Lords Sitting of 4 March 1998

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Lichfield.

Scottish School Leavers: Basic Skills
Lord Hogg of Cumbernauldasked Her Majesty's Government:
How many pupils in each of the past five years left full-time education in Scotland unable to read or write.
Baroness Ramsay of Cartvale: My Lords, this information is not available in the exact form requested. However, we hold information based on Scottish Qualifications Authority data on qualifications awarded and on the number of leavers who do not obtain qualifications. This provides an indication of those leavers who are unable to read or write. However, it is not possible to give a precise figure. For the session 1995–96, the percentage of school leavers who held a standard grade English award at grades 1 to 7 was 88.5 per cent. In addition, the Scottish School Leavers Survey showed that in the spring of 1995 4 per cent. of 18 to 19 year-olds had no qualifications.
Lord Hogg of Cumbernauld: My Lords, I thank my noble friend for that Answer. It has a remarkable similarity to the reply I received to a Written Question some three weeks ago. Therefore, may I commend the Government for their consistency? Does my noble friend agree that it is important to have such information? If the system fails so badly that some children leave school unable to read or write, we have a right to know how many there are. Surely, it would he in the interests of the education authorities for such details to be collected centrally. Will my noble friend ask the department to do so so that if I table the Question at the start of the new Session I shall receive the information?
Baroness Ramsay of Cartvale: My Lords, we are nothing if not consistent. I am afraid that the department has no proposals for gathering information on the precise number of school leavers who are unable to read or write. I can assure my noble friend that increasingly sophisticated screening processes and monitoring systems are in place to identify any pupils with educational problems and difficulties. There is professional back-up to deal with those cases. Where necessary, a record of needs is opened—that is the equivalent of a statement in England and Wales—and the vast majority would be identified and dealt with. It would be foolish to believe that no children slip through the net, but a sophisticated, closely woven net is in place and constant efforts are made to strengthen it.
The Earl of Mar and Kellie: My Lords, can the Minister explain why no special measures are in place to ensure that the most fundamental skills of reading and writing are acquired by every pupil?
Baroness Ramsay of Cartvale: My Lords, I am not sure why the noble Earl believes that no measures are in place to do just that. The 1996 HMI report, Standards and Quality in Scottish Schools, indicated good standards of reading in primary schools. Constant monitoring is carried out not only to identify the children who have specific educational needs and problems but to assure everyone that standards are maintained. Recently, we launched a paper setting targets and strategies to raise standards.
Baroness O'Cathain: My Lords, does the Minister agree that focused resources should be available to deal with such a huge problem? One would then know the measure of it. Will the Minister assure the House that a system will be put in place to identify such children so that special educational resources can be made available to combat the problem?
Baroness Ramsay of Cartvale: My Lords, I am afraid that I must repeat my reply, although I do not wish to waste the time of the House. Such monitoring systems are in place. The Question specifically asks how many pupils left full-time education in Scotland unable to read or write. Some may have slipped through the already closely woven net which is in place to identify the children with problems.
Lord Northbourne: My Lords, if the teachers are doing their job, how is it possible for a child to pass through secondary school unable to read or write? Surely, the teachers will be marking the written work and must be able to see that the pages are blank.
Baroness Ramsay of Cartvale: My Lords, I do not wish to be too dismissive of the issue. I am not saying that anyone is leaving school unable to read or write. My noble friend's Question asked how many there are. I have said that constant monitoring takes place in schools. However. sometimes problems arise at the end of a school career when, for many reasons, children may become disturbed emotionally or in other ways and drop out of the school system. It is difficult to monitor such cases.
Lord Mackay of Ardbrecknish: My Lords, at the risk of worrying the noble Baroness, perhaps I may help her. As regards collecting such statistics, is not one of the problems that many youngsters who cannot read or write have long since given up attending school? Will her department consider the reintroduction of attendance officers—they were more aptly called "whippers in"—who went out to ensure that children attended school? Local government could arrange that. Can the Minister also comment on the 'suggestion that central government could make attendance at school a condition of receipt of child benefit?
Baroness Ramsay of Cartvale: My Lords, I knew that I was right to be worried when the noble Lord said he was going to help me. Of course, he is quite right to say that some children have given up attending school by the end of their school career. In fact, that is what I was trying to point out in my previous reply. As I am sure the noble Lord is aware, the whole question of truancy is constantly being reviewed by the department. As regards the noble Lord's last point about child benefit, I am sorry but I have absolutely no comment to make in that respect.
Baroness Nicholson of Winterbourne: My Lords, does the Minister agree with me that, while reading and writing are essential skills for profoundly and severely deaf children, there is also a third one; namely, the ability to speak? As some profoundly and severely deaf children in Scotland leave their specialist schools without speech skills, can the noble Baroness assure me that she will look into the question of introducing speech therapy as an essential part of the curriculum for those children throughout their school careers?
Baroness Ramsay of Cartvale: My Lords, I am grateful to the noble Baroness for raising this point. In fact, during our consideration of the problem, we have found that some children have difficulty in communicating; indeed, it is not just a matter of reading and writing, as the noble Baroness so rightly says.
Baroness Carnegy of Lour: My Lords, if the Government really do not have these figures—it seems quite extraordinary when we consider the amount of time we have spent talking about this matter and concerning ourselves with it—can the Scottish Office refer to the voluntary organisation which attends to adult literacy which, I suspect, does have the figures?
Baroness Ramsay of Cartvale: My Lords, I hear what the noble Baroness says. However, I do not know why she finds it so extraordinary that we have not managed this in the past 10 months when it has not been done previously.

Opencast Coal Mining
2.46 p.m.
The Lord Bishop of Durhamasked Her Majesty's Government:
What response they are making to the review of planning policy with regard to opencast coal mining.
The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): My Lords, my honourable friend, the Minister for the Regions, Regeneration and Planning, will be announcing at 3.30 p.m. in another place that the Deputy Prime Minister has taken into account the responses to the
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consultation on planning policy on opencast coal conducted last year, and the announcement last December by my right honourable friend the Prime Minister of a full review of energy policy. In consultation with his colleagues he has concluded that there should be a full review of Minerals Planning Guidance Note 3 on coal mining and colliery spoil disposal. This will run in conjunction with the present review of energy policy, and will take into account its conclusions. The energy policy will, in turn, take into account the planning issues raised by coal extraction, including the issues on opencast coal dealt with in the 1997 consultation paper.
The Lord Bishop of Durham: My Lords, I am grateful to the Minister for that reply, especially as she has been able to take advantage of the extraordinary coincidence of a government announcement in another place and the tabling of this Question today. However, can the noble Baroness assure the House that the Government's guidelines to the mineral planning authorities will be consistent with their 10-point plan (which they published when in opposition) which stated, among other things, that opencast mining is one of the most environmentally destructive things in the United Kingdom?
Baroness Hayman: My Lords, the consultation which took place last July showed the Government's commitment to early action and our recognition of the environmental issues which are involved in opencast mining. However, we believe that it is necessary to look at these issues in the round and that we could not approach the problem properly unless we took into account the outcome of the Government's review on energy policy. We believe that the guidance we shall eventually be able to give to mineral planning authorities will be the better and the fuller because of that approach.
Lord Dormand of Easington: My Lords, is my noble friend the Minister aware that the problem raised by the right reverend Prelate is a real one? However, is she also aware that it is only one of a number of such problems now facing the opencast mining industry? One of those other problems is the position of deep mined coal. Has my noble friend seen a report published last week by Reading University which emphasises not only the need for deep mined coal—coal in the round—but also that it is particularly necessary to have a supply of such coal during the next few years? Having regard to employment in the coal-mining industry, which is by no means dead, does my noble friend accept that I absolutely agree that the full review that she has mentioned must take place?
Baroness Hayman: My Lords, I am grateful for that support for a full review. It is certainly a relevant consideration that opencast coal is at present a significant source of fuel in the UK energy market; about 16 million tonnes a year compared to 33 million tonnes from deep mines. This is a factor that the energy

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review has to take account of in looking at future energy policies and markets for coal. We in the department are concerned that the land use planning considerations arising from coal extraction will be fully considered in the energy review.
Lord Islwyn: My Lords, does the Minister recognise that opencast mining invariably takes place in areas that have had deep mining over the generations? Does she realise that opencast mining has a major detrimental effect on the environment? Does she not feel that priority should now be given to improving the environment in these coal-mining communities, which have suffered so much for so long from the ravages of deep mining?
Baroness Hayman: My Lords, I am aware of those strong concerns about environmental effects. We have to consider sustainable development. Social and community issues also have to be considered, not simply the balance between the economic and the environmental issues. When we published our consultation on a sustainable development strategy on 4th February we recognised that we had to take account of that wider balance. I am sure that is the right approach for the former coal mining areas.
Lord Ezra: My Lords, is the noble Baroness aware that during my period at the Coal Board opencast mining was regarded as supplementary to deep mining and not a replacement of it? Can we be assured that that policy will be continued by the Government in their forthcoming review?
Baroness Hayman: My Lords, the noble Lord's comments show exactly why we need a thorough review of energy policy which considers exactly that balance between opencast and deep mined coal and between coal and other forms of energy.
Baroness Seccombe: My Lords, does the Minister's reply include Scotland? When will we hear more from her right honourable friend about the new policy as regards planning and brownfield sites?
Baroness Hayman: My Lords, I believe I gave a comprehensive answer as regards planning and brownfield sites and the work that is being taken forward by the task force, chaired by my noble friend Lord Rogers of Riverside, which considers the availability of brownfield sites, when I made a Statement in this House only two weeks ago. As regards Scotland, separate consultation exercises were carried out in England, Scotland and Wales last year on the review of opencast coal planning policy reflecting the different circumstances in each country. The announcement that my honourable friend is to make in another place today relates solely to conclusions in relation to England. My right honourable friends the Secretaries of State for Scotland and Wales are considering the best way to proceed in the light of responses to their respective consultation exercises.

Power Stations: Energy Sources Review
2.53 p.m.
Lord Roberts of Conwyasked Her Majesty's Government:
Whether they will grant an exemption from the review of energy sources for power stations to the Shotton combined heat and power station.
Lord Haskel: My Lords, my right honourable friend the Secretary of State for Trade and Industry has said that she will be prepared to consider reasoned requests for exceptions to be made. These will be considered on their merits and she will bear in mind the environmental and other benefits of combined heat and power. A case has been made by Eastern Generation for the Shotton project to be an exception because of these factors. I can confirm that as a result the application is under active consideration.
Lord Roberts of Conwy: My Lords, I am grateful to the Minister for that encouraging reply. But is he not concerned, as I am, that an excellent scheme such as this is being held up by this review? I am sure he is aware that the scheme was specially designed for Shotton Paper, one of our major newsprint manufacturers and a heavy energy user, and will assist the company in its international competitiveness as well as bringing obvious environmental benefits. In view of all that and the case for the scheme, will the noble Lord do his utmost to expedite the exemption and let the scheme be carried out?
Lord Haskel: My Lords, certainly it is a good application, and that is why it is being actively considered. The current situation is that there is a local environmental issue raised by Ellesmere Port and Neston Borough Council; namely, whether the mound on which the proposed station is to be built can be reduced. A study has been carried out and the position as of this morning is that the relevant officials are urgently trying to set up a site visit with the DTI, the Environment Agency and other people involved to discuss the relevant problems. If the purpose of the noble Lord's Question is to place this application under the spotlight, I can assure him that the intention is that this visit will take place within days, not weeks or months.
Lord Ezra: My Lords, is not the Shotton scheme one that should be held up as an example? If the Government are really keen on expanding the use of combined heat and power, this scheme, which has more than 70 per cent. efficiency and which will replace the burning of heavy fuel oil, is the type of scheme to go for. Therefore, far from being held up in any way—which I hope will not be the case—it should be brought into operation and developed as a model for others to follow.
Lord Haskel: My Lords, it is certainly a good scheme. However, there is a statutory process for assessing what are called Section 36 applications, as the noble Lord well knows. This process is being completed as quickly as possible.
Lord Thomas of Gresford: My Lords, is the Minister aware that Neston and Ellesmere Port are in England, and that this application has the full support of the Welsh Development Agency and Flintshire County Council'? Shotton has suffered terribly from unemployment in the past. Special regard should be given to the feelings of people in that locality that no jobs should be lost as a result of delay.
Lord Haskel: My Lords, that is certainly taken into account. That is why my noble friend the Secretary of State for Trade and Industry is trying to speed up this application as much as possible.
Lord Elis-Thomas: My Lords, does the Minister agree that, for those of us who are concerned about sustainable development, this scheme from Shotton Paper and Eastern Generation appears to be a prime example of that very attitude towards environmental and energy management? Does he accept that Shotton Paper has invested substantially not only in production in North Wales, but also in the forestry industry, and that we have a fine example in mid and North Wales of sustainable forestry by that company? Will the Minister also take that into consideration and the fact that the whole cycle of energy production undertaken by the company is a positive one?
Lord Haskel: My Lords, it is certainly an admirable scheme. As I say, that is why the Government are taking it seriously.
Viscount Mersey: My Lords, I declare an interest as an immediate past president of the Combined Heat and Power Association. I have here a list of 13 combined heat and power stations which may be threatened by the moratorium. Rather than recite the list, I hope I may send it to the noble Lord. Will he comment on the future of each station in writing and possibly place a copy of his reply in the Library? Will he also confirm that the British Sugar combined heat and power station at Bury St. Edmunds has just been given the go-ahead?
Lord Haskel: My Lords, I can confirm that the British Sugar scheme at Bury St. Edmunds has been given the go-ahead and will be in operation in 1999 in time for the sugar beet harvest. As regards the noble Viscount sending me the details of other schemes, I shall certainly be happy to receive them but I cannot guarantee that I can give the noble Viscount more information than he probably already has.
Lord Roberts of Conwy: My Lords, in view of what the House has heard this afternoon, will the Minister give an assurance that he will consider all these applications for exemption and where there is an excellent case, such as the one we have dealt with this afternoon, he will give it his special attention?
Lord Haskel: My Lords, I can assure the noble Lord that the Department of Trade and Industry is looking carefully at these applications. Whatever encouragement is needed will he given.

House of Lords: Reform
2.59 p.m.
Lord Hoosonasked Her Majesty's Government:
Whether they envisage that the future role of the House of Lords will he changed, having regard to the impending changes in the United Kingdom's constitutional framework and her future relationship with the European Union; and when they intend presenting their views on this matter to encourage public debate.
The Lord Privy Seal (Lord Richard): My Lords, it is unquestionable that this House plays an important and valuable role as a revising chamber and makes an important contribution to the legislative and political process. We envisage that this will continue after reform.
Lord Hooson: My Lords, is the noble Lord the Lord Privy Seal aware that the Government are giving the impression that they have embarked upon a journey with little idea of their destination'? The Lord Privy Seal's Answer today reinforces that. In order to dispel this unfortunate impression, would it not be better for the Government to publish a preliminary paper on the possible enlarged function of this House in the future? That surely will govern how the House is to be constituted. Alternatively, are we to look forward to a future where this House as a second Chamber will depend entirely on patronage?
Lord Richard: My Lords, the answer to the noble Lord's last point is no. One should not look forward to a future where this House will depend upon patronage. I am happy to tell the noble Lord that the Labour Party manifesto was distinctly clear on the subject.
As regards the remainder of his questions, I do not think that we are on a blind journey. The Government are considering all the options, as one would expect a responsible government to do. When we have considered the options, we shall publish our conclusions. I hope that there will then be ample opportunity for public consultation.
Viscount Cranborne: My Lords, I welcome the last statement by the noble Lord the Leader of the House. I do not think that it was of great surprise to anyone who has followed his remarks in the past on this important question. However, he knows, as does the House, that the history of the reform of your Lordships' House has always foundered on the difficulty of deciding the form of stage two of the reform after the abolition of the rights of hereditary Peers. That is the easy part and constitutes stage one. Can the noble Lord the Leader of the House agree that the best guarantee of achieving the objective he has enunciated today is for any reform to take place simultaneously: that is, stage two simultaneously with stage one? We all recognise the temptation for any powerful government, in particular a powerful Prime Minister, to ride roughshod over the legitimate concerns of specific interest groups because

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of his majority in the other place. I imagine that above all this week students will readily understand the force of that argument.
Lord Richard: My Lords, the picture that the noble Viscount paints of this poor, defenceless House in which about 500 Conservative Peers shrink in the face of a Government who have a majority in the other place is somewhat fanciful.
I am delighted to welcome the noble Viscount's statement that the abolition of the hereditary Peers' right to sit and vote is easy. It will be easy if the Opposition accept that in principle. I am delighted to note that both the noble Viscount and his leader in another place, Mr. Hague, seem to be indicating that it is something they are now prepared to accept.
As to whether one has stage one first and stage two afterwards, I commend the noble Viscount to read the Labour Party manifesto.
Lord Bruce of Donington: My Lords, is the noble Lord the Lord Privy Seal aware that there is a growing volume of opinion in the United Kingdom that the role of the House of Lords, as distinct from its composition, needs but minuscule changes compared with the drastic changes that are required in the structure, powers and institutions of the European Union? Is he further aware that on present form and indications it is likely that your Lordships' House will be in existence long after the European Union?
Lord Richard: My Lords, resignedly, and somewhat wearily, I congratulate my noble friend on managing to bring the affairs of Europe into any single question. No doubt he will have ample opportunity to express his views in future, as he has had ample opportunity to do in the past—opportunities which he has taken, and no doubt will take in the future—but, with great respect, not on this Question.
The Earl of Lauderdale: My Lords, will the Minister assure the House that there is no intention to modify the powers of this House to veto any amendment on quinquennial action thereby delaying another general election?
Lord Richard: My Lords, at present I am not proposing any variation whatsoever in the powers of this House. Speaking for myself, I find it inconceivable that any government even, if I may say so, one composed of representatives of the noble Earl's party, would wish to remove that part from our constitution.
Lord Chalfont: My Lords, can the noble Lord the Lord Privy Seal at least say whether the Government expect to publish their views or intentions on the future composition of this House in the long term before any legislation is introduced into Parliament concerning the status of hereditary Peers?
Lord Richard: My Lords, I repeat what I said. The way in which the Government are approaching the issue is set out in the Labour Party manifesto which I have
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no doubt the noble Lord has read. We shall conduct our work inside the Government with, I hope, due deliberate speed. When we have done so, we shall publish our conclusions.
Lord Rodgers of Quarry Bank: My Lords, I hope that the noble Lord the Lord Privy Seal will appreciate that he cannot rely for ever upon the terms of the Labour Party manifesto. Your Lordships' House will expect to see a development of those ideas very soon. Not all of us share the argument that stage one must be accompanied by stage two. However, my noble friend Lord Hooson made an important point which I hope the noble Lord the Lord Privy Seal will accept. When we have stage one—and the sooner the better; I hope preceded by a Green Paper for full discussion in this House at least before the Summer Recess—the Government must clearly point to the direction of stage two. It would be inadequate to go through the first stage of reform without knowing what the final destination might be.
Lord Richard: My Lords, I am well aware that that is the view held by the noble Lord and his party—indeed, it is a view which I have heard often expressed.
Lord Taylor of Gryfe: My Lords, the Question refers to constitutional changes. Can I direct the Minister's attention to the major constitutional change that will take place in May of next year? Is my noble friend aware that from that date Scottish Questions will no longer be in order in the House of Commons? Can we have some assurance that similar strictures will not be applied in the House of Lords in these new constitutional arrangements?
Lord Richard: My Lords, I am aware of no rules of order in your Lordships' House which would prevent a noble Lord from putting down such Question.

Legal Aid
3.8 p.m.
The Lord Chancellor (Lord Irvine of Lairg): My Lords, with the leave of the House I should like to make a Statement on improving access to justice.
At present the legal aid system is failing us all. It is failing the many millions of people on modest incomes who do not qualify for legal aid and who simply cannot contemplate going to law because of the potential legal costs if they lose. It is failing people on legal aid, because the Government cannot direct money to those who need it most and to those cases where there is a public interest in seeing justice done. Finally, it is failing the taxpayer who year on year is being asked to pay more and more, and yet can rarely get help from legal aid when it is actually needed.
But even though legal aid is costing us all more and more with costs running away ahead of inflation, it is helping fewer and fewer people each year. It is, therefore, our intention to modernise the way in which civil cases are paid for. We want a system of civil justice

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which is there for everyone when they need it, not just for the rich or for the very poor. We intend to transform the legal aid scheme so that we ensure we get good value for money from those lawyers who are paid from legal aid; and so that we spend taxpayers' money on those who need it most and on those areas where it can do most good.
Achieving all of our reforms will require the approval of Parliament through new primary legislation. But even using existing powers we can start the process of change. It is this first stage that I wish to concentrate on today.
The publication of this consultation paper marks the first stage of our modernisation of legal aid and legal services. When I announced the programme of reform at the Solicitors Annual Conference in October last year I said,
"it is essential that the details [of our proposals] are right … We shall be consulting widely and openly".
That is precisely what we have been doing in the four months since October and will continue to do for a further two months of the formal consultation period. This is a listening Government and we are listening to views on these proposals—and we will continue to do so. We have had detailed discussions with the legal profession and with many interest groups. More are planned. Their comments have contributed to the development of these proposals. But we will not confine our listening to the legal profession, because our aim is justice for all.
The consultation paper invites views on a proposal that will allow the majority of people in England and Wales to secure access to justice. We propose to allow conditional fee agreements (no win no fee agreements) to be used in all except family and criminal cases.
Conditional fees offer a new way for people to bring their cases. Lawyers share the risk of litigation with the client by agreeing to work without a fee if the case is lost. If the lawyer is successful he or she is entitled to claim a success fee in addition to his normal fees. Although the maximum success fee can be up to 100 per cent., normally it is 50 per cent. or less. In nearly all cases the lawyers also voluntarily limit the success fee to no more than 25 per cent. of the damages in any event. Conditional fees have been available since 1995 for a limited range of proceedings—personal injury, insolvency and human rights cases and they are working well.
Over 30,000 people have taken advantage of this approach to bring personal injury claims. Many of them would have been unable to afford to pursue their claims at all without conditional fees—people only just above the legal aid limit, people who are far from well off. They are the great majority of the population who are in work—with families, mortgages, savings, or other assets, which mean that they are not eligible for legal aid, but who cannot contemplate the open-ended
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commitment of meeting lawyers' bills. Only the very rich can face the thought of lawyers' bills without any financial fears and even they must worry sometimes. To continue to restrict narrowly the use of these agreements is to deny an avenue of access to justice to the majority of the people in the country.
The consultation paper also seeks views on any changes to the current law and practice that might improve the operation and use of conditional fees, for example by allowing the success fee and the insurance premium to be recoverable from the losing party.
Secondly, the paper invites views on the Government's plans to begin modernising legal aid. Over the past seven years, the cost of civil and family legal aid has tripled to £671 million. The average cost has grown from £1,442 to £2,684–53 per cent. above inflation. The number of acts of help funded in 1996–97 fell by about 39,000. Taxpayers are paying more and getting less. That cannot be right and it cannot continue.
We need a modern legal aid system in which only cases which cannot reasonably be funded in any other way and which have the necessary priority are backed by the taxpayer. It has never been our intention to abolish civil legal aid, as has been wrongly claimed. We want to focus taxpayers' money where it is most needed and can do most good: on social welfare matters—employment; housing; debt; state benefits; and actions against officialdom and bureaucracy.
To achieve this clear focus on social welfare issues, the Government therefore intend that, in future, most money or damages claims will be funded through conditional fees. Consequently, they propose to transfer most money and damages claims currently supported by legal aid to conditional fees.
However, as I told the House on 9th December, we do not intend to remove legal aid from housing cases where very often the main purpose of the action is to achieve a home fit to live in. That is precisely the kind of area to which legal aid ought to be directed. In addition, the ability to challenge public authorities through judicial review is a necessary check on the use of the power of the state, and a positive encouragement to maintain high standards in public administration or by public bodies. The poor must also be able to exercise this right of challenge. Legal aid will remain available for those who qualify. We also believe that legal aid must continue to be available where a person claims to be the victim of wrongdoing by public authorities; for example, the police. Here too, the ability to challenge misdeeds is an encouragement to maintain high standards and proper behaviour to those over whom public bodies exercise authority.
The extension of the availability of conditional fee agreements will provide an alternative means for people to bring most money or damages claims without public funding. Our aim is to create the conditions in which anyone can use conditional fees to bring cases, regardless of their financial status, across the whole range of litigation in which money or damages are the main remedy sought. However, we recognise that

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solicitors' firms may not presently be financially structured to do this, and that the insurance and finance industry needs time to develop products to assist in the expansion of the use of conditional fee agreements. The Government, therefore, propose a measured approach to encouraging this change to take place.
The Government propose to remove from the scope of legal aid most personal injury actions by the middle of this year. Lawyers working in this area have considerable experience in taking cases using conditional fees. Similarly, the insurance industry has developed products with premiums which in most cases are £155 or less. The Government will be working with the insurance and banking industries to help them develop more and still better products to allow everyone, regardless of their financial standing, to bring cases using conditional fees. This combination of the experience of lawyers in this area of litigation together with developed insurance products is sufficient to allow these cases to be alternatively financed through conditional fee agreements.
In addition, there are certain categories of proceedings which the Government believe no longer have sufficient priority to command continued public funding. It is important that scarce public funds are directed to where help is most needed. The Government are not persuaded that cases which involve, for example, disputes arising from running a business, inheritance, partnerships or trusts meet this criterion. Nor do they believe that taxpayers' money should be used to help neighbouring landowners to settle disagreements over disputed boundaries. In these cases there will be assets at issue which would allow the case to be taken with a conditional fee arrangement. In any case, the issues will generally be too narrow or too specific to deserve the use of public money, when such support means less for other matters of greater public importance. The consultation paper seeks views on the proposals to remove these categories from the scope of legal aid.
The Government have been listening carefully to the comments we have received in relation to medical negligence cases. The Government believe that many lawyers practising in this area need to modernise the way they run their firms, so that they can structure their finances to enable them to take cases on behalf of clients regardless of their financial standing. We accept, however, that this will take time. The Government do not, therefore, propose to remove these cases from the scope of legal aid for the present.
We do, however, intend to do what we can to reduce the high failure rate of these cases. It cannot be right that it is only in as few as 17 per cent. of all the cases that are supported by a legal aid certificate that more than £50 is recovered in damages. Medical negligence cases should be conducted by practitioners who are experienced in this field of litigation. We cannot any longer allow inexperienced practitioners to take cases. I have no doubt that part of the reason that the failure rate is so high is that lawyers take these cases on without the necessary experience. They are, therefore, unable to
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make timely, informed decisions on the merits of a case or whether an offer of settlement is appropriate or reasonable in amount.
It serves no one's interests if cases are brought with little prospect of success—least of all the victims of the alleged negligence. The consultation paper therefore invites views on a proposal to allow only experienced practitioners to be able to take cases on behalf of assisted persons in this field. We propose that the Legal Aid Board should establish contracts only with lawyers of sufficient experience. Anyone who is granted legal aid to pursue a medical negligence case will be required to use a lawyer who holds a contract with the board. We are keen to hear what criteria could be used to establish whether a lawyer is sufficiently experienced to hold a contract to take cases on behalf of those receiving legal aid.
We intend to remove the remaining money or damages claims from the scope of legal aid as experience of conditional fees among lawyers and insurers develops and they become more widely and readily available.
The Government recognise that help will be needed during a transitional period to assist in the change of funding away from legal aid. There may be some extraordinary cases among those categories to be removed which the lawyers may not initially be able to fully support on conditional fees. In time, the Government believe that these cases will be able to be financed solely through conditional fees. Therefore, the Government intend to establish a limited transitional fund. This fund would provide support in cases, for example, where presently few lawyers' firms are structured financially to carry a very high costs case, because they could not afford the risks of losing, or where there are high investigative costs of establishing the merits of the case. We would expect that the need for the fund to support this kind of case will cease because in the long term the Government believe these cases will find lawyers who are financially structured to take them on under conditional fee agreements. The transitional fund would also provide help in those cases which we exclude from legal aid which demonstrate a significant wider public interest. This would allow us to begin to provide assistance in this kind of case under the transitional arrangements ahead of primary legislation to establish a public interest fund. The size of the transitional fund will be set each year according to other priorities for spending legal aid money and the diminishing extent to which the fund is needed.
The Government will develop a modernised legal aid system. We are working towards a system in which we can control expenditure; obtain good value for public money; and target legal aid where there is the greatest need and it will do most good. In future, the Government's main priority for using public money to provide legal services will be to assist those who are excluded from society because they are unable to exercise their legal rights. The Government will achieve this through the legal aid scheme and through the creation of a community legal service.

