HC Deb 26 March 1985 vol 76 cc416-32 6.23 am
Mr. Tim Yeo (Suffolk, South)

I am glad to have the opportunity to introduce a debate on the voluntary sector. The paucity of attendance in the House this morning and the fact that the few hon. Members who are in the Chamber seem to be leaving does not, I am sure, reflect any anxiety about the quality of the speeches in the forthcoming debate, which no doubt will be of the highest order. Nor, I hope, does it reflect the view that the subject which we are about to debate is other than of great importance.

The voluntary sector is not only a very important subject for debate; it is also a very large one. Very few people, if any, complete their journey through life without contact with the voluntary sector at some stage. It may be through active contact as a volunteer, or financial support as a donor, or as the user of services provided by a voluntary organisation. As it is for individuals, so it is for the state. Very few Government Departments can conduct their business from the beginning of one year to its end without coming into contact with the voluntary sector.

The Home Office is this morning represented on the Front Bench by my hon. and learned Friend the Member for Ribble Valley (Mr. Waddington), who, I understand, has responsibility within the Home Office for the voluntary services unit, a unit that is very much involved with the development of the voluntary sector. The Home Office has legal responsibilities for charities. Through its responsibility for prisons, immigration and race relations, the Home Office also deals with a range of voluntary organisations.

Other Government Departments are also involved with the voluntary sector. The Treasury has an interest in charities and tax concessions. The Department of Education and Science has an extensive interest, not only in special and higher education, but in research. That Department gives direct financial support to many voluntary organisations for young people.

The Department of Employment is involved in community programmes, many of which impinge upon the voluntary sector. The Department of the Environment has a wide involvement through its work on inner city projects and with housing associations, local authorities, sport and historic buildings organisations. The Foreign and Commonwealth Office deals with overseas aid, in which voluntary agencies have a major role. Such agencies are free from political constraints and can do things which Governments cannot do.

The voluntary sector is also heavily connected with the DHSS. Organisations interested in health, disability, retired people and so on work with the DHSS. Even the Department of Trade and Industry — a less likely candidate—has a relationship with the voluntary sector through the Citizens Advice Bureaux and various consumer bodies. The Department of Transport deals with transport for disabled people. Even the Ministry of Defence has a relationship with the voluntary sector through its dealings with organisations helping former service personnel, such as the Royal British Legion.

That is not a comprehensive list. The Scottish Office, the Welsh Office and other Departments are also involved. When I came sixth in the ballot for today's debates, a Minister from another Department told me that he might be responsible for answering the debate because of the extent of his Department's involvement with the voluntary sector.

It can faithfully and truthfully be said that the voluntary sector enriches our national life through its diversity, its innovative nature, and its capacity to attract and harness the talents and enthusiasm of many individuals. We should not shrink from acknowledging that the existence of the voluntary sector removes a burden from the state and saves money for the taxpayer by reducing the cost of providing services.

Celebrating that happy circumstance does not mean abandoning the Government's absolute responsibility to provide and finance a basic framework for education, health and social services, nor does it involve any weakening of the Conservatives' commitment to continue that provision. If using the voluntary sector cuts the cost to the taxpayer and releases resources which can be redirected to the most needy, the Government would be derelict in their duty if they failed to seize the opportunity.

The voluntary sector enriches the nation's life and brings greater fulfilment to many individuals. Participation in voluntary work is a source of inspiration and satisfaction to many. When I was still working in the City, I was a volunteer with the North Islington nursery School Trust. I was a trustee, and we set up a project to enable children of nursery school age from one-parent families to use a nursery school's facilities during the long summer holiday. My enthusiasm for that project communicated itself so much to my wife that she suggested that I should take a full-time job which would give me the opportunity to do that type of work more frequently. It was that which about a year later led to my applying for and being appointed as director of the Spastics Society.

Three characteristics strike me most forcefully about the voluntary sector. First, it is very large. Estimates of the annual expenditure range up to 3 per cent. of gross national product. These figures are difficult to be precise about, but there are thought to be over 100,000 people employed in the voluntary sector, besides the millions of volunteers. The second characteristic is the diversity of the voluntary sector. As the range of departmental responsibilities shows, nearly every aspect of life is covered. All age groups are involved. The voluntary sector is active at home and abroad.

The third characteristic is the innovative nature of the voluntary sector. From the time when the Churches were the first organisations to carry the message of European civilisation into other continents, through the post-war period when organisations such as the Spastics Society pioneered the new attempts to educate children who had previously been written off as ineducable because of their handicap, right up to the present day when a small charitable organisation called Comet is now harnessing microtechnology for the benefit of physically handicapped youngsters—at each stage the voluntary sector has had a fine record of innovation and initiative. It has often blazed a trail which the state has then followed. It has gone down routes which properly the state would not have pioneered on its own.

The voluntary sector also performs many functions which could not otherwise be undertaken. I give the example of the huge sums which are raised and spent on medical research, cancer research and so on. The relationship between the voluntary sector and the Government—this is where we come to the nub of the debate—generally speaking has been a constructive one. Broadly speaking, there is, happily, a bipartisan approach politically. There is an attitude of co-operation on the part of all Governments. But in my view there is considerable scope for improvement in that relationship.

