HL Deb 07 March 1987 vol 487 cc330-47

9.14 p.m.

Baroness Ewart-Biggs rose to ask Her Majesty's Government what response they will make to the report After Abolition recently published by the National Council for Voluntary Organisations.

The noble Baroness said: My Lords, when your Lordships' House debated the 1984 Local Government Bill on the abolition of the GLC and the metropolitan county councils, great concern was expressed from all sides of the House about the impact that abolition would have on voluntary organisations. After all, much was at stake. By March 1986 over 3, 500 voluntary groups were receiving grants from the abolition authorities. Over £100 million was needed if all these groups were to continue without loss. This represented one-third of the total of local authorities' grant aid in England.

In the debate powerful arguments were put forward by many speakers about the danger of the work of voluntary organisations not being maintained. As a result some important changes were made to the post-abolition arrangements. The Government's own funding contribution through transitional funding was quadrupled and the original ceilings envisaged for the collective funding of cross-borough or district projects by local authorities were removed. Following this, most of the 3, 500 groups affected by abolition managed to survive the first year of abolition.

Unfortunately the impact of abolition is not yet over. For that reason it seemed important to consider this evening the report entitled After Abolition which has been prepared by the National Council for Voluntary Organisations in conjunction with the London Voluntary Service Council. I am most grateful to noble Lords who have stayed rather late to consider this important report. It shows that, although people's worst fears were averted, the voluntary sector is still being damaged by abolition. The damage may not always have been dramatic, although in some cases it has been, but it is still occurring. I should like to give a few examples.

The area which has been worst affected by abolition is undoubtedly Merseyside. The former county council provided over £5 million funding to 90 different voluntary organisations. Its support covered a wide range of groups concerned with social provision, employment, training, arts and recreation. Sixty-three of these projects have lost some or all of their funding. Overall funding has been reduced by £2.5 million. Ethnic minority projects, arts projects and unemployment centres have been the worst affected. Even those groups that received funding are now faced with an uncertain future. The new Liberal administration has decided to review all the projects approved last year for transitional funding, which means that these projects have been given grants only until the end of June. When one considers that June is next month, one can imagine the terrible chaos that this must have caused to these voluntary organisations, which are already working in difficult areas.

London has also been affected overall. As many as 90 projects have lost funding. Most of these have been at local level. However, the position for cross-borough projects has also been made difficult. The confusion that beset the London boroughs grants scheme has created one of the great problems.

As your Lordships probably realise, last year it took the boroughs three months to agree a budget. This year it was even worse. In late November 20 boroughs agreed a proposal for expenditure of £32 million, but ratification by two-thirds of the boroughs is required, which means the agreement of 22 boroughs; so in the end no agreement was reached until the middle of March. This came only after the Secretary of State indicated that he might set a limit of £28.5 million. Of course the chaos was pending as voluntary groups were waiting to hear whether they would get their grant and were faced with the prospect of having to lay off staff or close their doors on 1st April, which was the start of the new grant year.

Even now it is clear that the budget is very low. The director of the grants unit has reported that the scheme needs more than this just to refund current commitments, pay the costs of the unit and deal with contingencies. To allow any response at all to new groups and ideas, the committee has had to agree to make savings from its community, employment and arts divisions. As a result, 10 groups were refused renewal funding when they were considered on 8th April.

London groups in receipt of transitional funding are also beginning to experience difficulties as their boroughs are taking over an increasing proportion of their grants. I shall give a few examples of that. In Wandsworth, the council orginally took on a number of groups with transitional funding arrangements, but it now appears to be increasingly reluctant to take on full responsibility for those groups as transitional funding from the Department of the Environment tapers away. There have already been cuts in the funding of the three law centres.

In Tower Hamlets, which is after all another borough which faces enormous problems, the voluntary sector has just been subjected to major cuts. Indeed 60 per cent. of the borough-wide groups have been refused grants in £1 million-worth of cuts. Much of the Tower Hamlets grants budget came through transitional arrangements, and the borough has now decided that it cannot afford to carry on at the same level.

Even in Lambeth, where there is a full commitment to funding ex-GLC groups, there are some problems. The council does not have the staff to administer the funds effectively, so that payments made quarterly are usually late or unpredictable. Voluntary organisations are having to arrange overdrafts to continue staffing and rent payments and, in all the uncertainty, they find it impossible to plan their work ahead properly.

There is also considerable concern about the long term. There is concern about the growth and the development of the voluntary sector in the metropolitan areas and the GLC. Both the GLC and the metropolitan areas had a very good record for assisting new employment and training projects. They gave particular priority to black and ethnic minorities and women's groups. Many of those groups had previously found it most difficult to obtain support, despite the very great importance of their work. They were beginning to catch up, but that has now come to an end. So in London the largest category of new groups applying for funding from the London boroughs grant scheme came from black and ethnic minority projects.