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This consultation paper sets out the steps towards that goal which can be taken now. By making conditional fee agreements more widely available, targeting civil legal aid on social welfare matters and creating a special fund for public interest cases what we propose will significantly widen access to justice. We welcome responses on the consultation paper and will consider them carefully before we arrive at considered decisions on specific proposals to bring before Parliament.
My Lords, that concludes the Statement.
3.24 p.m.
Lord Henley: My Lords, I offer my thanks to the noble and learned Lord the Lord Chancellor for coming to the House to make this important Statement on legal aid. I offer my apologies to the noble and learned Lord for the fact that it is I who is responding to the Statement rather than my noble friend Lord Kingsland, who is, I think all will agree, better versed to make such a response. My noble friend is, sadly, detained in court today—whether in receipt of legal aid, I do not know.
We share the concerns expressed by the noble and learned Lord about the ever-rising cost of legal aid. We also accept the point he made in the debate on 9th December, that any review of these matters should not he Treasury-led, as I believe he put it on that occasion, though I believe he would accept that when costs are rising in such a manner the Treasury has a perfectly legitimate interest in the size of the bill that the taxpayer is asked to meet.
Turning to the Statement itself, I believe that the noble and learned Lord will recognise that it was his predecessor, my noble and learned friend Lord Mackay of Clashfern, who introduced the concept of "no-win, no-fee"—conditional fee—agreements to increase access to justice, but did so by making it an add-on to the legal aid system. What the noble and learned Lord proposes is different. I would argue that, in proposing conditional fees agreements for personal injury cases, other than medical negligence cases, he is missing the point. Will he confirm that the overall legal aid costs are around £1.6 billion gross, which I understand is £760 million net? Is it not the case that the great bulk of those costs are incurred on criminal and matrimonial legal aid and immigration and that personal injury is the one area of legal aid which is largely self-financing? Can the noble and learned Lord say what the net costs would be without the medical negligence cases?
Is it not the fact, that if civil legal aid is withdrawn from personal injury cases and replaced by no-win, no-fee agreements, little, if any, money will be saved and a complex system will result which will damage the poorest litigants, with little benefit to anyone else?
Litigants will meet an elaborate system involving insurance against costs. We heard the noble and learned Lord talk about the insurance industry developing packages costing at most £155. I imagine that that figure would be greeted with a degree of cynicism by a great many people in that field. If a system is developed which involves insurance against costs in cases which do not succeed, and a reduction in damages, will not the
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poorer litigants, those who would not receive legal aid, be worse off and have less access to the courts? How much does the noble and learned Lord estimate the reductions will be? Will they not be significant, particularly in the more complex personal injury cases, where damages are badly needed?
I wish to put a number of other points to the noble and learned Lord on which I should be grateful for a response. The first relates to his comments about medical negligence. I wonder whether the noble and learned Lord could say a little more about the system that he proposes for licensing practitioners. It seems rather odd. In his Statement he refers to the fact that as few as 17 per cent. of all cases supported by a legal aid certificate recover more than £50 in damages, which he thinks is largely a result of cases being pursued by practitioners with insufficient experience. I should be grateful to know what evidence there is for that statement and what evidence exists to suggest that better figures would be produced if practitioners were licensed by the Legal Aid Board and were therefore more experienced.
My second point relates to some remarks made by the noble and learned Lord, Lord Brightman, and the noble Lord, Lord Goodhart, in the debate on 9th December when they referred to what I understand is described as CLAF, the Contingency Legal Aid Fund. The noble and learned Lord makes no reference to those suggestions. I do not think I need to go into detail here because they are dealt with in considerable detail by the noble Lord, Lord Goodhart, in that debate. The noble and learned Lord makes no mention of them in his Statement. Whether they are dealt with in the consultation paper I do not know because obviously I have not had it long enough to have studied it. But I know that the Bar Council has put further submissions relating to CLAF to the noble and learned Lord. I would be very interested to hear what his considerations are and what his conclusions are likely to be.
The final point I wish to make relates to timing. The noble and learned Lord referred to a consultation lasting some two months. The consultation paper itself refers to a consultation that ends towards the end of April, a little short of two months but very nearly two months.
Can the noble and learned Lord give us an assurance that we will at some point during the course of that two months, or possibly later on, have a full-scale debate in this House on these issues? They are very important issues, as the noble and learned Lord will discover during the course of the brief debate on this Statement. They are issues that need to be addressed in full by the House. I would be most grateful if he could seek through consultations with the usual channels an assurance that these matters will be given full debate at the appropriate time.
3.32 p.m.
Lord Thomas of Gresford: My Lords, I welcome the much less precipitate approach to change that this Statement suggests and that the April date for the commencement of these changes, which was initially announced by the noble and learned Lord the Lord Chancellor, has now been pushed back.

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We also welcome the absence in the Statement of controversial and dubious rhetoric about overpaid legal aid practitioners. These proposals either stand on their merits or they do not. The absence of that rhetoric means that the noble and learned Lord can expect much greater co-operation in consultation with the legal profession.
We are also glad to note that the 75 per cent. merits test has been dropped and does not appear in the Statement or the accompanying document. As we said in the debate on 9th December, it is meaningless to aim at a particular percentage of risk. The percentage has now been replaced by the phrase "strong prospects of success". That is a much more acceptable way of approaching the difficulty that practitioners feel in this area. The practitioner, after all, is faced with an inchoate series of facts by his client upon which he has to put some sort of legal form and decide the proper route to pursue. From his own experience he will get a feel as to whether the ultimate outcome will be successful, but his appreciation of the chances of success will vary as documents are disclosed, reports are revealed and witness statements come forward.
Legal aid has been phased so that conditional certificates are granted first of all, and the various stages of the action do not usually take place until counsel's opinion has been obtained to ensure that the prospects of success are still there. One of the problems of conditional fee agreements is that presumably, once one enters into a conditional fee agreement at the beginning, there is no subsequent point at which one can assess the way in which the case will go.
We also welcome the retention of legal aid in medical negligence cases. I suspect that that is a response to the problems that arise from the cost of initial disbursements for medical experts and the high risk of those cases. It may be that insurance cover is not available or is completely unaffordable. The 17 per cent. success rate to which the noble and learned Lord the Lord Chancellor referred in his Statement should not be thought to reflect upon inadequate advice or inexperience.
These are very difficult cases where, at the present time, the boundaries of liability are being pushed forward. It is very much the case that there are competing views as to whether there has been negligence in this type of case. It is only in this field that the noble and learned Lord has referred to block contracts. I would be glad to know whether he is now saying that block contracts are not suggested as the way to proceed in any other type of personal injury case. The problem with block contracts is that representation is confined to a number of firms. That means that there is liable to grow up a very narrow and tight industry in which there are professional witnesses on both sides appearing in case after case against each other. That cannot be in the interests of the public in the long term.
The retention of legal aid in housing and social welfare cases is also welcome, but what about the public interest cases to which the noble and learned Lord referred on 9th December, in particular issues arising under the Human Rights Act and multi-party actions
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where a large number of people are damaged in drug-related disasters? Is there any prospect that public interest cases of this sort will he funded by legal aid regardless of the injured person's level of income?
So far as concerns housing, a query still remains. It is not much good giving legal aid in housing cases if the small claims limit for housing cases is to be raised from the present £3,000 to £5,000. That means to say that there is no legal representation available if there is a claim that is below that £5,000 limit. The vast majority of cases are below that £5,000 limit. I hope the noble and learned Lord will take into account the representations made to him by practitioners in this field that the limit should be reduced from the current £3,000 in small claims cases to £1,000 so that there can be support for the poorest people who need representation to deal with issues such as enforcing landlords' obligations to repair, and resisting eviction proceedings or damages in housing cases. These are the people who are the most disadvantaged by poor literacy, very often poor English, and sometimes ill-health and mental health problems. For them, the small claims procedure, in which they must present their own case, is far more daunting than for middle income litigants.
Legal aid in personal injury cases, paid for by ordinary people out of taxation, redresses the balance between the most vulnerable groups in society and the insurance companies who are themselves funded by insurance premiums paid by ordinary people. Taxation is one way of getting money, but premiums paid to insurance companies who are on the other side is another. The ordinary people pay for insurance companies to defend to the utmost degree the cases that are brought against them. Conditional fee agreements do have their drawbacks. I would ask the noble and learned Lord the Lord Chancellor what research has been carried out on the out-turn of conditional fee agreements since their inception in 1995. I know of only one firm which has evaluated conditional fee agreements. Of the 450 conditional fee agreements into which it entered it found them to be only marginally profitable. A small firm is liable to be very considerably disadvantaged if conditional fee agreements become the main way in which personal injury cases are brought. That means that those numbers of people, particularly in the areas that I know in Wales, will be very considerably disadvantaged if there is no local firm of solicitors able to take their case.
The noble Lord, Lord Henley, referred to the fact that there is no mention in the Statement, nor so far as I can see in its accompanying document, to the Contingency Legal Aid Fund proposals that the Bar Council has put forward in its report, Access to Justice. It may that the Government remain unpersuaded on that, but I can give the noble Lord, Lord Henley, notice of a debate. I have an Unstarred Question down for next Monday during which I will be going into that subject in some detail. I shall leave further queries on that matter until then, when I hope to see the noble Lord, Lord Henley.
3.39 p.m.
The Lord Chancellor: My Lords, the current expenditure plans for legal aid are: for 1997–98, £1,553 million, and for 1998–99, £1,602 million. It is not intended, as a result of these changes, either to increase or decrease expenditure on legal aid in real terms; so the object of conditional fees is not to provide savings to the legal aid fund but to focus limited resources on those most in need in the areas of social welfare law. It is estimated that with the extension of conditional fees the following amounts will become available to concentrate on social welfare cases: in 1999–2000, £69 million; and in 2000–2001, £100 million.
The noble Lord, Lord Henley, mentioned personal injury cases. What he must remember is that the eligibility limits are such that the vast majority of people in this country do not qualify for legal aid in respect of personal injury cases. The principal benefit which will flow from conditional fee agreements is the expansion of access to justice which they will bring. I understand that later today the biggest personal injury firm in the country is to make a statement to the effect that, having considered the Government's proposals, it judges that it will significantly expand access to justice and hopes that it will be supported in the interests of the public. I, too, hope that it will not be undermined because of a reluctance on the part of the profession to change.
The noble Lord, Lord Henley, asked about medical negligence cases. A 17 per cent. success rate in cases that go to trial is a very, very poor success rate. What it suggests is that legal aid is being granted in too many cases which are too weak to go forward. The likely reason for this abnormally low success rate is that lawyers of insufficient experience are undertaking these cases. That is why the Legal Aid Board should contract for the expenditure of public money with those of proven expertise in this field. I do not think one does any favours to those who have suffered severe injury for medical negligence, if their case is weak, to drag them through the courts for disappointment at the end of the day. Litigation that fails is a very traumatic experience for those who are involved in it. It is the fact that legal aid is currently being used to support cases which should not go forward.
After I made my Cardiff speech, if I may be a little anecdotal—I know the noble Lord, Lord Thomas of Gresford, will permit me to refer to the Principality—I heard on the radio a solicitor from the Principality complaining about my proposals, which I had presented in outline. He said that he was very, very experienced in medical negligence cases, that he had brought many of them, that they almost always failed and that he could not possibly have brought them unless backed by legal aid. He was very frank, but that is the point.
I was asked about a conditional legal aid fund. We will be consulting on it and the consultation paper will deal with it. We envisage the possibility, and will consult on the possibility, of even taking powers to that effect. But I remain very sceptical about a conditional legal aid fund for this reason. I think the inevitable tendency would be for the profession to cream off the strong cases under conditional fee agreements and leave the weak cases for a conditional legal aid fund. I require persuasion that a
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conditional legal aid fund could work without outlawing conditional fee agreements, which I do not think anyone is proposing.
The noble Lord, Lord Thomas of Gresford, asked about the 75 per cent. merits test having been dropped. He is right, of course, that to specify an absolute figure is very difficult. He will, from his great experience, be the first to know that lawyers frequently advise without quantifying the prospects of success. They do not actually commit themselves to a prediction. I remain unrepentantly of the view that only really strong cases should go forward.
I also submit that contracting is the way forward, and contracting at fixed prices. Contracting is a means of guaranteeing quality assurance. I can assure your Lordships that nothing would concentrate the mind of a lawyer more wonderfully than if he had to contract at a fixed price. Any incentive to delay, any incentive to spin out a case, since paid on a time basis, would be gone.
3.48 p.m.
Lord Hooson: My Lords, perhaps I may ask the noble and learned Lord one question which relates to medical negligence cases. He referred to the 17 per cent. success rate at trial. My experience—and I did a fair amount of medical negligence cases during my career at the Bar—was that most of them settled. Does he have the statistics for cases that were started off under legal aid and were successful to the extent that they were settled? My experience from appearing for defendants was that one really fought the case if one was fairly certain of success. There is a difference between the cases that are started off and settled and those that are eventually fought. I have no idea what the statistics are, but I would be interested to know.
The Lord Chancellor: My Lords, I do not believe that such statistics exist. On the other hand, I would be ready to accept that a 17 per cent. failure rate at trial says nothing at all about cases which succeed in the sense of leading to a satisfactory settlement. However, if the noble Lord is right, on the basis of his experience, that a very high proportion of these cases settle because they are strong, that adds to the argument that they will in due time prove suitable for conditional fee agreements. But one cannot be complacent about a statistic for cases that go to trial when only 17 per cent. succeed because, again as the noble Lord will know from his experience, the really heavy costs of litigation arise out of protracted trials.
Lord Ackner: My Lords, before asking my noble and learned friend one simple question, might I remind him of the following matters? The first is from the Labour Party's proposal at the 1995 conference with regard to access to justice. The quite short quotation reads,
"We regard conditional fees as an experiment to be monitored closely, and in the light of the Scottish experience, do not expect their introduction to make a significant improvement to access to justice. They are, at present, little more than a gimmick designed to mask the chaotic state of the legal aid scheme and the court service".
The next short matter to which I ask the noble and learned Lord to apply his attention is again in 1995 when his own advisory committee impressed on him that in view of the novelty and potential risk to the litigant inherent in setting

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up conditional fee agreements, there must be effective monitoring of the results and that the committee did not believe that monitoring would be effective if it had to rely on a sample that might well be unrepresentative.
The third and penultimate matter is that there was commissioned, as your Lordships may recall, a very small sampling by the Policy Studies Institute. In its report it said,
"However, on the basis of the evidence so far available, there is potentially cause for serious concern about the way risk is being assessed and uplift calculated [and that] this could cast doubt over the fairness of the entire scheme".
The last matter before I come to the question—
Baroness Farrington of Ribbleton: My Lords, perhaps the noble and learned Lord will allow me to observe that there is very limited time. There should be very brief questions or comments to allow as many speakers as possible.
Lord Ackner: My Lords, this is very brief and I have only one question. The last matter to which I refer is an Answer by my noble and learned friend as recently as 18th February to a Question for Written Answer which I asked him about monitoring. The Written Answer states,
"In the five months since the Policy Studies Institute report was published, I have not commissioned further research on the practice of conditional fees … the Policy Studies Institute report concluded that many of the potential problems identified with conditional fees before they were introduced appear to have been successfully addressed. I accept that further research, at the appropriate time, may be necessary and I plan to seek views on what further research might prove useful in the consultation paper".—[Official Report, 18/2/98; col. WA 49.]
My short question, in the light of that preparatory material, is this. Can my noble and learned friend agree that as matters now stand we do not know enough about the manner in which conditional fee agreements are operating to switch to a system for which they are primarily a means of funding litigation?
The Lord Chancellor: My Lords, out of consideration for other noble Lords who desire to ask questions in the limited time available, I shall attempt to make a brief answer. In the PSI research to which the noble and learned Lord referred, there was certainly some concern about the ability of solicitors to assess risk. But the report also said in terms that many of the potential problems identified before conditional fees were introduced seem to have been successfully addressed. In most cases the uplift was under 50 per cent.—I believe that the average which emerged was 43 per cent.—and far less than the 100 per cent. maximum that is allowed. So that the overall picture that emerges is that the scheme seems to be working as intended.
I want to make a short point. As long as the availability of conditional fees remains limited, a very large number of people are, in practice, denied access to the courts. All the available evidence suggests that while there may be some areas where more research may be necessary, conditional fees are working as intended and clients are not being charged exorbitant sums. We have no evidence whatsoever in my department and none is reported by the Law Society, that clients are dissatisfied with the
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agreements that they have entered into. On the contrary, all the requests to my department have been to extend conditional fees.
Lord Campbell of Alloway: My Lords, I ask the noble and learned Lord one question on a point of clarification. What has happened about the proposals of the noble and learned Lord, Lord Brightman, which were put forward by the Bar Council? Can the noble and learned Lord deal with that?
The Lord Chancellor: My Lords, that is the CLA that I have already referred to. I have myself met personally with the Bar and discussed it with them. I have already expressed my reservations about it. However, in the consultation paper, which this Statement presages, we are consulting on it further.
Lord Borrie: My Lords, as I may ask only a short question I shall resist making a lengthy statement about the excellence of the Statement made by my noble and learned friend, especially on the changes that have been announced towards a measured approach. My question concerns what were referred to, if I remember correctly, as "financially well-structured lawyers" and "experienced lawyers" in the field of medical negligence. I hope that I am not being flippant when I say that, given that only 17 per cent. of the cases brought in this field on legal aid have been successful, there would seem to be more inexperienced lawyers than there are experienced ones. How does one become experienced except through practice? Therefore, I am really concerned about the use of the word "experienced" in this field and the use of the phrase "financially well-structured lawyers", which may mean that there is a severe reduction in the choice available and a narrowing down of those firms of lawyers—presumably, only substantial firms—that will be in receipt of legal aid in these cases.
The Lord Chancellor: My Lords, if I as plaintiff had a medical negligence claim to bring, I do not believe that the state would be doing me a great service if it pointed me in the direction of an inexperienced lawyer. The fact is that there are many experienced lawyers in medical negligence cases. I repeat what the noble Lord, Lord Hooson, said, that the picture is not as bleak as the success rate at trial suggests because of settlements. However, it appears to me to be right in principle that scarce public funds should be spent on medical negligence cases where they are used to secure the services of experienced lawyers.

Business of the House: Debate this Day
Baroness Ramsay of Cartvale: My Lords, on behalf of the Lord Privy Seal, I beg to move the Motion standing in his name on the Order Paper.
Moved, That the debate on the Motion in the name of the Lord Astor of Hever set down for today shall be limited to five hours.—(Baroness Ramsay of Cartvale.)
On Question, Motion agreed to.

Charities
3.58 p.m.
Lord Astor of Hever Lord Astor of Hever rose to call attention to the importance of the work of charities; and to move for Papers.
The noble Lord said: My Lords, charities play a huge and vital part in the life of this country. They are tremendously varied, ranging from household names like RoSPA (the Royal Society for the Prevention of Accidents) of which I am president, to local community trusts. They have little in common other than that their reason for existence is to advance some aspect of the welfare of the community. The size of the sector is impressive. There are more than 180,000 charities and a new one is registered with the commission every 12 minutes. The charity sector has 440,000 full-time employees backed by an army of 3 million individuals providing voluntary services. I have no wish to blind your Lordships with statistics but wanted to highlight some of the indicators that show how important is the charity sector; not simply because of the social purposes that the sector is fulfilling but because it makes a real contribution to the country's economy.
This debate is timely for several reasons. Despite the Prime Minister's exhortation to make the advent of the Labour Government the start of a "giving age", charitable giving is in a state of decline—especially among the young generation. The charities Acts and the lottery brought about great change in the charitable sector. The Government are due to produce their own consultation paper on charities in the next few weeks. The charity tax review was announced by the Chancellor of the Exchequer in the summer, and I know that a number of charities have submitted their views to that review. I have received a copy of the submission by the Charities Aid Foundation. I wish that more people would use its services, which are a most convenient and efficient way to give to good causes.
The Government also have a draft Bill to restrict the frequency of on-line lottery draws—in effect, a ban on Pronto! Doubtless my noble friend Lord Mancroft will speak on that matter. I look forward to the Minister's reply—particularly as I am a trustee of the Hearing Research Trust, which had hoped to raise £100,000 through Pronto! this year.
In January, the Government announced plans for a compact with the voluntary sector on the lines proposed by the 1996 Deakin Commission. That would set out principles for the relationship between the government and charities, against the background of the voluntary sector being increasingly identified with government because of the amount of work that charities do under contract to Government agencies.
This debate also provides the opportunity to review the need for measures to support the sector's development and independence, and I much look forward to hearing the maiden speech of my noble friend Lady Fookes.
First and foremost, as the roles and responsibilities of charities and the Government are drawn ever closer, we must be vigilant to protect the independence of charities
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from governments of all political colours. With so much of the charities' money coming from government sources, many charities lack genuine freedom of action. The vitality of charities and community groups comes about precisely because ordinary people feel strongly about particular causes or issues and get on with doing something about them. That personal commitment untrammelled by politics, is the lifeblood of the sector. It is not the place of the Government to silence the voice of charities, who tend to know a great deal more about people's problems and needs than any government. As an unfortunate example, a couple of years ago Barnardos was embarrassed by accusations that it delayed publication of research that it had commissioned, which conflicted with government policies.
Charities are now providing a whole range of mainstream services for people in need. They are no longer on the margins or simply the province of the original idea of the amateur do-gooder. It is no exaggeration to say that many local authorities and health authorities are now dependent on charities for providing services as part and parcel of their overall provision.
Many of your Lordships are aware that reform of the welfare state is on the agenda and that a Green Paper will be published on 26th March. No one is afraid of change, and undoubtedly we cannot go on as we are indefinitely, but there must be positive discussion with charities and voluntary groups about their contribution to change which ensures that their independence is protected and also encourages partnership and participation. The current Administration claim to want to develop that relationship, but ill-thought through taxation policies recently introduced are having the reverse effect.
The current charity tax review is in full swing and a consultation paper is expected shortly. I hope that paper will look widely at the options for change in the tax regime for charities and that the Government will not forget that they take 12 per cent. of the lottery's £5.8 billion turnover. I hope also that early commitments will be made to simplifying covenants and gift aid procedures. In addition, I look forward to the proposals for dealing with irrecoverable value added tax paid by charities on their non-business activities. That would particularly help Britain's ecclesiastical buildings, from our marvellous parish churches to the great cathedrals. I declare an interest as a trustee of Canterbury Cathedral and, with my noble friend Lord Mayhew, Rochester Cathedral.
Value added tax bears particularly heavily on cathedrals, with expensive programmes of building maintenance. Most cathedrals pay out more in VAT than they receive in grants, which is quite absurd. They have been seeking either a lowering of the VAT rate on repairs or extra grant from the Government through English Heritage, but to no avail. Will the Minister say what the Government intend to do to compensate cathedrals for those losses? Perhaps the right way is for the Government to decide and publish the net contribution that they wish to make to the built heritage, then top up that sum with the amount of VAT collected from it.
With regard to advanced corporation tax, it appears that charities have been the victims of changes aimed principally at pension funds. That will eventually cost UK charities £400 million a year. Will the Government consider treating charities separately from pension funds in respect of ACT and other corporate taxes? We would welcome it if the Government were to reconsider the position of charities in respect of ACT, even if they are not prepared to consider the changes made in relation to pension funds. The transitional relief announced by the Government will only give charities a soft landing. Make no mistake. They will lose out.
Given the importance of public confidence in charities and in the proper use of the money that they are given, the Charity Commission's role in providing public reassurance through its monitoring of charities is most important. Constant vigilance is also needed to prevent abuse of charitable status. The Royal Society for the Prevention of Cruelty to Animals has been warned by the Charity Commission that the society's links with the animal rights movement must be broken, which I welcome. We need to be clear that other charities are not abusing their status to run political campaigns.
That spotlights the need for clarification of the application of charity law. Case law is so vague, as to what is or is not acceptable conduct by charities, that a climate of uncertainty exists. On the one hand, the RSPCA brazenly pushes its luck and hopes to get away with it. On the other hand, the threat of penalties for possible unlawful activity tends to stifle other charities. I shall be grateful if the Minister will say whether the Government have any plans to clarify that point.
The Conservatives introduced the National Lottery, for which they should be praised. In my opinion, it has been a quite remarkable success in tapping major new funds for good causes. It has been extremely popular; given a welcome fillip to the retail trade; strengthened communal ties; promoted economic regeneration and enhanced equality and opportunity. I regret to see already that money that was dedicated to charities through the lottery is to be creamed off to support, what everyone can see but the Government will not admit, is revenue spending on Labour's pet projects. The beauty of the National Lottery was that it was an independent source of funding for charities and other good causes. Any charity could apply to the National Lottery Charities Board for a grant, but the initiatives paid for through the new opportunities fund will be specified by the Secretary of State.
According to the Office of National Statistics, there is no evidence that the National Lottery has had a significant impact on charitable giving. To date, the National Lottery Charities Board has made 12,200 awards, amounting to £640 million, to charities and voluntary organisations. Charities have also been successful in applying for lottery grants to the Millennium Commission.
However, that is not to say that the lottery does not need some fine tuning. The detailed research and administration necessary to make a bid for major funding has taken RoSPA six working days on each occasion when it has applied. Unfortunately, both bids
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were unsuccessful. Charities cannot afford to invest at that level for very long, which becomes a deterrent to applying for lottery funds. Perhaps applications could be dealt with in a two-stage process so that if a bid is clearly not going to be successful it can be filtered out before too much work is done.
If there are to be major preparations for activities to celebrate the millennium, the charitable sector needs to know quickly how it is to be involved. It is essential that a whole range of community and voluntary activities are encouraged in a way that will have a lasting impact on future generations.
When we were in government we sought to promote private giving to charities. We eased the regulations surrounding covenants. We introduced the Gift Aid system to allow one-off gifts, tax free. We extended tax concessions for charities and gifts to them. We created the National Lottery and ensured that charities were among the major classes of beneficiaries. I hope that those attitudes will be carried forward by the present Government. The Government must play their part in reinvigorating the culture of giving in this country and set a positive economic and fiscal environment within which charities can thrive. My Lords, I beg to move for Papers.
4.13 p.m.
Baroness Young of Old Scone: My Lords, I thank the noble Lord, Lord Astor of Hever. for the welcome opportunity to debate the importance and the work of charities. I should declare an interest. I am—at least for the next two months—the chief executive of the Royal Society for the Protection of Birds, one of this country's largest charities and certainly its most effective. I am also on the president's advisory council of the National Council for Voluntary Organisations and was a member of the Deakin Commission on the Future of the Voluntary Sector, to which the noble Lord referred. Those of your Lordships who have not recently read the work of the Deakin Commission will find that it is well worth revisiting. It is important that the commission's recommendations are followed through.
The noble Lord, Lord Astor, rightly pointed out the economic and social importance of the charity sector in public life in this country. It provides a large, diverse and ever-growing range of services across many areas. It provides an essential focus for community action and for people getting together, both locally and nationally, to make a real difference to issues that concern them. Most importantly, it provides a voice of advocacy for those who cannot speak for themselves. I do not just mean, in my case, the birds, but the disadvantaged, the marginalised and the persecuted. It is a fundamental part of a civilised society and democracy.
One could almost say that charities are more democratic than key political institutions including, with respect, your Lordships' House. After all, politicians in the other place are elected only once every five years, but charities are subject to a form of election virtually every day when a member or supporter decides to renew a subscription or to give time or money in support. Therefore, I believe that charities have a great