A number of questions are asked with increasing frequency. For example, where the voluntary sector receives finance direct from the Government, does it reflect the Government's own priorities and policy objectives? Is the Government's policy towards the voluntary sector clearly defined and co-ordinated? Is the voluntary sector sufficiently accountable for what it does? How could the voluntary sector obtain more support from business, and so on?

To understand those questions and to explore the answers, it is necessary to look at the relationship, particularly the financial relationship, between the state and the voluntary sector. There are three aspects to this relationship. First, there are the considerable tax concessions enjoyed by those voluntary organisations which are charities — and, of course, that is not all voluntary organisations, because some are not charities—embracing freedom from pretty well every kind of tax except VAT, on which I will touch later. Those concessions allow voluntary organisations a far greater use of their own financial resources and a greater facility to raise funds than they would have if they were not enjoying that status.

Those concessions are a way in which Government promote the voluntary sector generally. They do not discriminate, except, of course, where organisations fail to achieve charitable status. The precise value of these concessions is difficult to quantify, but I have seen estimates that they are worth perhaps £400 million a year—money that is lost to the revenue.

The second aspect of the financial relationship is the direct Government aid, grants which go from Government Departments into the voluntary sector. It is not easy to track down precisely how much those grants amount to. Various Members have asked a series of parliamentary questions, but we can only build up a picture in a piecemeal way, partly again because of the number of Government Departments involved. It could be estimated that the value of these grants is about £200 million per annum, although a certain amount depends on definition.

The third aspect of the financial relationship are those payments which are made by Government for services which they are legally obliged to provide; in other words, services that the Government must themselves provide but which they buy in from voluntary organisations on an agency basis. Most of those payments go from local authorities—such as fees for old people in residential homes or fees for handicapped children who attend special schools run by voluntary organisations — and those payments are a way of implementing Government policy.

What are the benefits to the Government of using the voluntary sector in this way? First, the general tax concessions promote voluntary giving. They attract resources into the voluntary sector for, say, medical research which otherwise would not be attracted or would have to be funded 100 per cent. by the state. Secondly, specific grants made to voluntary organisations, and the payments made for services, should be a way of enabling the Government to get value for money.

Voluntary organisations are often cheaper in the provision of such services because they have attracted voluntary funds by way of donations and because they enjoy the help of many voluntary workers. I say that there should be a way of getting value for money, but that is not always the case, and I shall return to that subject later.

The third benefit for the Government is that the existence of the voluntary sector alongside the state provides an element of competition. Sometimes the voluntary sector can show that it does things better than the state. For example, the Tadworth Court children's hospital for the last year has been managed by a new charitable trust with backing in the form of a Government grant from the DHSS, and that hospital is now operating about 20 per cent. more cheaply than when it was part of the National Health Service. It is also attracting more children; more of the beds in the hospital have been used in the last year compared with the previous year, which was its last year as part of the NHS.

Given that there are these advantages and that they are widely acknowledged, I have four suggestions to improve the relationship between the state and the voluntary sector. These suggestions, if adopted, would, I believe, lead to a successful and substantial expansion of the voluntary sector, to the advantage of everybody.

My first suggestion concerns the support which business gives to the voluntary sector. This is an area of huge potential. Estimates provided by Business in the Community suggest that at present 0.1 per cent. of the pretax profits of companies in the United Kingdom are devoted to helping the voluntary sector. The comparative figure in the United States, again estimated by Business in the Community, is between 2 and 5 per cent. of pre-tax profits. As the Financial Times commented in August of last year, by comparison with the US the sums here are miserly. Even if we take the bottom end of that range, it looks as though about 20 times more support goes from business in America than it does in this country.

In drawing attention to that, I do not want to appear critical of business, because many splendid projects are under way. Project "Full Employ", which was started as long ago as 1973 by a group of City institutions and banks, can train up to 1,000 people a year, a large number of them from ethnic minority backgrounds, and it claims a success rate of 75 per cent. in achieving permanent placements.

Another example is the strong support that we have seen recently for enterprise agencies. The business community supplies these agencies with cash and management, through secondments. An example of that is the joint initiative taken by Legal and General Assurance, Citibank and the Abbey National in their backing of Lenta housing, which is the non-profit making subsidiary of the London Enterprise Agency, which is investing in residential housing in Brixton. Those are a couple of excellent examples, and there are many others.

I am still left with the strong impression that more could be done. To facilitate the expansion of business involvement, and to promote what might be called corporate social responsibility, three actions should be taken. First, we need to improve the tax incentives for corporate giving. All charitable donations made by a company up to a limit of, say, 10 per cent. of its pre-tax profits should be made tax-deductible. The cost of granting such a concession would reduce as corporation tax rates come down to 35 per cent., as announced in the Budget last year.

At the moment the difficulty for business is that if it wishes to make its donation tax-deductible it has to make the donation under a four-year covenant. Covenants, although a suitable and desirable way for individuals to give money to charity, are less suitable for businesses because the nature of corporate income is that it tends to be less reliable and to fluctuate more than an individual's salary.