I must stress my next point, which I believe is the most important. Without growth and development, the pattern of voluntary sector activity will simply reflect previous years' work. Each year new needs emerge—for example, to meet drug abuse, the spread of AIDS, the increase in homelessness and the growth in the number of elderly people. Those are the very areas which require new support and new aid. That is why the voluntary sector must be kept going. If it is not growing, it will not be able to respond to the new demands put on it.

Another important impact of abolition has been a virtual end to capital support for premises and equipment. That has taken two forms. First, none of the post-abolition arrangements make any provision for capital grants. Transitional funding is for revenue only and the collective funding schemes do not have their own capital allocations. As a result, groups have to rely on local authorities' existing capital allocations, which are already heavily over-subscribed, and cross-borough or district projects have no funding source to approach.

Secondly, the present capital assets are in danger of being reduced because the residuary bodies are required to dispose of properties owned by the abolition authorities. Indeed in London over 120 organisations in 50 premises are now under threat of being made homeless. Finally, as I have already said, another underlying effect of abolition has been the continued uncertainty which so many organisations have to face up to all the time.

So, from what I have said, it is clear that 14 months after abolition the difficulties being experienced by the voluntary groups could become greater. One reason is the increased burden which the post-abolition arrangements are placing upon local authorities as, year by year, central government reduce their contribution. The Department of the Environment's contribution to transitional funding has been reduced this year by £5 million. The Arts Council's funding has also been reduced by £1 million. And none of the Government's funding makes any allowance for inflation.

What this means overall is that local authorities are likely to have to increase their contribution to post-abolition funding by as much as 25 per cent. if the same level of voluntary sector activity is to be maintained. And that is before any allowance is made for possible changes in rate support grant.

I conclude by highlighting some of the recommendations that the report puts forward. I hope that the Minister will respond to some of them. First, the NCVO suggests that the Government adopt a much more flexible attitude towards the tapering of their contributions. It calls upon the Government to recognise the particular problems being faced by black and ethnic minority projects in obtaining funding and to increase the Commission for Racial Equality's post-abolition budget from £800, 000, as at present, to at least £2 million per annum. The suggestion is made that the Government accept that the collective funding schemes established under Section 48 of the 1985 Local Government Act are not working well in most areas and that a fresh approach is needed.

Fourthly, the Government should correct the anomaly whereby none of the post-abolition arrangements makes any provision for capital funding. Collective funding schemes should be provided with their own capital allocation, but not at the expense of local authorities' own allocation. Fifthly—I believe that the Government have been thinking about this and that the Minister may have something to say—the residuary bodies should be instructed not to dispose of premises occupied by voluntary groups. Instead, these premises should be transferred either to the ownership of the relevant local authorities or perhaps to trusts established under Section 49 of the 1985 Local Government Act.

Sixthly, the Government should endow trusts in each of the metropolitan areas with part of the assets of the abolition authorities in accordance with Section 49 of the Act. The last recommendation that I should like to highlight is that the Government should accept the Widdicombe Committee's recommendation to double the Section 137 discretionary spending limit from 2p to 4p in the abolition areas. Abolition has effectively halved the amount of discretionary spending by local authorities in the abolition areas, and this is having a very serious impact on economic and voluntary sector projects which often can only be funded through the Section 137 powers. As I said, I hope that the Minister will have something to say which is of positive value in response to the NCVO report. After all, its authors describe the situation in a very constructive manner. They do not suggest that the voluntary sector in these areas is moribund. But they point to the malaise that has gripped parts of it and put forward some very sensible suggestions as to how that malaise might be put right.

9.29 p.m.

Lord Banks

My Lords, I am sure that the whole House will be grateful to the noble Baroness, Lady Ewart-Biggs, for asking this important Question this evening. I should like to support the general tenor of her remarks. The report by the National Council for Voluntary Organisations, in conjunction with the London Voluntary Service Council, is very fair and balanced. There was widespread feeling among voluntary organisations that the Government's initial plans to replace the grants to voluntary organisations, given by the Greater London Council and the metropolitan county councils, were, in the words of the report, "inadequate and unworkable". There was great uncertainty and for a time many organisations were preoccupied with the question of survival to their own detriment and that of their clients. There was inevitably and rightly much lobbying by the supporters of voluntary organisations in this House and elsewhere.

The result, as the noble Baroness has made clear, was that the Government contribution to transitional funding had been quadrupled and other improvements made. As she pointed out, £100 million had to be found and eventually most of that money was found. However, it was found from 10 separate sources instead of from one. Central government provided one-third of the amount through six sources: the Department of the Environment which contributed to transitional funding; the Arts Council; the British Film Institute; the Sports Council; the Commission for Racial Equality; and London Regional Transport. Local government provided two-thirds of the amount from four different sources: forward funding by the Greater London Council and the Metropolitan County Council; Section 48 schemes, where the boroughs in an area combined together to fund voluntary schemes across the area, such as the Richmond scheme, as I believe it is called, in London; the local authorities additional main programme, including a 25 per cent. contribution to transitional funding; and funding which came from a small number of local agencies.

