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Public Services

Volume 741: debated on Wednesday 12 December 2012

Question for Short Debate

Tabled by

To ask Her Majesty’s Government what steps they intend to take to enable the voluntary sector to participate in the delivery of public services.

My Lords, I am grateful for the opportunity to ask this Question. I am even more grateful to the numerous noble Lords on all sides of the House who have indicated a willingness to speak in this short debate. The numbers themselves indicate the extent of enthusiasm and interest in the House in the voluntary sector. That comes as no surprise, because noble Lords of this House, on all sides, will have cut their teeth in public service in the course of engagement with and membership of voluntary organisations of all sorts. We are enthusiasts for the role of the voluntary sector and its capacity to contribute to the civic life of our country. We owe it a debt of gratitude.

This is a time of risk and opportunity for the sector. The opportunity lies in the undoubted commitment of this Government and indeed the appetite of peoples of all political persuasions and none for public service reform. We want to see the delivery of our public services improved and made more efficient. We believe— overwhelmingly, in my experience—that the voluntary sector has a role to play in enabling that to happen. It is a source of innovation; it permits a greater degree of connection with our citizens because it operates close to the ground; and it is a source of passion, enthusiasm and activism within communities up and down the country.

The opportunity is there for the public sector to take to its heart the voluntary sector, to embrace it and to enable it to contribute to the reform process. Many of us hope and believe that that was the impulse that lay behind the Prime Minister’s promotion of the big society. I have never been one of those who decried that term and ambition. I believe quite unabashedly in the big society where that means the active involvement of the citizen and their enablement and empowerment to take responsibility for the improvement of the community as a whole. It is summed up in the South African principle of “ubuntu”: we are what we are because of others, and our relationship with others shapes not only ourselves but also our society for the better.

That is why I was glad—along with a number of noble Lords in this House and honourable Members in the other—to accept the invitation of the Association of Chief Executives of Voluntary Organisations to join the Commission on Big Society. It produced a report which was widely welcomed by the voluntary sector and received by Government. We would benefit from a considered and detailed response from the Government. I hope that that will be forthcoming, and I look forward very much to the Minister’s response to the debate this evening, in view of his wealth of experience in the not-for-profit sector.

Central to the report’s findings was the call for a better partnership between central and local government and the voluntary sector. It made a number of practical proposals, which I will come to, as to how that partnership might be enhanced. The opportunity is there, if the Government will but take it, to find a partner for change and improvement in the voluntary sector. However, there is also risk. Only this week we saw published by the Charities Aid Foundation and the National Council for Voluntary Organisations a report on UK giving in 2012 that found that donations to charity had fallen by 20% in real terms in the past year. This means that £1.7 billion less is being given to charity. In addition, fewer people are donating to charity, and the average amount given by donors also fell. This undoubtedly reflects the period of austerity and the challenging economic times in which we live.

Even more worrying was the concern highlighted by a trawl of some 252 senior workers in charities by the Charities Aid Foundation. The results, also published this week, highlighted the severe threat facing many of our nations’ charities. The survey found that 17% of those asked said that is was likely that their charity would face closure in the next 12 months; 40% worry that their charity may have to close if the economic situation does not improve; nearly half—49%—of charities asked had been forced to use their reserves to cover income shortfalls over the last year; and more than one-quarter—some 26%—have cut front-line services.

This is not a plea for more resources for charities in these straitened times. Of course, one always hopes for more resources and greater giving to charities. I hope that the Minister will pass on to the Chancellor of the Exchequer and the Chief Secretary that there is more that Her Majesty’s Revenue and Customs could do in reviewing the gift aid system and to promote giving; I hope it will do so. However, the main purpose of this debate is to ask what we can do and we should be doing to promote the partnership between the voluntary sector on the one hand and central and local government on the other. I argue that this partnership is at the heart of the reform of public services and the better delivery of services to the public.

That partnership was enshrined in the compact between the voluntary sector and government which was initiated by the previous Government and which has been carried on by the current Government—and to their credit. It sets out the key principles of the approach which needs to be taken to improve the relationship to the mutual advantage of both. The compact is itself subject to stresses and strains at this time. The recent Compact Voice report on local authorities and the voluntary and community sector found that up to 50% of local authorities are in fact cutting the voluntary and community sector disproportionately. What will the Government do to ensure that local authorities are sticking to best value guidance? One year on from the publication of the NAO report into compact implementation, what demonstrable progress has been made in the implementation of its recommendations?