Secondly, we should clarify those activities which are eligible for business help on a tax-deductible basis. That help could be in the form of cash and of management who are seconded. The charitable definition is somewhat restrictive. We have seen this recently. Only at the end of 1983 were organisations promoting harmonious race relations able to achieve charitable status. Even today, an organisation whose sole objective is the reduction of unemployment may encounter difficulty in securing charitable status. So we should either reform or reinterpret charity law to allow a quicker and clearer definition of what constitutes charitable activity.

Perhaps a faster and simpler solution to the problem would be to identify those areas where corporate expenditure could be made tax-deductible, as it is now for enterprise agencies. After appropriate consultation, the Government could define those areas in which they believed expenditure could be made tax-deductible. It might involve expenditure in inner cities. After all, the business community responded positively to the problems in Liverpool. It might be expenditure designed to reduce unemployment or expenditure on the arts. Some areas could be designated on a permanent basis and others perhaps on a temporary basis, if there were particular problems in a geographical locality as a result of a business withdrawing as a large employer.

The third change I should like to see to promote business interest in the voluntary sector follows on from the second. If we were to prevent abuses from extending the area to which businesses could contribute on a tax-deductible basis, we should require greater disclosure in the annual reports of those companies that took advantage of the tax concessions. The annual report and accounts would be subject to audit. This could replace the very limited and narrow disclosure which confines itself to a statement on charitable donations.

If the incentives were improved, I am confident that the business community would respond positively. In my constituency and elsewhere, one consequence of the high level of unemployment is a much greater feeling of responsibility on the part of employed and privileged people, particularly in the business community, towards the problems of the unemployed and the under-privileged. The existence of what we might call a 1 per cent. club of major companies which would pledge themselves to give, say, 1 per cent. of their profits before tax, would, if widely adopted, increase tenfold the level of corporate support.

I am not advocating here any extra Government funding. It is important to get that clear. To the extent that corporation tax revenue was lost to the Government because of businesses taking advantage of the scheme, since the areas into which the extra payments were made would be identified in the companies' accounts, it would be possible for the Government, if they were providing direct funding in those areas, to reduce their contribution correspondingly. In the arts, for example, there might be substantial scope for Government savings if their expenditure was offset by additional business support.

This would be advantageous because, for every £100 spent by business, the Government would lose only £35 in corporation tax. Therefore, even if they decided to cut their support for that area by the full £35, almost three times as much money would go into the area, because of the contribution made by business. There is a sort of beneficial multiplier effect. The effect would be to reduce total public expenditure, although not to reduce the PSBR, because there would be a matching fall in revenue and expenditure.

More importantly, this process would transfer decision making to the private sector. I believe that the private sector is generally likely to be more responsive and less bureaucratic than the public sector. Local private sector decisions, with the benefit of some management expertise provided by the business community and injected into the voluntary sector, are likely to produce more cost-effective results than a Government Department sitting in London trying to supervise and monitor the performance of the voluntary organisations to which it gives money. One worthwhile spin-off could be the development of local voluntary trusts of the sort advocated by Mrs. Felicity Craven.

I may come into slightly more conflict with Government thinking with my next suggestion—that we should remove the remaining tax burden from the voluntary sector. I do not wish to make that a major part of my speech, because my views are already well known. VAT is a real burden on charities. In the 1983 Budget, the inclusion of building alterations for VAT purposes had a major effect on charities. Many charities are unable to acquire new buildings or build from scratch. They are frequently involved in the adaptation of old buildings which may have been received as part of a legacy. A considerable extra tax bill was imposed on charities in the 1983 Budget.

I have to admit that I overlooked the fact that in the latest Budget the extension of VAT to press advertising represents a further major financial blow to charities which rely heavily on the use of press advertisements for their fund-raising programmes. New organisations and charities that had not previously been worried about VAT, because their activities had mostly taken place abroad, are now concerned with this problem

VAT is an anomaly for charities, because it is one respect in which they are treated less favourably for tax purposes than commercial companies, which can usually offset their inputs and outputs, and local authorities, for which there is a mechanism for recovery of VAT. It would not be administratively complex to grant relief from VAT, as has sometimes been claimed

Even if it is impossible for the Government to grant blanket relief from VAT, I urge my hon. Friend the Minister of State to ask Treasury Ministers to look again at the specific shopping list which the Charities VAT Reform Group submitted before the Budget at the Treasury's request. The group suggested that, where VAT is paid on building alterations that are required because of new fire regulations, VAT should be recoverable by charities. VAT remains a real problem and a substantial cash drain.

My next suggestion for improving the voluntary sector is aimed at the voluntary sector itself, but it has a dimension where Government action could help. It concerns the accountability of voluntary organisations. My hon. Friend the Minister will already be aware of my concern about the lack of accountability of charities and voluntary organisations. Last summer, I introduced a ten-minute Bill which dealt with certain aspects, such as the need for charities to file regular, up-to-date accounts.