The outcome, as the noble Baroness has said, was not as bad as was originally feared. However, as she pointed out, a number of serious problems still exist. She mentioned the fact that there was no provision for capital expenditure and referred to the problems that were caused with regard to premises and to re-equipment. She also mentioned the fact that there is no adequate funding for new projects and that an unmet demand has built up. One can say that the voluntary services are at a standstill in these areas.

The report refers to the establishment in London of a fund to be financed by the London Residuary Body selling the properties it inherited and using those funds to meet new demands by voluntary organisations. The report also refers to the possibility of a similar development in other areas. I should like to ask the Minister whether he can give, when he comes to reply, any indication of what is happening about that suggestion in the various areas, and whether the funds are being established and will be used for that purpose.

There is also a lack of strategical approach in each area because of the variety of sources from which funding now comes. There is no one funding body for the whole area. Then there is the question of imbalance. The fact is that while some areas have done better than before, many others seem to have suffered very seriously. London did not do too badly in that regard. However, even there I understand that 93 voluntary groups have closed. The area, to which the noble Baroness referred, which seems to have come off worst, is Merseyside which seems to have lost 47 per cent. of funding and where 63 groups appear to have closed. I again ask the Minister whether he can refer to that matter in his reply. It seems to be a most unfortunate development in an area which is already suffering in other ways.

There is considerable concern about the question of capital provision, about the question of pent-up demand for new development and about the absence of a strategical approach. In addition to that, local government is expected to contribute £10.7 million extra in the second year to offset the tapering arrangements under the Government grants and to cover pay awards and inflation. That is a 15 per cent. increase in the contribution made by local government and is being asked for at a time of considerable local authority financial stringency. That must give cause for concern.

Then again, £5.6 million is also required if the forward funding out of the abolished authorities is to be continued. I ask the Minister where the Government propose that should come from; that is, the continuation, if the Government wish it to continue, of the forward funding which came in the first year from the abolished authorities.

The noble Baroness referred to the 20 recommendations which had been made by the National Council of Voluntary Organisations in its report. She mentioned and outlined some of them. I will not attempt to summarise them at this point; but I conclude by expressing the hope that the Minister will be able to say that the Government will respond in a positive way to those recommendations and thus give the very important voluntary sector, which the Government claim to support, a welcome word of reassurance.

Baroness Darcy (de Knayth)

My Lords, I thank the noble Baroness, Lady Ewart-Biggs, for giving us this opportunity to look at how the voluntary organisations are faring after abolition, to consider the NCVO's recommendations and to hear the Government's response. The noble Baroness and the noble Lord, Lord Banks, have between them achieved a masterly portrayal of the overall view. I shall narrow things down very much and, in comparison, I feel rather as if I am looking through a keyhole.

Last March, during the debate initiated by the noble Lord, Lord Bottomley, on the voluntary organisations and abolition, I looked in some detail at a handful of organisations which were doing a worthwhile and necessary job for disabled people. At that time two had been refused funding, two were uncertain about obtaining funding and one risked being unable to carry out necessary expansion. All said they would try to carry on whatever happened, even if it meant providing only minimal services or cutting out various aspects of their work, because they believe totally in the job they are doing.

Today I telephoned them to ascertain how they are doing—indeed, whether they all exist—and what their prospects are. The first was the Federation of London Dial-a-Rides, which was initially refused funding. Since the funding and running of the Dial-a-Ride service has been taken over by LRT—a very satisfactory and welcome solution—FOLDAR's role has become one of developing the service, looking after customers' needs and ensuring that they know about the service.

I am happy to say that FOLDAR appealed and has survived, and is now called the London Dial-a-Ride Users Association. It had three months of uncertainty and disruption, but fortunately it kept all its dedicated staff. It received enough money to carry on but said that it was a very traumatic period. It has not yet received funding for this year and, again, it will not know until June whether it will receive funding.

I also spoke to one of the Dial-a-Ride services. Last year all the Dial-a-Ride services received £5 million from LRT and this year it will be £6 million. While the old vehicles which need replacing are being replaced they cannot expand the service, although membership is increasing at as rapid a rate as ever. There are now about 45, 000 members of Dial-a-Ride but only 35, 000 trips are made every month, which looks like something under one trip per month for people who rely solely on this form of mobility. Noble Lords will agree that that is not much.