I also raise with the Government the issue of commissioning. If there is to be an effective partnership between the voluntary and statutory sectors at a time of public service reform, we need effective public service commissioning. We need to see that the Public Services (Social Value) Act is effectively implemented. We need flexible commissioning approaches which allow potential providers to deliver in consortia and partnerships and to assist that progress. We also need to invest in the capacity of the provider base, particularly those smaller organisations which are working with vulnerable or hard-to-reach groups. Very often it is those hard-to-reach groups that can be adversely affected by the payment by results approach adopted by government. I do not deny that there is value in the approach, but I fear that bad practices such as cherry picking and going for low-hanging fruit, the targets that are easiest to achieve, may lead to a situation in which we will fail to serve those most in need—the most difficult to reach of those suffering from a disability, and the most hardened of those being served by the excellent charities working in the field of rehabilitation, crime prevention and with the homeless—if we adopt a payment by results approach.

What are the Government doing to ensure that emerging payment by results methods have effective tariff systems? They can make a huge difference to ensuring that government and the voluntary sector are working effectively together to address the needs of the most vulnerable. What are the Government doing to support the voluntary sector in the transition to payment by results models?

I will end there. This is an important debate. I will welcome the Minister’s response to these questions and to the many others that no doubt we will hear from other noble Lords.

My Lords, I thank the noble Lord, Lord Boateng, and congratulate him on securing this debate. I declare an interest as the chief executive of Tomorrow’s People and a trustee of New Philanthropy Capital.

The subject matter is important to our country, our communities and our Government. We need professional, effective and robust public services delivered by whoever can best do the job. Noble Lords will need no confirmation that I am completely committed to the voluntary sector and the role that it plays. That it has a role to play in the delivery of public services I have no doubt. However, there are real challenges for both government and the sector if this is to happen and if we are all to step up to the mark.

I hope that my contribution to this debate will be seen as challenging but helpful, ambitious but realistic. It is not a case simply of assuming that the sector can step up to the challenge; it will have to consider some significant issues. I have no desire to set the hares running, but while I know that the Work Programme is new and in its early stages, there are significant lessons that we can all learn from the process of becoming involved in it. That applies to the sector and to government. The sooner we learn those lessons for the benefit of the people we are all in business to serve, the better.

I will address my first remarks to the sector; I am talking to myself now, in the nicest possible way. There needs to be a maturity in measuring impact in a consistent way. This is crucial. It is not what we as a sector believe that we can do, it is what we know we can do, with evidence to back up what we know we can achieve. My second point concerns financial capacity and capability. The issue of working capital needs to be understood. The payment by results point made by the noble Lord, Lord Boateng, is critical. Nobody I have spoken to has a problem with being judged on their results, but it is no good going into these things believing you can achieve something if you cannot prove it. If the voluntary sector is going to come into public service in a serious way, we must face the issue of scaling up. Sometimes in scaling up, organisations lose the magic of what they can do. Sometimes in becoming too big, we lose something. We must not compromise mission for volume and vanity. Coco Chanel said: “Turnover is vanity, profit is reality and cash flow is sanity”. That applies also to the voluntary sector.

I turn now to the Government and say to the Minister that there needs to be maturity in the commissioning process. Progress has been made. This has been demonstrated by the DWP innovation fund. I am grateful to the Government for that, but some people have said to me: “If only the Government would commission what works rather than what can be traded at the lowest fiscal cost”. We may get value into that. I am the first to understand that we are in very difficult times and that cost is a major factor. However, sometimes we spoil the ship for a ha’porth of tar.

It never does any harm to remember the people we are in business to serve. We have to hold them at the heart of what we do. Can the sector step up to the mark? Of course it can—but with changes. I am sure that with government procurement changes we can all do a much better job.

My Lords, I, too, thank the noble Lord, Lord Boateng, for introducing this debate. I declare an interest; I have a consultancy called Third Sector Business.

Three years after the financial crisis in the City, the shock waves are making their way out to local government and to charities. The noble Lord mentioned the survey results that came out this week from the Charities Aid Foundation. They should have come as no surprise. The survey showed that there are approximately 10,000 charities that are very vulnerable because they derive a large percentage of their income from delivering services through contracts with local authorities. Probably some of the charities have lost sight of the purpose for which they were set up. Some of them may deserve to move over and make way for more innovative and interesting social enterprises that are very tech-savvy and cost-effective; but some of them for years have been subsidising local authority service provision, and some of them are very important to the communities that they serve and to which they bring additional benefits. Therefore, some of the organisations deserve help to survive.