It is astonishing that the public have normally no opportunity to inspect the accounts of charities. Charities over a certain size should be required to have an independent audit of their accounts. Larger charities should have independent qualified audits. There is a need for a compulsory and universal register of all charities, instead of the somewhat incomplete system, which is at present confined to England and Wales. I have previously stressed the desirability of giving financial supporters of charities the right to attend annual general meetings.

I welcome those aspects of the Charities Bill, which has passed through all its stages in the House of Lords and has received a Second Reading in the House of Commons, that strengthen the accountability of small charities. Last year's report of the evidence received by a House of Lords, Select Committee clearly bore out my previously stated views about the need for greater accountability within the voluntary sector.

All the issues that I have mentioned in this section could be dealt with by simple legislation and I continue to urge my hon. and learned Friend and his right hon. and hon. Friends at the Home Office to consider introducing such legislation during the lifetime of this Parliament.

I have one other suggestion on the subject of accountability and I am sure that my hon. and learned Friend will be glad to know that it does not involve any legislation or Government expenditure. It is an initiative which the voluntary sector itself could undertake off its own bat, and it is modelled on existing practice in the United States.

In the United States there is an organisation called the National Information Bureau which has for many years been providing an advisory service to prospective donors with the aim of, first, maintaining high standards in the voluntary sector and, secondly, aiding wise and well-informed giving. The bureau issues advisory reports on voluntary organisations, evaluating their performance against eight basic standards, which one listed in the leaflet which I have here.

These relate to the membership of the board of the organisation; the clarity with which the aims of the organisation are stated, whether its programme of activities is relevant to those aims; whether its administrative and management expenses are reasonable; whether its promotional and publicity material is ethically based; whether its fund-raising is conducted in an efficient and proper manner; whether is is adequately accountable—the statements made in its annual report, and so on, are scrutinised; and, finally, whether it draws up an annual budget in a form which is consistent with the other criteria.

The results of that scrutiny are reports which are of great value to people and companies thinking of making donations — and indeed can be of great value to the organisations themselves—and I believe that we could well follow that model. If in this country large donors were able to link up with a few large charities initially and with appropriate professional help, a suitable list of criteria could be compiled for application to voluntary organisations in Britain. Then such organisations could submit themselves on a voluntary basis for scrutiny.

No legislation or Government funding would be needed for this, although perhaps an advisory input from the VSU or the Charity Commission would he helpful. Provided that the large donors were willing to fund this exercise—it would be in their interests to do so, because they would then be able to make their donations on a more informed basis—the cost, which would anyway be fairly small, would not fall on the charities themselves.

My fourth, and final suggestion concerns Government rather more directly. It is a plea for a more clearly co-ordinated approach by the Government towards the voluntary sector. Of course, I am not suggesting that there is no co-ordination at the present time. I am well aware of the role of the Voluntary Services Unit and I understand that ministerial meetings do take place from time to time between Departments. Also, I do not want to give the impression that I am seeking some sort of Government-imposed uniformity for the voluntary sector, whose strength lies in its diversity, its plurality and perhaps even its untidiness. But I am concerned that the Government are not necessarily getting the best out of the voluntary sector.

It appears, for example, that different Departments have a very different approach to the question of how their direct grants should be made. The Department of the Environment appears to have a straightforward approach. I see from a written answer of 10 December 1984 that the Under-Secretary of State said that his Department's grants were intended to assist national and regional voluntary organisations carrying out activities which furthered the Department's policy objectives. There is nothing very surprising or exceptional in that.

Other Departments have a different, sometimes rather more stringent and narrow, approach. On the face of it, for example, to secure a DHSS grant under section 64 of the Health Services and Public Health Act 1968, one has to do more than just carry out activities which further the Department's policy objectives. I know that from experience, having tried to apply for such grants on behalf of the Spastics Society.

Within the criteria laid down by particular Government Departments, it is not always clear to the outside world why one organisation is selected in preference to another. My own view is that Government support should be concentrated, where possible, on organisations whose work is not particularly eye-catching or emotive, because organisations that have such activities ought to be able to fund them elsewhere.

In general, smaller organisations should be preferred to larger organisations. I understand that the criteria applied by the VSU are that either it must be a national organisation whose work spans the interests of several Government Departments, or falls outside the interests of one specific Department. Alternatively, it could be a local body engaged in a local project that is innovatory and likely to have national significance, or an organisation working in an area of social priority for which alternative funds are expected to be available in due course. I would be interested if my hon. and learned Friend the Minister elucidated to the House what leads his Department to choose one individual organisation as opposed to another, given that those criteria are satisfied

I should also be interested to know what comparative measure, if any, is made of the relative efficiency of different voluntary organisations. Quite a few organisations receive grants from more than one Government Department. No doubt they serve more than one Department, but it would be interesting to know what, if any, co-ordination takes place between the two or more Departments that are funding the same organisation.

Before I came to the House, in the days when I was engaged in full-time work in the voluntary sector, many of the voluntary organisations that I talked to found the process of applying for grants rather confusing. The criteria for success were hard to understand. The decision-making process, on occasion, was rather slow. That concern remains today.