Another organisation initially refused funding is CALL—Cancer Aid and Listening Line—which eventually received the amount it required. CALL is a telephone service offering support, information and advice to those who have had cancer. There is no similar service in the area, either statutory or voluntary. It also enables people to meet and discuss problems. At present it appears as though it may not be able to expand as much as had been hoped because this year's grant is just over half of that requested; though the organisation is hopeful that more will be forthcoming shortly. Over 15, 000 new cancer patients are diagnosed annually in the Manchester area so I hope CALL will be able to expand and provide much-needed support.

One organisation which had not heard last March whether it is to be funded is the Greater Manchester Coalition of Disabled People. It is an organisation run totally by disabled people to ensure that they have the necessary facilities and support to live independently and to have control over their own lives. The coalition received funding and happily has not lost any staff. But it cannot expand at all. There is no long-term funding. It is reviewed every year and so there is anxiety as to whether it will be in operation the following year.

Another organisation in the same position is Lambeth Accord. That project was started in response to the EC's wish to support schemes dealing with social and economic integration. It is supported financially by all statutory authorities concerned. When ESF funding comes to an end, the whole project could close. It is doing a useful job. For example, it provides assessment and training for disabled people. Unlike some other of the ESF-funded projects, it would be unable to become self-supporting. I hope that it will obtain sufficient funding to continue.

Another scheme in danger last year of losing ESF funding was the Greenbank project which is based in Liverpool. It is a county-wide organisation which trains handicapped people along with some able-bodied people so that there is an element of integration, in workshops, teaching basic and higher skills. It obtained ESF funding for three years to open a consortium of six co-operatives from 1985 to 1988. Greenbank had to close its first three co-operatives, but reopened them when it received almost the full amount of grant requested from the public authorities, which was then of course matched by ESF funding.

Because of that hiccup in continuity, and the eventual shortage in funding, Greenbank is a bit behind with opening up the next three co-operatives, but it feels that it should be able to achieve its target of being commercially viable in 1988 when ESF funding comes to an end. One compensating factor has been that Liverpool City Council and the district councils of Knowsley, Sefton and St. Helens have been supportive and have increased their links. For example, Knowsley has asked Greenbank to do a feasibility study with a view to providing a service for its 16 to 25 year-olds in Knowsley's day centre, training them for work or providing them with work; for example, fitting hand controls to cars.

That sounds inspiring and rosy. It is a tribute to the enthusiasm of those at Greenbank. But there were other aspects. Thirty-four youngsters were laid off when the three co-operatives were temporarily shut. Some did not return and some are not in employment. There is also the knock-on effect of uncertainty. The publicity about the co-operative closing resulted in some people gaining the impression that the workshops were also closing. To this day, some people still think that Greenbank is no more.

I am delighted that all the organisations to which I talked have survived, but several of them said that they knew of other organisations, just as worth while, which have gone to the wall. I think that what I learnt from those organisations very much bears out what the NCVO's report says about most worthwhile projects surviving; but how real was the impact made by worry and uncertainty and how there is no scope for expansion and growth.

I have mentioned only the lack of opportunity for existing organisations to expand. There is of course the whole question of the new organisations to be created to help solve new problems or new aspects of old problems. I look forward to hearing the Government's response. I hope that it will be positive, especially in relation to the NCVO's recommendations for a flexible attitude.

9.43 p.m.

Baroness David

My Lords, I should like to congratulate my noble friend Lady Ewart-Biggs on asking this Unstarred Question at what seems to be an apt time, because it is just over a year since the abolition of the GLC and the metropolitan councils. It is also just over a year since an excellent debate on the voluntary organisations initiated by my noble friend Lord Bottomley on 19th March last year, which has been mentioned by the noble Baroness, Lady Darcy, and in which she spoke.

There was then only a fortnight to go before the demise of the councils, when there was acute anxiety about what was to happen, and therefore, it seemed a good moment to take stock. Now is also a good moment for this House to give itself a pat on the back, as, without its efforts and the concessions and changes achieved by the House of Lords during the passing of the abolition Bill, voluntary bodies would have been in a bad way indeed. As it is—and this has been said—most of the 3, 500 voluntary groups have survived. Indeed some, in particular in the arts, have enjoyed increased funding, but 200 projects have lost some or all of their funding. The efforts have been very varied. Tyne and Wear, West Midlands and West Yorkshire have done well; and Merseyside, as my noble friend said, has done very badly. This is very sad, as the noble Lord, Lord Banks, said, because we know that it is an area that has acute problems.

What should be recognised is the uncertainty and worry that the voluntary groups had to go through before knowing what the position would be, and the loss of morale among workers that that brought about. That was very clear to me yesterday when I read through the debate of 19th March 1986. However, I do not wish to spend time on what happened last year except in so far as it can teach us about how matters can be improved for the future.