The Government recognised that in April this year when the Cabinet Office launched the £10 million Investment and Contract Readiness Fund, run by Social Investment Business. That is a three-year programme, but it is urgent that learning from the programme should be got out quickly to charities that clearly need to develop new business models and the sort of skills that the noble Baroness, Lady Stedman-Scott, talked about, such as measuring their impact, knowing their cost base and, above all, being able to demonstrate that they are the best organisations to serve the people who need public services.

In 2007-08, the Public Administration Committee published Public Services and the Third Sector: Rhetoric to Reality, in which it asked: “Does size matter?”. It is a hugely important question. In future, public services that will be delivered by the third sector will primarily be those where it can be demonstrated that money is being saved elsewhere in the public expenditure budget. The problem with that is that often the people who deliver the services have real difficulty demonstrating the savings and the value to other parts of the public service system. Under the previous Government, Total Place budgeting began to address that issue. Under this Government, community budgeting is going to continue—but it has a long way to go before it will be possible for one public service commissioner to say, hand on heart, that giving money to a particular voluntary organisation has definitely saved money.

It is particularly important for models of preventive services—in other words, services that apply across whole communities that are at risk rather than to individuals. Will the Government put greater effort into developing the community budgeting skills of local authorities and of the voluntary sector? Community budgeting will only work, as the noble Baroness, Lady Stedman-Scott, said, if we have a commissioning process which is sufficiently flexible to deal with the major problems which we have. There is a question about how we configure large and small voluntary organisations in future to deliver public services on the scale which we know is going to be necessary. We know that in social care, in order to relieve the pressure on NHS budgets, the voluntary sector is going to have to deliver a lot of high-quality services. In conclusion, this is going to be a very turbulent but quite exciting time if the Government can assist the voluntary sector with two or three specific targeted things which I have mentioned. I hope the Minister will say that they can.

My Lords, I will start by thanking the noble Lord, Lord Boateng, for his foresight in leading this debate. It is a very important issue which goes to the heart of what we might call a civilised society and the future of social services generally. In particular, it is a privilege to hear my good friends and colleagues, the noble Baronesses, Lady Stedman-Scott and Lady Barker, speak. Their comments were appropriate and timely. I was particularly keen to hear the philosophical reference to the ubuntu—something we should remember not just in the not-for-profit sector but in business generally. I declare an interest as the chief executive of Turning Point. I do not know whether Turning Point is too big or not. I am often amused by this reference to too big or too small in the not-for-profit business but not necessarily in any other business. Ours is an organisation that employs nearly 3,000 people and has services in 250 locations with a turnover of 80 million quid. That is not vanity; it is just a fact, and we will, I hope, make a surplus. The fact that we are not for profit does not mean that we are for deficit. This is an important point.

I want to refer to the not-for-profit sector’s and the voluntary sector’s contributions to health and social care, because that is my interest at the moment, and to the impact of spending cuts. In reference to health and social care, it is important to note that voluntary sector and, although I do not particularly like the word, not-for-profit sector organisations contribute a huge amount across a wide range of public services. I want to restrict my contribution to the health and social care sector, which is the focus of my day job. It is estimated that 57% of the not-for-profit sector workforce is employed in health and social care, which amounts to around 437,000 people. Over £4 billion-worth of health and social care services are provided by charities and social enterprises. Turning Point is a social enterprise. These services provide vital support to people at the sharp end of the inverse care law. It has been an ongoing theme of my existence as a Peer constantly to refer to the fact that those most in need of health and social care services tend to get them least. I could make reference to employment and other services that fit within that law. Often these people are at their most vulnerable and unwell. Not-for-profit organisations have specialist skills when it comes to delivering services to those with complex needs and the ability to innovate and offer tailored services that people can have confidence in was mentioned by the noble Lord, Lord Boateng.

The sheer size of the not-for-profit sector and what it offers means that its contribution to health and social care in particular is invaluable. However, both the public and not-for-profit sectors are facing very difficult times. The cuts are biting and we are all feeling the effects of reduced budgets. Many smaller charities are at risk of closing entirely. I think it is worth repeating the reference made by the noble Lord, Lord Boateng, to the Charities Aid Foundation which showed that one in six charities believe they face closure in the coming year amid public spending cutbacks and falling donations. Not-for-profit organisations are having to think long and hard about how they can remain sustainable when faced with local authority and health budget cuts while maintaining the quality of services and support that they provide to the people that need it. My own organisation, as has been reported and as some of your Lordships will be aware, is having to make some very difficult decisions in order to continue to provide high-quality services to support the most vulnerable people in society. The proposals that we are currently discussing with our staff and union were borne out of economic necessity and the decision to announce them was not taken lightly. The very tough economic climate means that we and other providers are facing the prospect of dwindling local budgets and the changing demands of commissioners who have less funds at their disposal.