I should like to mention one current applicant without, I hope, damaging its chances for a Department of Health and Social Security grant. It is the Campaign for Mentally Handicapped, a small organisation that does unemotive work. It is doing research into the ways in which mentally handicapped people can be brought out into the community. It is not involved in the provision of services, but is working in an area of stated Government priority. I find it hard to understand why a fairly small application for such an organisation should encounter much resistence when larger organisations, the work of which might be thought to be rather more emotive or appealing to private donors, appear to achieve ready success in large applications to the DHSS.

Therefore, there is sometimes a question mark over the coherence of the Government's policy towards the voluntary sector. That also applies at the macro level. For example, is proper attention paid to the potential role of the voluntary sector when new Government policies are determined? Are we making as much use as we could of the voluntary sector in fighting unemployment?

Let me take a specific example. The Government's policy on care in the community, widely supported, involves many voluntary organisations whose normal relationship would be with Departments other than the DHSS, which is the lead Department for that policy. Housing associations and bodies concerned with sheltered housing have a function relating to the care in the community policy. Transport and employment organisations do. All those bodies, as well as the DHSS-related voluntary organisations, could be involved. Is there a stage at which the impact of the voluntary sector on a policy such as care in the community is discussed interdepartmentally? Is it at an early stage? Such discussion would be needed if the Government were to get the best value for money from the voluntary sector.

Mr. Andrew Rowe (Mid-Kent)

If my hon. Friend does not have this information, perhaps my hon. and learned Friend the Minister will supply it later. When the Voluntary Services Unit was originally established in the Civil Service Department, there was regular liaison between officers at assistant secretary level, in Government Departments, during which such matters were regularly discussed. I am ignorant as to whether it continues, but if it does not, I wonder whether it would be a good idea to revive it.

Mr. Yeo

I am grateful to my hon. Friend. I do not know the answer to that question, but no doubt my hon. and learned Friend the Minister will be able to enlighten us when he replies to the debate.

I summarise my four suggestions. First, I suggest more business involvement — the promotion of corporate social responsibility. Secondly, I suggest the removal of the remaining tax burden. Thirdly, there should be greater accountability in the voluntary sector, and, fourthly, better co-ordination of Government policy.

My final point concerns the Local Government Bill, which will be debated in the House later this week. Real concern has been expressed by the voluntary sector about the consequences of the abolition of the Greater London council. I hope that the Government will pay heed to it. Of course, it is high time that we stopped wasting taxpayers' and ratepayers' money on many of the absolutely loony organisations that have been supported by the GLC. But let us not throw out the baby with the bath water. We must make sure that the important work that is done by genuine organisations, which is funded by the GLC, is able to continue.

The voluntary sector already plays a very distinguished, valuable and major part in our national life. I believe that that role could be further developed and expanded, and the suggestions that I have made this morning are designed to achieve that end.

7 am

Mr. Alfred Dubs (Battersea)

I congratulate the hon. Member for Suffolk, South (Mr. Yeo) on raising an important issue, even though he has the misfortune to do so at this time of the morning. I listened with interest to what he said and noted his comments about the size of the voluntary sector, its diversity and its innovative nature.

The voluntary sector can sometimes be local and sometimes national—it can even be international. At all those levels there may be a relationship between the state and a voluntary organisation. I was a little disappointed that the hon. Gentleman did not develop the relationship between voluntary organisations and local authorities. He concentrated more on the national rather than the local level. From what I know of the voluntary sector, a great number of organisations have their main activities at a local level and, to some extent, depend for their funding on local authorities.

The other dimension is the European social fund. It is another confused set of arrangements and many voluntary organisations are unable to derive full benefit from it. However, that is a subject for another day.

I was interested in the hon. Gentleman's suggestions about business support, although he did not tell us why business should find it possible to increase its level of support. I understand the argument about taxation, but there must be a different attitude by business if it is to increase its support for many of these worthwhile activities.

Perhaps the hon. Gentleman knows more than we do about what would make business more energetic. Before I entered the House I was involved in a community relations council. We had the support of a large multinational organisation, which seconded to us one of its computer executives who moved from the world of selling computer systems to community relations in an inner-city area. It was a tremendous shock to him, but also, I hope, of great benefit to his subsequent business career. Alas, that does not happen often. I am not convinced that many organisations would be so generous as to second their staff.

I sympathise with the hon. Gentleman's arguments about the VAT burden. The voluntary sector has four specific advantages and four things to offer which the state—either through central or local government—cannot easily emulate. The first is the experimental and innovative nature of much voluntary work. At a local level it is impressive how voluntary organisations can experiment and try new things that a local authority would find it hard to do.

Secondly, there is the speed of response by the voluntary sector. It can get projects off the ground very quickly while the state, understandably, finds that more difficult.

Thirdly, a voluntary or community organisation has a particular strength as it can involve local people in its activities in a way that a local authority seldom can. It can achieve a level of commitment and interest which is healthy for a community. This is because it makes it feel that a project or activity belongs to it and not to a remote town hall or to central government. That is a great strength of voluntary organisations. If it is developed, it gives them the ability to call on a wider range of support in the community and to get more people involved, or to have a better awareness of the problems in the community. By having so many feelers in the local area, there is an ability to understand quickly and sensitively what is happening.