My noble friend Lady Ewart-Biggs covered the present situation very well in her speech. The recommendations that come in the very thorough and excellent report, After Abolition, produced by the NCVO in conjunction with the London Voluntary Service Council give very good guidance. We hope tonight that the Government will tell us what their response will be at least to some of the 20 recommendations. They have had four months to consider them.

In the debate of 19th March the noble Lord, Lord Glenarthur, repeated the assurances of the noble Lord, Lord Elton, to the House the previous year that it was not the Government's intention to damage worthwhile voluntary activity through abolition. He said: I look forward to a flourishing voluntary sector in our cities for many years to come".—[0flicial Report, 19/3/86; col. 975.] We hope so too and, if the Minister can give us some reassurances this evening that they are willing to go along with most, if not all, the recommendations, that would be a great help and boost to morale for those very dedicated people who work in the voluntary sector.

I do not wish to take up the time of the House in referring to all the recommendations, but I should like to pick out a few for comment. The collective funding scheme for projects covering more than two boroughs or districts under Section 48 of the 1985 Act is not working well. The London boroughs grant scheme needs to be changed. It is difficult to get agreement to expenditure when one needs two-thirds of the boroughs concerned to be of one mind. Last year it took three months to agree a budget. This year it was not until the middle of March that a conclusion was reached. Think, my Lords, of the upset for staff when the start of the new financial year is only two weeks away and they do not know what will happen. I understand that some redundancy notices were issued. Eventually the Secretary of State used his power to fix the amount, pitching it just higher than what the Conservatives had voted for and quite a bit lower than that which Labour boroughs wanted. The system needs to be reviewed.

Surely it would be much more sensible to let a straight majority of boroughs decide. There should be a date by which a budget must be agreed. If the present arrangement provides an unworkable system in which the Secretary of State always has to intervene, it rather negates the idea of local authorities relating to local need.

The first recommendation deals with the transitional fund tapering. The request for this to be reviewed in the light of the unwillingness or inability of local authorities to produce their percentage of the expenditure seems very sensible, and I hope that the Government can agree to a local authority contribution being disregarded for grant penalty calculations. A sound case is made for not tapering the Arts Council grant and for increasing the Home Office's inadequate £800, 000 to £2 million in order to fund black and ethnic minority projects and to ensure that existing projects continue and new projects have a source of support.

A general criticism of the present situation is that it is very difficult to get support for good new ideas. It is more a carry-on-if-possible situation. It is almost impossible to do any forward planning. That is neither healthy nor sensible. There seems to be no provision in any of the Government's calculations for inflation, pay awards and contingencies. The Government should review the difficulties arising from the cash-limited, inflexible funding programmes, and there should be updating to allow for inflation. That is in recommendation 6.

Local authorities also have trouble in absorbing the time-expired schemes into main programmes, at the same time as having to contribute more to transitional funding and to arts projects. There should be a more flexible approach by the Government. If local authorities absorb these schemes, the expenditure should be disregarded from grant penalty calculations.

The lack of capital funding which has been mentioned is to me another very important matter. It will become more important as the years go by, as existing equipment and premises need renewing or expanding and as new projects develop. One cannot assume that the successor authorities will fund voluntary sector capital projects out of their own allocations. We know how hard pressed they are already for housing and so on. The voluntary sector has already experienced a cutback. In 1985–86 the GLC and the Mets spent approximately £20 million. In 1986–87 the only significant example of capital funding was the Section 48 scheme in Greater Manchester, which has funded two large projects totalling £185, 000 and £100, 000 respectively.

Projects serving more than one borough or district have no prospect of obtaining capital funding. Recommendation 11 suggests that successor authorities' capital allocations are increased to reflect the need to give grants to voluntary organisations and that Section 48 schemes are provided with their own capital allocation so that the anomaly as a result of which cross-borough and cross-district projects have no access to capital grants is ended.

What capital assets there are are in danger of being sold, because the residuary bodies are required to dispose of properties owned by abolition authorities. Recommendation 12 proposes that the Secretary of State uses his discretion to extend the property transfer order to include premises occupied by voluntary organisations so that the local authorities can receive them at no cost. I hope that that recommendation can be agreed.

I should like also to mention the charitable trust which was to be provided. The commitment was made by Lord Elton on 20th May 1985. There was to be an endowment off 10 million raised from the sale of GLC land and properties. I understand that the City Parochial Foundation is to administer the trust. Can the Minister tell us how soon the income from this trust is to be available and whether the Government really think that an endowment of £ I 0 million is likely to be adequate? The NCVO recommends that a larger sum should be provided, as f 10 million, I understand, was intended to be the minimum level of endowment.