I acknowledge that local authorities are working very hard to protect frontline social care services but it is a fact that they are facing a 28% reduction to their government grants. According to the Autumn Statement austerity is now also set to last for longer than expected—at least until 2017-18 if we are lucky—and the IFS has warned that more cuts will be needed in the future to plug the black hole in spending that it has identified of up to £27 billion. Given the vulnerability and lack of ring-fencing around much local government funding, the prospect of further cuts and their potential impact is deeply concerning. Everyone in the sector will have seen Barnet Council’s graph of doom which illustrates the acute social care funding pressure that local authorities are already facing as well as giving a warning for the future. The Government need to ensure that there is adequate local funding in the future so that fundamental social care needs can be met. Local authorities, care providers and the voluntary sector must be able to maintain and protect the quality of services and care that they provide. This is not just about the Government’s enthusiasm for the sector; it is about the Government’s ability actually to acknowledge the challenge facing public services at this time and to work in partnership with the not-for-profit sector, the private sector and the public sector to reverse the inverse care law.

My Lords, as one who, like many others in this House, has spent a great deal of my life in voluntary agencies, I very much welcome the way in which my noble friend introduced this debate. It is absolutely undeniable that, with their integrity, experience, ethos and principles, voluntary agencies have a great deal to contribute to effective public service. They are free of the pressures of shareholders and profit. They are there to serve.

However, if this is to be the success that we all want it to be, we have to watch some issues very carefully. One is that this is genuine partnership and not simply voluntary agencies being contracted to provide a service defined by government. There must be an interplay between the agencies and the Government as to what the right services are and how they should be delivered. I was very worried once when I visited a young offender institution where there were dedicated workers on a contract to get those within the institution into jobs. As they did their work, they became convinced that there were quite a number of youngsters who were quite unfit to go straight into jobs and needed a lot more support, help and counselling before they would be ready to go into the employment sector. They got absolutely no credit for spending time on this; in fact, as they put it to me, they were endangering the contract because their job was to deliver people into jobs. That seems to be something we must look at very carefully, because it is a real danger, which could turn a good adventure into a sad story.

The other danger that we must take seriously is financial dependency. If voluntary agencies are working increasingly on government contracts, will their existence as agencies become dependent on that kind of income? I raise this because if I became convinced of anything in my time as director of Oxfam, it was that responsible advocacy could be one of the greatest services to those with whom we were working. By building real relationships of solidarity and real experience at the ground level, we were able to speak to government and society about the real underlying challenges we faced. I think it would be very unfortunate if, by the way that the scheme developed, agencies started self-censorship or dumbing down their advocacy role. That would be to betray their unique contribution.

As a member of the party I am in, I am in politics because I care about public services—I want the highest quality services. However, having worked in the voluntary sector, both as a volunteer and a staffer, I must say that the essence of the voluntary sector at its best is that it is a catalyst or challenge to society; it uses its experience to widen society’s outlook and to increase the sense of responsibly in society and, indeed, in government. As we take this opportunity forward, we must guard that principle as fiercely as we possibly can.

My Lords, I add my congratulations to the noble Lord, Lord Boateng, on securing this very timely debate and start by declaring my interest as president of the National Children’s Bureau and vice-president of the charity Relate. I want to focus briefly on the importance of the voluntary sector in delivering vital services to vulnerable children and young people, as well as to older people, and to stress the importance of collaboration between sectors.

The children’s voluntary sector represents a quarter of the voluntary sector—34,000 organisations, the vast majority of which are small, local and with a low budget. It currently relies more on public funding than the voluntary sector overall, so is particularly vulnerable to austerity. Research so far suggests that it is also struggling to access new funding streams such as private sector funding and the newly emerging social investment market. In 2012, the NCB and the National Council for Voluntary Organisations estimated that children’s charities face cuts nearing £405 million between 2010-11 and 2015-16.