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legitimacy for both action and advocacy. However, one sometimes gets the feeling that successive governments wish that charities would sometimes go away.
Charities in this country have key characteristics which we must protect and for which we must fight. I refer first to the diversity of the sector. The voluntary sector was once called "a loose and baggy monster". We have 125,000 active registered charities. Some are very large and highly professional while others are small, struggling and, frankly, chaotic. We should not have concerns about the range, diversity and struggling nature of the charity sector. Tidiness is not a virtue in this sector. The idea that we should have mergers to avoid duplication or that small, struggling organisations should disappear flies in the face of the importance of local, individual, value-driven personal effort. Charities spring up from the conviction of their founders to meet perceived needs. Their ability to work in the way best suited to themselves is essential for their vitality and appropriateness. Let us celebrate the glorious diversity of the charity sector and defend the loose and baggy monster.
Charities are also adaptable. They certainly show greater creativity than the public sector, and greater flexibility to respond to challenges and changing needs. We need to foster that. The noble Lord, Lord Astor, also pointed out the importance of the independence of charities. They represent different interests and views in an independent fashion. Charities are, of course, very driven by their values. They allow people to give expression to the values that have brought them into existence. I hope that I can persuade your Lordships that the charity sector is a good thing and that it has characteristics that need safeguarding.
Charities have to operate within certain frameworks: a framework of relationships; a framework of regulation and within a financial framework. On relationships, we need a partnership with the public sector, including government, and with the private sector, including business. The growth of the contract culture whereby the Government were buying services from the charity sector began to jeopardise that partnership and produced a master/servant relationship. We see the work on the compact between government and the voluntary sector which the Deakin Commission recommended. I ask the Minister to assure us that the Government will lay out not only the key principles of the relationship between the voluntary sector and government, but that they will also enshrine a commitment (shown by the Government in their early days) to involve the knowledge and experience of charities in designing, as well as implementing, policy.
The framework of regulation is important. It is important that the public have confidence in charities—and they generally do. The National Council for Voluntary Organisations recently carried out a survey. It showed that 91 per cent. of the public respect the work of charities and that 89 per cent. believe that they play an essential role in society.
However, the public and particularly the press are now tending more towards criticism of institutions than was the case in the past. The press particularly has an
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increasing habit of "having a go", almost in direct proportion to the worthiness of the bodies concerned. I am sure that my noble and learned friend the Lord Chancellor would recognise that phenomenon.
There is a need for a framework of regulation—not only external regulation, but also self-regulation. I commend the work of the Charity Commission in developing measures to enhance the credibility of the charity sector overall. The commission is developing its computerised register that will give all of us access to more information about the range and functions of charities and allow us to judge the appropriateness of their work. But there must be regulation with a light touch that does not stifle some of the characteristics that we value—the spontaneity, independence and value-driven nature of the sector—or put the loose and baggy monster into a straitjacket. In particular, small charities would find it difficult to cope with heavy regulation.
I also commend the work of the Charity Commission in giving advice to charities to foster standards of good practice, particularly the advice it has given on political activity. The role of advocacy by charities is fundamental in this country and must not be stifled illegitimately. But self-regulation must be the main form of regulation for this wide and diverse sector. All organisations in the charitable sector must embrace standards of conduct, governance, accountability, service and management. I ask the Minister to give an assurance that the balance between light formal regulation and strong encouragement and incentives to charities to self-regulate will prevail.
Charities operate within certain financial frameworks. The noble Lord, Lord Astor, pointed out some of the difficulties. I take issue with him on the impact of the lottery on charitable giving. There is conflicting evidence, some of which appears to demonstrate a downturn in individual fortuitous giving to charities as a result of the lottery. In this country in general charity income is stagnant apart from investment income. The recent changes in ACT that have already been referred to will shortly hit that hard by as much as £350 million each year.
The Government have the opportunity to review the tax treatment of charities. A vital element of a civil society is that charities need support financially. As part of the review the opportunity needs to be taken to consider the tax burdens of charities and reinvigorate the environment for charitable giving. Charities require a reduction in their annual £400 million burden of irrecoverable VAT. They need simpler arrangements to allow them to trade on a tax-free basis. Most of all, individuals and companies need to be incentivised by effective tax breaks to encourage tax efficient charitable giving. It is bizarre that in this country compared with the United States the level of charitable giving both by individuals and companies is so low. I ask the Minister to give noble Lords an indication of how he sees the tax review proceeding. Charities are a vital part of an effective civil society in this country. This glorious loose and baggy monster deserves all the support that we and government can give it.
4.23 p.m.
Baroness Fookes: My Lords, I rise with considerable trepidation to address your Lordships' House for the first time. Although I was in the other place, for the past five years I was unable to speak from the green Benches because from time to time I occupied the Speaker's Chair as a Deputy Speaker. It means that I have become something of a connoisseur of others' speeches, but it is a different matter now that I am making one myself. It is probably a case of the biter bit. I am emboldened to make this speech this afternoon because I have believed passionately in the value of charities from the time I was a very timid teenager who rattled a box for the local lifeboat appeal to the time that I became involved in other charities in which I was either a participant or ran. In the presence of my noble friend Lord Astor perhaps I may dare to mention the RSPCA which I chaired for two years.
As a Member of Parliament I came to realise the immense breadth and value of charities both locally and nationally. More than one lord mayor of Plymouth said to me after a year in office that he thought he knew the city but had been staggered by the amount of charitable and voluntary work that had taken place in his time as lord mayor. From my position I say a fervent amen to that. One should not overlook the value to the some 3 million volunteers, not just those on the receiving end of the charitable work, who gain tremendous satisfaction from dealing with a cause that they hold dear. Sometimes it arises through tragedy or unhappy circumstances. Perhaps a loved one has died or become handicapped and the volunteer wants to do something to save or help others. That is a great motive for many charities. I have witnessed this in the MENCAP organisation in Plymouth of which I am proud to be a patron.
I have also been grateful for help that is readily available. Perhaps I may deal with a matter that is very close to my heart. Two years ago my mother died of cancer. In the last month or two she was able to remain at home. Hospitals could do no more for her. But I did not know whether it would be possible even with nursing assistance and My help for my mother to remain at home, which was what she wanted. But I knew that the local hospice, St. Michael's Hospice in St. Leonard's on Sea, had a bed ready if I needed it. It was not needed but it gave me tremendous support to know that it was there if it was wanted. Local community nurses came in and supplemented the work of the district nurses. I was very grateful for that. I am now a very happy fund-raiser for that particular hospice, even to the extent that I took part in a marathon "aqua fit" session which lasted for three hours—it felt like three days—to raise funds. For those noble Lords who are unaware of that particular activity, it involves vigorous exercise in a swimming pool, but not necessarily swimming. There are very many volunteers who have exactly the same kinds of reasons for doing it.
I believe that the role of charities can be seen also at community level. Charities are great fosterers of community relations with people acting together locally or otherwise. I vividly remember one small charity in Plymouth. It tries to give holidays to children who have
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never had much. I refer to the Mayflower Children's Charity that has done sterling work year after year for some very disadvantaged children with little publicity. Perhaps at the other end of the scale is the London Marathon which has become a tremendous national event but with the same charitable instinct. One can also think of the Hampton Court flower show organised by that great charity the Royal Horticultural Society. We must never underplay the value of charities in fostering good community relations, especially at a time when there is so much talk of that going out of the window.
There is also the traditional pioneering role of charities. I refer to the promotion of education and the relief of poverty. Historically, they have been great matters for charities. But I still believe that there is a pioneering role for charities today because they are unhampered by the kinds of restrictions of the state or even local authorities. I should like to give one example taken from the body that I know best, the RSPCA.
A little while ago the RSPCA developed what it termed "freedom food". Many of us who are not vegetarians want to know that the food that we eat has been produced from animals that have been treated humanely and in a manner that goes far beyond what the state requires for the care of animals. That society has developed a very ingenious arrangement whereby it vets food producers and has an arrangement with retailers. Any food that comes up to scratch bears its logo so that consumers can be satisfied that the animals have been treated humanely during their lives. I always buy those goods when I shop in a supermarket. It would not be possible for the state to undertake that function because it would be yet one more thing for it to do and it would have to be done on a universal scale, whereas this can be done almost as an experiment. It happens to be working extremely well, but, if it was not, it would be very much easier for an individual charity to withdraw it than if the state had embarked upon it. There is a continuing role for charities in reaching out and doing things which are thought to be good and necessary, which the state cannot entertain.
There is a role for charities, as an arm of the state, in providing services. I very much approve of that in one respect and I think that it is a valuable use of charities, but I share the view of other noble Lords that it could become a straitjacket. I hope that we will hear from whoever winds up for the Government tonight that the Government will not be putting them into such a straitjacket, which would be a great shame and diminish the value of charities.
Charities already have considerable tax advantages. I hope that those advantages will continue because much of the work of charities would come to an end if they were taken away. I welcome the review that is taking place, but I have been in public life long enough to be wary of reviews, especially when a government may be a bit strapped for cash. That is just a gentle warning within the limits of not being controversial. I hope that the Government will not go down that path.
There may well be good reasons for altering the system; indeed, a professor at Royal Holloway College, my own college, has put forward the view that the tax

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arrangements or breaks for charities should be on their expenditure rather than on what they receive. Be that as it may, I hope we will not see any attempt to undermine the valuable work that charities do.
I very much look forward to hearing what the Minister has to say on charities. In my youth it was thought that they were almost passé, that the state had taken over. Happily, I believe that to be quite wrong and I look forward to a strong and important role for charities in the years ahead.
4.31 p.m.
The Lord Bishop of Lichfield: My Lords, it is a convention of your Lordships' House that the speaker following a maiden speech has the privilege of congratulating that speaker. I congratulate the noble Baroness on her maiden speech. It was impressive that someone who confessed trepidation should nevertheless give a maiden speech extemporary and with such panache. We congratulate her very warmly. Her speech revealed her wide experience as a Member of Parliament and as Speaker in another place. I warmed to her passionate advocacy of the charitable principle not least in relation to the City of Plymouth and her reference to appeals for lifeboats. I was fascinated to hear how the noble Baroness can indulge in vigorous exercise in a swimming pool without swimming! We hope that the noble Baroness will appear often in this House and look forward to her future contributions.
I welcome the opportunity to comment on the importance which the Churches attach to the work of charities not only in this country but throughout the world. The Churches have often been at or near the forefront of endeavour in the charitable and voluntary sectors. During the 19th century the Church of England was central to the development of the voluntary sector. I worked for some years in Uganda and was deeply impressed by how Anglican medical missions had pioneered medical care as charitable voluntary institutions in so many regions across sub-Saharan Africa. This involvement still takes many forms; for example, the Children's Society, the Church Army and Christian Aid. It should be noted that Christian Aid supplemented the work of missions in a most imaginative way. The hard print is that last year Christian Aid raised £39,344,000 for work in needy regions overseas. A year or two previously it had raised over £40 million.
The extensive work undertaken more recently by the Churches Urban Fund, which was set up only 10 years ago, has now distributed more than £27 million. This fund received a frosty response in some quarters when it was first launched, but the £27 million has generated over twice that figure in partnership funding. Charities can prime pumps. Members of my own diocese—West Midland churchgoers—have raised nearly £1 million for the urban fund, but in our region that has generated over £15 million of partnership funding for urban regeneration in areas of post-industrial shock across regions like Wolverhampton, the Black Country and elsewhere.
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It is particularly at diocesan and parochial level that there is the widest experience of direct involvement in charitable work. Last Sunday I visited Bilston, a Black Country town that has suffered very high levels of unemployment since the foundry and steel works were closed. Over lunch I spoke to a pensioner, a woman who had worked most of her life in Bilston's industries in an enamelling plant. She described to me how the closing of those foundries has removed the community glue of Bilston and its identity.
However, in Bilston last Sunday a training community centre was opened, triggered by church leadership but in partnership funding between charitable trusts, the European Development Fund and the borough council. That partnership has created a training and community centre for bringing self-excluded post-industrial young people off the streets into worthwhile activity. It is providing facilities where young mothers, for whom jobs are available in that town, can safely leave children in order to go to work, and where life-long learning and appropriate work training for that area can be promoted.
There is a pattern of involvement with local councils for voluntary service from the charitable sector, able to encourage and support the conduct of voluntary activity.
I should like to emphasise the role of individuals in the range of activities that make up the voluntary sector, in church-based organisations and secular areas. This involvement is not undertaken as a formal representation by the Church. Such individual involvement, often in a sense private or even hidden, is hard to measure, but a survey of almost any local congregation would demonstrate the point. For example, I know of a long-term Alzheimer's sufferer whose family struggled to support her in her own home for as long as possible. That has inspired a group of volunteers to come for parts of five days a week to hold her hand and give a break to the principal carers in order to keep her at home. That kind of endeavour by individuals provides a vital channel for people to answer a call to help the weakest and neediest in our society.
I have a further important point to make about the fact that even the voluntary sector needs funding. There has been considerable provision in the past for tax relief from various forms of taxation, as other speakers have said, because of the recognition of the public benefit of charitable work. Back in 1973, when VAT was introduced, it began to be charged at the rate of 8 per cent. on repairs to our Church buildings, to which the noble Lord, Lord Astor, referred. That rate is now set at 17.5 per cent. The Churches are now paying out more on VAT than they are receiving from such welcome sources as English Heritage grants.
Annually, £16 million is paid out on repairs to listed buildings. Only £10 million comes back in heritage grants. Indeed, Churches of all denominations pay out annually £25 million on repairs—a figure far in excess of English Heritage grants. That applies also to cathedrals which have commitments, as the noble Lord, Lord Astor, said, to things such as sustaining their great musical traditions which are of such interest to large numbers of the general public.

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The work out there, in Bilston and such places, suffers while energy is taken up on such issues. That problem can also damage our schools. The DfEE has recently given approval to the Stoke-on-Trent City Council to proceed with a public/private partnership scheme for the maintenance and repair of school buildings in Stoke-on-Trent, but because of the current arrangements for VAT payment it may not be possible for our crumbling schools to benefit from that arrangement. It is vital that Church schools, which in Stoke-on-Trent are popular with parents, should have the same opportunity to participate.
This is a crucial moment for me to be raising these issues. The time for change over the VAT issue has come. The UK occupies the presidency of the EU. The date for the revision of the VAT system is close. Tax relief for labour-intensive occupations is currently under discussions. I urge the Government to start the ball rolling now. I support enthusiastically the Motion:
"To call attention to the importance of the work of charities; and to move for Papers".
4.47 p.m.
The Duke of Norfolk: My Lords, I, too, congratulate my noble friend Lady Fookes on her maiden speech. We are lucky to have her as a Member of this House. I must declare that I am concerned with about 50 charities, as, I imagine, is the case with many of your Lordships. I declare also a special interest in the rapid-draw lottery game PRONTO, run by my noble friend Lord Mancroft.
My wife started her national charity Help the Hospices 13 years ago. Its title is self-explanatory. It mainly funds training in palliative care for the terminally ill, following the principal recommendation of the 1994 House of Lords Select Committee on Medical Ethics. Help the Hospices is one of the charities due to benefit from PRONTO by possibly up to £200,000, which is about one-fifth of the charity's income.
The draft Bill that the Government have published on lotteries (frequent draws), if carried, would kill PRONTO, which is not viable if the draw is limited to one per day, as proposed. I am not speaking merely on behalf of my wife's charity, but for many others. Most charities have appealed, more than once, to the National Lottery Charities Board. Most, like Help the Hospices, have received not one word in reply to their appeals. I hope that the Government are feeling guilty about some of these things.
Each PRONTO game is played in the name of the charity due to benefit. That is good publicity. The proceeds of the game can be spent on the charity's objectives, as the trustees think fit. The trustees are not constrained by rules which the lotteries board requires them to follow. Those are some of the advantages of PRONTO. Once chosen, a charity is certain to gain.
The Gaming Board, the Government's adviser on gambling, granted a licence to PRONTO in March 1997. The board, in discussions with PRONTO, made no comment about the frequency of draws, until a day or two before PRONTO was launched at the end of November. I find it disgraceful and abnormal to wait from March until then. I hope that there will be an
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explanation for that later. The Government have not responded to inquiry about the Gaming Board's views on the frequency of draws.
The Government's case against PRONTO is that the frequency of draws will make it addictive. Playing PRONTO is under much closer supervision than any other form of gambling in pubs, such as scratchcards and one-arm bandits. There is plenty of evidence that those are addictive, especially when played by youngsters of 16. The recent Fisher Report makes that clear. There is no evidence of the effects of PRONTO which is limited to 18 year-olds and above, according to the direction given by my noble friend Lord Mancroft.
I am not in favour of unrestricted gambling. I believe that the Government should review all gambling in pubs and postpone consideration of the draft Bill. In a few months' time, there will be evidence of the implications of playing PRONTO, to contribute to the other findings in their review.
In the meantime, the Government have failed to make their case. Charities, above all, should not be penalised by legislation based on opinion which is purely speculative. PRONTO has the capacity to make a significant amount of money for charity. Until the review is complete, PRONTO should be allowed to continue. If a problem develops and legislation is thought desirable, it can be introduced next year. I hope that the Government will come clean. The suspicion is that their reason for trying to harness PRONTO is that they are afraid that it is a rival for the National Lottery.
4.49 p.m.
Baroness Linklater of Butterstone: My Lords, I, too, am grateful to the noble Lord, Lord Astor, for initiating the debate on this important subject. I, too, add my congratulations to the noble Baroness, Lady Fookes, for an absolutely wonderful maiden speech. I feel that we are all more or less singing to the same tune. I hope that noble Lords will forgive me, if, on occasions I echo, or even repeat, what some have already said.
Charities have played a major part in my life. I have been on the boards of several and have founded or co-founded three charities. One in the late 1960s which was the first visitors centre for prisoners' families at Pentonville. In 1985 I set up the Butler Trust which gives recognition to people who have done outstanding work within the prison services. It is concerned with standards of practice. Five years ago I founded a small secondary school near my home in Scotland called The New School Butterstone from which I proudly take my name. It was founded in response to the perceived lack of provision for a particular group of children; educationally fragile children who find the experience of mainstream education overwhelming, but would not be appropriately placed in a special school. It is the classic motivation for charitable initiatives. Since then, it has been greeted with considerable interest from the Scottish Office and a range of other bodies and professionals in the education field. This, too, is characteristic of activity in the charitable sector when links are made with other sectors and the charity acts as a catalyst for new developments and provision.

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When I started my professional life as a child care officer, I had come fresh from university where I read from the works of my noble friend Lord Dahrendorf. I leant about the development of the welfare state and the vital influence of, among others, that great Liberal Sir William Beveridge who laid its cornerstone in the new post-war world. I believed that I would play my part in that statutory safety net through which no one was meant to fall, and that there would be provision from the cradle to the grave for all our citizens with the state replacing the "do-gooding" of the unprofessional Victorian past. Those simplistic expectations were quickly adjusted in the light of the reality of the Children's Department of Tower Hamlets Council.
My first stop in the charitable world was at Pentonville, where we saw the daily queue of women and children, standing in the street in all weathers outside the prison, waiting for the moment when the prison officers came back from their lunch to start visits. Here was a very visible group of vulnerable people who badly needed help and for whom no one was taking any care or responsibility. Now, I am glad to say, there are similar centres throughout the country. This was the first of many holes I was to encounter in the safety net.
Today, it is fully acknowledged that the voluntary sector in general, and the charitable sector in particular—and there is an important distinction here—is a vital part of our society and a major force in its own right. Independent voluntary associations have been portrayed as the backbone of civil society and their presence as the essential precondition for the health of democracy. That is a major claim. The charitable sector is a kind of organic link between the state, private and personal sectors of society, filling gaps, challenging values and brokering links between the other sectors.
Its real strength is its flexibility and diversity, its ability to respond to perceived need—such as my school—and to changing needs. These may be small scale specialist services which fill a gap, such as the visitors centre. They may be a challenge to current thinking and statutory provision; my school again. They may push against institutional boundaries and put a brake on uniformity. They come in an infinite variety of shapes and forms and, above all, they contribute to the wellbeing of society outside the confines of the state and the market.
A key element is the presence of volunteers, who are as varied and diverse in their interests, input and motivation as the organisations for which they work. They are the life blood of the sector and add value in a multitude of unquantifiable ways. By and large they are unsung, unseen and unpaid and therein lies their great strength. At the visitors centre, the very fact that our volunteers were neither from the prison nor the social work department was a real bonus, and they were a complete cross section from former prisoners' wives, to lawyers, to people like myself. They brought with them a commitment which could not be measured in money terms.
In fact, the charitable sector is not only very important it is surprisingly large, with 125,000 active, registered charities, 27,000 of them in Scotland. No fewer than
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23 million people are involved in volunteering in some way or other, and in Scotland there are 700,000 regular volunteers which, out of a population of 5 million, is a remarkable figure. What this reflects is the high value that is placed on charitable bodies in this country, not only in terms of the work they do but in the desire to participate in their work.
I am privileged to have an overview of what is going on in the charitable sector as a trustee of one of the major grant-making trusts, the Esmé Fairbairn Charitable Trust. It is one of about 8,800 grant-making trusts and foundations in the UK which give about £1.25 billion a year to charitable causes. Esmé Fairbairn is the 12th largest in the UK, one of only four generalist trusts, and last year it gave £11.55 million in grants; 866 in all. In so doing, we become aware of the truly remarkable range, diversity, imagination, commitment and generosity of spirit of people the length and breadth of this country, which is really very humbling. They include schemes to help the homeless and unemployed; to teach better parenting skills; to support the underachieving, vulnerable youth of our country; to help people to help themselves; and to mitigate the problems of childhood and the difficulties of old age, just to mention some in the field of social welfare alone. To imagine that the state could or should be able to do what we see is to dream the impossible and the undesirable.
There is now a wish on the part of this Government to work in some form of partnership with the voluntary sector in a "compact", as it was called by the Deakin Commission which was set up last year to look at the future of the voluntary sector. I have read parts of it and can say that it is a model of clarity. This desire comes from a recognition of the scale and importance of the sector and is also a reflection of the fact that much of its work not only impinges on but overlaps the activities and responsibilities of the state sector.
There are potential opportunities for the future of the voluntary sector through the chance to contribute to government policy thinking and also in developing further the quality of its own delivery. In theory, both government and the voluntary sector could gain more and bring more clarity into their relationship. But what is absolutely crucial is that the voluntary sector retains both its service and advocacy role and remains distinct, vibrant and independent. Without the flexibility and diversity which the charitable sector enjoys today, its role and position could be dangerously compromised. Government must start to promote a climate in which the charitable sector can thrive and its activities develop for any partnership to be meaningful. There are at the moment some worrying signals.
Those signs have been referred to, but perhaps I may reiterate two. The first is the phased withdrawal of the Advance Corporation Tax credits. Overall, this will result in the sector losing as much as £350 million each year. As regards the Esmé Fairbairn Trust, it means that its annual income available for grantmaking will be reduced by 2 per cent. next year. By the time the transitional relief ends in 2004, its annual loss of income is likely to be about 18 per cent. or £2.3 million in 1997 terms. That is a huge loss to the sector. In terms of a partnership, this seems a very one-sided relationship so