The last recommendation I refer to is No. 17, which proposes that the Widdicombe Committee's recommendation to double to 4p the 2p limit under Section 137 should happen immediately in the abolition areas. We have made repeated efforts before, during and since abolition to persuade the Government that the doubling is a necessity. It would restore the financial status quo and enable local authorities to fund more voluntary organisations which cannot be dealt with under other legislation. As recently as two weeks ago at a meeting of the Consultative Council on Local Government Finance the Secretary of State said that he was still considering this. Has he by now come to a decision? I hope the Minister will tell us.

There is a lack of overall strategy for the areas covered by the GLC and the Mets which those councils could give and did give in the past. The noble Lord, Lord Banks, referred to that. The intention was that county-wide or London-wide reviews of need would be carried out under Section 48(10) of the Act, but very little progress has been made. In London one section of the London Research Centre, currently based with the London Residuary Body, has been working on a review of need. Elsewhere no reviews appear to have been started. Therefore the fears of the voluntary sector that abolition would cause a strategic policy vacuum have unfortunately been confirmed. There is an urgent need, as the report says, for more priority to be given to those Section 48(10) reviews and the resource implications stemming from them.

There is still a great deal of concern about the present system. NCVO is hoping to set up a local government unit to handle local government voluntary sector interaction. This seems to me a good idea. What is the Government's reaction to this proposal, and would they be prepared to fund the NCVO for this purpose?

9.55 p.m.

Lord Skelmersdale

My Lords, the noble Baroness, Lady Ewart-Biggs, has provided an opportunity to return once more to the subject of the abolition of the GLC and the metropolitan counties. I congratulate her on her perspicacity in picking up this report of the NCVO as indeed has every other speaker in this short debate.

Abolition issues were much debated when the Bills giving effect to this policy were before the House. How different is the situation today from those heady days the like of which must have been seen but rarely in the long and distinguished history of your Lordships' House. The GLC and the metropolitan councils have been abolished. They ceased to exist on 1st April, 1986, a point of which the noble Baroness, Lady David, reminded us. The voluntary sector and everyone else must come to terms with that fact. The voluntary sector has had to learn to work with the institutions that are now in place. That they are doing just that is one of the messages that thankfully comes out of this survey conducted by the National Council for Voluntary Organisations and by the London Services Council.

In passing, I should say that I believe the reason that the worries of the voluntary bodies were worse than they need have been was that those worries were politically exaggerated. However, before responding directly to the report, we should consider the wider effects of abolition.

The GLC and metropolitan county councils are already almost forgotten and their abolition has led and will continue to lead to real savings. Abolition has led to successes in five main categories. In manpower savings, more than 6, 000 posts were saved immediately on abolition. The Government predicted 7, 000 posts in the long run. I am confident that this will be achieved as the residuary bodies wind down their remaining activities. This equates to long-term annual savings of some £100 million. Even in the first year, abolition has saved ratepayers some £50 million after deducting one-off staff compensation payments.

Secondly, vast amounts of ratepayers' money locked up by the abolished councils are now being released. In the first two years, the residuary bodies expect to distribute approximately £257 million in revenue balances, £173 million in capital receipts and £753 million in capital spending power. And there will be more to come as the residuary bodies sell off additional surplus land and property.

Thirdly, it is clear, as the residuary bodies sort out their property portfolios, that the abolished councils were hoarders of property on a grand scale. The Government are encouraging the residuary bodies to sell as much of the surplus as they can. The residuary bodies currently estimate that by the end of 1987–88 they will have generated some £300 million of capital receipts, mainly from the sale of surplus property. The proceeds of these sales will return to the ratepayers, and under-used property, by being released to the private sector, is being brought back into full economic use.

Fourthly, functions have been devolved successfully. The chaos and disruption predicted by some has not materialised. The boroughs and districts have absorbed their new or enhanced functions with scarcely a ripple. This has led to an increase in accountability. And if—

Baroness David

My Lords, will the noble Lord give way?

Lord Skelmersdale

My Lords, if I may finish the point, I can imagine that the noble Baroness is about to complain about my speech because I have not referred to the voluntary bodies once. If she will give me time to make my speech in the way that I intend to she will find that there is a direct relevance to everything I have said at the beginning.

Baroness David

Then it is going to be good news.

Lord Skelmersdale

My Lords, patience! This has led to an increase in accountability; and if successor authorities so choose, it can lead to leaner operation and avoidance of duplication.

This takes me to the fifth area of success; namely, the effect on services. It is emphatically for successor authorities to grasp the opportunities presented by abolition for more efficient, cost-effective and relevant services. Some authorities have improved key services; others have chosen to emulate the waste and inefficiency which became the hallmark of the GLC in its twilight year. It is, at last, for truly local electors to decide what they want from their local council. They at least no longer face the prospect of being overruled by a remote and spendthrift county council. We must also remember that the voluntary sector as a whole has attracted very considerable support from the present Government. Several speakers tonight have recognised that.