Despite austerity and despite these cutbacks, the children’s voluntary sector is doing invaluable work to identify and address social inequalities that, if unaddressed, can last a lifetime. I will give one quick example, of a project called Making it REAL—Raising Early Achievement in Literacy. It is a great project, with the NCB working in collaboration with eight children’s centres. The programme so far has touched nearly 500 carers, parents and grandparents, nearly 400 child participants and nearly 150 younger siblings through home visits and events in Sheffield and Oldham. Parents have improved their knowledge and confidence to support their children’s learning and children have progressed to the stage where nearly 90% can name a favourite book, compared to less than a quarter at the start, and more than 70% enjoy books most days compared to a mere 13% at the outset. I say that to try to bring this debate to life.

There are many other examples that I would love to give noble Lords but I have not got the time to show how the voluntary sector can really add value to the way the statutory sector delivers its statutory services. There are so many excellent examples of co-operation, and a very good report—which I commend to the House—called the Ripple Effect has set out some very good case studies in this area.

The services delivered range from cradle to grave. I have talked about children’s services but will very briefly talk about the work of the WRVS, which has 43,000 volunteers giving practical and emotional support to 100,000 older people monthly. It co-ordinates public services, and the home from hospital services provide support to older people after hospital discharge. By carrying out very simple tasks, shopping or making sure the right foods are available, they make a huge contribution to older people’s reablement. As my noble friend Lady Barker pointed, out the NHS is spared hospital costs to a very large degree. It is a real win-win.

This debate allows us an opportunity to ponder the way forward. The voluntary sector offers great potential for help in joining up services and making the best use of limited funds. I know that the children and families voluntary sector is eager to work with the Government to create a strategy which will enable it to become more sustainable and resilient during these difficult times. It will need a two-pronged approach. The voluntary sector needs to do all that it can to manage reduced resources and cut costs, including pursuing different business models and mergers, investing in its voluntary workforce and reinvigorating its fundraising strategies in all the ways that it can.

The Government have a clear role in engaging with the sector to develop the sort of transformation strategy that will help small and local charities to become much more resilient. This is likely to work better if it brings together representatives of the voluntary sector, service commissioners and potential investors. Will the Government be prepared to enter into these discussions with the sector to try to develop this sort of transformation strategy?

My Lords, I thank the noble Lord, Lord Boateng, for this timely debate. I have spent the past 35 years demonstrating in practice how the voluntary sector can play a crucial role in innovation and in delivering public services in new ways that focus on the customer. How can it use its position, sitting between the often large bureaucracies of the public and private sectors, to bring much needed innovation in the delivery of public services?

The Health and Social Care Act eloquently mentions this. Integration, innovation, and enterprise are found in the legislation that encourages us to go local. These are important words, but words alone will not make this happen. New thinking and hard work are required. So how do we enable more voluntary sector organisations to win and deliver more public service contracts in a way that is a game changer?

First, you should start small and learn how to innovate and deliver public services well in one place before you exercise that overused phrase, “Roll it out”. The micro and the macro are connected. The Government should choose six projects located in specifically identified areas in the inner city, suburbia, the countryside and the north and south of England, and get it right in a few places and really understand what the blockages are, and not roll out a national programme before this has been done.

Steve Jobs obsessed about creating his first Apple store. He hid away for nine months in a warehouse and was fanatical about the small details. Apple is now one of the most valuable companies in the world. If the voluntary sector has a role, it must be in innovation, creating integrated customer-focused services and lifting the game. I worry that the Government have become very adept at talking and simply putting old men in new clothes.

My second point focuses on how best to get the voluntary sector to deliver. Simply encouraging it to play a role in delivering public services will achieve little. The rules, specifying to the nth degree how a contract is to be delivered rather than enabling the supplier to propose different solutions, possibly by integrating different services, constrict much needed flexibility and creativity. The VCS plays this bureaucratic game as well or badly as the public and business sectors. You are not good at delivery just because you are under the banner of “voluntary sector”. Flexibility is desperately needed, and I am pleased that the noble Lord, Lord Heseltine, makes this point in his important report.

If you want innovation, you need to create space for it to happen and reward it. It is amazing how the new academy infrastructure for schools, for example, is quickly starting to look exactly like local authority education departments by another name. This happened 30 years ago when the Government got hold of housing associations and dumbed down their entrepreneurial flair. The business community moving into the health sector is starting to look like a public sector response with a few more bells and whistles. Working relationships with social entrepreneurs are not cementing fast enough because the Government are not commissioning services to create new, lean, innovative relationships. Bureaucracy speaks to bureaucracy. It does not understand any other language. The procurement systems of this country are broken. I have tried to raise these concerns with the Government. The noble Lord, Lord Gardiner, and I have talked about this, but no one seems to follow through on the practical detail. We have tried, but I have received no practical response that is interested in getting hold of this detail.