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far. The irrecoverable VAT charged on charities is another: it affects my school. To see money given in good faith stopping, touching base with us and moving on to the taxman seems to me to be mad.
We all owe it to the charitable sector to support, sustain and promote the activities of these groups and individuals who make such an important contribution to our society and to our lives. We must protect its freedom, nurture its diversity and recognise the profound value that it has in promoting a better quality of life for all the people of this country.
4.59 p.m.
Lord Vestey: My Lords, I am very grateful to my noble friend Lord Astor of Hever for initiating this debate. I should also like to add my congratulations to those already expressed to my noble friend Lady Fookes on her maiden speech. As I understand it, she is likely to be longer in this House than I am, hut I hope that I am allowed to remain long enough to hear more of her speeches. I believe she said that some of the regulations which are laid down in this country should be laid down by charities and not by government. As a fourth generation butcher, I hope that we can find some charity which will allow us to eat beef on the bone again.
I should like to declare an interest in charities as I am the Lord Prior of the Venerable Order of St. John, whose two active foundations—St. John Ambulance and the St. John Ophthalmic Hospital in Jerusalem—have done so much invaluable work for well over a century. I welcome the chance to contribute to this useful debate.
The noble Baroness, Lady Emerton, of Tunbridge Wells and Clerkenwell, will describe after me the work of St. John Ambulance in England. She is well qualified so to do because she is our Chief Officer for nursing. I honestly do not know how she has the time to do all this and also carry out her other work, but I can assure the House that she does it extremely well.
St. John Ambulance is an entirely independent operation without any state subsidy. Although we co-operate closely with the statutory services, and increasingly provide commercial training, we remain substantially dependent upon the generosity of the public we serve. Your Lordships will hear today—and have already heard—about the problems that most charities are having with fund raising, in particular because of the National Lottery. Of course, there is funding available from the lottery but so far, in my particular charity, we have not yet balanced what we have lost with what we have gained.
St. John is one of the largest youth organisations in the country. Its young people from the age of six upwards, acquire skills to equip them as adult citizens of the future. At the same time, they make a dedicated contribution to public service. Moreover, from the traditional "core business" of first aid, St. John Ambulance is now expanding into social care, which we see as an area of growing concern in the 21st century with an ageing population in Britain.
However, our work does, of course, extend even further than that, both around the world and back into history. For our order is in effect an international
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network of charities. Autonomous priories operate not only in Scotland and Wales, but also in South Africa, New Zealand, Canada and Australia. Then there are St. John Councils in over thirty other Commonwealth countries and territories, which carry out St. John Ambulance work. We are now embarked on a major reform which will result in this network being operated more along Commonwealth lines. Simultaneously, for the first time, a distinct English priory will come into existence.
This great St. John family throughout 40 countries in both hemispheres has been spreading "best practice", over first aid and healthcare training and duties, all around the world for many decades now. Recently, for example, we have been developing a new training course tailored to the needs of developing countries, particularly in Africa. During last year's catastrophic volcanic eruptions in Montserrat, we were able to get an ambulance shipped there quickly from Bermuda. We also sent money which helped the islanders considerably in their hour of need.
When Hong Kong reverted to Chinese rule last year, although the authorities in Beijing could not accept a continued formal link with our Royal Family, they strongly encouraged St. John to continue its charitable work in Hong Kong. Indeed, we have been discussing whether first aid training might not be extended to the mainland of China. St. John first aid training has also just started in Japan—an entirely new venture. St. John's training packages in first aid and social care are starting to become available on CD-ROMs and via the Internet; for we intend to enter the 21st century as a practical and forward-looking charity using the latest techniques of communication, while never losing sight of the caring mission that we have had for so many centuries.
St. John goes back a long way. Although our present order was created by Queen Victoria, we shall next year be celebrating 900 years of the "hospitaller tradition" of caring for the poor and sick. That great tradition is maintained not only in the United Kingdom and in most Commonwealth countries, but also in the Holy Land—where it all started. Our Ophthalmic Hospital in Jerusalem has been providing top quality eye care for the people of that city and the surrounding area, regardless of race, creed or ability to pay, for over 100 years. Regimes have changed in Jerusalem, but the need for eye care remains as great as ever.
In all this, the order has tremendous international support from all round the Commonwealth; from the United States; and from our friends in the European Alliance of the Orders of St. John. It gives us great encouragement that the Minister of State for Foreign and Commonwealth Affairs, Mr. Fatchett, visited our Jerusalem hospital last month. We see that as evidence of the Government's continued support for our endeavours in that volatile but key part of the world.
We are also proud that our order has been based in Clerkenwell since 1140 (despite a short interruption of 350 years caused by King Henry VIII); that we enjoy such wholehearted support from Her Majesty the Queen, our Sovereign Head, the Duke of Gloucester, our Grand Prior, and indeed all the members of the Royal Family;

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and that for the past hundred years our St. John Ambulance volunteers have been on public duty to provide first aid cover to the public at virtually every major event in this capital city.
On the sad event of the funeral of Diana, Princess of Wales, St. John had over 1,400 personnel on duty from early in the morning until late in the afternoon. Moreover, for the week before the funeral and the week after, we had 25 people a day at St. James's Palace looking after the vast crowds signing the condolence books. I am sure that many of your Lordships will have seen the St. John personnel at the countryside March last Sunday. We are confident that the sign of St. John volunteers on duty will be as familiar in the 21st century as it has been in the 20th.
However, apart from fund raising, we have another worry in this age of increasing litigation: the spectre of unreasonable lawsuits being brought against our first-aiders simply doing their duty. The matter was raised five years ago in an Adjournment Debate in another place on, "The Volunteer in the Community". The question was raised as to whether the time had not come for so-called "Samaritan legislation" to enter our statute books to protect good Samaritans, such as first-aiders, helping people who have had accidents. I regret to say that, despite the support of the then Minister of Health at a meeting which I attended with other senior volunteers from St. John, the previous Lord Chancellor turned that suggestion down. I trust that this Government will be prepared to re-examine the question in a more positive spirit.
Finally, I have an offer to make. I should be pleased to arrange training for any noble Lord who is interested. We are, in St. John, the leading providers of first aid training. To show your Lordships why, I will arrange, completely free of charge, a three-hour first aid course at the headquarters of the London District of St. John Ambulance in York Street, W.1. If any noble Lords are interested, would they please contact me here.
I hope that your Lordships will have gathered from what I have said that St. John, as a charity, plays a very large part in the fabric of our country. I thank your Lordships for being able to speak in this debate to call yet further attention to the importance of the work of charities in this country.
5.8 P.m.
Baroness Emerton: My Lords, I, too, should like to thank the noble Lord, Lord Astor of Hever, for opening this debate on such an important topic in such a comprehensive way. I should also like to congratulate the noble Baroness, Lady Fookes, on her excellent maiden speech and on her enthusiastic support of charities. I should, first, declare an interest. As has already been mentioned by the noble Lord, Lord Vestey, I am the Chief Officer Nursing and Social Care for St. John Ambulance, and have been a member since 1946 when I joined as a cadet.
I want to speak for a few moments on the St. John Ambulance Foundation. The mission of St. John Ambulance is to provide first aid and medical support
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services such as caring services in support of community needs and to provide education training and formal development of young people.
It is well known by most members of the general public that St. John Ambulance provides first aid cover at activities ranging from the village fete, to football matches and the London Marathon, which has already been mentioned. But what is often not recognised is that 68,000 adults and young people between them provide in an average year 2.4 million hours of public service, 207,000 hours in transporting patients, 12,000 hours in hospital duties and 240,000 hours in nursing and social care, in addition 1.4 million hours in community work. The noble Lord, Lord Vestey, has already mentioned the duty that was undertaken at the march organised by the Countryside Alliance last weekend. That was a comparatively small duty. In 1997 1,469 St. John Ambulance first aid and medical personnel were on duty at the London Marathon. Some 6,000 competitors were treated and 36 were taken to hospital. Some 110 members of the public were treated, six of whom were sent to hospital.
There are 1,000 doctors and 2,000 registered nurses, all of whom are volunteers, within the membership of St. John Ambulance who assist with training and who support first aiders on public duties. Specialist doctors and nurses in the field of resuscitation are involved in the formulation of protocols, training, and are accountable for the training of selected first aiders in the use of defibrillators. Gone are the days of "do gooders" referred to by previous speakers.
These are a few examples of volunteers providing a service to the public of the highest quality of first aid and care performed by professional first aiders, all free of charge to the public. The organisation is dependent on donations for providing these services which are costly to mount. The duties mentioned require precise management in collaboration with the police and local ambulance trusts. The operational plan is set out as a military operation, the aim being to provide the highest quality of first aid when required.
St. John Ambulance is also well known as a training organisation—as has been previously mentioned training volunteers in first aid and care. But in addition St. John Ambulance trains 200,000 members of the general public each year, including those trained to provide first aid in the workplace to fulfil health and safety requirements. This latter part of our operation is designed to raise funds to keep our volunteers active in the community. An organisation such as St. John Ambulance has to balance carefully its charitable mission with its commercial enterprise in order to survive in a competitive marketplace.
One matter which is causing considerable concern not only to St. John Ambulance but to other charities such as the British Heart Foundation and the Royal Life Saving Society is the question of VAT relief on medical training goods. As a result of some considerable campaigning by the Charities Tax Reform Group in the 1990 Budget, provision was included for zero rating to apply to medical equipment used in training. Since then this relief has been worth up to £75,000 a year to

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St. John Ambulance alone and our local divisions have been the beneficiaries. Overall relief to the eligible charities involved in resuscitation training has been estimated to be £350,000 a year. A Customs and Excise notice published in March 1997 contained a new detailed list of eligible and ineligible items and resuscitation training models appeared on the ineligible list. Subsequent inquiries to Customs through the Charities Tax Reform Group established that in their view such models are not items of medical equipment. St. John Ambulance and the British Heart Foundation intend to challenge this ruling jointly at a VAT tribunal which is likely to be held later this spring.
The Government have stated their commitment to charity. Withdrawal of this relief will cost St. John Ambulance £75,000 a year and the purchase of vital life saving training equipment has already slumped. How does this demonstrate commitment to charity? Furthermore, as fewer models are being purchased, inevitably fewer people will be trained. Her Majesty's Customs and Excise were in no doubt about the eligibility of the relief until the production of the 1997 listings. Why have they reneged on their previous rulings? It is unfortunate that valuable and much needed charity funds, and, indeed, taxpayers' funds, will have to be expended to challenge the ruling at the tribunal. I understand that this matter has been raised today in another place and I hope that the support of this House can he given to examine this matter because if resuscitation training models are not items of medical equipment, what are they?
First aid is only one aspect of our work. The second I wish to mention is that of our nursing and social care role in the community, which is by the year 2000 to be recognised as a core activity of the organisation. While training in first aid has been the lead role, there has always been training for members in home nursing and more recently caring for the sick. Members have carried out a variety of basic nursing and care activities for many years but within the past seven years St. John Ambulance has worked towards developing a strategy to meet the requirements of the elderly, physically or mentally handicapped, and their carers to assist them in living an independent life with the appropriate care and support giving an enhanced quality of life.
The services range from the most simple to the more skilled; for example, taking an elderly person to the doctor, hospital, library or on holiday; taking the dog for regular walks; tending the garden; preparing a meal; cleaning the house or just befriending; organising individual care programmes of bathing; assisting someone to get up or to go to bed and rehabilitation; applying simple dressings and assisting people to the toilet. This allows people to retain independence to live at home and to retain their dignity.
A more recent development is to provide first aid and care to the street homeless who, in the main, are marginalised by the primary healthcare services and hospital services. Many of the homeless have real healthcare needs. We provide respite care for carers by running day centres in four social services' premises at weekends for 60 Alzheimer's sufferers and also day centres for the elderly, providing reminiscence
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therapies, laundry and bathing facilities and transport to and from home. These programmes are set up through service agreements with social services.
There are 6.8 million informal carers in England as well as those who provide care in residential homes and nursing homes as care assistants. St. John Ambulance together with the British Red Cross Society and St. Andrew's Ambulance Association has recently published a carers handbook. This is designed to meet the basic needs of carers. St. John Ambulance has produced a modular course for carers which is designed to provide a knowledge and skill base which will produce a competent carer able to deliver care to the client. It is also hoped to attract social services, residential home and nursing home carers to buy into the course. In addition, courses will be mounted at local level for informal carers with St. John Ambulance volunteers providing a sitting service to clients while they attend the course.
The third aspect of the work of St. John Ambulance I wish to highlight is relative to our youth movement which currently has 39,000 members, of whom 17,000 are between the ages of six and 11 and 22,000 between the ages of 11 and 18. Our work with young people aims to develop their skills in team work and to develop them to become responsible young people. We also run a training scheme in schools and we would like to see first aid included in the national curriculum.
In 1099 the Knights of St. John provided first aid, transport and care in the crusades. Today St. John Ambulance members provide first aid, transport and care delivering quality through well trained members. I suggest that the role of a voluntary organisation such as St. John Ambulance deserves the support of government and the public as it seeks to meet the mottoes of the Order of St. John; namely, pro fide (for the faith) and pro utilitate hominum (in the service of mankind).
5.20 p.m.
Lord Mancroft: My Lords, 1, too, wish to thank my noble friend Lord Astor for initiating this important debate. I join with him and other noble Lords in congratulating my noble friend Lady Fookes on her excellent maiden speech. I hope that she will not delay too long before speaking to us again. I hope she realises that it will not be necessary for her to jump around in swimming pools every time she wishes to speak in your Lordships' House. I suspect that those of us who have charitable interests might keep our interests to a minimum if we were forced to do that every time we were involved in charities!
I wish to restrict my remarks to issues surrounding humanitarian charities. I refer to those charities which look after the most disadvantaged in our society—children, the ill, the old and those whom we call the most under-privileged within our society. I speak as chairman of the Drug and Alcohol Foundation. Like many others, it is a small charity doing its work within a local community. It may he interesting to your Lordships because it is based in Westminster. For 24 years the Drug and Alcohol Foundation has provided

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care in the City of Westminster to those who suffer from drug and alcohol problems. I believe that it is the only provider of day care for drug and alcohol sufferers in the City of Westminster. As noble Lords will appreciate central London will be a magnet for drug addicts.
Last year we gave 3,500 counselling sessions. We undertook 240 school visits educating people on the problems of drug and alcohol addiction. But, as we all know—it has been said today and on numerous occasions—charities are only as good as their income allows them to be. A small charity such as the Drug and Alcohol Foundation receives about half its funds—in this case it is about £65,000 to £70,000—from donating trusts such as those of which the noble Baroness, Lady Linklater, spoke. I am delighted to be able to thank the noble Baroness. The Drug and Alcohol Foundation has received many donations over the years from the Esmé Fairbairn Trust. We are enormously grateful for those. Other grant giving trusts such as Smith's Charity and the Tudor Trust are well represented in your Lordships' House. They are enormously important to us.
Like many other charities in different fields up and down the country, we receive some help from local authorities because we now care for people from local authorities. We received £8,500 last year in return for 3,500 counselling sessions. It is a drop in the ocean. However, in the past two or three years we have benefited from charity lotteries and scratch card lotteries, from which we did not previously benefit. I declare another interest. It is a financial interest. Not only did I act for the Drug and Alcohol Foundation as the promoter of its charity lottery under the 1976 Act. but, thanks to the amendments moved in your Lordships' House in 1993–94, I also act as the manager under a licence granted by the Gaming Board for Great Britain. It is a company which I chair and of which I am a shareholder. I am proud to have founded it. Between 1995 and 1997 the little company that I chaired sold 28 million scratch cards across Britain and raised £5 million for charities. Those were small humanitarian charities which would not have received that money otherwise. My noble friend the Duke of Norfolk referred to the charity, Help the Hospices. I refer also to charities such as the Royal British Legion which is not so small but well known; the Chemical Dependency Centre which also offers drug care and is chaired by my noble friend Lord Parkinson who, sadly, is not in his place today; and MENCAP, chaired by the noble Lord, Lord Rix, who, again sadly, is not in his place today.
The bad news is that what we did between 1995 and 1997 is not commercially viable. We cannot do it. It does not work. We cannot compete against the National Lottery, and against the enormous monopoly that the Government have set up. Last year we set up a new company which I also chair and of which I am also a shareholder. I am proud therefore to declare an interest. It was set up to run other lotteries for charities in the UK. We have been developing the business over two years. We have injected £30 million worth of capital. We are licensed by the Gaming Board for Great Britain.
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The activities in which we indulge are legal, and have always been legal. They are approved by the Gaming Board, and confirmed by the Home Office.
Yet two weeks before we launched, after an injection of £30 million of capital, and two years development, with the objective of raising £100 million a year for individually named charities—that is not a drop in the ocean by any means—the Government announced that they will ban us on social policy concerns: the raising of £100 million for UK humanitarian charities is not justified by the means of compulsive gambling, linking alcohol to gambling in pubs, and all those wicked things. The argument sounds convincing, but the Home Office has not been able to produce one single shred of evidence to back its case. The gaming board, its official adviser, which raised those concerns has not been able to produce one single shred of evidence. It has been asked to do so; it has no research data to back it. The Home Office has no research data to back it. In the past two weeks the Home Office's own adviser, Dr. Fisher of Plymouth University, has released a report. Noble Lords may have seen articles in the press last week. It does not indicate that the small charities are causing a problem or that there is a social policy concern as regards our undertaking. But it does indicate that the Scratchcards from the National Lottery, the weekly draw of the National Lottery and, more importantly, the slot machines are causing serious problems among young people in this country. Seventy-five per cent. of people under the age of 16 are gambling on slot machines; and 40 per cent. are gambling in pubs on slot machines. Slot machines are taking £3 billion a year out of those pubs. And we are causing problems, my Lords? It is a serious problem. The Government's case has been pulled from under them like a rug.
It is important that noble Lords see the issue in its full context. Currently your Lordships' House awaits the Report stage of the new National Lottery Bill which creates the sixth good cause. That will remove £60 million per annum from charity. That is what it will cost the National Lottery Charities Board. It is not an insignificant sum. I remind noble Lords, if they did not know it before, that when the Bill hits the statute book, as it undoubtedly will, the United Kingdom Government will be taking more money out of their national lottery than any other government or state in the world. State and national lotteries are not for governments. They are set up for charities, sport, the heritage, and so on. This lottery, more than any other lottery in the world, now goes straight into the Treasury's coffers; and that is not what was intended.
The noble Baroness, Lady Young of Old Scone, mentioned the NCVO report of 1996. It states that there has been a 20 per cent. decline in charitable giving since 1993. If the voluntary sector is to continue to fulfil its role, it must be properly funded. The role of Government is to facilitate and help. The Government's draft Bill is opposed by the National Council for Voluntary Organisations. It is opposed by the Institute of Charity Fundraising Managers. It is opposed by almost every charity, and by the 70 charities which hope to benefit.

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Introducing non-manifesto legislation without adequate consultation, in response to a knee-jerk reaction, legislation which will destroy the single biggest initiative in charity fundraising in Britain today, is strange action for a Government which claim a close relationship with the voluntary sector. I hope that upon sober reflection the Government will realise that they are making a silly mistake and will decide to allow us to carry on raising the money the voluntary sector needs to do the work it does so well.
5.28 p.m.
Lord Ponsonby of Shulbrede: My Lords, when I looked at the list of speakers today I noted that I was to follow the noble Lord, Lord Mancroft. I wondered whether he would raise the issue of the gambling game, "Pronto!". I took the trouble to look up the Companion to this House. The Companion states clearly about noble Lords declaring a financial interest, which the noble Lord has done. However, it also states that,
"Lords should, however, he especially cautious in deciding whether to speak or vote in relation to interests that are direct, pecuniary and shared by few others".
I question whether the noble Lord has crossed the line set out in the Companion.
In opening, I wish to thank the noble Lord, Lord Astor of Hever, for initiating this debate. The voluntary sector faces a fundamental debate about its identity and the role it will play in the future. Over recent years, the state has shifted its responsibilities and many charities have responded by adopting new responsibilities, primarily in the field of social welfare, as the noble Baroness, Lady Linklater, said in her excellent speech. It is to those additional responsibilities that I wish to address my comments.
I wish to concentrate on two aspects: first, the funding mechanisms of the voluntary sector; and, secondly, its independence from government as part of the building of greater partnership. I should declare an interest in that my wife is chief executive of a charity that is currently facing many of the problems that are 'so typical within this sector.
The introduction of the National Lottery has highlighted the increasing trend on the part both of government and other funders away from core funding towards project funding. By core funding, I mean funding that is not restricted to a particular project but which can be used by the organisation for whatever it sees fit within the general purposes for which it was set up. By project-based funding, I mean funds that are allocated for specific projects which are seen to be new and innovative and have clearly defined objectives that can be easily measured.
I understand that trend, but I believe it has gone too far. I understand that funders want to know how many pieces of equipment they have bought for a hospital, or how many mouths of starving children they have fed. But what happens when successful projects come to the end of their funding period? They are no longer new or innovative. Many charities have great trouble raising on-going funds for routine work.
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I shall give one example from my wife's charity. For the past 10 years it has run a telephone advice line, providing advice for working parents on childcare problems. It has been an extremely successful and popular advice line over the years, but now it is neither new nor innovative. The charity has found it impossible to obtain on-going funding for that service and has had to downgrade it to an answer-machine service simply in order to cut down the cost. It is a small example, but is entirely typical, I understand, of the difficulty that many charities are experiencing through relying excessively on project-based funds while perpetually seeking new and innovative funding ideas.
Funders say again and again: be more efficient, effective, accountable and open; have higher standards and better systems—and so it goes on. Yet nobody wants to fund routine administration costs, overheads and the tried and tested services that have stood the test of time. Without those, charities cannot function.
If the Government want to encourage and develop the voluntary sector, the single most beneficial action they could take would be to reverse the trend from unrestricted funding to restricted funding, and to encourage funders to give charities whose work they value the flexibility to allocate funding where it is needed most.
I turn now to the relationship between the Government and the voluntary sector. One of the greatest strengths of the voluntary sector is that it can reach parts of our society that neither the public nor the private sector can reach. It should be recognised that independence is vital to these organisations, and that they have a key role and duty to act as an advocate on behalf of their beneficiaries, speaking on behalf of those who would otherwise have no voice—and that includes birds, I would say to my noble friend Lady Young.
I recognise that the Government place a high priority on developing and strengthening the partnership between government and the voluntary sector, and that the main vehicle for that will be the compact to which many noble Lords referred, on which the Government are currently collaborating with the sector through a working group which I believe is chaired by Sir Kenneth Stowe.
My honourable friend Alun Michael wrote in a Labour Party document entitled, Building the Future Together, that,
"It is not the job of Government or Opposition to determine the future of the voluntary sector. That must be for the sector itself".
I agree with that view. However, I am sorry to have to report to my noble friend that I have heard the view expressed in the voluntary sector that the proposed compact will be an attempt to get the voluntary sector to speak with one voice while in partnership with the Government. I hope that my noble fiend will be able to reassure me that that is not the intention of the working group; and that he will acknowledge that diversity in the sector is its strength and that many voices are needed and many channels of communication. If true partnership is to develop between government and the voluntary sector, then the sector should be involved not only in assessing the likely effects of policy changes but

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also in the policies themselves. It will be a challenge to go down the road of partnership between government and the voluntary sector while at the same time recognising the voluntary sector's diversity and independence. I believe that the Government have started on that road with openness and ambition and I wish them well for the future.
Finally, as demonstrated this afternoon, there is a special relationship between this House and the charitable and voluntary sector. I urge that, whatever changes are seen in this House in future years, we try to preserve that special relationship. It is to the benefit of both the charitable sector and this House.
5.36 p.m.
Lord Westbury: My Lords, I congratulate my noble friend Lady Fookes on her maiden speech. Sadly, she has left the Chamber. I had intended to tell her that it would be her worst experience of speaking in this House, but that it would be fast.
I thank my noble friend Lord Astor of Hever for calling attention to the work of charities. I have been involved with various charities for the past 30 years, and therefore feel eligible to give my views. There is no doubt that the existence of charities saves any government an immense amount of financial relief in welfare for the needy.
Today, charities have become big business, and I do wonder whether the voluntary contribution is diminishing and the paid sector is taking over. For instance, if you pay a fundraiser, the volunteer in the organisation will not feel so keen to raise funds as somebody else is being paid to do it. In addition, the cost to charities is escalating as a result of the high wages paid to administrators. Headquarters are becoming too large and are therefore not servicing the organisations that they exist to serve. Money raised is therefore spent on administration, not on the specific needs of the charity.
Fundraising has changed a great deal from personal giving to corporate giving, whereby big businesses are prepared to support charities through sponsorship, which is invaluable. I believe that trusts and organisations are prepared to give money for specific projects, rather than money going to general funds—in other words, overdrafts.
There are too many charities carrying out almost the same activities. There should be more amalgamation of charities doing similar work.
Sadly, covenant giving is not being encouraged by Her Majesty's Government; nor was it by the previous government. It is all right for the charities, but not good for the donor. In the United States, the individual receives good tax relief when he or she supports a charity.
The great cry has gone up that charities have suffered as a result of the lottery. I do not believe that; I think it is an excuse. The person who buys a lottery ticket has never been a big spender to the benefit of charity.
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A great accolade should be given to volunteers. They are the salt of the earth and receive so little recognition—for instance, in the Honours List. Why should people who have made an enormous amount of money be honoured, and not the volunteer in a charity who has worked so hard for the organisation to which he or she belongs? Her Majesty's Government should give a great deal more money and consideration to charities to encourage the continuation of their wonderful work.
5.40 p.m.
The Lord Bishop of Hereford: My Lords, I add my own thanks to those expressed to the noble Lord. Lord Astor of Hever, for initiating this debate on a subject which is of enormous importance, as is obvious from the speeches so far made. We can, as a country, be rightly proud of our remarkable commitment to charitable giving and charitable work.
I echo what the noble Lord, Lord Astor, and my right reverend friend the Bishop of Lichfield said about the enormous burden on cathedrals, churches and church schools of VAT. Noble Lords may know that last month there was a debate on this subject in the General Synod, when a motion was passed overwhelmingly, by 423 votes to 2, calling on the Government to reduce this intolerable burden.
The Church is not in a privileged position, receiving money from English Heritage, but is in fact disadvantaged. The figures have already been given. Despite considerable support from the faithful and the wider community and the help from English Heritage, churches up and down the land are heavily penalised for maintaining the nation's heritage and community treasures. This punitive taxation affects rural and poor urban parishes and church schools alike. All repair work and improvements are subject to VAT. While local education authorities can reclaim VAT, church school governors cannot. That is unjust and unreasonable. Although the Church of England is famous for having room within itself for eccentrics, I find it remarkable that in that debate two people were so enthusiastic about VAT that they voted against the motion.
I wish to speak about something much more general. Four years ago I became a trustee of a new trust set up to serve mainly Herefordshire and West Worcestershire, established by the generosity of a farmer's widow who left an estate worth £49 million and who had seemed in her lifetime to be unaware of the fact that she was, even by lottery standards, a remarkably wealthy woman.
My first and overwhelming impression as I tried to discharge the work of a trustee, inevitably being on the receiving end of a large number of applications for help, was of the scale and range of charitable activity in our communities. I thought that, after many years in the Church's ministry, I knew a good deal about voluntary and charitable effort; but it was an absolute revelation to me to discover the vast number of excellent projects which exist in our area alone, sustained by the energy, imagination and devoted work of tens of thousands of good people, part of that army of 3 million mentioned by the noble Lord, Lord Astor. Every conceivable