Lastly — I do not press this argument too strongly when we have a Government who are trying to cut public expenditure all over the place—some of the community groups and organisatons provide good value for money in what they are able to achieve. It should be remembered that they often operate on a shoestring.

Unfortunately, there are a number of difficulties. The hon. Member for Suffolk, South indulged in the familiar game of knocking the GLC. I think that he knows better than to do that really. If we were to go through the list of projects and voluntary organisations that are supported by the GLC, the difference between us would probably be confined to 1 per cent. of all GLC grants. I am not conceding that the 1 per cent. are wasteful or loony, as I think the hon. Gentleman described them. I am saying that the bulk of the money that is provided by the GLC is not directed to controversial areas. It is channelled to worthwhile activities and to organisations that are fearful for their future.

The Minister knows that many organisations in the black community, for example, have been funded by the GLC and have done useful work. That has happened because of the far-sighted work of the GLC. These organisations are extremely concerned about what will happen if the GLC is abolished. No arrangements have been made for their future or for that of the many other organisations that are similarly funded by the GLC.

The second area of uncertainty is that of urban aid. Many voluntary organisations depend upon it and they face uncertainty because the way in which the funding operates does not give them a guaranteed financial basis in future.

An area of enormous political controversy between the two sides of the House that comes to the surface at intervals concerns the accusations that are made by Conservative Members that some voluntary organisations are too political in their activities and adopt something of a campaigning stance. I do not wish to spend too much time on this argument. It is to the hon. Gentleman's credit that he did not mention the issue.

Over the years some voluntary organisations have found themselves in difficulty, and in my opinion unfairly so. By their very nature, organisations that are active in and dissatisfied with the care of the mentally ill, or the provision of legal services in the community, for example, are bound to adopt a somewhat political stance. If there is a feeling that these organisations operate a little to the left of the political centre rather than to the right of it, I do not think that that is a reason for being as hard on them as some Conservative controlled local authorities and some Conservative Ministers have been.

Mr. Rowe

I take the hon. Member's argument, but I should hate him to feel that that is only because these organisations sometimes have a stance to the left of the political centre. There have been many occasions, especially at local government level, when Labour councillors have found themselves extremely annoyed by what they regard as the political activities of voluntary organisations.

Mr. Dubs

The hon. Gentleman says so and that must be true, although I cannot think of any examples. However, if I press him to do so he will no doubt want to intervene again to give me some.

Organisations which have their roots in the community are bound to take a somewhat campaigning stance. It is not sensible for politicians to jump on them immediately if they feel that their local authorities are providing funding. Organisations have to toe the line or at least shut up on some of these issues. I think that that is asking too much of community activists. Mercifully, such criticisms are not made very often, but they surface from time to time.

Another aspect is the relationship between voluntary organisations and political parties, and indeed the House itself. I suppose that political parties could be defined as voluntary organisations, but I shall not pursue that line. Members of Parliament have cause to be grateful to the voluntary organisations. Many of the all-party groups in the House depend for their ability to function on the generosity of voluntary bodies in providing the secretarial back-up to enable us to be effective Back Bench groups. One thinks of the all-party penal affairs group, the all-party disablement group, the all-party group for pensioners, and so on. In a sense, Parliament is run on a shoestring and we should be grateful that information comes to Members, especially Back Benchers with specialised interests, because voluntary organisations are willing to invest the time necessary to educate Members of Parliament and to keep us properly informed.

Mr. Andrew F. Bennett (Denton and Reddish)

And the political parties.

Mr. Dubs

In that sense, of course, political parties are voluntary organisations and provide the wherewithal for the operation of our political system. Indeed, I believe that we are not generous enough to them. I should certainly like a different approach to the funding of political parties in this country, but that is wider than the subject with which the hon. Member for Suffolk, South sought to deal.

Members of Parliament, especially when in opposition, also depend on voluntary organisations for briefing on the details of legislation. Some of them may be something of a red rag to the Minister because they make his life more difficult, but they also make Parliament more effective. The National Council for Civil Liberties, for example, has been enormously helpful in alerting Members of all parties to the dangers and anti-civil-libertarian aspects of certain legislation. The Joint Council for the Welfare of Immigrants — no doubt the Minister's favourite organisation — provides help for individuals with immigration problems and offers helpful criticism of legislation. There is also the Legal Action Group and dozens of others, all of which help Members of Parliament. Without them our debates would be less well informed, and we should be the poorer for that. I mention that dimension as I should like to express my gratitude to the many organisations which go out of their way to help us and to provide back-up information and briefings at very short notice, although I appreciate that those matters are some distance away from the starting point of the hon. Member for Suffolk, South.

In conclusion, I believe that voluntary organisations or community groups, however one defines them, play a very important role and I should like to see more generosity to that sector by the Government — and by local authorities, if only they were not inhibited by the lack of Government money and the tight controls imposed on local government by central Government. We need more generosity and more understanding of what the voluntary sector does and the useful role that it has to play.

An element of certainty in the funding is also necessary because it is unreasonable to expect voluntary bodies to plan ahead and look to the long-term if they do not know from one year to the next whether they have any basis for their operations.

