterprises locally. His plea for support and development is absolutely right. My noble friend Lord Stone talked about internationalising our expertise and business models for charities and social enterprise. He, too, is correct. I remember him talking to me about DIPEx many years ago and it was a mere twinkle in his enterprising eye. If ever there were a serial social entrepreneur in this House, it has to be my noble friend.

I have my own example of a new social enterprise going international. Future First was launched in two state schools in 2009 to bring former students back into their old schools to act as inspirational career role models for young people, and indeed my children’s school in Camden was one of those. Since Cabinet Office funding, Future First is now building grass-roots alumni communities in over 500 schools in England, and has begun to export its model. A 10-school pilot in Nairobi is to start this year, funded by a Kenyan philanthropist, and there is a move to build this in the United States. I congratulate the founders and the Cabinet Office, and I wish them well.

The growth of social enterprises owes a great deal to the previous Government, whose public policy, legislative and financial legacy has enabled the coalition Government to continue their support for social enterprise. I very much welcome the launch of Big Society Capital, but one has to recognise that this is a rebrand of the social investment bank that the Labour Government were establishing through dormant accounts legislation, and it has taken two years to get there. I also welcome the Public Services Value Act. It has to be noted that the words “Social Enterprises” were removed, but it is still a worthy piece of legislation. It will not work, though, unless we embed social values in local commissioning—it will go nowhere at all.

I have two further points. One is that I rather hope that the noble Lord, Lord Phillips of Sudbury, will explain to the House and give us a pre-run of the amendments that I understand he is about to put down on the Social Finance Bill. We will be interested in supporting them, because they are the heart of how we get social investment into the Financial Services Bill. The second is that, while I am grateful to the noble Baroness, Lady Randerson, for explaining the community investment tax relief, I would like the Minister to explain what progress the Government are making on that matter.

These are challenging days for charities and social enterprises. Both are proving resilient and imaginative, as illustrated by the noble Lord, Lord Storey, when he spoke about the Furniture Resource Centre, which was a founding member of the Social Enterprise Coalition, so I am very familiar with it. Both need our support and policies that break down barriers to their success. Whether the government parties can provide public policy coherence and face in one direction at the same time is the question—and, indeed, their challenge.

My Lords, on what we are discussing today there is a lot of common ground across the Chamber and across all parties. I do not intend to follow the noble Baroness, Lady Thornton, in her slightly partisan wind-up because there is a great deal of common ground.

We are all volunteers. Volunteering, after all, has a long tradition in Britain. Long before the welfare state grew up there were churches and chapels; philanthropy and charitable activities by the well-off; friendly societies; co-operatives among the working classes; trade unions, of course; and, above all, women. My mother retired from her last voluntary post when she was older than a considerable number of the women in the old people’s home of which she was chair. She was one of that generation who would have had a career had she not married. As we know, one of the problems that we are facing in the voluntary sector is that there is no longer that great pool of capable women who are not able to work because they are married. We therefore have to rely on the fit retired much more than we did.

I suppose that in some ways I am one of the fit retired who is a volunteer, as are half the government Front Bench. I work but I am not paid, although that is partly because I have quite a generous academic pension—not, of course, half as generous as doctors’ pensions—which enables me to provide my contribution. Most of us in this House are actively engaged in one way or another in the third sector. Indeed, I remember some months ago the noble Baroness, Lady Scott, and myself being taken by the noble Lord, Lord Mawson, to the Bromley by Bow Centre, a remarkable generation of investment, started on the basis of a rather dilapidated congregational church and now involved in the regeneration of a large area in east London. So I welcome the focus on volunteers and recognise, as do the Government, that support for volunteers is very much part of what has to happen in this sector; you often need paid staff to train and support volunteers. At a reception for small charities the other evening, I met the leaders of a small charity in north Yorkshire which has two part-time paid staff who, in turn, support several hundred women in visiting elderly people living on their own in homes. That is a good example of the sort of thing that all of us wish to support and encourage, but which the state does not easily provide.

Several noble Lords, including the noble Lord, Lord Giddens, have talked about the proper balance between state, society and market. That is what we are all really concerned about here. We need to make sure that, in that balance, there is a strong civil society as part of the mix, both in relationship to the market and in relationship to the state. The Prime Minister has labelled this “the big society”. I, as a Liberal Democrat, would prefer to call it “the responsible society”, or even “the liberal society”: empowered individuals working within strong communities, working with a decentralised state. I remind the noble Baroness, Lady Thornton, that Ed Miliband said in a speech last year:

“I have been clear that we should recognise the shortcomings of the centralised state”.

Indeed, we need to go back, as far as is possible, to much more local engagement and local accountability. Of course, this is a process. Change takes time. The Localism Act 2011 is another part of this, and so is the provision of diverse funding streams—Big Society Capital—now getting under way and, as the noble Baroness rightly says, building on work of the previous Government with other support schemes providing matching funds—for instance, Community First, the Community Endowment Fund, community foundations and private bodies. They are all very valuable, giving grants to social enterprises when they are set up. I was very happy to visit the Community Foundation for Calderdale, which my noble friend Lord Shutt had a great deal to do with starting. Now there is also the Public Services (Social Value) Act 2012.

Then there is the whole question of government contracting, on which we have had a number of contributions and, rightly, some criticisms. The noble Lord, Lord Prescott, raised the particular question of Close Protection UK. I understand that Close Protection UK has taken full responsibility for the very poor treatment that its staff suffered, and has offered an apology to all concerned. The Security Industry Authority has written to CPUK asking for further information to ensure that it is in compliance with the relevant legislation. We in no way wish to see volunteering as a mandatory requirement for individuals to claim benefits, but volunteering is part of the way in which you get people back into the idea of work, and should therefore be offered, as far as is possible, to people as they begin to get out of long-term unemployment and back on to the job market.