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disability and need seems to have elicited an appropriate charitable response. Whether it is physical or mental illness, whether it is social deprivation, exclusion or homelessness, whether the victims are young or old, whether it is a case of ambulance work to pick up the pieces or preventive work to try to stop a disaster happening, the network of voluntary agencies is immense and deeply impressive.
Of course, some of these agencies may be misguided; many are under-resourced; almost all are under-funded; but the existence of these organisations is a magnificent tribute to human generosity and good will. That was my first and strongest impression. It is not only the Lord Mayor of Plymouth who has been amazed and humbled to discover the level of generosity, devotion and good will.
The second conviction which has been strengthened by my recent experience is that some good things are best done, ideally done, by voluntary, charitable effort rather than by statutory agencies. I should like to mention briefly two examples.
One is the organisation called Lifestyles, a remarkable charity which seeks to release disabled people from the imprisonment of their disability, where the normal, decent level of care provided by the welfare state would leave them. Lifestyles has depended on the vision and pioneering and innovative imagination of one or two people who have seen that it is possible to give disabled people real choices, to enable them to start to come back into the mainstream of life rather than remain on its fringes.
The second is that excellent body Homestart, which celebrates its silver jubilee this year, which recruits and trains volunteers to accompany struggling young parents, support them, befriend them, encourage them, give them time, in a totally relaxed and unthreatening way, and teach them, where necessary, the basic skills of parenting, budgeting, or even cooking and housekeeping. Homestart needs to work in partnership with the statutory agencies because most referrals come by that route; but Homestart volunteers are real friends in a sense that social workers cannot be and probably should not try to be.
That is a word of praise and appreciation for those projects as two examples among many of the need for charitable activity and voluntary effort. It is extremely cost-effective and prevents untold misery and exceedingly expensive social disasters.
My third point is a very different one. If Lifestyles and Homestart represent examples of charitable and voluntary work at its best and in its element, other demands which have increasingly been made on our trust funds have been seriously worrying for us. In the past three years we have been asked for £900,000 for purposes which should properly be part of core National Health Service funding. Stroke rehabilitation, cardiac after-care and head injury rehabilitation are matters of such importance and urgency that the trustees, having to weigh these applications against hundreds of others that we receive, and assured by the health trusts that no statutory funding exists for these purposes, have felt bound to make at least some of the grants requested of
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us. We have allocated nearly £400,000 to the acute and community trusts in Hereford and £100,000 in grants to hospitals in Birmingham and Dudley.
We feel deeply uneasy about that and about the fact that nearly 10 per cent. of hospital equipment is paid for by charitable giving: that in 1994–95 no less than £500 million of total NHS income came from charitable sources. It is true that many hospitals were originally charitable institutions, and there are still many areas where extras can properly be provided by voluntary giving, through the league of friends or some such organisation; but core funding for urgent and essential treatment should not have to come from charitable sources. I very much hope that the noble Lord, Lord Hoyle, will be able to respond with some assurances that that position will not have to continue, not least because reliance on charitable funding for basic healthcare turns the National Health Service into even more of a lottery than it is already, with widely differing standards of treatment available in different places.
We are, of course, glad that we have been able to offer much-needed help to the victims of strokes, heart attacks and head injuries, help which, disgracefully, was not previously available in anything like adequate form. We are in the fortunate position of being able to help. There are many places where such funding does not exist. My urgent plea is that such basic needs should not in future have to be met from charitable funding.
5.48 p.m.
Lord Hayhoe: My Lords, I add my thanks to those expressed to my noble friend Lord Astor of Hever for initiating this important debate, not least because it gave me the opportunity to hear the splendid speech of my former honourable friend in another place and now my noble friend Lady Fookes.
I begin by declaring an interest. I am a somewhat inactive president of Help the Hospices and a trustee of medical charities, the Liver Research Trust and the British Brain and Spine Foundation, as well as being involved in other charitable activities.
I wish to concentrate today, rather narrowly, on fund-raising and financial questions. I deal first with taxation. Successive Chancellors have in the past helped charities with favourable tax breaks, but they have also hurt and handicapped them by the imposition and incidence of VAT and the changes in advance corporation tax in the Chancellor's first Budget last year, which was referred to by previous speakers.
I warmly welcome the Government's review of the taxation of charities announced last July and I look forward to the consultative document promised for publication in spring this year. I hope that this review will not preclude favourable measures being included in this year's Budget on 17th March.
The National Lottery, as has been said by others, has been very successful, some £4.5 billion already raised for the five good causes. As a former Treasury Minister I confess I am not surprised that Treasury eyes look covetously at this largesse. Pressures to replace or enhance Exchequer grants with lottery money will grow and must be resisted. I must say that the Government's

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provisions in the National Lottery Bill, which comes before this House at its Report stage next Tuesday do not augur well. In a similar vein I recall the special trustees of charity funds at London hospitals being expected to take on projects which should rightly have been covered by NHS funding.
Without doubt, the National Lottery has led to some switching from direct charity giving to the detriment of the charities. As a result of these pressures many of the larger charities seem to be employing more professional fund raisers and techniques than ever before. The whole business—and it really now is big business—of charity fund raising embracing sponsorship and merchandising is growing and expanding. Computer based direct mail appeals, coupled with what one could call direct blunderbuss type deliveries of charity appeals in selected postal districts where the residents are thought more likely to give than in others, are already in danger of becoming self-defeating.
While I appreciate the technical problems, I wish those concerned could clean up their computer lists so as to avoid repeated postal requests to the same family at the same address—very irritating indeed. Sometimes one needs great strength of will to overcome that irritation and go on contributing to that particular charity.
But this is a relatively minor gripe which must be set against the enormous efforts of so many dedicated and concerned individuals who organise and support charitable fundraising for so many different and worthwhile causes in so many different and appealing ways.
I mentioned the Government's National Lottery Bill a moment ago. I want now to refer to the draft Lotteries (Frequent Draws) Bill, which was issued by the Home Office for consultation on 7th January, although I notice that this draft Bill carries an endorsement "10 December 1997 (Second Print)". No doubt there is some quite reasonable explanation of the difference of date from 10th December when it appears to have been printed to 7th January when it was sent more widely for consultation. I should be grateful to hear the explanation from the Minister in his wind-up speech.
While I welcome the publication of this Bill in draft I wonder if more detailed evidence of the views of those organisations consulted by the Home Office before publication could not have been made available. The information given in the Draft Regulatory Appraisal document dated 7th January which accompanied the draft Bill is helpful but rather sparse and not all that persuasive. For example, I note that the views of the Methodist Church, the Church of England, and the National Council for Social Concern are prayed in aid of a statutory limit on the frequency of on-line lottery draws. I seem to recall that these important bodies were not all that enthusiastic about our National Lottery, yet that has become a great success. Just imagine how much would have been lost to good causes if the National Lottery plans had been strangled at birth.
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I am now very concerned, as was my noble friend the Duke of Norfolk in his important contribution to the debate, about the potential loss to many charities. I have a list here of some 70 or so humanitarian charities which could be affected by the Pronto! lottery. That was referred to in considerable detail by my noble friend Lord Mancroft. Incidentally, I hope that the procedural point that was raised by the noble Lord, Lord Ponsonby, will not in any way detract from the very powerful arguments that my noble friend Lord Mancroft made in his speech. I am worried by the potential loss to the charities if this scheme is effectively killed off in its infancy by this Bill. Help the Hospices, as has been said, hoped to receive £200,000 but the prospect of this highly restrictive legislation has knocked this down to about £50,000. The end result, if the restrictive "one draw a day" is implemented, could be nothing at all.
Government sympathy, as expressed in paragraph 7.5 of their Draft Regulatory Appraisal, is of little comfort to the charities who were expecting substantial funding from the Pronto! scheme. I am not much impressed by the Government's attempts to justify this proposed legislation. The arguments are tentative and smack of special pleading on behalf of the National Lottery, though I understand this is denied.
I hope that Government Ministers will have second thoughts, that they will listen to the voices of the charities directly affected. Surely the legislation should not be rushed. Rushed legislation, as we know to our cost, is nearly always bad legislation. At the very least a longer period of consultation should be allowed. It has been far too short. From 7th January to 13th February was quite inadequate to give full consideration to the "one draw a day" proposal. Why not establish a carefully monitored trial so that hard evidence can be collected and assessed and a proper and fair balance struck between benefits and difficulties? Why "one draw a day", an arbitrary limit without any solid basis behind it? Why not one an hour or more frequently, as Pronto! promoters propose? Let us have a sensible trial and a realistic decision.
I very much doubt whether this Bill would make any progress in another place if free votes are allowed. No doubt Government Whips could drive it through in another place but perhaps not in your Lordships' House. I hope that the Government will think again about their plans. It would be a grave omission not to say something about fundraising for charities without mentioning the Charities Aid Foundation. I endorse entirely what my noble friend Lord Astor said about that remarkable body, splendidly conceived, extraordinarily effective. It allows people to have their charity giving enhanced by simpler tax rebates and allows a more flexible operation by the use of CAF vouchers, their credit card, or their charity card.
Let me end as I began by referring to taxation. Perhaps the Chancellor will give greater encouragement to charities in his Budget or perhaps, like some of his predecessors, he will wait until nearer the General Election to exercise the Treasury's compassionate concern, if that is not a contradiction in terms.
5.58 p.m.
Lord Weatherill: My Lords, I, too, should like to begin by congratulating the noble Lord, Lord Astor of Hever, and also my noble friend Baroness Fookes on her admirable maiden speech. Like her, I spent some 15 years in the Chair but I am afraid I am not as confident as she in being able to deliver my speech today without a note. I am far too nervous for that. It is a great attribute, but I think both she and I, as former occupants of the Chair in the other place, will know that the trouble with those who speak without a note is that one brilliant thought tends to lead to another.
Some 15 years ago 1 presided at the annual general meeting of the Croydon Council of Voluntary Organisations. Wondering what on earth I was going to say to that excellent body, I picked up the Evening Standard and found a leading article which proclaimed, "Utopia—you may be surprised to know that you're living in it now". The article went on to draw attention to all the good things going on in society and said that we should not be bamboozled by the reports of all the bad things that the newspapers so regularly report.
When I was in the other place I used to keep a note of speeches which had particularly pleased me—and there have been many today. One speech, by the honourable Member Ron Brown, who had the misfortune to drop the Mace one day, was on the press. He summed up his speech with this quip: "You can sum up the modern press in three short phrases; make it brief, make it juicy and make it up". In this debate we have an opportunity to redress that balance between good and bad.
In my alleged retirement I am connected with a great many charities, some of them of national standing and others very small, such as Bridges in Edenbridge, which the noble Lord, Lord Astor, has so generously supported. In particular, I am very proud to be a vice-chancellor of the Order of St. John of Jerusalem. It has been a special pleasure to hear the speech of our Lord Prior, the noble Lord, Lord Vestey, this afternoon, and the speech of the noble Baroness, Lady Emerton, who spoke about the order's worldwide activities. But in this debate I should like to use my few minutes to draw attention to the work of the Prince's Trust.
Most of us take for granted the opportunities we have had in life—a good home, a good education and security—hut we all know that this is not the experience of everyone, as we have heard this afternoon. The Prince's Trust aims to help and to inspire young people, particularly the disadvantaged, to develop their full potential and to serve the community. For 21 years it has had a track record of considerable success. For example, it has established 500 study support centres where young people can go to do their homework. We all know, particularly those of us who have been in the other place, that young people can have great difficulty in going home, frequently to council houses with very few rooms, and finding a room in which they can quietly do their homework. These study centres enable young students—there have been 80,000 of them—to study and to be helped in their homework in order to increase their chances of getting good 0-levels and A-levels and entry into universities.
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Then there is the Prince's Trust Volunteers, which I was privileged to launch with His Royal Highness the Prince of Wales in 1990 in my capacity as Founder President of the Institute for Citizenship Studies. The Prince's Trust Volunteers has helped some 20,000 young people to develop their characters and personal leadership qualities and potential by serving the community, working together as a team. Sixty-five per cent. of them subsequently have gone on to get good jobs.
Next there is the Prince's Youth Business Trust, with which I am most actively associated. In the past 11 years, 40,000 young people between the ages of 18 and 30 have been helped to establish their own businesses, thereby creating some 60,000 new jobs. Because the trust provides them with a godfather or a godmother to whom they can go for advice, 60 per cent. of them remain in business after they have been trading for three years. This is far better than the track record of the banks.
The trust, through the PYBT, is able to take young people off the unemployment register and help them to establish their own businesses for an average of £3,000, which is far less than the annual cost of individual unemployment benefit. Of those we help, 60 per cent. are long-term unemployed, 10 per cent. come from the ethnic communities, 10 per cent. are young offenders and 20 per cent. come from other backgrounds, notably the disabled. Although many of the businesses remain small businesses—some of them do fail but we do not go in for failure in the PYBT because we know that a large number of those who do not continue trading find other employment—we have had a track record of setting up some large businesses. Indeed, our largest businesses have a combined turnover of £20 million and employ more than 1,600 people.
Time does not allow me to mention other charities with which I am connected. In his admirable opening speech the noble Lord, Lord Astor, mentioned that charitable giving is in decline. I am in no doubt that this is partly due to the National Lottery, and I agree with the noble Lord, Lord Mancroft, that lottery money should not be used for activities which are properly the responsibility of government. Furthermore, application for lottery money is very difficult to make, largely because the application forms are so complicated. In the Committee Stage of the National Lottery Bill I joined with the noble Lord, Lord Howell, in moving an amendment which would establish a fast-track procedure for small applications—up to, say, some £5,000 for small charities, which would be a pot of gold to many of them. I hope that this will be successful.
The noble Baroness, Lady Emerton, mentioned the motto of the Order of St. John: pro fide, pro utilitate hominum—"In the service of mankind". We politicians regularly draw attention to getting the balance right. We shall hear a good deal about the balance of trade, the balance of payments and other balances on 17th March, which is Budget day. But we all know there is another balance which is even more important—the balance between material welfare and spiritual welfare. There must be a balance between what the state can and should do and the obligations of citizens in a free society to

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make their contributions. That balance, as we have heard today, is made by the activities of the 180,000 registered charities in our country.
There is an old Punjabi proverb:
"Good words will earn you honour in the market place:
Good deeds will win you friends among men".
I thank the noble Lord, Lord Astor, for giving us this opportunity to pay tribute to the many good acts and good deeds of the charities of our country.
6.8 p.m.
Viscount Mackintosh of Halifax: My Lords, I should like to thank my noble kinsman Lord Astor of Hever for initiating this debate. The variety of contributions from noble Lords so far has drawn our attention to the importance of the role of charities. I should like to make a short contribution this afternoon about some of the ways in which charities raise money. However, before doing so, I should like to congratulate my noble friend Lady Fookes on her maiden speech. It was a most impressive contribution to this debate and we look forward to many more speeches from her in this House.
The amount of good work which any charity can do is dependent upon how much money it can raise, by whatever means and from whatever source. Charities nowadays must, and have, become increasingly professional and resourceful in facing the challenges of fundraising. There is much competition for the charitable pound and charities know this. Whilst there is the danger of "charity fatigue", generosity is also sometimes overwhelming when the cause is appealing and when, importantly, the request is made in the right way. New ideas abound—even a glance at some of the charity post which comes through the letterbox shows this. The variety of charitable events, too, has increased enormously in the past few years; much imagination has been at work, and it has been needed.
One very interesting development in the field of charitable fundraising, which has tapped a new pool of money, has been in relation to the giving of unwanted small change left over from foreign trips. The odd coin is of no use to its owner; it cannot be exchanged back. Who has not found themselves keeping jars or envelopes at home of coins in various currencies, in the vain hope that they will be remembered for the next trip? British Airways, in its "Change for Good" campaign, has raised huge sums of money for charity by pooling these individually useless small coins.
In theory, the same could be done for other leftover or otherwise unwanted assets—shares for example. Many many millions of pounds are tied up in shareholdings too small to be worth selling; the cost of commission would be higher than the value. The biggest source of these odd lots is scrip dividends where the underlying shareholding has been sold.
The hitch is that, unlike a coin, one cannot simply give a share away, to a charity or to anybody else. Documents must be signed; registrars provided with the proper pieces of paper. Even destroying an unwanted share certificate does not do any good. The shareholder
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remains on the register and will still receive all communications from the company. Tiny dividends are received and must be scheduled on tax returns. Companies spend large sums of money servicing holders of perhaps a single share, many of whom would rather not own it at all.
In a word, these small shareholdings can he a nuisance to all concerned. In aggregate, though, they represent an enormous reservoir of potential cash, which could go towards charities, if unlocked. Many an owner would be only too delighted if their useless bits and pieces could go to good causes.
But transferring small holdings direct to a charity is often not the answer. The charity, though grateful for the generous intention, may find itself equally unable to deal with a holding worth less than the minimum commission.
A charitable scheme now exists (Sharegift) which can collect these small parcels of shares and make something of them, unlocking their value. If the cost of selling a shareholding is, say, £20 (it can be much more!), and one holds shares in that company worth only £15, one has nothing. By donating them through the Sharegift charity, one's small holding can be combined with others in that company, making enough to be sold.
Here I should declare an interest. The scheme was devised and is run by my wife, after a career in the City in pension fund management and stockbroking, and I am a trustee of the charity which administers it.
Sharegift functions by aggregation. Though laborious, it works because there is a critical mass of many donations. Holdings of shares are re-registered, then pooled and sold when they are large enough and the proceeds are distributed to a growing number of charities. Donors are invited to suggest their favoured charities for consideration if they wish. Charities are encouraged to enter into partnership with Sharegift by mentioning the existence of the scheme in their newsletters to supporters and so on.
The beauty of it is that there is no conflict with any other form of charitable fundraising. Donors have, at a stroke, got rid of something which is a nuisance to them, and given to charity, without relinquishing any hard-earned, tax-paid cash at all. Charities are benefiting from the releasing of otherwise frozen assets.
There are so many admirable causes, but there is never enough money. What is important for charities is not just to continue to raise funds from the same or similar sources, though this is vital of course, but to be aware of the possibility of new ways altogether—entirely different sources of revenue.
6.14 p.m.
Lord Dholakia: My Lords, I also wish to add my congratulations to the noble Baroness, Lady Fookes, for her excellent maiden speech. The last time I heard her was in Cheltenham at a memorial service for Sir Charles Irvine, MP., the great charitable worker and she has lost none of her sparkle.
I came to this country 42 years ago. On the very first day, walking with my host in Brighton, I was confronted by a number of people rattling tins. For a minute I was

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puzzled. I then saw my host put his hand in his pocket, take out some money and put it in the tin. I said to him, "Why did you do that?" He said, "I have enough: others don't and there is great joy in giving".
I came from the third world, which was always the recipient of such help. For the first time I realised that it is not only receiving aid, but also giving that gives great pleasure to a great many people. From that day onwards I have been associated with a number of charities in this country. The three that I value most are Save the Children—I am a trustee—the National Association for the Care and Resettlement of Offenders and the Mental Health Foundation.
On many occasions people give money without realising what precisely some of the charities do. Quite often we are confronted with television pictures within which we see some of our resources being used. That gives the opportunity for a few minutes to highlight the work of just one of these charities, Save the Children. Perhaps I may quote the director-general of that fund, Mike Aaronson. He said in the last annual report of the charity,
"In a world which is changing at a breathtaking pace, the gap between rich and poor is now wider than ever before, and it is children who are, as always, the first to lose out".
It is not a new charity: it began as early as 1919. It has done pioneering work with, and making a difference for, children. It has grown to become the United Kingdom's largest international children's charity which works to help to meet the needs of children around the world, regardless of race, creed or nationality. The programme for this charity covers over 50 countries including the United Kingdom, which is often forgotten. The work is highly regarded not only in terms of effective emergency relief programmes, but much more than that the focus of the work is long-term development. Save the Children helps governments and communities to bring about long-term improvement for children and their families.
The situations that we work in around the world may be very different, but our aim is always the same; namely, to ensure that the rights of children are met. For example, the rights of children to healthcare and education; to be protected from harm; the chance for children to express themselves and to be listened to are at the heart of all the work that we do. Our programme is enhanced by the fact that we are an international agency so that we are able to learn from our experience with working with children in different settings and we can draw on our experience and expertise from around the world.
The work in the United Kingdom includes helping children and young people to represent their views, giving them a chance to have a say on how services are provided in their area and helping parents from low-income families gain new skills so that they have a better chance of finding work and breaking out of the poverty trap.
I shall give one or two further examples in a minute. Our work overseas also includes projects designed in terms of improving healthcare and education services; schemes that address the poverty experienced by
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families or that address the impact of HIV/Aids and also programmes that reunite children who have become separated from their families during war.
As we move towards the new millennium, the needs of children and young people are as pressing as ever. In the UK, poverty now attacks one in three children, and that figure rises significantly in some parts of Scotland, Northern Ireland, Wales, larger cities and post-industrial areas of England. Save the Children believes that is unacceptable, given the wealth available to our society.
Poverty is only part of the problem. Save the Children believes that it is unacceptable that many children in the UK suffer from homelessness, sexual exploitation and abuse, addiction, inadequate care when separated from their families, bullying, school exclusion and discrimination. All too often, society labels children as a social problem and feels that they must be controlled. Save the Children believes that children should not be labelled that way and sees it as part of its role to challenge harmful preconceptions about children and young people.
In many developing countries in which Save the Children works, war and conflict have, following the ending of the cold war, taken on new forms. Such wars are frequently caused by a struggle for resources and are rooted in ethnic conflict and environmental change. The legacy of previous conflicts continues to damage the lives of millions of people through uncleared land mines, refugee movements, the dissipation of families and the destruction of social institutions. The 1980s and 1990s saw the dominance of the model of economic and social development across the world whereby market forces were seen as the answer to alleviating poverty and social problems. Many former socialist countries are in the process of making an often painful transition to a market-led economy. At the same time, the integration of the global economy has led to fierce international competition in previously under-developed parts of the world.
The Save the Children Fund has found that substantial economic growth goes hand in hand with rising levels of poverty, ill health, homelessness and insecurity. Women and children form the majority of the poor in developing countries in which the fund operates and are increasingly consigned to the margin of society, with few adequate safety nets to protect them. I will give two examples.
The St. Mellons project in Cardiff is an example of the fund's work to help local communities tackle problems by promoting the benefits of involving children and young people in the planning and implementation of projects and by supporting community initiatives in demonstrating how that approach can produce sustainable solutions. An international example with which your Lordships will be familiar is Sialkot in Pakistan, where the fund is working to influence child labour practices. Save the Children joined an international initiative to phase out child labour in Pakistan's football manufacturing industry, to prevent an immediate ban on child labour that could dangerously lower family income and force children into more hazardous jobs. The ultimate

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objective is to review what can be done in relation to children, to make sure that they enjoy their right to a childhood and that we contribute to the better development of the world around us.
6.23 p.m.
Lord Quinton: My Lords, I want first to thank my noble friend Lord Astor of Hever for raising the work of charities as the subject for debate, which is just the sort of thing for which this House is partly designed. Its other role is to instruct the government of the day, but its Wednesday role is to air topics with which the other place is far too busy to deal but which can enjoy some rational consideration in the less hurried atmosphere of your Lordships' House. I too want to congratulate my noble friend Lady Fookes on her maiden speech. I hardly like to say "maiden speech" because she was, so to speak, previously married to the other place. I feel that I have to say that that showed. The seven-year Trappist vow as Deputy Speaker to which my noble friend referred seems to have had nothing but a beneficial effect on her oratorial powers. I look forward to hearing her often.
When I saw my name rather far down the list of speakers, I thought that the matter that I want to talk about would be utterly obliterated by the time that my moment came. In fact, the topic has barely been touched upon. I refer to the method by which tax relief is accorded to charitable donors. The covenanting system reminds me of egg rationing, gas mask cases and 98 per cent. income tax at the higher rate—a relic of wartime thinking. What are the main objections to the system? First, it is complex for the donor. Here is where one speaks from the heart. There is quite a lot of filling-in of forms to do. In some versions, small pieces of paper regularly appear at certain times of the year, which one has to sign and return—I cannot remember whether to the charity or the tax office—guaranteeing that one is paying tax in the current year. I am often aware of having incurred an obligation to a charity but the piece of paper does not appear. I am too lazy and disorganised to pursue the matter. Whether the charity is seriously disadvantaged, I do not know. It seems fatuous that I should have to worry about it and fatuous that the charity—if it is the charity—should have to pester me with little pieces of paper. It is like those offers that one sees in evening newspapers, for extraordinarily inexpensive meals at very good restaurants. One needs resolution something like that of the Princess Royal, if one is to manage to make any kind of charitable donation in the face of a distraction of that kind.
That is not the only thing wrong with the covenanting system. The administrative inconvenience to the donor is no doubt matched and multiplied by that caused to the Inland Revenue. It may be that authority feasts on it but, if so, it is an unhealthy diet and the Inland Revenue should be cured of it. All that is absolutely unnecessary. Also, entering into gift aid is, for persons of relatively straitened means, a relatively large commitment. The minimum payment is £250 and one may not want to dish out that sum in one dollop to a particular charity. Covenanting is too much like marriage, not like a
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friendly weekend relationship. It stretches out much too far into the future. I say that because I am recommending, proposing and deeply hoping for a shift to something like the system in the United States. There, one makes a charitable donation and the charity sends one a receipt. No doubt that is an authoritative-looking form bearing the charity's registration number, so that one can present the document to the tax inspector. Like any allowable or non-allowable expense, it has to be scrutinised and if the tax inspector does not like the look of it, he will not allow it. If he does, the sum given should be subtracted from one's taxable income.
I would not want to recommend some of the more baroque extravagances of the American system, whereby one can have a 500 dollar dinner at some swish hotel, about 40 dollars of which goes to charity. The allowance should be confined to that part of the payment that goes to charity. I am entirely happy with the restriction of that kind. There is always a slight, weird fringe in charitable activities, with incompetents giving themselves huge meals and the prime beneficiaries being neglected.
On the three grounds of complexity for the donor, presumed administrative inconvenience to the Inland Revenue and the way in which the covenanting system is so oddly shaped, temporarily speaking, that it discourages middle-range donations, I strongly urge that the system be abolished and replaced by a simple deductibility system.
I believe, for reasons that I shall outline briefly, that doing such a thing would considerably enhance charitable donation. After all, the social structure of this country has very materially changed in the past 50 or so years. We now have what one might call a very large mass of middle income people. We no longer have a great cone with the noble Duke, the Duke of Westminster, on the top and the underclass, poor souls, at the bottom. As everyone says, our social structure is now a blob, like some sort of fruit, with a largish number of very badly off people at the bottom, a fair number of pretty well off people at the top, and a huge number of reasonably well off people in the middle. Many of those people would be prepared, like Americans, to make larger contributions to charity than they are currently accustomed to doing. There seems to be plenty of charitable impulse about in the world, but it is not adequately provided for by the covenanting system. However, your Lordships have probably heard enough about that.
I now want to move briefly to a topic of enormous generality which is not unrelated to what I have just been talking about. There seems to be a frame of mind behind the persistence of the covenanting system, which is somehow a statist hostility to the institution of charity as such. Perhaps I should describe it as a Benthamite hostility to it which says, "It must be inefficient, so surely it would be better for the state, through the tax system, to raise the revenues required for all these eleemosynary purposes". I hope that Hansard can spell that! It seems to be felt that all the money could be raised by tax and be competently and efficiently distributed to the points of need.