Generally, the gap in expertise and imagination is in the statutory and public sectors. While there is a procurement college now for large contracts, will the Minister tell us where is the support for innovation in the £20,000 contracts and for the hundreds of thousands of statutory and quango staff? Real change in public service must involve senior leadership. Otherwise it will quickly be regressive. In relative terms, contracts to the VCS are small and so the senior staff—the CEOs—do not often get involved themselves. What would happen if the procurement processes encouraged this engagement?

The Prime Minister once talked about the big society but, like the third way, it seems to have lost its way. I am interested in small societies and those teams of local players who can make all the difference. In order to see results, we need to understand the practice of what people on the ground do, and we need to help them to grow and up their skills in an organic way. They must be encouraged by us to innovate and deliver more, but we must not put elephants on their backs. We should incentivise this joined-up leadership, encourage these relationships between business and social entrepreneurs and build them into the procurement contracts. This is how we will create social value and innovation and move it to scale. It is all about relationships.

My Lords, I, too, thank the noble Lord, Lord Boateng, for initiating this excellent debate.

I want to use my few minutes to make a practical point about the engagement of smaller charities and community-based organisations which currently find it very hard to win contracts to provide local services. Local authorities and health trusts, as well as central government, are often reluctant to entrust public money to these smaller bodies because they are unlikely to have capital to invest or assets to borrow against and they are inherently insecure financially, so there is a risk to public funds should they fail. Thus, despite the emphasis on localism and the fact that smaller bodies may well have the all-important trust of local communities, knowledge of neighbourhood issues, access to volunteers and real commitment at the grass-roots level, they lose out to major, national, often profit-making, organisations.

Sometimes the small charity or the community-based social enterprise finds itself used as “bid candy” to help the major players—the prime contractors—win contracts for public services, but then sees very little of the action thereafter. My proposal is that these smaller local bodies team up with the major housing associations operating in their area. Today’s housing associations are an enormously significant part of the voluntary sector. They are non-profit social businesses embedded in specific places with a full range of managerial skills that can provide the financial security and longevity which service funders desire. Together, the housing associations hold assets worth, at the last estimate, more than £109 billion. I declare my interest as chair of the Hanover Housing Association.

There is a large and growing number of examples of how this partnership between a quite small community-based organisation and a well resourced housing association can deliver a local service with an implicit guarantee against bankruptcy or failure because of the strength of the housing association’s balance sheet. A report out last week from the think tank ResPublica demonstrates how lots of housing associations are now delivering on the localism agenda by acting as vehicles, enablers, capacity builders and brokers for community activities of many kinds. I have time to give only one example. I visited a brilliant project in September supported by Aspire Housing, a housing association with homes in north Staffordshire and south Cheshire. The association has teamed up with a number of local social enterprises, of which this project was one, to provide employment and training for well over 1,000 young people each year by successfully organising apprenticeships and the skills that get them into work.

I accept that my proposal for more of these partnerships to enable the voluntary sector to deliver more and better public services could be undermined by welfare reform changes that impoverish housing association tenants and thereby jeopardise the finances of the housing associations, but that is a story for another day. Tonight, I would greatly welcome hearing the Minister’s response to this way of squaring the circle and enabling funders to work with a financially secure, well grounded, safe social business in the form of a strong housing association in partnership with really local voluntary sector, non-profit, charitable and social enterprises.

My Lords, I am grateful to my noble friend Lord Boeteng for enabling this debate. It is especially important when all services are under immense and increasing pressure, due to a combination of cuts and increased demand. As noble Lords have said, this is a crucial time for decisions about the future of public services. I have always strongly believed in partnerships between local and national government and the private and voluntary sectors. For too long and for too many people, the goal was to move away from public services, notwithstanding their quality. What might be called the G4 moment at the Olympics removed ideological blinkers, so that once again quality and value are to the forefront. Quality and value—not just for money—must be the key. The Public Services (Social Value) Act is a significant step forward and should ensure that the additional social, environmental and economic benefits that an organisation provides will be taken into consideration when a contract is being awarded.

There are superb voluntary services in our country, which are innovative catalysts and add value, on which millions of often the most vulnerable depend and without which society would crumble. They are often community based, with real knowledge of, and a stake in, the community that they serve. However, the systems are complex and commissioning needs improvement, as so many noble Lords have said. I ask the Minister what the Government are doing to ensure voluntary sector involvement in the commissioning process. While it is right that charities should be enabled to deliver public services, they should not have to fill in the gaping holes which are left up and down the country as councils withdraw from certain services because of budgetary pressure. Many councils do a brilliant job and, with vision and innovation, provide or commission new ways of delivering services. However most have now made all the cuts that are possible without severely impacting on the citizens they serve. It is the voluntary sector that has to pick up the pieces when their own income is being cut.