There is a changing culture in government contracting, and that also takes time to change. We have a new Crown representative for the civil society sector, who took up post on 18 June, so this is very much a new initiative. He will work closely with the Crown representative for mutuals and the Crown representative for small and medium-sized enterprises to achieve changes in how the Government do their business, and to ensure as far as possible that we catch the small social enterprises and local companies, which we all wish to do. Social impact bonds are another way of trying to help social enterprises cope with payment by results. A number of experiments are under way in that area.

On funding, all businesses, including mutuals and social enterprises, must consider the VAT question raised by the noble Lord, Lord Shipley, as part of their business planning. Our evidence from mutuals has not suggested that VAT is a major barrier to mutualisation, but I will be very happy to talk to the noble Lord further about some of the issues he raised.

The financing of social enterprises was raised by a number of people. We are concerned to encourage charitable donations, giving as much as we can. We recognise that the welfare state cannot meet all the demands that will be placed on society over the next 20 or 30 years, particularly in adult social care. As the noble Baroness will recall, the consultation on the Budget proposals on high taxpayers was intended to raise the issue for implementation in the 2012 Budget. Some extremely vigorous consultation has been under way, as we will all have noticed, and we have taken it into account.

The world of for-profit companies has been raised by a number of people, the noble Lord, Lord Giddens, and my noble friend Lord Phillips in particular. This raises wider issues about the future of company law and what companies’ formal obligations are, which are rather beyond the limits of this debate. Corporate social responsibility does not save you from takeover when it comes. I lives in what was a company village, built by Salts of Saltaire with its very strong sense of local social responsibility, not far from where Rowntree’s did the same in York and left substantial endowments for regional social benefit. I am aware of Cadbury’s and others in that wonderful Quaker tradition. As such, I am conscious that we have gone a long way back in our corporate sector. That includes the Quaker bank, which educated me and of which I remain rather ambivalently a customer, which has lost a lot of its corporate sense of social responsibility. However, that is a wider question, which I encourage the noble Lord to put down for another debate.

We are learning and reviewing as we go. This summer, we will have a social economy review, which will look at how social enterprises operate. Also this summer, after five years of the Charities Act, there will be a Charities Act review, which my noble friend Lord Hodgson has well under way. I was very happy to be briefed extensively by him on the sheer complexity and diversity of the charity sector. I hope he will not mind my saying that I emerged from it confused at a far higher level than I was before.

The noble Lord, Lord Watson, asked whether we were, none the less, cutting down on the public sector. The evidence that we have shows that we are moving towards mutuals where we can. We are also experimenting with mutuals and there will be a mutuals task force report this summer on the experiments in mutual pathfinders in public sector delivery. Some of the evidence that I have seen, which is still limited, suggests that improving job satisfaction and better workforce morale lead to both higher productivity and greater customer satisfaction, which supports experimenting further with the mutual model. That also raises the question of impact measurement, on which we are working in partnership with the voluntary sector. The noble Baroness, Lady Barker, spoke about this, particularly the role of Triangle Consulting.

The government focus is on communities where social capital is low. This is very much part of the thrust. We will all have different labels for what the Prime Minister calls the big society. We have a vibrant civil society in many areas of Britain. Indeed, in my own village of Saltaire, we are almost embarrassed by the number of local bodies, such as the Saltaire Festival, the Saltaire Arts Trail, the Saltaire Village Society, the history society, the allotment society and so on. However, within five miles of Saltaire are large 1950s and 1960s estates, where social capital is very low. The Community Organisers scheme that the Government are running and the national citizen service are very much aimed at encouraging people who have lost the hope that they can control their own lives and manage their own communities to regain hope and faith in that.

Social enterprises play an important part in this because, as noble Lords have said, they employ people locally and reinvest locally. That is exactly what we need. Last year I was in a very large estate in Yorkshire—I had better not say which one—in which the largest single area of local economic activity appeared to be illegal cannabis growing in sub-tenancy council houses. I was going round with the local police support group. We need to get people back employed within their own communities as far as we can, with community associations and organisers and the encouragement of social enterprises, which feed into a revival of self-confidence and a strengthening of local community links.

I would call that building a liberal society. Conservatives would talk about strengthening the little platoons on which a strong society and state should rest. Labour would talk about local co-operation and self-government. I hope that we would all agree on the underlying objectives and admit that we had not got it right but have continued to work on getting it right—and also admit that there is a limit to what central government can do, because much of this has to come from the local level. We have learned that top-down government is not good for civil society. We have also learned that increasing government expenditure on welfare runs up against strong resistance to paying high levels of taxation. Let us hope that the enterprise on which we are embarked in rebuilding a very strong civil society based on voluntary contributions of all sorts in time, money and social enterprise helps to bridge the gap which we may otherwise face in providing support for a changing society, a much larger proportion of elderly people and all the other contributions that we need to make.

My Lords, we have had an excellent debate today. Having six minutes in which to speak is sensible compared to the time given us in some debates; it gives noble Lords an opportunity really to develop their arguments. I particularly enjoyed the way in which we have woven together the broad context of the relationship between markets, society, the third sector and so on, with really good examples of local case studies from right across the country, which both demonstrates the points that we are making and in many cases are really quite inspiring.

A number of issues and themes have arisen which we would never get agreement on if we spent the whole day here, and we have to set those aside. But we have also identified a number of specific problems—and, more importantly, a number of solutions to those problems, which make follow-up from this debate very important, provided that government is prepared to listen. It was a debate that was characterised at least until the very end by an absence of overt party-political point-scoring, and it was the better for that. The role of this sector in our society is beyond measure, and I am delighted that across the House today we have recognised that.

Motion agreed.

Sitting suspended.