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A number of serious points have been made this afternoon which together add up to a refutation of that. First, I believe that it was the noble Baroness, Lady Young of Old Scone, who said that charities pioneer. They operate on a smaller field than some huge ministry and can thus identify small areas of need.
Secondly, charities can act much more rapidly than can a government. After all, government represent the community. They have to be sure that there is a very broad consensus in that community behind spending tax revenue on certain sorts of abstractly desirable things.
Thirdly—in a way, I think that this is the most important of all, but I hope that I do not sound too edifying in saying that because a number of other noble Lords have mentioned it—charities are important because of the voluntary principle. It is not just money that is given to our charities. There is also an enormous amount of unpaid work involved. Many people are in a position to give quite a bit of unpaid work who may not be able to give substantial donations. However, when costed out, what they are giving in the way of unpaid work adds up to a very substantial donation. We should not think of the vast donors as being the only heroes of charitable giving; we should also remember all those people who give unpaid work. I was thrilled to hear the number of 27 million people mentioned. I shall say it once more and then sit down-27 million. It is extraordinary.
6.33 p.m.
The Earl of Sandwich: My Lords, I too extend my thanks to the noble Lord, Lord Astor of Hever, and congratulate the noble Baroness, Lady Fookes, on her maiden speech.
As the noble Lord, Lord Quinton, has just said, promoting the voluntary sector is a bit like advocating fruit, fresh air or clean water. There is a lot of it about, and it is good. The voluntary sector is now one of our major employers, turning over an estimated £13 billion last year. Fortunately, we have not yet institutionalised it and I, too, hope that our charities will safeguard their independence during the forthcoming review.
Periodically we hear from charities, just like any other sector, that their income has fallen, that the public have lost interest or that the Government are doing too little to help them. I worked in charities for 20 years and it was part of our job to beat the drum and to draw attention to ourselves, especially when a new government came into office.
The new Home Office Minister, Alun Michael, has recently spoken of the "active community" in which there is to be a new triangular partnership with business and the voluntary sector. This happy honeymoon is to be welcomed, but the charities remain cautious because they are still unsure of the Government's intentions. This is a time of uncertainty, and whatever the achievements of the charities, their staff remain vulnerable to policy changes, public opinion, and the market. That is perhaps the price of preserving their identity.
Charities' general income has been falling in recent years, as we have heard, although there have been some increases in trading, investments and legacies. Some
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studies point to a decline in regular giving. I have seen that happen in the overseas aid sector—now a substantial proportion, representing one-fifth of the top 500 charities' voluntary income. The three or four largest aid agencies have recently had to make drastic cuts in their staff and their overseas programmes.
The lottery has played a role in that, although it is hard to quantify. However, the lottery has also brought considerable benefits. The international grants element of £25 million was a good start and it has been responsibly administered, but I am sorry that it was a Cinderella fund representing only 5 per cent. of the charities board distribution. It is hoped that that will be made up in the forthcoming round.
I am not convinced that the public are any less interested in charities simply because, partly owing to tax changes, they seem less able to support them. The Live Aid and Princess Diana phenomena showed how far people willingly respond to emotional but well planned appeals. The Henley Centre survey two years ago showed that the public have more confidence in charities than in the law or the Church. One could hardly expect more. Charities are highly valued for their contribution to education. The principle of volunteering remains intact. There seems to be no shortage of volunteers. As has been said, 4 million are involved formally with a further 23 million working informally. The problem lies in ensuring that charities' employees are fairly rewarded and that anomalies in pay scales are minimal. The recent difficulties encountered by VSO in attracting younger volunteers relate mainly to the high quality of the professionals that are now being sought.
One factor in the decline in income may be a loss of identity and purpose. Some of the most innovative social work—in education, prison reform and foreign aid—has been pioneered by charities, often with the intention that government should take it over. However, there is a danger that local and central government will swallow up that work and bureaucratise it. Government funding can be a mixed blessing unless the integrity of the work and the relationship with the community can be preserved.
There are two sides to the Government's policy towards charities. The first, which is long term and philosophical, is to improve relations along the lines of Professor Deakin's Commission, and to go beyond service-providing towards a more equal partnership, with the special aim of reducing mistrust between the voluntary and private sectors. We should all pay more attention to that. It need not cost the charities any money and is already being well received.
The second is short term and financial. I refer to the improvement of the tax environment, as already signalled by the review of charitable taxation and a reform of the Trustee Investments Act 1961. That will be some compensation for the phasing out of the ACT tax credit which is bound to harm charities with investment income. High street trading by charities—demonstrated by the noble Baroness, Lady Ryder—has become a source of grievance to the private sector, but it should not be penalised where there is a genuine charitable purpose. In fact, if anything, it should be

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further simplified with the business rate relief being fully protected. As has been said, VAT on genuine charitable trading should also be revised in favour of charities, especially churches. More consideration should be given to the tax system so that tax relief can be shifted from the charity to the donor.
There is an almost permanent debate, not to say tension, between the voluntary nature of most charities and the growing professionalism and accountability demanded of them. In every sector there is now a high level of expertise, envied by many countries abroad, some of which now seek the advice of our voluntary associations. I believe that we have great potential in exporting our long experience of charitable work and that that has an important function in terms of imparting democratic values. I hope that the noble Lord, Lord Dahrendorf, will mention that.
The links between charities and politics have become more sophisticated and less threatening than they used to be. The two can be closely entwined as the high quality professional briefings now provided to parliamentarians demonstrate.
In my experience political education is much more powerfully conveyed through charities than political parties—which is one reason why I have not joined one. To work inside a charity gives one a sense of motivation and direct contact with the public which the political parties rarely provide, least of all in an age of political consensus. In my own field I have noticed the gradual transformation of overseas aid charities. It began as an emotional response to need and gradually acquired skills in public affairs, information, education and what is now recognised, as the noble Baroness, Lady Young of Old Scone, pointed out, within the limits of their charitable status as lobbying and advocacy. However, I disagree with the noble Baroness that the large charities are likely to be more efficient. Supporters have come to grips with topics such as enhanced structural adjustment and post-Lomé negotiations. The NGOs have come to realise that they are themselves no angels and must be much more self-critical in their work overseas.
The number of aid charities has grown as has their relationship with government. In 1993 the organisation British Overseas NGOs for Development was formed by 61 charities. That number has now grown to 166. Simultaneously, as the noble Lord, Lord Dholakia, has pointed out, smaller networks of aid agencies have been formed on issues such as debt, fair trade and child labour. The DfID, having encouraged greater evaluation of its NGO programmes, now involves NGOs at a high level in the department.
The Government are committed to new international development targets. They will need the aid charities not just as a channel of funds but increasingly as a means of informing public opinion. Another encouraging example of partnership is the ethical trading initiative. All of these matters are evidence of the dialogue encouraged by the Home Office, but I hope that the Government will not overreach themselves in their ambitious programmes and involve charities too intimately in the policy process. Charities have proud traditions and sometimes their staff on the ground are
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less enthusiastic than their executives in the rush to the corridors of Westminster and Whitehall. The best presents that the Government can give in the review or the Budget are more, not less, tax reliefs and greater mutual respect for and understanding of the objectives for which the charity was established.
6.42 p.m.
Lord Rotherwick: My Lords, who can doubt that we live in an era of communication? The Radio Times lists 31 television channels and 19 radio stations. Car telephones, mobile telephones and fax machines in the air and on the railway contribute to—some may say detract from—our daily lives. But what of those who cannot partake of this orgy of self-expression—those who are physically and/or mentally isolated by the rigours of work, unemployment, depression or illness? My theme today is helplines—national, regional and local—known countrywide, nay even internationally, like the Samaritans or those struggling to gain the trust or recognition of the people they seek to help, like the Victim Support helpline launched only last week by the Princess Royal.
I should first paint a brief picture of the charity sector on which I believe some noble Lords have already touched. At the end of January 1998 the Charity Commission's register listed 180,000 charities with a total annual income of £18.3 billion. Most of that money is raised privately but local authority support has risen steadily in absolute money terms from about £606 million in 1983–84 to over double that figure 11 years later in 1994–95. That is equivalent to about 2.9 per cent. of total revenue spending.
The National Council for Voluntary Organisations covers about 2,500 charities. Of these, 263 are helplines. Additionally, the Telephone Helplines Directory published by BT lists over 800 helplines, some national, some regional and some local, but they do not include the smaller helplines operated by larger charities. The use of helplines has increased dramatically over the past 10 years, and they are still coming on stream. They are manned either totally by volunteers or by a combination of salaried staff and volunteers. In either case there is a need for intensive initial and on-going training. Funding is required to meet the cost of the premises, the phone line installation, rent, usage and publicity. In many cases to attract funding from various sources the helpline provides anonymised data to health authorities, researchers and planners, thus incurring computer costs. Most lines operate on the basis of local call rates and have to meet any differences between those and national rates. Some lines offer a call-back service.
One national line established in 1992 has attracted core funding from the Department of Health to the tune of £125,000 in 1996–97, falling to only £5,000 in the third year (1998–99), after which it must be self-supporting. Over half its callers suffer from mental illness. One quarter are carers and two-thirds are aged between 25 and 44 years. There are about 40,000 calls a year, and the charity Saneline provides the health services with analyses of the calls to identify unmet needs and to aid planning.

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Probably the most famous helpline of all is that of the Samaritans. That helpline receives 4 million calls a year and combines various initiatives to meet specialised needs in particular sectors or regions. For example, increasing isolation and financial pressures in the countryside led to local outreach programmes supported by videos aimed at the farming community. In Leicestershire such an initiative was partnered by the NFU and the diocese. In December 1996 the NFU in response to statistics showing that the rural suicide rate was higher than its urban counterpart helped to set up the Rural Stress Information Network to co-ordinate the efforts of some 13 to 14 charities working to publicise the level of deprivation in the countryside and ameliorate its effect on the rural population.
At a meeting in mid-February of this year these charities confirmed that demand for their help was still rising. If these demands are not met the resultant mental and physical breakdowns which must be dealt with by health and social services departments will rise. Funding comes from government agencies and bodies like the Lotteries Board. Each operates within a set of rules and according to a timetable that normally allows for diminishing financial support over three or four years. Moreover, most of the help is available for work at the cutting edge which leaves the logistical support short of money. This results in the failure of helplines, sometimes just as they are achieving the recognition and trust of the community that they try to serve. It is particularly difficult in rural areas where the public's perception of charities like the Samaritans, Sane and MIND is not conducive to discussing with them incessant, mind-numbing worries.
There is also a conflict between the ethical position of health and legal bodies who cannot discuss an individual's situation with a third party and the fact that many of the callers to the helpline are carers, partners, neighbours or relations of a sufferer. It is surely more cost effective to put relatively small sums of money into preventative services that are manned largely by unpaid volunteers than to have to cope with full-blown crises in hospital and use paid staff. I ask Her Majesty's Government to review the rules for the support of helplines and give consideration to increasing the proportion of funding that goes on logistics, lengthening the duration of support and recognising that the problems of the countryside can be summarised in one word, "isolation", which may be defined as the absence of communication.
6.50 p.m.
Baroness Pitkeathley: My Lords, I must apologise for being absent for part of the debate. I hope that I will be excused in that I have been engaged in charitable activity both in my role as Chief Executive of the Carers' National Association and as a trustee of the newly formed The Diana Princess of Wales Memorial Fund which is about to announce its first lot of grants. This excuse for absence will, I hope, also serve as a declaration of interest in what I have to say in the debate. I confess that, as somebody who is involved at the sharp end of fund-raising and constantly trying to bring more money in. I am tempted to spend my few
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minutes tonight whingeing about how difficult it is, in the hope that at the end of the debate noble Lords would offer me large amounts of money. However, rest assured that I do not intend to do that.
I will concentrate on only two of the many virtues of the charitable sector—its ability to campaign for and facilitate social change and its ability to help disadvantaged people to speak for themselves.
We have heard about the increasingly important role which the charitable sector plays in our society and we know that charities face many changes because of the shifting role of the state and the fact that voluntary organisations are increasingly being drawn into provision of services.
But we should never forget that there are many charities which do not undertake service provision and which only focus on helping individuals gain access to information and helping them to develop. Sometimes this development can be quite spectacular, as it was with Doris, a carer who, finding it impossible to obtain any support in her local area in her caring role, set up her own carers group. At first the group was simply focused on mutual support, a chance to share troubles and find someone else who had the same difficulties as herself. Gradually, Doris found that she was developing her own knowledge about benefits and services to such a degree that other members of her group were turning to her for advice. As their strength and confidence grew, the group, led by Doris, began to look outside and to get its voice heard in the local media and by the local authority. They became a branch of CNA and, with advice from our head office, began to operate very effectively as a campaign group. At this point Doris's husband, for whom she was caring, died and she withdrew for a while to cope with her grief and bereavement. Later on, she returned to the group, and as she was no longer caring, was free to do even more work and to attend even more evenings. She became a representative of carers on the social services committee and, eventually, having joined a political party, successfully stood for election to the council. The last time I talked to her she told me she had hopes of becoming an MP. Lest any of your Lordships feels I am making a party political point, I should point out that she hopes to represent the Conservative Party in another place.
Noble Lords will be aware of many similar examples where self help activity leads to active citizenship—thus benefiting not only the individual but society itself. Not every individual can represent themselves and it is for them that the campaigning charities exist. As well as alleviating distress, the campaigning charities have a proud record of bringing social, health and environmental issues to public attention. Abuse of children, protection of endangered species, the plight of the homeless, and rights for people with disabilities would not have come to public attention without the work of charities. I hope it is not immodest to claim that the contribution of the 7 million carers in the UK and their recognition now in public policy is almost entirely due to the work of Carers National Association and our colleague organisations in the Carers Alliance.

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I am sure that noble Lords were moved, as I was, to hear the noble Baroness, Lady Fookes, speak of her own caring experience in her splendid maiden speech.
It is frequently claimed that the campaigning role of charities is threatened by the so-called contract culture. If you are dependent for your survival on the local authority contract, can you really be pro-active in criticising that local authority for the quality of services? It is, I believe, a problem we must acknowledge and it is the reason why my own organisation, CNA, has set its face very firmly against becoming a service provider.
I confess that I used to be very depressed about this situation. I used to think that the campaigning aspect of charitable work would be unable to grow and develop because the only way in which charities would be able to survive financially would be by taking on service provision contracts. I am happy to say I am more sanguine about this than I used to be for three main reasons.
Charities are realising that contracts can be withdrawn as quickly as they can be agreed—indeed more quickly. There are around us too many sad stories of charities which are on the point of closure or bankruptcy because contracts have suddenly been withdrawn. The staff of the charity has been increased to cope with the demands of the contract, but income and staffing levels cannot be maintained unless the contract continues.
The second reason is that campaigning charities are finding that money is available to fund these activities, contrary to the popular wisdom that no one will give money to campaigning activities because of their so-called political connections. Charities, however, are increasingly learning that if you become politically sophisticated you can be "small p" politically active and politically effective while remaining "large P" politically neutral. Increasingly, partnerships are being developed between charities and the commercial sector which will provide funding for campaigning activity, because the thing which campaigning or, as we often call it in terms of private sector partnerships, "awareness raising", can provide is public profile which companies need.
These partnerships are proof that the relationship between charities and the private sector is increasingly a two-way street. The days of charities just expecting a donation from the private sector are perhaps coming to an end and I for one will not mourn that if we gain, as a replacement, a more equitable situation. I am extremely grateful for the support CNA receives from many companies in the private sector. Increasingly I negotiate with these companies with much more confidence about what CNA can bring to the table too. A company may wish to have a caring image, to be seen to be supporting a group in society which is well regarded, to meet politicians and policy-makers at events. There is no problem with that because CNA needs access to the companies' consumers to help them recognise that they may be carers, and we need funding for our publications and our events. The end result is better information and more profile for carers. I am glad to say that CNA's partnership with Centrica (British Gas) to help us reach
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more carers has been sealed recently with the appointment of its chief executive, Roy Gardner, who is our president.
The third reason why I am increasingly confident about the role of campaigning organisations is the increased emphasis on user control of charities. Let us admit that many charities are still paternalistic, even patronising, in the way they are run, but the move to user control is gathering pace and most people would applaud that.
User control is not without its challenges, indeed conflicts, for charities. On the one hand, we are all told we must operate effectively, efficiently, compete in the market place and use business techniques. Trustees are expected to bring skills in these areas, but they must also be prepared to take on the serious responsibilities which the Charities Act made explicit. On the other hand, as the movement to user control gathers pace, it may soon be difficult to raise any statutory, trust or lottery funding without being able to prove that users are adequately represented, if not in control.
For most charities the challenge of user involvement can be viewed as developing particular kinds of partnership, rather than a take-over by users. The exciting thing is that we can view it as a model for society itself for pushing forward the agenda which will enable hitherto socially excluded groups to become empowered and to become real stake-holders in our society. Charities must embrace this concept as they show every sign that they wish to do, otherwise they will lose the support of the very people they are there to serve, their own beneficiaries.
I have every confidence in the ability of the charitable sector to make these changes, enabling charities to continue at the forefront of social change, as they have been for over a hundred years.
7 p.m.
Earl Haig: My Lords, I would like to add my thanks to my nephew, the noble Lord, Lord Astor of Hever, for initiating this debate. He has rendered great service to a number of charities and has not escaped the mantle of his grandfather in ex-service organisations. I am sure those organisations will benefit greatly from his participation. Charities must ask themselves three questions: does our charity do a job that is necessary; does it do it well; and do the public respond? All charities have to look at the situation and consider whether some of their systems and institutions need to be reformed, or whether some of their initiatives need expansion and others need to be quietly withdrawn due to the change in habits and needs of contemporary society. They should always aim at improvement. My purpose in joining in the debate is to portray some of the work of the Haig Foundation and in particular its work north of the Border. Although it is the smaller sister of a much larger organisation south of the Border, it has its own autonomy. It plays a role which is smaller than that of what we term the "other legion". Any figures which I give for Scotland are approximately one-tenth of the figures for the rest of the UK.

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In Scotland, the legion and the Haig Fund have shouldered jointly much of the heavy task of rehabilitating ex-servicemen since the First World War. They were set up slightly differently from our sister organisation south of the Border. Our benevolent funds, our grants to individuals and to institutions, our buildings and properties, our poppy factory and our homes are the responsibility of the Haig Fund and independent of the legion. They are administered by committees throughout Scotland upon which serve people who are good at business matters—lawyers, accountants, bankers and so forth. Thanks to their guidance, the benevolent money has always been well supervised.
Although the Poppy Appeal is not their responsibility, much of the poppy collection is organised by legion branches. The legion's share of that collection is used to assist in legion welfare and pension work which is conducted on behalf of all ranks in conjunction with the War Pensions Agency. The structure of war pensions, which is the responsibility of the state, must always be maintained. They are awarded to veterans of past wars and the many younger men coming out of the services who find difficulties when they enter civvy street.
As the numbers of ex-servicemen decrease, our three organisations have to concentrate available funds where the needs are greatest. There are many cases of hardship. I am always impressed by the courage and dignity of those in need. They are part of a population of service and ex-servicemen and women which currently numbers in Scotland 0.6 million. A further 0.9 million dependants are eligible to seek assistance from all or some of our charities.
Although the Scottish ex-service population is likely to fall in the next 10 to 15 years, demands on the charities' services and resources could increase if we assume that the remaining veterans of World War Two and National Service will be in their 80s by then. The joint secretariat was established 15 years ago under my presidency in order to streamline our three organisations and to avoid wastage due to duplication of staff. That system enables our management to plan ahead and to receive maximum information about the cost of our various enterprises.
Apart from our income from investments, the main source of our funds is the Poppy Appeal which brings in over £1 million a year. Part of that is allocated, as I have said, to the legion and the Officers' Association. All three organisations have their own capital, their own accounts and their own constitutions. The main difference between the legion and the others is that it is democratically elected.
From time to time outside advice is obtained about cost and salaries and ways to streamline the three organisations. The cohesion between them is satisfactory, and there is little duplication and wasted effort. But in Scotland there is a need for closer co-operation between all the various ex-service organisations, of which there are over 80. Those different organisations are not always aware of the way sister organisations are handling similar problems to their own, work in some cases being duplicated, particularly in matters concerning housing and homes.
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There is a need for ex-service people to have a single point of contact, from which government departments could also benefit. With the changing political structure in Scotland, ex-service charities will need to be able to address issues directly to a Scottish parliament. One point of contact does exist, although still in embryo; namely, an amalgamated body called SESCO (the Scottish Ex-Services' Charities Organisation). An expansion of that agency would be beneficial with the setting up of Select Committees on housing, healthcare, welfare, benevolence and finance.
I understand that there will be a tightening up of the law and accounting rules governing charities in Scotland to bring us more in line with the Charity Commission in England. I understand also that SESCO is considering making an application for charitable status to the Inland Revenue. Although I am in favour of developing that system of centralisation, I would not want to undermine the present system where individual organisations retain their autonomy. Much strength is gained when people involved in committee work have their own particular concerns at heart, and their individual experiences enable them to address those concerns.
The links between the Royal British Legion Scotland and the Royal British Legion south of the Border are strong. We have a co-ordinated policy for the benefit of ex-service people throughout the UK. Those policies are helped by office bearers from both legions attending one another's meetings. We also share membership of the British Commonwealth Ex-Service League which helps to succour men and women who fought under our flag and who suffer severe hardship.
The two legions marched together on the VE 50th Anniversary parade when the Scottish representatives flew down in a jumbo. The national coverage of the ceremonies at the Cenotaph and in the Albert Hall on TV enhances our image. The publicity work of both legions helps the public to maintain a generous response to the Poppy Appeal. The fact that so many people wear poppies in indicative of that response.
My father's appeals for legion membership retain their meaning today, although the numbers of disabled and the extent of the suffering is mercifully less. In a speech in 1919 he said:
"We feel convinced that unless there is a great society in this country whose business it is to watch over the interests of the disabled, the orphan and the widow, their interests will suffer at the hands of the state".
The other legion's membership stands at 620,000 which, together with our membership of about 60,000, constitutes what my father described as a "great society".
Headquarters, down to the rank and file, can communicate with one another by computer. The legion's reorganisation has made possible the removal of one tier from the national structure. It has installed a specialist fund-raising division to broaden the scope of its fundraising. In order to support the increasing demand on its welfare services, fundraising is now an all-year round activity. Like us, it has improved the efficiency and cost-effectiveness of providing welfare. It has created a full-time county field staff to make the

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process faster and more direct. It has stepped up its campaigning on ex-service issues and increased its standing with government and Whitehall.
The British Legion has thrown off the perception that it is an outdated institution devoted mainly to beer and skittles. It is, as it always has been, a caring institution, inspired by its motto "Service not Self". This debate will help to promote the purpose of its work in the minds of the public.
7.7 p.m.
Baroness Masham of Ilton: My Lords, I thank the noble Lord, Lord Astor of Hever, for initiating this important debate, enhanced by the excellent maiden speech of the noble Baroness, Lady Fookes. Your Lordships' House must be the biggest reservoir of knowledge about charities in the world. Today's debate has illustrated that. It gives us an opportunity to bring to your Lordships' notice some of the concerns facing many charities at present.
Charities can often provide small scale, specialised services, particularly in the field of personal care, which would be technically more difficult, and thus uneconomic, for public sector social services to provide. They can also respond rapidly to changing social conditions in a way that governments sometimes cannot. Charities can respond quickly to changing patterns of need. The volunteering factor adds value to the charitable sector, not just in terms of time but in the commitment and enthusiasm of volunteers.
I have a very serious plea to make to the Government. The countryside, with its enormous march in London on Sunday, has been in the headlines. Today, I wish to bring to the notice of your Lordships the problems of very severely disabled people who live in the country and who cannot even walk. I have not heard that mentioned in any countryside debate. They cannot use public transport if it exists and sometimes cannot even use a car.
There are in some local areas small charities providing buses or minibuses with ramps for wheelchairs which, with volunteer drivers, give severely disabled people some means of getting out of their homes or hospitals. If more tax is levied on petrol it will put that much extra expense on to the small charities which provide a meagre amount of transport for blind and disabled people. I hope that the Government will realise the extra expense which will be imposed on transport in rural areas and the loneliness and isolation which, if they are not helped by those local charities, some disabled people suffer.
The variety of disabilities is very complex. Over the years, many disabled organisations have emerged which are organisations of disabled people rather than for disabled people. These self-help, specialised organisations can promote their members' unique needs. This has been one of the changing faces of charities. Of course, some people with certain illnesses or disabilities have to have able-bodied people speaking for them. Therefore, there has to be a clear definition and constitution for each charity and the individual needs of
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members should be taken into consideration by the Charity Commissioners. An example of that has been the Charity Commission being tough in demanding in annual company returns details of the expense claims of all governing council members. Yet it appears to have been lax on some big issues. That matter has been brought to my attention by the Spinal Injuries Association, whose council members have all had broken necks or backs and are paralysed and whose travelling expenses will therefore be greater, as often public transport cannot be used.
Trustees of charities seem to have piled on them many worries and fears that they will be liable if their charities get into serious debt. Therefore, charities have had to change into very professional organisations.
The tragic death of Diana, Princess of Wales, has left a deep vacuum in many of the charities dealing with drug addiction problems and HIV and Aids. Not only did she bring understanding and compassion to the unfortunate sufferers, but she gave an important impetus to the charities' fund raising. These charities are very important, but they often have difficulties in procuring funds. As was said by the noble Lord, Lord Mancroft, there is concern about the funding through special lotteries. I hope that the Minister will give sympathetic consideration to this issue.
Many charities which undertake residential or nursing home care for a variety of severely disabled or ill people, such as people with HIV and Aids, are having particular difficulties making ends meet. If health authorities or social services withdraw their funding for beds, those charities will go under and then the patients will be returned to statutory care. That may lead to hospitals without palliative care and a home-like atmosphere, and hospitals returning to having their beds blocked by patients with a long-term condition. I hope that the Government will realise this as the charities' residential homes come under threat of closure. Indeed, some have already closed.
What worries me is that many excellent projects which have had money given to them by the Government and from voluntary fund-raising in a pump priming three-year exercise will then have their funding withdrawn. A great deal of time and effort goes into planning. When the funding ceases and the charity has to close its doors, the patients are thrown back on to the statutory services. The needs then re-emerge and the whole cycle starts all over again.
That does not inspire confidence in people who give their time, money, energy and expertise to these projects. It also wastes much needed public funds. Many charities have struggled on for some time, going from crisis to crisis. Will the Government look into these combinations of providing residential care and find a better long-term solution, so that the serious matters can be better provided for without so much wastage of human resources? Charities providing accident prevention do an excellent job in highlighting many dangers which emerge in a fast-moving society. They should work very closely with government departments.
I conclude by asking the Minister whether he will give an undertaking that charities will be listened to. I am sure that society can benefit when charities and