I am looking to the Minister for a generous response and an understanding of what the voluntary sector does and its important contribution in the community and at national level so that it can operate with a bit more certainty in the knowledge that the Government back what it does, even if they are sometimes critical of some of its activities.

7.14 am
The Minister of State, Home Office (Mr. David Waddington)

This has been a good debate and I shall do my best not to spoil it.

My hon. Friend the Member for Suffolk, South (Mr. Yeo) raised so many interesting and important issues that his was the type of speech that people will go away and read, digest and make their minds up on rather than come to swift conclusions about. I recognise his expertise and feel humble. As the Minister with my responsibilities but having never worked in the voluntary sector, I am at a disadvantage and have a great deal to learn from my hon. Friend. The House is fortunate to have had the benefit of my hon. Friend's long experience in the world of charities. I shall read carefully all that he said.

There should be no mistake about the fact that the Government recognise the enormously valuable work done by the voluntary sector. In our 1979 manifesto we referred to our determination to encourage the voluntary movement. Nobody who looks at the figures can doubt that that is what we have done. During the past few years, in the interest of the fight against inflation and the laying of the foundations for economic recovery, there have had to be considerable constraints on public expenditure. In spite of those constraints, Government support for an enormous range of voluntary bodies, embracing the whole gamut of voluntary endeavour, has increased considerably.

Leaving aside the £300 million spent by the Manpower Services Commission on training and employment projects provided by voluntary bodies and considerable grants by non-departmental public bodies such as the Arts Council, Government grants in 1983–84 totalled more than £182 million. That represents an increase in cash terms of 95 per cent. and an increase in real terms of 35 per cent. over 1979–80.

I have been presented with a table which I am sure is pretty accurate. I agree with my hon. Friend, however, that it is not always easy to get accurate figures and to decide what is grant, what is payment for service and the rest. No doubt the table will emerge in Hansard as the answer to a parliamentary question, but if my hon. Friend is interested, I shall let him have it.

We know less than we should like about local authority funding of voluntary bodies. Taking grants and payments for services together, in 1982–83, social service authorities in England spent about £110 million, but there was less easily identifiable funding for education, the youth service, to ethnic minority groups, the arts, environmental bodies, advice centres—the list is almost endless. We all know examples of local authority grant giving which some of us criticise as being plain eccentric, but the great majority of authorities adopt a thoroughly sensible approach and the great majority of grants have gone to thoroughly useful organisations.

I was interested to hear what the hon. Member for Battersea (Mr. Dubs) said about that. I agree with him that many local voluntary services are of enormous value and fulfil a unique role that cannot be fulfilled either by central Government or a local authority. They can be sensitive and informal in a way in which a statutory body cannot, they can reach out to those who may be wary of officialdom, and they can help people to tackle the problems of their communities.

Recently the Government's policies for local government have often been portrayed as a threat to the support by local authorities of voluntary bodies, but once councils have adjusted to their new post-abolition responsibilities and thought how to make the best use of their necessarily limited resources, those fears will be found to be groundless, and we shall find that the voluntary sector has not lost out.

It would not be appropriate for me to get greatly involved in the debate about abolition, because we shall be talking about little else during the next two days. I merely remind the House that steps have already been taken to strengthen the collective grant giving arrangements. Various undertakings have been given about the reconsideration of the upper limit on collective grant giving. There is also transitional funding and the undertakings given about the targets for successor districts taking into account new responsibilities.

However, we need to draw in new resources if we are to see even further beneficial expansion of the voluntary sector to all those areas where it has proved itself so able to help the community. That means stimulating support from individuals and the wealth-creating sector of the economy.

Many charities demonstrate the art of successful fundraising. My hon. Friend, as former director of the Spastic Society, knows all about that. The Government should do what we can to encourage people to give to charities, and to encourage charities and other voluntary bodies to tap the resources which are undoubtedly available. As the Government we have introduced increased tax reliefs for charities and tax incentives for donors, and publicised them so that small and large charities can profit from them. My hon. Friend will know about the little booklet "Tax Benefits for Charities" published by Voluntary Services Unit, which provides answers to questions, such as, what changes have the Government made to help charities since 1980, what tax reliefs are available for charities, and what tax incentives are there for donors?

I am glad that the booklet has had to be reprinted. I am told that the demand for copies shows little sign of falling off. That is therefore a success for VSU. I am glad that it is there to remind people of the changes that we have made. As my hon. Friend said, we have reduced the minimum period of a covenant which qualifies for tax relief to four years. We have exempted direct gifts and bequests to charities from capital transfer tax, and enabled a company to claim tax relief on the salary of an employee while he or she is seconded to a charity. Recently there has been more good news with the Chancellor of the Exchequer announcing in his Budget that higher and additional rate tax relief on annual gross covenanted payments will be raised from £5,000 to £10,000.

My hon. Friend says that there should be more incentives for corporate giving, and I am sure that my right hon. Friend will bear his words in mind. He also asked for further VAT relief for charities. He will have heard this answer before, but it is a fairly good one and should go on the record in view of what my hon. Friend said.