May I remind the House of the answer given in another place on 2nd March 1987 by my right honourable friend the Prime Minister. She was asked about government support for the voluntary sector in 1985–86. This is the latest year for which data is available. Grants and payments to the voluntary sector by government departments amounted to £268 million. This represents an increase of 208 per cent. since 1979 and an increase in real terms—that is, after allowing for inflation. This is quite separate from the payments of £500 million that were made to voluntary organisations under various employment programmes run by the Manpower Services Commission. This is a record of which the Government can be proud and for which we should be given credit. Now answering the noble Baroness's unpermitted question, it is only against the background of savings from abolition and the level of support for the voluntary sector that we can properly consider the NCVO report. I welcome that part of the report which provides a factual survey of the position of the voluntary sector, in the abolition areas in 1986–87.

Some noble Lords may recall that before and during the abolition exercise there were those who forecast the effective collapse of the voluntary sector in London and the metropolitan councils. I must disagree with the noble Baroness, Lady Ewart-Biggs, and I take succour from the words of the noble Baroness, Lady Darcy (de Knayth). It simply has not happened. The report tells us that, in the event, direct and indirect government funding and local authority funding in 1986–87 almost matched the funding in abolition areas in 1985–86 and provided adequate support for the voluntary sector—and this after a very considerable expansion of the voluntary sector, particularly in London, over the previous few years. In some areas arts funding, in fact, increased between 1985–86 and 1986–87.

I take note of the point raised by the noble Lord, Lord Banks, when he talked about the general problems of individual voluntary organisations. The funding of voluntary groups is a matter for borough and district councils or for Section 48 schemes. Local councils are in the best position to judge local needs and to decide on spending priorities in accordance with the fundamental principles of abolitions. As I have explained, the local authorities in question have had large amounts of money released to them, and it is up to them to decide how they use what I think I would describe as these windfall receipts.

I am afraid that I can give less of a welcome to the recommendations for change made in the report. I shall explain why. My principal reason is that few of the recommendations are fully supported by argument or by evidence in the report itself. I readily accept —and the noble Baronesses and the noble Lord have pointed to some—that there have been individual hard cases. Much as I regret this, obviously I am not in a position to comment on any individual case for the simple reason that the decisions, as I pointed out, have to be made by the local authorities in whose areas the various voluntary bodies operate.

The noble Baroness, Lady David, rather centred on recommendation 11 which asks for an increase in successor authorities' capital allocations. I must say that this would have a direct effect on the government money—and indeed the rates-raised money—of local authorities in other parts of the country. In fact, the total allocation available to successor authorities has been larger than would otherwise have been the case because no part of the total was needed for the abolished councils.

In addition, successor authorities have benefited from a substantial enhancement in their capital resources as residuary bodies distribute capital receipts left by the abolished councils. I have already given some figures for the residuary bodies receipts. To go even beyond this level of support would draw capital allocation from elsewhere in the country. Other recommendations in the report are based on what appears to be a misunderstanding of the position. For example, in recommendation 10 we are enjoined to adjust the assessment of spending needs for the rate support grant settlement to take account of the additional responsibilities of successor authorities. We are reminded that my noble friend Lord Elton gave an assurance in this House that that would be done, and we have fulfilled that pledge. Or again we are asked in recommendation 7 for flexibility over time expired urban programme schemes. I am happy to say that this recommendation is out of date and we already try to offer that flexibility.

As regards the urban programme, I make the point that it was never intended as a long-term means of finance for anything, and that from the beginning it is always agreed for a certain life. The noble Baroness, Lady Ewart-Biggs, will be reminded of discussions that we have had between ourselves on this matter in connection with law centres. I recall saying that in exceptional circumstances extra time is given to one or two of the law centres, and has in fact been given on occasion.

We are asked several times to increase transitional aid and other central government support to take account of inflation. In some cases provision has already been made for inflation. In others, particularly transitional aid, the basis on which this support was offered was made clear when it was announced. There is no justification for changing the rules, not for reopening the issue of the allocation of transitional aid. It has always been intended as a stepping stone to the takeover by the local authorities concerned.

Some recommendations have come forward before. The possibility is raised again of doubling the Section 137 limit for the London boroughs and the metropolitan district councils. My right honourable friend dealt with this very carefully last year. The position remains that he will make an announcement in due course.

I am aware that problems have arisen as a result of the European Social Fund funding. As the noble Baroness, Lady Darcy (de Knayth), will appreciate, these difficulties are coincidental with, and do not spring from, the abolition of the GLC and the metropolitan counties.