Too often charities have to shoulder burdens caused by a shrinking state. As Sir Stuart Etherington, the NCVO’s chief executive, has said:

“Often it is charities, that are best placed to provide this specialist support and we are urging the Government to make a number of changes that would enable charities to play a fuller role. We know from our own research that charities are working extremely hard to service even the hardest to help, often by having to dip into their own reserves”.

Many noble Lords, including my noble friend, mentioned the Compact Voice report, which found that up to 50% of local authorities are cutting grant funding to the voluntary sector disproportionately. I hope that the Minister will not say that it is not a matter for the Government but for local authorities to choose how to spend their money. That simply would not do. Devolution of responsibility must not be dereliction of duty. Partnership working is crucial and one of the things we are trying to do in the Forest of Dean is to provide a comprehensive and seamless system of social care with our local NHS community services and community hospitals, working with Crossroads Care and other charities which are delivering services but wish to do more. However, as noble Lords have said, it is difficult for small charities such as the ones with which I am involved, like Forest Sensory Services, to get involved. The system is so complex and is devised for bigger charities.

The noble Lord, Lord Adebowale, spoke of the social care sector. Many public services currently delivered by the voluntary sector relate to vulnerable, marginalised and disadvantaged groups. The work is often not valued and salaries have historically been lower than they should be. We live in difficult economic times, when organisations and individuals are hurting, but I trust that the Government will do all they can to promote the living wage. Apart from being the right thing to do, it is a means of cutting back the budget for working tax credits. I am proud that 19 Labour councils now pay the living wage and many also ensure that those with whom they have contracts also pay the living wage. A living wage brings dignity and we have to raise the esteem we have for those who work in caring and other community services. Of course, many people in the voluntary sector are volunteers and we could not exist without them. A recent WRVS study showed that older people who volunteer are less depressed, have a better quality of life and are happier.

I close by celebrating the fantastic contribution that the voluntary sector and volunteers make to our society. As we look at the future of public services there is so much more to be done and we must do it.

My Lords, this has been an excellent debate and I look forward to many more on this theme. I thank the noble Lord, Lord Boateng, enormously for the way he introduced this debate. This is a cross-party and cross-government issue in which we are attempting to go through a major cultural change in the way in which the state, centrally and locally, delivers services in partnership with the voluntary sector, rather than simply as a contractor of it, as a number of noble Lords have said.

I am interested that no noble Lord has cited the new report from Social Enterprise UK, which contains some sharp language which I am sure that the noble Baroness, Lady Royall, would welcome, on the dangers of ending up, through outsourcing, with a private oligopoly of firms that are too big to fail and have a stranglehold on the outsourcing sector. The Government are aware of that, and a great deal of what we are now attempting to do is to make it easier for smaller enterprises and those which do not have the financial reserves and the skills to prepare complex contracts successfully to achieve a relationship with government. The Commissioning Academy is now getting under way, training central officials to simplify the contracting process between government and the voluntary sector, thus advertising small contracts available on government websites to make it easier to find out what is going on.

This is, of course, a long-term development and, in some ways, a revolutionary development. We are now admitting that we have a limited government and that we cannot provide for our society everything that is needed through the state itself.

At a meeting in Paris, I sat between one of my party colleagues in government and a senior French Minister. He was saying, “We share a similar set of problems. We in Britain are spending nearly 45% of our GDP on public services; but you are spending 55% of your GDP on public services”. I thought, “That is a very important gap”. Part of the problem that we all have—the previous Labour Government faced this—is that we have a public who resist paying higher taxes but want better services. That is a problem that is going to get worse in the next 10 to 20 years because our older population is growing. The possibilities of what one can provide in social care and healthcare are rising, so the pressures are intense. We have to find ways of providing a mix of state and voluntary services which can provide the quality that we need.

We hope that we are moving toward real partnership. Even there, I have to say that, as we are accounting for public money, and we are having to contract out public money, the question is how one achieves a balanced partnership where the state is paying and the Daily Mail is looking over the state’s shoulder to see whether it is spending the money properly. That is a relationship that we will have to learn about as we go on.