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government help each other, so long as the charities can keep their individual freedom in order to develop creative and inspired projects which fulfil the needs of communities.
7.17 p.m.
Baroness Hooper: My Lords, I, too, welcome this timely debate and congratulate my noble friend Lord Astor on the clear and positive way in which he introduced the topic. It is clearly important to many of your Lordships, but also to the many people up and down the country who generously give time, energy and support to an amazing variety of activities which enrich and improve not only the lives of other people, but also the welfare of birds, animals and other creatures, and, indeed, the preservation of our heritage, whether buildings or the natural environment.
Like many other noble Lords, I am involved in a variety of charities and voluntary organisations. Therefore, I have had the opportunity to see at first hand the efforts of those who freely give service in this way. That has been recognised by all noble Lords who have spoken today and by none more so than my noble friend Lady Fookes in her excellent maiden speech.
I agree with and support so much of what has been said about the treatment of charities, the functioning of the National Lottery and the PRONTO initiative of my noble friend Lord Mancroft. But these issues have been well discussed and spoken to. Therefore, I wish to concentrate on a particular educational charity. It is the GAP organisation of which I am a patron, as are other Members of your Lordships' House.
GAP stands for Gap Activity Projects. It is an educational charity which assists young people to broaden their perspective and experience by travelling overseas and working as volunteers in communities where they are needed. In most cases, the young people or their parents make a contribution to the costs.
The GAP organisation is essentially run by volunteers for volunteers and is currently sending 1,300 young people overseas to assist in such areas as teaching, caring, conservation and outdoor education. On arriving in the Falkland Islands last December, 1 was rather surprised to discover that there were no fewer than eight GAP students working in various ways; for example, in the local museum, on farms, and so on. In addition, GAP will be bringing over 300 volunteers from overseas to this country and wishes to increase and develop that aspect of its work.
From the stories that those young people are able to tell of their experiences, it is clearly a personally enriching period in their lives and one which prepares them, in many cases, for making more of their university and other career opportunities. However, it is also a scheme which can provide help and service to people in remote countries and communities throughout the world. This is greatly welcomed.
There are three issues which I have been asked to raise. I appreciate that the Minister may not be able to respond to everything that has been said in the debate. If that is the case, I should be grateful if he felt able to write in reply to my questions. The first issue is the
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need to encourage the broader educational experience to which I referred and which the GAP programme represents. I think, in your Lordships' House, that the need and importance of this is self-evident, especially when there is increasing anxiety about young people and their disengagement from society. There is a need to encourage them to play a more active part in citizenship. However, notwithstanding the fact that I believe that that is generally appreciated, it would be most welcome if the Government (who campaigned so successfully during the election last year under the banner, "Education, Education, Education-), felt able to recognise that this type of broader educational experience is important and should be encouraged and developed.
The second issue is the subject of post qualification application to university, which, again, the Government are currently considering. The main concern is that the current time-scale allows young people to apply for a GAP year one year in advance, giving time for selection, training, fund raising, and so on. In that way, a young person can make his or her commitment to the organisation or community in which he or she plans to spend the GAP well in advance. Currently, most decisions about applying to university and the GAP organisation are made concurrently and that works.
Therefore, it would be helpful if the Government, in moving to a system of post qualification application, would provide those in the GAP organisation with a clear means of communication to the Department for Education and Employment in terms of being able to provide information from their experience and being able to explain clearly their needs. They should also be included in the consultation process which is taking place as well as being involved in any pilot schemes that are envisaged.
My final issue relates to the Government's announcement of their Millennium Volunteers programme, which is a most welcome initiative. I hope that the Minister will be able to reassure me and the GAP organisation that the Government will be flexible in their approach to that programme and that they will incorporate overseas volunteering in part of that programme.
I am not asking for funding this evening, although all that has been said about that, about tax and about other issues will be of interest to the GAP organisations. I am asking for understanding and appreciation of what organisations such as GAP are doing and for the role of volunteers in giving time and the benefit of their experience, as my noble friend Lord Quinton so clearly emphasised earlier. As my noble friend said in his opening remarks, charities are about giving and that does not only mean giving money. I fully support the Motion.
7.24 p.m.
Lord Chorley: My Lords, as the noble Baroness, Lady Masham, observed earlier, today's debate has shown that we are discussing a subject of which we in this House have quite unrivalled experience. I believe that every noble Lord who has spoken has had an

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interest of one sort or another to declare. I am no exception in that respect. For nearly six years I was chairman of the National Trust, and I am currently deputy chairman of the British Council. I believe that they are probably Britain's two biggest operating charities. Although the British Council is about twice the size of the trust, they both constitute quite big businesses.
As I listened to the debate, two points struck me most forcefully: first, the sheer size of the charitable sector; and, secondly—this is perhaps more interesting—the sheer variety in terms of size, especially in terms of activity, and the way that charities are, so to speak, leaders in innovation as regards penetrating and opening up new areas.
The latter was forcefully brought home to me when I visited the European Commission in Brussels. The continental concept of a charity—and the noble Lord, Lord Dahrendorf, will correct me if I am wrong—seems to be much narrower. Indeed, I am not even sure whether they have a proper concept of charity as we do. Perhaps for that reason, and also because, typically, the continentals rely much more on state provision than we do, the range of activities pursued is far less rich than is the case in this country. At any rate, people in Brussels found it a little difficult to come to terms with the size of the National Trust—for example, the fact that we own nearly 2 per cent. of the land of England, Wales and Northern Ireland and that we have today over 2.5 million members or 3,000 permanent staff—and the sheer range of our activities. Indeed, they found it most difficult to understand how we fitted in with the rest of the United Kingdom.
I make that observation solely to make the point and emphasise the need to keep a close eye on what goes on in Brussels, so that policy formulation and prospective directives are not inimical to us due to ignorance of the charitable sector in Britain. I do so also to draw their attention, and sell to our continental colleagues, the sheer richness and vibrancy of the sector as it has developed in the UK.
The second preliminary observation that I wish to make is to note the importance of the sector's regulatory body, the Charity Commission. The 1992 Act in that regard was a major milestone, and this House played a significant role in the passage of the legislation. The Charity Commission was given new and much clearer powers and purposes and, to match its new responsibilities, much greater resources. There has been a huge increase in the number and range of charities. Therefore, the legislation was timely and the revamped Charity Commission has, in my view, operated both effectively and sensitively. It has been a positive force seeking to help the sector develop sensibly and properly rather than creating a bureaucratic straitjacket, as so easily could have been the case.
The other arm of government which concerns us and about which we have heard much this evening is, of course, taxation. Frequent reference has been made to VAT. I shall add but one slightly different observation. The Byzantine nature of the VAT legislation is quite
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extraordinary. I shall give your Lordships one example. If we in the trust incur VATable expenditure on the maintenance of our open space properties, we pay that at the 17.5 per cent. rate. However, if a local authority carries out exactly the same work (and sometimes such authorities do so as our agents) no VAT is incurred. If that is not an anomaly, I do not know what an anomaly means. We have taken this matter up on several occasions with the Treasury but have got nowhere. Coupled with that is the sheer complexity of the VAT legislation which creates a huge administrative burden on the taxpayer. For example, our internal VAT manual in the National Trust runs to 200 pages.
The withdrawal of ACT has been mentioned. I shall not say any more about that except that it will cost the trust about £3 million a year. I am confident that if a cost benefit analysis was done it would show that the loss of revenue to the charitable sector—or the gain to the Treasury, shall we say—would be more than offset by the additional expenditure that, one way or another, the Government would be bound to incur to fill in as it were the hole that is left.
I shall turn briefly to two quite different aspects of running large charities: the use of volunteers and the remuneration paid to staff. Volunteering has been touched on in the debate. It is often associated with charities and has grown enormously in recent years. It is an important part of our social and economic life. I do not suppose that it figures at all in the GDP statistics as it is unpaid. Yet in the trust well over 30,000 people, young and old, give a significant amount of their time each year to a whole range of activities. No doubt the British Trust for Conservation Volunteers has even more volunteers.
Using volunteers is not always a straightforward matter if one is to get real value from them and they from the volunteering. First, they need to do proper and necessary jobs. Therefore their work needs to be planned and they need to be managed. They work alongside and are supervised by paid staff. So there is always a relationship which is very different from that in the normal workplace. This can demand careful handling. But if one gets volunteering right, it is hugely productive and satisfying to both sides. The voluntary effort is worth millions of pounds a year to the trust.
I now wish to touch on the remuneration of staff who run a charity. I believe that point has not been mentioned this afternoon. I have particularly in mind the senior staff of large charities. They need to be properly paid. That may sound a blindingly obvious statement but it is nonetheless surprising how often otherwise sensible people have absolutely no idea of what this means. Partly this is due to ignorance as they often have little idea of what is involved in running large organisations, or of pay levels. Somehow they assume that a charity must be run differently. One detects, too, a sense that the senior staff should, as it were, be part of the charitable ethos. However, we have to recognise that the larger the organisation and the greater its complexity, the higher the calibre of management that is needed. Charities are no exception to that. One needs management that is commensurate with the nature of the job. I am not talking about commercial or City pay

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levels, but I am talking about reasonably adequate pay for people who are doing just as demanding and responsible a job as those in organisations of a comparable size and complexity in industry and commerce. It is unwise to overtrade on the goodwill of one's staff. One should always be mindful of the old adage, "If you pay peanuts, you will get monkeys".
I should also like to see these large charities show a wider acceptance that it is both proper and desirable for trustees—who devote a considerable proportion of their time to the charity—to be paid a reasonable honorarium. This applies particularly to the chairman of the trustees who carries the ultimate responsibility for good governance. The reason for this is simple; namely, to rely on people who are rich enough to do the job unpaid is to restrict the field from which the chairman can be found. There is a real risk of getting people who are either too old or past their "sell-by-date". I do not wish to labour those two points but I should like to see a wider recognition of what is involved in running these big charities. Ultimately it is for those of us who are involved in this world to educate our constituencies, but recognition and support by the Charity Commission would be a great help.
I have one final thought and that is that the relationships and constituencies involved are far more complex than those in the commercial world. I refer to the notion that because there is no "bottom line" and no profit test, running a charity is less demanding, which is, in fact, the reverse of the truth. The bottom line is a tremendous discipline. No bottom line means that performance is much more difficult to monitor and to manage. Despite this, if one manages to get things right in a charity, it is hugely rewarding to be in that business and to be responsible for running a charity.
7.35 p.m.
Lord Annaly: My Lords, I thank my noble friend Lord Astor for instigating this debate this afternoon. I also congratulate my noble friend Lady Fookes on her excellent maiden speech.
Those in this long list of speakers have highlighted a range of charities, their aims and the challenges which they face. First, I wish to say a few brief words about charities in general and the vital role they play in many cases in providing services to the disadvantaged and sick. Charities normally carry out work of a caring nature but tend to come from a different direction from government. Charities are generally willing to take risks where a health authority or statutory sector body may not dare to do so. For example, a charity may try all kinds of ways to find a cure for some illness, or they may try out a completely new service. Charities will often operate where no one else wishes to do so; for example, in war torn zones. Charities will work with client groups that others find difficult or unpleasant, for example with those who are dependent on drugs and in "wet" hostels.
Charities are often experts in a highly specialised field; for example, like SIGN—Campaigning for Services in Mental Health and Deafness. It is the charity for which I am a trustee. I here declare another interest
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as I have a sister who falls within the SIGN client group. My late father and my stepmother were responsible for setting up this charity. SIGN aims to offer a range of services to deaf people who have experienced mental health difficulties and who are striving to live independently. The charity was formed in 1986 to address the needs of this neglected and disadvantaged group of people. Of some 8.7 million people in England and Wales—that is, one in seven of the population—with some degree of hearing loss, about 62,500 (that figure is supplied by the British Deaf Association) rely on sign language as their first or preferred language. These people suffer from prejudice and discrimination. The hearing public do not easily recognise that someone may be deaf as there is probably nothing visible to show that that is the case. These people are also unable to speak up for themselves. SIGN is the only organisation which exclusively seeks to improve the provision of facilities for profoundly deaf people with additional needs.
In 1993 SIGN opened its first supported housing project in Balham, London. The large Edwardian house was converted into six studio flats with access to a communal area. Serving as a home to six residents it has been the basic model from which SIGN has developed other similar units around the country. There are two in Manchester, one in High Wycombe and a second one in south west London. Others are currently under development. The benefits to residents, many of whom have moved from long-term institutional care, are clearly measurable. With the aid and support of dedicated carers clients have learnt new life skills and, in addition to their mental health conditions having stabilised, they are moving towards a greater degree of independent living. This is an example of a charity in a specialised field working alongside government departments, providing services—care in the community—for marginalised groups for whom statutory services are either not provided or are not appropriate.
Government reports and social services inspectorate reports have indicated how poor statutory services can be for such groups. SIGN has long been concerned with the severe lack of facilities for deaf children suffering from mental illness or mental health problems. In 1995 SIGN agreed to develop a national psychiatric service for deaf children in partnership with Pathfinder, a mental health trust based in Wandsworth, London. Central to the proposal was the building of a single unit combining a psychiatric in-patient unit and long-term residential treatment centre, both specifically for deaf children, and both unique in the UK.
At the moment—noble Lords may not believe this—there is only one psychiatrist in this country who works specifically with deaf children, and he is in London. A suitable property was purchased in May 1996 and planning permission for the 10-bed intensive therapy unit and an associated six-bed residential treatment centre was granted in October 1997. That is an example of how charities can work in a collaborative way. There is currently no such service in existence and without SIGN there would still be no service. It is SIGN's expertise and money which will get this service

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developed. But in conjunction with the Department of Health, an NHS trust and other charities a new national service will be developed filling a current void. The funding of that £3 million plus capital project of the National Children's Service will be a challenge.
That brings me to my final point. I ask the noble Lord, Lord Hoyle, to convey to the Government my strong belief that Pronto!, the charity lottery, should not be restricted as proposed by the Government to one draw a day, as Pronto! would in due course be of great benefit financially to many charities. In the three months that it has been in existence, I believe that it has already raised £300,000 for five charities, with other donations due to a number more. SIGN is not on Pronto!'s list of contracted or registered charities, so I have no interest to declare although financial support from Pronto! would undoubtedly help SIGN get the National Children's Service off the ground.
I understand that the Government have some concerns about Pronto! but I have not read one which really stands scrutiny, taking into account the availability of scratch cards and the easy access to gaming machines for those under 16 years of age. I understand that Pronto! outlets would be in pubs, and only for use by those aged 18 and over. I would very much like to associate myself with the remarks in this regard made by my noble friends the Duke of Norfolk and Lord Hayhoe. It would appear that the Government's real but unstated objection to Pronto! is in fact the potential impact it might have on the National Lottery, of which they are taking, seemingly, a larger cut. I hope that the Government will think again and consider the benefits that Pronto! will provide for many charities like my own.
7.43 p.m.
Lord Dahrendorf: My Lords, we are nearing the end of a wide-ranging, important and, in some ways, rather moving debate. Perhaps I may explain why I use that word. When we reach the end of the debate, 28 Members of your Lordships' House will have spoken. With no disrespect intended, perhaps I should say that 27 volunteers and one government Minister will have spoken. Everyone has referred to charities in which he or she is involved. Twenty-eight other Members of your Lordships' House might well have spoken in addition, and many would have liked to do so. In itself it is a rather significant fact. No doubt some of us are here for the good things we have done. I assume that that is most certainly true for the right reverend Prelates on the Bishops' Bench. But it is quite striking—is it not?—that many of us are invited to take part in the life of charities not least because we are here.
In some ways it has become one of the unspoken functions of your Lordships' House that many Members should be involved in voluntary and charitable activities of many kinds. I cannot think of a second chamber anywhere else for which the same statement could be made. I for one would regard it as deeply regrettable if that strength of your Lordships' House, along with others, were lost.
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Much has been said about the motives of charities. I found memorable the maiden speech by the noble Baroness, Lady Fookes. She spoke about community formation as one of the effects of a strong voluntary sector, and about pioneering. My noble friend Lord Dholakia added an important motive: that people want to give. They do not want just to obey or make money; they have other motives. We are all complicated and have a range of motives. One is that we wish to make a contribution to the community. That does not fit readily into the language of either the state or the business sector, if I may use that essentially ugly sector language.
I can confirm what the noble Lord, Lord Chorley, said in comparing this country with others. One must be careful not to lump all continental countries together. For example, Holland has many similar features to the United Kingdom, as has Switzerland, in another way. But there is a clear distinction between what I sometimes call civil societies on the one hand and state societies on the other. It is a fact that the institutions of liberty, the rule of law, and democracy are better anchored in countries in which there is a vibrant sector of activity which does not readily fit into the dichotomy of business on the one hand and state on the other. That is why it is so important that we preserve the voluntary sector, the charity sector, with which we are concerned today thanks to the splendid initiative by the noble Lord, Lord Astor of Hever.
I can associate myself with many remarks made, notably by the noble Baroness, Lady Young of Old Scone, the noble Lord, Lord Ponsonby, and the noble Earl, Lord Sandwich. Many others have spoken in a similar vein. I wish to pick up two points on the relationship between charities and the voluntary sector in general, and Government. It is a sensitive area. Some topical developments have rightly been touched on by many who have spoken. One topical area relates to finance. I am the chairman of the Council for Charitable Support. It is a voluntary, non-representative umbrella organisation, and a place for, I hope, intelligent and useful debate. In that capacity, I have been slightly worried recently about contradictions in statements about charity income. It does not help the charities that it is not entirely clear whether there has been a decline in income in recent years. It is high time that the charities and Government got their act together and produced reliable statistics. I am pleased to hear that the Home Office is co-ordinating an exercise to find out the effects of the lottery. I understand that the first publication is expected fairly soon. I hope that organisations such as the National Council for Voluntary Organisations, and the Charities Aid Foundation (CAF) will make their contribution in getting the facts right.
Having examined the evidence, on one item I have no doubt at all. There is a gap between actual giving and potential giving. It is probably quite a large gap. A recent study by Professor Pearce of University College, London, suggests that the gap is enormous. It is hard to quantify. To do so, one has to use methods which need effective scrutiny. However, I am convinced that there is such a gap. The question is: what can those

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of us who believe in a vibrant charitable sector do to close that gap; and is there anything we can ask the Government to do to help?
A great deal has rightly been said about the tax review. The Minister will correct me if I am mistaken, but I understand that the current tax figure in so far as it relates to charities is fairly technical. It is quite unlikely to come up with proposals which even close the gap that will be opened up by the losses from advance corporation tax. However, apart from the current tax review, there is now an increasingly lively debate on more radical changes in the taxation system. Those of us who would like to see significant changes should not fix our attention on the immediate review, but should contribute to a wider debate which, as sometimes happens, may lead to results earlier than a detailed examination of a whole lot of Customs and Excise questions.
In that connection I want to associate myself personally and without reservation with the remarks of the noble Lord, Lord Quinton. If we want to close the gap between potential and actual giving, the easiest way to go about it is to turn the incentives for institutions into incentives for individuals, and enable individuals to deduct from their own tax the donations that they wish to make to charities. Like the noble Lord, Lord Quinton, I am well aware of the abuses of that system in the United States, and also of the difficulties of transition from one system to another. Nevertheless, one could make a start. I hope that the notion of a start of this kind will be high on the agenda for the wider discussion of tax reform in relation to charities.
Another point that is topical and important has to do with the famous "compact"—in other words, with an agreement, a text, a treaty almost, between government and the charitable sector. I am in favour of a compact, but of one which is light and generous. By "light", I mean that the text must be short; it should contain a few principles; it should not be detailed. And by "generous", I mean that it should be liberal; it should recognise what so many noble Lords have said—namely, that charities need the air of independence if they are to get anywhere at all. They must not become para-governmental institutions.
I know enough about the charitable sector to realise that there are charities which are very close to government. I understand that certain rules have to apply to them which do not necessarily have to apply to many of the others mentioned. I hope, therefore, that the compact will not be forced on unwilling charities. I hope that, when it is concluded, it will be possible for charities to opt in and opt out, so that we retain the large number of independent, perhaps idiosyncratic, charities—those based on an idea which not many people share but which nevertheless has its place in the free country in which we are fortunate enough to live. In other words, I should like to see a compact that respects the basic principle so generally supported in this House that charities are, after all, as I described it in a previous debate, a world of creative chaos. They are not, and should not be, wholly organised; they are a
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creative ferment in a free society. I very much hope that the compact will not change that, and that the tax debate will help it.
7.55 p.m.
Lord Henley: My Lords, as the 27th and final volunteer before the noble Lord, Lord Hoyle, comes as a conscript to the Dispatch Box, perhaps I may say what great pleasure it gives me to thank my noble friend Lord Astor of Hever, and to congratulate him on introducing the debate and persuading so many Members from all parts of the House to offer their experience of the charitable world. The noble Baroness, Lady Masham, talked about this House having the largest reservoir of expertise on charities anywhere in the country or anywhere in the world. She is absolutely right. A vast array of different subjects and different charities have been mentioned.
The noble Baroness, Lady Young of Old Scone, began the debate with the RSPB, and it ranged through lifeboats, the RSPCA, Christian Aid, to the Church Urban Fund, hospices, Butterstone School, the Drug and Alcohol Foundation—I could go on. We have covered a very great deal in four or five hours of debate.
It is right that a great many noble Lords have brought their own personal experience to the debate. I particularly commend my noble friend Lord Mancroft giving the House his views. I have to say to the noble Lord, Lord Ponsonby, that it is absolute nonsense to suggest that in doing so my noble friend breached the rules of the House. He quite clearly declared what his interests were, and made those interests clear to the House. If we followed precisely the noble Lord's interpretation of the Companion to the Standing Orders, we might be deprived of the expertise of salaried chief executives of charities and many others. I do not think that is the wish of this House.
As many noble Lords made clear, the moving of this Motion by my noble friend is highly timely. He stressed the importance to all of us of the charitable sector. Other noble Lords stressed its size and the sheer number of directly salaried employees—the figure was quoted as some 440,000. We then heard that there are about 3 million voluntary workers. My noble friend Lord Quinton referred to the 27 million others who were involved. That is an enormous figure of which we can be proud.
The charitable sector is of vital importance not only for economic reasons but for social reasons too. My noble friend Lady Fookes, in an excellent maiden speech—if we can call it a maiden speech from someone of such expertise and distinction coming from another place; but perhaps it was a maiden after so many years of self-imposed silence in the other place when acting as a Deputy Speaker—stressed just how much charities can do, at both local and national level, in fostering community values. She also spoke very firmly of what they can do given their flexibility. The noble Baroness, Lady Young of Old Scone, also stressed that their very flexibility, and—dare I say it?—disorganisation on some occasions, gave them advantages against which governments could not compete. We all accept that

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governments have a great deal to do. The vast mass of these matters must be dealt with by government. However, there are a great number of matters that are not best addressed by governments but by charities.
Perhaps I may give an example from my own personal experience in these matters. I remember taking round the collection tin for poppies for the British Legion in my own village. Perhaps in passing I may tell my noble friend Lord Haig how greatly I enjoyed working with him, and with the Royal British Legion and the Royal British Legion Scotland during my time as war pensions Minister some years ago, and just what an excellent job is done by the Royal British Legion. It is sad that we were deprived of the presence of the noble Lord, Lord Molloy, on this occasion. He would have been able to inform the House in detail of the excellence of their work.
When taking the collection tin round on that occasion I was greeted by a gentleman who agreed to put some money in but who said that he felt it was something the Government, rather than the voluntary sector, should be doing. He asked why the Government were not helping war pensioners and those disabled in the various conflicts of this century. Fortunately, being the war pensions Minister at that time, I was able to assure him that the Government did a great deal for war pensioners. I believe a little over £1 billion a year is spent on war pensions. But I had to say that, however much the Government do to help those in need, a great deal more needs to be done by the more flexible organisations which help war pensioners throughout the country. It is not just the Royal British Legion: a host of other organisations provide help and support of the kind that it is not always possible for governments to provide.
The other reason why I believe this debate is timely, as was mentioned by my noble friend when introducing the debate, and by others, is that we are perhaps seeing a long-term decline in the incomes of a number of charities. A study by the Institute for Fiscal Studies published in 1997 confirms the long-term downward trend that has continued for a number of years, but is not related to the lottery. For example, the proportion of households making charitable donations every fortnight has shrunk from 34 per cent. in 1974 to 29 per cent. in 1997.
As is also evident from last year's National Audit Office report, to which I shall briefly refer later, as a result of the decline in donations from the general public, charities have increasingly had to rely on grants from government, contracts with government agencies, tax reliefs, the sale of goods and services and especially investment income.
Investment income has also suffered, as a number of noble Lords have said. I hope that the noble Lord, Lord Hoyle, will deal with the question of how charities can make up the £300 million or £400 million that they have lost as a result of the changes to ACT announced last year. That is an enormous sum of money for individual charities. As the noble Lord, Lord Chorley, said, £3 million was lost to the National Trust purely as a result of that change. I believe that that is a matter for the noble Lord to address.
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This is, rightly, a timed debate, and in the time available to me there is a limit to the number of points I can put to the Government; and, as my noble friend Lady Hooper made clear, there is a limit to the number of points that the noble Lord, Lord Hoyle can answer. In fact, I do not believe that very many questions have been put to him but, even so, I suspect that there are far more questions than he can answer in the time that the House will allow him or the present composition of the House will tolerate at this time of night.
The first question I wish to put to the noble Lord relates to the charitable status of schools in the independent sector. This is an important matter on which we should like assurances. I should like to know whether the Government have any plans to change the status of the provision of education as a charitable object. As far as I know, education has been a charitable object since the charities Act of the early 17th century. I forget the date of the Act, but no doubt the noble Lord's officials can look it up and confirm that education has always been a charitable object. I should like confirmation that that will continue to be the case.
Secondly, I should like to underline the points made by my noble friend Lord Mancroft and many others. Do the Government intend to ban the Pronto! lottery? If so, when will they do it, and why will they do it when it is seen to be raising so much money for charity? That money is much needed when we have seen other sources decline or dry up over the years and when there is likely to be a further decline as a result of the changes to ACT.
I now come to questions of taxation and other revenue matters. The noble Lord will be glad to hear that I shall not deal with the question of VAT on churches. I have had the dubious pleasure of answering questions on that subject from the Dispatch Box opposite and I know what a tricky task it can be. The noble Lord has been asked that question and no doubt he will wish to respond to the right reverend Prelate in due course.
I should be grateful if the noble Lord could say something about the Government's review of charities tax law, which was announced in last year's Budget, and whether there is likely to be a response in the Budget on 17th March. The noble Lord will not be able to comment in detail but I should be grateful for any assistance that he can provide.
I wish to raise one other detailed point, which was touched on by the noble Earl, Lord Sandwich, relating to the Trustee Investments Act. As the noble Lord will be aware, that Act was introduced in 1961 to compel charities to spread their investment risks across a range of different investment vehicles. It was recently described by the Association of Charitable Foundations as a costly and out-dated straitjacket, which it claimed cost charities some £40 million a year. Before the election the previous government announced plans to scrap that Act, but because of the constraints of the 1997 election was unable to get the measure through the various parliamentary processes. It is my understanding that what was announced at that time was not considered