The noble Baroness, Lady Ewart-Biggs, complained about the amount of money in the Section 48 budgets and said that there was no room for new groups. The London voluntary sector has expanded over the past several years, and at the time of abolition no one from this side of the House pretended that all the organisations that were then funded by the GLC would necessarily continue. It was acknowledged that the local authorities concerned must form their own opinions and judgments of the worth of each and every one of those organisations. It must therefore continue to be open to the Richmond Grants Committee, if it so considers, to withdraw grants to allow space for new grants.

The report asks my right honourable friend to make use of is powers under Section 49 of the Local Government Act 1985. The House will remember that under this section the Secretary of State may by order provide for the making of grants to eligible charities out of money received from the sale of land by residuary bodies. Eligible charities are a body of persons or a trust established for charitable purposes only, being purposes which are wholly or primarily for the benefit of the area for which the residuary body is established.

As the noble Lord, Lord Banks, has said, it was under this power earlier this year that an endowment of £10 million was provided to the trust for London, This money will provide a new long-term source of funding for the voluntary sector in London. In answer to another question from the noble Baroness, Lady David, I should say that I understand that the income from this fund will become available for distribution in about a year's time.

The NCVO report contains recommendations that Section 49 should also be used outside London and that the £10 million should be increased. At this stage, all I can say is that my right honourable friend is considering these recommendations and will announce his conclusions in due course.

One of the problems which has been alluded to tonight, I think by the noble Baroness, Lady EwartBiggs, is the disposal of premises occupied by voluntary organisations. The noble Baroness will know that the residuary bodies have the primary responsibility for deciding whether the properties vested in them should be transferred to local authorities because they are required in connection with inherited functions or whether they should be disposed of and the receipts redistributed to the ratepayers. My right honourable friend has no power to make an order transferring property to local authorities unless a proposal has first been made by a residuary body.

In London of course it has proved necessary to consider the use of my tight honourable friend's power to limit the budgets for Section 48 schemes. The Secretary of State was concerned about the uncertainty that the voluntary sector in London was facing due to the reported failure of the London boroughs grant scheme to fix a budget. I do not know whether noble Lords are aware, but my right honourable friend announced yesterday that he did not propose to make an order in London. He said: As a result of representations made when I met the London Boroughs Grant Committee on 24th March and others received in response to consultations, I have decided not to proceed to make an order under Section 48 of the Local Government Act 1985 to set a ceiling of £28.5 million on the budget for the committee for 1987–88. The grant committee has now fixed a budget of the same amount. I wish to demonstrate support for the voluntary sector in London by proposing to exercise my powers. Having considered all representations received, I have decided that it is no longer necessary to proceed further. I am pleased that my action has achieved its desired effect of establishing an agreed budget and of removing uncertainty over the funding of the voluntary groups. The noble Baroness, Lady David, suggested that this was something ongoing which had happened for years. This is of course the first time—

Baroness David

My Lords, the second time.

Lord Skelmersdale

My Lords, this is the first time that an agreement has not been reached within the Richmond Committee; and to suggest that this will be an ongoing uncertainty is at this stage, if I may use the expression, a bit rich. The noble Lord, Lord Banks⁁

Baroness David

My Lords, if the Minister will allow me, two-thirds of the boroughs have to agree. The same difficulty as there was this year is very likely to go on with the same uncertainty and doubt, until very near the beginning of the new financial year.

Lord Skelmersdale

My Lords, why should that be so when last year there was not? The noble Lord, Lord Banks, complained of patchiness, and I too recognised that there are particular problems for the voluntary sector in Liverpool. They are however caused not by abolition but by local factors, a point which I suspect he and his party appreciate full well in the current context. District councils have failed to act in a co-ordinated way to provide transitional funding. No scheme has been set up under Section 48 of the Local Government Act to provide support for the Merseyside-wide voluntary sector. We in central government help through the urban programme. Liverpool itself is a partnership area; Knowsley, the Wirral, Sefton and St. Helens are programme authorities; however, the voluntary sector would do well to make its case not to me but to the local authorities on Merseyside. We must see what comes out of today's election and whether a more sympathetic line is adopted there towards the voluntary sector.

I know that I take my title from the Liverpool area, but I must confess that it is not an area which I know well. I certainly wish the voluntary sector well in the approaches that I have suggested they make.

To sum up, the NCVO report is good in parts and provides a useful survey of the present position of this part of the voluntary sector. It shows that the voluntary sector is for the most part doing well, but the report's recommendations could be better formulated and in some cases, as I have explained, they are ill-founded. In seeking support, the voluntary sector in London and the metropolitan areas must look to the future and not to the past. That future lies first and foremost with the boroughs and districts, which are in a better position than the GLC and the MCCs ever were to judge the needs and priorities of their areas.

Perhaps I may make one last point. Quite clearly I have not been able to do justice, in the length of time it has taken me to deliver this speech, to the report. The Government will be publishing a proper response in due course and will take account of the points raised in the House this evening.