As we all know—I certainly remember from when I was a politician in Manchester—there is deep suspicion among large local authorities of the volunteer and the amateur. Only the full-time council employee could be trusted to do things. That is part of what we need to change. We also recognise that there is a deep problem in London. A lot of people in London—politicians, journalists and officials—do not really believe that people in Birmingham, Manchester or Leeds can be trusted to do things on their own. Manchester, Birmingham and Leeds are very large local authorities and, in their turn, do not trust some local enterprises which really understand what is happening in parts of Leeds or Bradford to begin to deliver the sort of public services which are needed.

As has been said by several participants in this debate, the voluntary sector is often best when it is small and local. The noble Lord, Lord Mawson, spoke about those teams of local players, and I think that he meant personal relationships. That is fine, but it does not fit the model of state provision of services. We have to find ways around that. The noble Lord, Lord Boateng, and others talked about giving instructions to local government. If we believe in pursuing the localism agenda, we have to encourage local government rather than sending the sort of mass packs of instructions that Governments have tended to do over the past 25 years or more. We have to encourage them to go in for community budgeting—double devolution, which the previous Government and this one have also talked about. We have to recognise that our city local authorities —Birmingham is larger than several European Union member states—have to be encouraged to push things down from the local authority level to the communities below them.

This is a set of challenges for the voluntary sector as well. As the noble Baroness, Lady Stedman-Scott, and others have said, a lot of social enterprises and charities do not have the skills needed to get into these large procurement exercises. The charities I have been involved in lacked accounting and legal skills. We have had to learn by packing the trustees and getting accountants and lawyers to provide their services pro bono. If you are going to be getting into contracting with the Government you need a certain level of contracting skills and that, again, is something which the Government are experimenting with as we try to simplify the contracting process.

Working relations with social entrepreneurs, as the noble Lord, Lord Mawson, knows well, are never going to be easy. The way in which states have to operate does not easily absorb the individualist—the entrepreneur—who wants to do things in an entirely different way. We have to live with that tension and we have to do our best to make it work. Although I recall with some amusement being told that various government departments have wanted to replicate in other cities in England what the noble Lord, Lord Mawson, has achieved in east London. They have worked on this but not quite found the right non-conformist Ministers to lead it. It is again part of the problem with the voluntary sector which requires determined individual leadership.

The Government are pursuing a partnership with the voluntary sector. We are learning as we go forward. We are experimenting, as the noble Baroness, Lady Barker, said, with new forms of financial assistance and support. We are very conscious, for example, that in one or two cases social enterprises have failed in bidding for government contracts because they could not demonstrate that they had the financial reserves to guarantee that they would be able to carry out the contract through a particularly difficult period.

We all hope that the Public Services (Social Value) Act, which is just about to come into operation, will help a great deal although estimating and calculating social value and standing up to the Public Accounts Committee asking you whether your department did deliver social value may not entirely be an easy thing to do. I am also engaged through the Cabinet Office in Civil Service reform. Getting officials out of their offices and changing the ways they think about the sort of services they are delivering again is part of this whole process. The voluntary sector, in turn, also has to adjust.

I was fascinated to hear the noble Baroness, Lady Barker, talk about a period of turbulence. In political science there is the phrase “creative destruction”. I fear that what she is suggesting is that some charities will fail to make the grade and others will come into greater prominence. However, when one looks at the figures of turnover in the number of charities registered with the Charities Commission one realises that this is a continuing process. Charities die; other charities come into effect.

The noble Lord, Lord Best, said something extremely interesting about housing associations. A couple of weeks ago a good friend of mine who has just retired from a big housing association was making almost exactly those points. Housing associations have the funds, the presence and the weight to be able to do a lot of things that smaller and more fragile bodies cannot. I think that is a model we all need to take on board. Housing associations can actually do broader things within the local communities of which they of course form a part.

We are learning as we go along. The Government and the voluntary sector know that this is a long journey. We will be publishing tomorrow a new document about making it easier for civil society organisations to do business with the state. I think it will address some of the issues that the noble Baroness, Lady Tyler, raised in her speech. This is of course part of a process whereby we hope to be building a better and easier relationship with the voluntary sector. It would be much easier if the economy were growing at 2% to 3% a year but, in the circumstances where the economy is not growing, we all hope that in two or three years’ time that will be the case. Our aim should be a plurality of social enterprises, charities and others working with local government and with agencies of national government to deliver the quality of services which we need in an increasingly difficult environment, with an older and more diverse society. That society will be coping with a very large range of different challenges.

House adjourned at 9.10 pm.