The main complaint of charities is that they must bear VAT on their non-business purchases, and they have been lobbying for some years for a special refund mechanism. Although limited schemes to benefit some sorts of charities have been put forward from time to time, it is clear from discussions with the VAT Reform Group that, in practice, relief would have to apply to all charities, since no method of discrimination would be acceptable to all charities generally. The number of charities which would seek to benefit from a general relief is estimated as at least 100,000, and its administration would be complicated and expensive in terms of staff.

The cost in revenue terms would also be significant. Charities would benefit unequally, with controversial charities or those with limited objectives benefiting as much as or more than those with wide public support. In short, indiscriminate VAT relief would be an inefficient and expensive way of helping charities. But the Government recognise the valuable work that they do, which is why they have preferred to use limited resources in other ways, some of which I have just outlined.

There is a potential for company giving that we have hardly begun to develop. Bearing in mind the fact that by no means all voluntary bodies supported by industry are charities, we must, therefore, treat with a little caution figures that relate only to charities, but I believe the following figures to be pretty startling. They are the figures given by the Charities Aid Foundation, which I am sure my hon. Friend knew when he quoted the other figures from Business in the Community. The Charities Aid Foundation says that the top 200 corporate donors to registered charities gave £34 million in 1982–83, which represents only 0.21 per cent. of profits before tax. In 1983 in the United States of America, corporate contributions amounted to $3.1 billion, which — according to the Charities Aid Foundation, whose mathematics is bound to be right—represented 1.51 per cent. of pre-tax profits. The figures given by my hon. Friend are even more disappointing.

But progress is being made. The fast-growing local enterprise agency movement represents a major voluntary contribution by business in Britain to job creation through help to small businesses and the self-employed. Public-spirited businesses—the sort that join Business in the Community, that help not just their local enterprise agencies, but local environmental or social groups and, indeed, young musicians and artists—are growing in number. The discernment which they show in making their contributions, be it by grant, sponsorship, secondment or other help in kind, is there for all to see.

We are interested, too, in the idea that experimental community trusts might be able, as in America, to stimulate new giving to charities and charitable groups at local level.

I have said that the Government have the clear objective of encouraging the voluntary movement; and there are various means — grants, payments for services, fiscal reliefs and other financial advantages and incentives—which we may use, according to circumstances, to help useful organisations and to create the right climate for voluntary sector growth. We have a principle that grants should normally be given by those responsible for policies or services because they can best judge whether the recipients are giving value for money. Our style of grant-giving emphasises the need to ensure that grants go to bodies with the capacity to manage their work cost-effectively and to set and achieve realistic objectives.

I am not sure how much real scope there is for more co-ordination between Departments. This has always worried me. The VSU is in the Home Office, and I am the Minister with a special concern for the general health of the voluntary sector and our dealings with it. Because of that, I have regular meetings with those of my colleagues whose work brings them in close contact with the voluntary sector. I am not, and could not be, a Minister charged with working out a common policy towards grant giving. My hon. Friend showed how enormously varied are the bodies that are supported by different Departments, and my colleagues know better than anyone else how money can best be spent. We can learn from each other, and by meeting we can try to create conditions in which useful, voluntary bodies can flourish.

Mr. Eddie Loyden (Liverpool, Garston)

The Minister has raised an important point about co-ordination, which can be a minefield. Referral bodies can be brought in to make the work of parliamentarians easier, and to bring to their attention the problems in their communities. Co-ordination is of prime importance, whether it be with the Home Office, the Department of the Environment or any other. There is a great need for co-ordination that will explain in simple and explicit terms to voluntary organisations the path that they have to follow to gain the advantages that are there to help those bodies to function. There is a great deal of concern about the transitional period that may occur with the abolition of the metropolitan county councils. I hope that the Minister will take on board what he has said about the need for coordination so that th benefits for those who play a useful part in community with referrals will continue.

Mr. Waddington

It is the responsibility of the Department that is financing a voluntary body to have a close relationship with that body so that there is understanding as to what is intended. I was concentrating on the difficulties of laying down a policy of grant giving to voluntary bodies, which will be appropriate for the Ministry of Defence, the Department of the Environment and the Department of Health and Social Security. I doubt whether it is possible to lay down a policy in that way.

I heard what my hon. Friend the Member for Suffolk, South said about the desirability of funding small rather than large bodies, if I understood the importance of what my hon. Friend was saying, when he said that it was probably better to fund less eye-catching bodies rather than the more glamorous. However, one cannot develop that into a policy for Government, controlling what one particular Department should do. Each Department is aware, or should be aware, of how volunteers and the voluntary sector can help them in the carrying out of their statutory responsibilities, and can fulfil needs that cannot be met by the statutory bodies.

I hope that what I have said shows that the Government take the question of the relationship between the state and the voluntary sector seriously. I am grateful to my hon. Friend for giving me this opportunity to put on record some of our ideas about this complex, ever-changing but durable relationship. I shall go away from the debate weary, but happy to have listened to my hon. Friend and Labour Members. We sometimes quarrel, though tonight there was a recognition on both sides of the House of the valuable work that is done in the community by the voluntary sector.

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