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to be politically controversial and I should be grateful to hear whether the Government are prepared to move on that matter.
My last question relates to funding. From the National Audit Office report of May last year we see that some 18 per cent. of funding for charities comes from the Government by way of contracts and tax reliefs and some 16 per cent. from grants. Much of that obviously comes in the form of core grants. There has been a degree of concern over the years that there has been a gradual shift away from core funding, on the occasions when government or local government provide support, to funding by use of specific grants. I very much hope that in any review of charities the Government will consider that matter very carefully indeed. I believe that it has considerable implications for charities.
8.8 p.m.
Lord Hoyle: My Lords, like other noble Lords, I am grateful to the noble Lord, Lord Astor of Hever, for securing this worthwhile debate. In view of the number of Members of your Lordships' House who have participated, it is unnecessary to say how much attention the debate has attracted. The noble Lord, Lord Henley, was right to point to the number of charities which have been referred to; it shows the wide interest of noble Lords in charities. That is important, and it has been a very valuable debate.
The noble Baroness, Lady Fookes, and I were colleagues in the other place. I did not realise that she was maintaining a Trappist silence whenever she was in the chair; we all trembled when she got up and addressed us! I am delighted that she has joined us and I look forward to hearing many more speeches from her from those Benches. They will all be worthwhile contributions. We all admired her contributions in the other place—when she was allowed to speak—and the great work that she does for charities. I am pleased that she took this opportunity to make her maiden speech on the subject.
The noble Lord, Lord Henley, was right, of course, that I cannot answer all the points that have been raised with me. In fact, I cannot attempt to answer all of them. But I would say to him that I have no intention, and neither would he if he were on this side, of pre-empting the Budget in any way. Nor would he expect me to do so.
I will try to answer some of the specific questions which have been asked, but first I should like to deal with general points. I think there has been general agreement, certainly shown tonight in the debate, that voluntary organisations and volunteers are vital to the United Kingdom. They are not fringe activities but are central to the fabric of our society. We all owe a debt of gratitude not only to the full-time employees, who number over 300,000, but to the volunteers, who number over 3 million. I am sure I carry all parts of the House with me in saying that we all wish to thank them for the work they do.
I now come back to the Government's position in relation to charities and volunteers. We believe that volunteering and community involvement are essential
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acts of citizenship. The role charities are playing in the modern world, and the demands placed upon them, are ever increasing and changing. We, in the Government place great value on their work: their contribution to the lives of millions of people has been immense. I think everyone would agree that they are essential, not only in the provision of services, but also because of the vital role they play in society. The voluntary sector has an enormous range and diversity. In the past, many of us have rather taken that role for granted. We aim to redress the balance as a government and to give it the recognition that it so richly deserves.
That is why, as in many other areas, we are committed to a partnership approach. We are developing a compact with the sector on this basis, as has been referred by many speakers tonight. Our belief is that the Government and the voluntary sector share many values and goals and that we can achieve far more by working together than by working apart.
The compact will be a statement of the principles which will underlie the relationship between the Government and the voluntary sector. Initially, of course, it will apply to central government but we hope that ultimately it will extend to all public authorities.
What I can say, here and now, is that that will be a very light touch on the rudder. There is no intention of interfering with charities as such. Charities must be independent. What we are offering them is a partnership between them and the Government. But, as has been emphasised so often, we have to take into account the diversity, and the difference between charities. That has to be recognised. I would hope that the benefits of the compact will be seen and that most charities, having seen what is happening, will want to join.
All speakers have agreed that the Government, in drawing up a framework, must encourage and support voluntary activity. A part of that framework must be provisions that ensure that, where appropriate, policy affecting volunteers and voluntary organisations is co-ordinated across Whitehall. On the other hand, as I say, charities' independence must be retained, and they must remain at arm's length from government. That will be achieved by good working relationships both informally—and I stress informally—and by regular bilateral liaison. Formally, a ministerial taskforce and working group will be set up. That will be chaired by my right honourable friend the Home Secretary. It will oversee and monitor the way in which the principles of the compact are put into practice and the way in which the principles of partnership are implemented across all departments. That is very important. The responsibility cannot rest with one department: it spreads across quite a number of departments. The working group held its first meeting two days ago.
For charities, a legislative framework is required. It only takes one scandal affecting a well-known charity, one question mark over the propriety or even efficiency with which voluntary organisations are run, to put in jeopardy the public's support and money. So we must bear that in mind as well.
Our aim is to ensure that the legislation meets current requirements without overburdening charities with unnecessary requirements. That is a matter which has

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been raised time after time by speakers. We do not want, in any way, to interfere with the particular nature of charities or the diverse work that they do. So we have set up the Better Regulation Taskforce. It has been established as an independent advisory body and will advise the Government on measures which improve the effectiveness of government regulation in relation to charities. The task force has a sub-group for charities and the voluntary sector. The main thrust of its current work is to review rules and regulations relating to government funding of the voluntary sector. We look forward to receiving its recommendations later this year.
I move on to the review of charity taxation. There, I may say that I take issue with the noble Lord, Lord Mancroft. It is not just a technical matter. It is the first time a comprehensive look has been taken at all charity taxation. The review includes both VAT and direct taxation. It has been widely welcomed by the charities themselves. Its aim is to see whether there is scope for the simplification of charity taxation.
Secondly, and again this relates back to the Churches, I understand what the noble Lord, Lord Henley, says in talking about this as a European matter and our difficulties in relation to VAT, which, once put on, cannot be reduced. But we are aiming to make Europe aware of our position on VAT as applied to charities and to see where we can go from there. We are hoping to publish a document for consultation in the spring. Obviously, and I say this to Lord Henley, I cannot pre-empt the outcome of the review, but the points that have been made in the debate will, of course, be brought to the attention of the review body. That review body is an inter-departmental one. It includes the Treasury, Customs and Excise, the Inland Revenue, the Charity Commission and the Department of the Environment, Transport and the Regions. So we are intent on helping the charities themselves. The main thing is to ensure that all the matters are considered in depth and the report will go out for consultation with the charities.
I shall now try to reply to some of the points that have been raised with me. The noble Lord, Lord Astor, and the noble Baroness, Lady Linklater, asked whether the Government will compensate charities for the losses in relation to ACT. I may say in relation to that—and again the noble Lord, Lord Henley, was another who asked me—that the reason for the abolition of tax credits on UK dividends was that it was part of a wider budget package, including a substantial cut, as has been said, in corporation tax rates. This was designed to promote economic stability and rebalance the tax system in favour of investment and long-term stability.
However, the Chancellor recognised the impact of the change upon charities in two ways. First, it was deferred for charities until April 1999. Secondly, we have provided for special compensation payments on a sliding scale over a further period of five years which will be worth nearly £1 billion. I know that it is a blow, and we do sympathise, but charities have nearly seven years to adjust to the change.
Many noble Lords asked about independence. I have already said that independence must be at the forefront in relation to the compact. The noble Lord, Lord Astor,
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reaffirmed the uncertainty of the law in the area of political activities. The law may be complex but the Charity Commission has published guidelines explaining within these rules what charities can and cannot do. The guidelines themselves were prepared after consultation with the charities.
The noble Lord, Lord Mancroft, and others asked about the lottery position. We sought advice on this and asked people for their views. Noble Lords have asked why there can be only one draw per day. All the views we received are being considered at the moment. The noble Lord, Lord Mancroft, is aware that his views will be considered before the response comes out. Many noble Lords have asked about the Pronto! lottery and have pointed out that it brings great benefits to many charities. I will ensure that all your Lordships' views are brought to the attention of the Minister and his advisers when they are considering this matter.
The noble Baroness, Lady Young of Old Scone, asked about the compact and partnership. I cannot say too often that the Government recognise the need to balance support for voluntary organisations with their independence. But, again in relation to the tax review, I cannot pre-empt anything that will come out of it.
I have already referred to the maiden speech of the noble Baroness, Lady Fookes. She said, like many others, that government help must not be in the form of a straitjacket. I think I have made the Government's position clear. In attempting to help charities, we must do nothing that interferes with them or puts them in a straitjacket.
The right reverend Prelates the Bishops of Lichfield and of Hereford asked about VAT relief. I shall attempt to go over some of the ground which the noble Lord, Lord Henley, covered. The Government are sympathetic to the problems the Churches face with such costs but there is no possibility of removing VAT. Under European legal agreements, in the form of the sixth VAT directive, the UK does not have the option to create any new zero rates or to extend the scope of existing zero rates. To change European law would require the unanimous agreement of all finance ministers of the European Union. However, one of the main aims of the Government's review of charities' taxation is to inform the Government of the views of the charitable sector prior to any future debate with our European partners on VAT social reliefs. The concerns of the Churches have been clearly expressed not only here today but during the first phase of the review in which ideas and suggestions have been asked for. We will he taking up the matter again to see whether we can secure any way forward. I recognise the tremendous difficulties in which this places churches and cathedrals.
The right reverend Prelate the Bishop of Hereford referred to the charity funds raised and to the core services that ought to be rendered by the National Health Service. I shall certainly see that the point he was making is brought to the attention of my right honourable friend the Secretary of State. However, in saying that, I think he would agree with me that the demands on the health service are many and varied. We have put extra funds into the health service, but there will always be great demands on the service.

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Many noble Lords said that the ban on the on-line lotteries is hitting small charities. However, I have said that the views expressed so forcefully tonight will be brought to the attention of the Minister drawing up the Bill. We have heard many varied speeches in the debate. It was right that noble Lords who are involved in charities and are proud of them should bring that to the attention of the House.
The noble Baroness, Lady Emerton, referred to the Order of St. John and asked what is medical and what is not medical in relation to the review. The case of St. John has been raised as part of the review and it will certainly be looked into. We did not bring the problem about but inherited it from the previous government. Nevertheless, that does not make it any less painful to the noble Baroness. She is right in saying that an appeal has been made to the VAT tribunal. We are awaiting a date for the appeal. We shall have a comprehensive look at it because there is a need to clear up this matter. I hope that we can get a satisfactory outcome.
My noble friend Lord Ponsonby asked about the compact between the Government and the voluntary sector. I have dealt with a good many of the points of concern in that area. He also asked about core funding, a matter which was mentioned by a number of speakers. It is certainly something that needs to be looked at. It is not much good going for a project and, when it ends, the charity being left without the funds necessary to carry on its normal business. That can be a hindrance to the charity and it is certainly one of the points at which we shall be looking.
The noble Lord, Lord Westbury, referred to administrative costs. The Charity Commission monitors administrative costs and it will challenge any charity whose costs seem unjustified or markedly out of line with similar charities. That is an important point. It is very necessary that we keep these matters under review. The noble Lord, Lord Hayhoe, raised similar points and asked about "Pronto!". I say again to him that he would not want me to pre-empt what may come out of the review. He has raised the matter with me before tonight. I shall ensure that his views are brought to the attention of the people concerned.
We seem to be well-fitted as regards ex-Speakers of the other place tonight. I admire all the work done by the noble Lord, Lord Weatherill. He was quite right to talk about the Prince's Trust which he represents which helps the under-privileged and also the Action Trust which sets up young people in business. I know that the matter has been looked at, but we need to see whether there can be a fast track procedure. Once again, I shall bring that to the attention of those concerned.
I now pass to the noble Earl, Lord Sandwich, who raised quite a few points. He asked what were the aims of the review and I have already explained that. He asked about the simplification of charity taxation and to inform the Government's negotiating position in any EC review of social relief. He raised a number of points. The noble Lord, Lord Rotherwick, asked about telephone helplines. I may be able to give him some good news because the Home Office will be providing a
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grant towards the core costs of the Telephone Helplines Association, which as many noble Lords know, is the umbrella body. I hope that is welcome news to him.
I now refer to the noble Baroness, Lady Hooper, who asked me a number of questions. She spoke quite rightly about the efforts that go into educational trusts and taking people overseas. That is very important indeed. She spoke about the Millennium Fund. I say to her that at the moment discussion is taking place about that. I hope that those points of view will be made known and put in the paper. It is a matter that should be looked into. I certainly undertake to bring it to the attention of my right honourable friend the Secretary of State for Education and Employment.
I shall now try to deal with several matters raised by Lord Chorley. He asked why local authorities have tax advantages which are not available to charities. Local taxation has to bear the costs of many services which local authorities undertake. Council taxpayers also have to bear the burden of those services. If what the noble Lord suggests was done, it would reduce the services which local authorities can provide. The only alternative would be to increase council tax to cover that. However, charities have a different range of tax concessions unique to them, which are designed to support their valuable role. Charities also undertake some activities in which they are in competition with the commercial sector for local authority contracts. Therefore, it would be difficult to treat charities differently for tax purposes.
I hope that I have dealt with as much as I can in the 25 minutes that I have had to address the House. There was a great deal of common ground among all speakers. I hope that I have said enough tonight to demonstrate that the Government are determined to play their part in making charities not only important and a cornerstone, but to work with them in order to create a better climate for them to work in. We hope that we shall make this vision a reality. I once again thank all noble Lords for their very valuable contributions.
8.34 p.m.
Lord Astor of Hever: My Lords, this debate has clearly highlighted the size of the charitable sector and the important work carried out by so many different charities. I thank all speakers, each one an authoritative and knowledgable speaker, who have contributed to the debate. I also thank the Minister who addressed so many of the points that we made. Finally, I congratulate my noble friend Lady Fookes for her excellent maiden speech. My Lords, I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Millennium Celebrations
8.35 p.m.
Lord Tanlaw Lord Tanlaw rose to ask Her Majesty's Government what is their response to the claim made by the National Physical Laboratory, the British Horological Federation and the National Mapping Agency of Great Britain that the third millennium is to be celebrated at Greenwich on the wrong meridian with the wrong time-scale and in the wrong year of the second millennium.
The noble Lord said: My Lords, I am most grateful to the House for allowing me to bring before it once again some of the complexities of time, perhaps to make the public more aware of just how complex they are and also perhaps to give an opportunity to the Government to correct them before the millennium starts.
I must make clear at the outset that this Question has not been raised as an indirect means of criticising the Dome at Greenwich, its costs or its contents. I see the Government's objective regarding the Dome as a genuine attempt to divert, satisfy and educate the general public in the year of the millennium—a goal which I heartily support.
Am I not correct in saying that it follows a long tradition in populist government, which was commented on as long as 2,000 years ago by the Roman poet Decimus Juvenal? Did he not use the immortal phrase, pane et circenses to describe bread and games of the circus with which the Caesars used to divert the people from the anxieties of everyday life?
I believe that the Dome is something along the same lines. As I say, I support it but with two possible provisos to this approach. By all means let the Government help us enjoy the occasion to the fullest, but does a government of today, in order to remain popular, have to feed the people with scientific facts, as they are perceived, rather than with the scientific truth? I believe that the majority of noble Lords are aware that the sun is perceived to revolve around the Earth. The scientific truth is otherwise, as we all know. Galileo Galilei in 1633 risked his life and virtually lost his reputation by making the public statement,
"And yet the Earth moves".
I shall return to this question later.
Meanwhile, there is another problem, of how best to maximise the national income from the promotion of these celebrations. How can this be achieved successfully if Britain remains outside the European time zone? Is the noble Lord, Lord Haskel, not aware of the loss of potential franchise income to the British communications industry, which is just one example, which will arise by celebrating the arrival of the new millennium at least one hour later than the rest of Europe? I am sure that the noble Lord is aware that the world may be unable to watch the celebrations in the Dome, as has been predicted by the Minister without Portfolio, because Europe will have gone to bed and the Americas will not yet be awake.
Is the noble Lord also aware that the world may be surprised that the so-called "modern" Britain still apparently wishes to retain an outdated time scale on its statute book and that the Dome displays an architect's model with the historic rather than the correct prime meridian?
The focus of my Question is to try to ensure that visitors to Greenwich and the Dome are given correct rather than perceived scientific and historic facts about the millennium celebrations on 1st January 2000 and in particular the co-ordinates of time, place and date with which Greenwich has been historically linked for the
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past 300 years. For example, the prime meridian, or the longitude line zero, is not—and I quote from the new Millennium Experience pamphlet,
"defined by the line drawn on the eye-piece of the large 'Transit Circle' telescope in the Old Royal Observatory",
as it was defined in the Treaty of Washington 1884. That information is out of date. The Ordnance Survey customer information sheet of September 1997 states more correctly that the new prime meridian for the millennium will be defined by the IT and ET reference frames of 1989.
I am asking the Government to ensure that the new prime meridian—now calculated to an accuracy of centimetres by global positioning system satellites—will be clearly indicated on the ground to visitors to Greenwich and the dome. Furthermore, I am asking the Government whether they will have the courage and imagination during the term of the British presidency to persuade the European Union to adopt a new European time zone based on the ETRF89 prime meridian at Greenwich.
After all, is not time intended to be the main theme of the dome? Was not Greenwich selected in preference to Manchester, Edinburgh or Cardiff because of its 300-year history of accurate timekeeping? Then why does there appear to be so much confusion over this subject? I wonder whether it is because the Government apparently require two senior Ministers to be responsible for time—the Minister with responsibility for science and technology, for the leap second of the national time scale and the Minister of State, Home Department for summer time? Is not that the equivalent of having one Minister responsible for the big hand and another for the small hand of public time? Does that anomaly explain why noble Lords, including myself, received a negative response to suggestions in previous debates? Is it incomprehension or the duality of departmental responsibility that is the root cause of that silence?
Will the Minister confirm that the Prime Minister has stated on a number of occasions that it is his intention that the New Millennium Experience should bequeath a permanent legacy to not only the citizens of Greenwich but the nation? Does the Minister consider that the rebirth of GMT as Greenwich meridian time, as a new local time for both Britain and Europe, would be a fitting legacy after the celebrations are over? Would not that be a more permanent legacy than the empty marquee on a desolate mudbank that will await the removal vans on 1st January 2001?
As the Government are aware, 1st January 2001 is the real beginning of the third millennium, but most people have indicated that they wish to celebrate the occasion from 1st January 2000. I do not argue with that because I shall be joining them. The difference in dates is historic rather than scientific and was recognised as such at the beginning of this century. The newspapers of the period reported that the 20th century was to be publicly recognised as starting on 1st January 1901, not 1900. That was because the official date of Christendom should have been 0 AD not 1 AD—whereas the historical birth is put at between 4 BC and 7 BC, according to Lambeth Palace.
The first year of the new Christian calendar, which I think was designated by Pope John I, was 1 AD—anno domini, in the year of the Lord—rather than 0 AD because the zero was not available in Europe until about 200 years later. Interestingly, the term BC, meaning before Christ, to register the years prior to 1 AD was not created until about 1,000 years later, in 1681. The terms BC and AD to define the years of Christendom are, I understand, about to fall out of use. Perhaps the right reverend Prelate will put me right, but that is what I have been told. I understand that new terms—BCE and CE—might be possible replacements, with BCE standing for Before Christian Era and CE for Christian Era. Non-Christian countries and, I suppose, agnostics may prefer to interpret the letter C as standing for the "common" era of all humanity.
Might not the Christian Churches call a special ecumenical committee to agree those terms before the start of the new millennium, so that the year 1 CE could be internationally recognised as the official start of the Christian or common era? The years before 1 CE would be known as BCE—before Christian or common era. My concern is that if there is no general clarification or standardisation, software organisations such as Microsoft might select terms of their own choosing. It is unlikely in my view that such terms would pay deference to Church history. The millennium bug, which is causing so much trouble in IT systems in Government and the private sector, has been caused by the failure of designers correctly to identify the co-ordinates of time and date. I hope that clarifying BC and AD to BCE and CE will allow them to become a standardised IT protocol that will see us through to the next millennium.
I understand that more than £1 million per day is being spent and will continue to be spent on the dome celebrations, until 1st January 2000. They are primarily intended to illustrate in dramatic form "modern" Britain's achievements past, present and future. Can the noble Lord the Minister say why we as a nation will not be celebrating that momentous occasion together with, and at the same time as, the rest of Europe? Why will so-called "modern" Britain still have an outdated time scale on the statute book, when the rest of Europe and the industrial world have accepted as the default time scale since 1975 atomic or co-ordinated universal time? Is not this the moment, while there is still time before the new millennium, to ask the Select Committee on Science and Technology to form a special sub-committee to investigate the question of how British time is presented to the public, Europe and the outside world?
Does not the noble Lord agree that if such a sub-committee were to be formed, it should have the widest possible terms of reference? They would of course include the ability to recommend rationalisation of the responsibilities of the two departments currently responsible for time into one—the most suitable being the Department for Trade and Industry, which has a scientific section. Does the Minister agree also that such a sub-committee could investigate the best methods of harmonising British civil time with European time—either by introducing a new civil time scale, as I have
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suggested, or equalising the values of the existing time zones between Britain and Europe? Does the Minister agree that the sub-committee could also have powers to recommend whether or not the referendum on entry to the European monetary system should include the question of time harmonisation?
I hope that the noble Lord will not be advised by his department to ignore suggestions, as has happened on previous occasions, and that he understands that matters of deep principle underlie the specific questions that I have raised in this Unstarred Question. If I receive a negative response regarding recognition of the scientific facts, that will merely confirm the situation for me this evening—just as it did for Galileo Galilei some 365 years ago. The date of 1st January 2001 CE may mark the birth of a new Dark Age—an era of virtual reality in which Church and state could find it more convenient to replace factual reality with their own perception of what is real. I hope that I am proved wrong.
8.48 p.m.
The Lord Bishop of Lichfield: My Lords, I am sorry to say that I have not had the benefit of listening to previous debates or discussions on this subject, but I had been made aware that a word from the Churches would be welcome. I believe that there would be general agreement among the Churches that we may not know the precise date of Christ's birth at Bethlehem. It is very possible, therefore, that we may celebrate the third millennium on the wrong meridian, with the wrong time scale and in the wrong year. But perhaps the wrong year may not be that far out.
My friend and colleague the Dean of Lichfield, in my own diocese, is both an eminent New Testament scholar and an ancient historian. He informs me that, as the noble Lord said, a date between 4 BC and 7 BC is favoured by many scholars for the birth of Christ—4 BC being the same year in which Herod the Great died. If 4 BC is correct and if we are concerned about the particular year of Christ's birth, it means that the 2,000th anniversary of His birth already happened in 1996, so the Dome is therefore already four years behind schedule—if 4 BC is correct.
Other scholars within the Churches and Christendom generally would look at it from another point of view. Although the event of Christ's birth is of great importance to Christianity, there would be general agreement that the climactic events recorded in the New Testament are not Christmas Day, but Good Friday and Easter Day. In those events, so the Church believes, death itself was defeated and evil routed. But, again, those key events probably took place in AD 30 or thereabouts, so that a strong body of opinion which sees those events as the centre of the Christian era would hold that there is still a generation to go before an even more important celebration is due.
My real point is this: such issues as the precise dating of Christ's birthday—I shall be interested to hear what the Minister says about the suggested committee to consider the scientific issues—as raised by the noble Lord's Unstarred Question are secondary to the

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Church's understanding of the heart of the matter. The heart of the matter for a Christian mind is the coming of Christ. I must advise the noble Lord that I have no news or evidence of a discussion in the Churches about switching to BCE and CE. The key issue for a Christian mind is not whether we can put an exact date on the coming of Christ, but the meaning which the coming of Christ gives to human history in terms of new personal purpose, new direction and new hope.
Recently at Question Time, a Member of your Lordships' House asked bluntly, "Whose birthday is it anyway?" A lot of heads turned towards these Benches. The answer now from this person on this Bench is that, in the Church's view, it is the birthday of the Son of God into the course of human history, thereby giving to all time and all history, including our own individual lives, new purpose, new priorities and new hope.
On a Christian view, time is not to be killed. Time is a highly precious commodity. Even a new millennium is a time not merely to be celebrated, which is why arguments about dates and domes are secondary in the Christian view. Instead, all time—not just millennium time—is precious because it can be used for the greatest benefit to mankind and for the loving purposes of God.
All the Churches in England have therefore set themselves this task as the millennium draws near: to forge a living link between the fact of Christ's birth, the year 2000 and, even more importantly, the possibility of personal meaning and public hope. In the Churches' strategy there are three clear messages, which have been widely accepted by all the Churches in these islands: "A New Start at Home"; "A New Start for the World's Poor"—that is the practical issue relating to the preciousness of time—and "A New Start with God".
In my own West Midlands diocese, for example, we plan to make "A New Start At Home" in those areas of the diocese which have suffered the large collapse of manufacturing industry. I refer to places such as Wolverhampton, Walsall and Black Country communities such as Tipton and West Bromwich. In those areas brave efforts have been made by agencies such as the Black Country Development Corporation with regard to land reclamation, the detoxification of old mine shafts and the creation of new prime sites to attract Japanese, European and American investment. Those are examples of using the preciousness of time to benefit people's lives. However, as the Church sees it, in my area, urban regeneration with its new roads and prime sites leaves one huge task unfinished. I refer to the task of "people regeneration" and to the regeneration of community life, family life and personal life. That is what, for us, the millennium is about.
In my own diocese, therefore, the year 2000 does not mean arguments about dates and domes; it means developing the splendid work of Christian truancy workers, guiding truanting children and neglectful families back to the community of the school. The millennium in my diocese means the strengthening of our partnership in relevant industrial training schemes. It means the opening of community care centres, like the one I opened last Sunday in Bilston with the local Member of Parliament, where life-long learning,
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industrial retraining and care for the well being of families and children can grow. For us, that is what the millennium is about.
Finally, aside from the scientific debate which is important in its own way, if the millennium truly is to honour the one whose birthday it is, we need to set up another signpost—of greater freedom for the world's poor. We need a new start not only at home, but also for the world's poor. More than a century after slaves were officially freed, millions in the world are now in bondage because of crippling debt, compounding itself over and over in a dark spiral. I lost a daughter in a place near the Equator in East Africa where no medical facilities were available to save her life. There are still no medical facilities there—and that is because that country is too busy repaying its debts instead of spending its money on those vital issues.
In conclusion, I am suggesting that our minds need not be too greatly preoccupied with precise questions—but I wish the noble Lord, Lord Tanlaw, good fortune with his scientific committee—concerning the right meridian, the right time scale and the right year. Rather, at this new millennium, I suggest that our minds might be more profitably addressed to the deeper implications of whose birthday it is in terms of more effective action for justice, peace and the greatest benefit for mankind.
8.57 p.m.
Lord Haskel: My Lords, I must first congratulate the noble Lord, Lord Tanlaw, on the ingenuity of his Unstarred Question. He asks about the claims by three different bodies about three different things, so in theory there could be nine different answers. However, I think it important to state at the outset that at least some of the bodies in question have not made a claim in quite the way he expresses it. Noble Lords have gone beyond the apparently conflicting physics of the millennium into more spiritual considerations and deliberations on society.
However, the noble Lord, Lord Tanlaw, raised serious points of science and I should like to deal with those first. I start with the question, "What is the year when the next millennium starts?" The noble Lord is absolutely right that the next millennium will begin on 1st January 2001. The Government are aware of that, but the decision has been taken to concentrate millennium celebrations across the country throughout the year 2000 as all inquiries indicate that that is the year in which the public wish to mark it. There is some logic in this. One might say that the year 2000 is an extended New Year's Eve for the year 2001. After all, it is on 31st December of each year that we see the maximum amount of celebration, not the first day of the new year. I say to the noble Lord, Lord Tanlaw, that the remainder of Europe also appears to be celebrating the new millennium with us in the year 2000.
I move to the scientific question of what is the right or wrong meridian. Certainly, there are two meridians at Greenwich but, unlike lines of latitude where nature provides us with an obvious reference in the equator, the reference point for lines of longitude is arbitrary. I do not say that all lines of longitude are equally good

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because it is important that the reference is well defined and capable of being measured, but within these constraints we have a choice.
The noble Lord has mentioned the prime meridian. This is the most familiar meridian which is indicated by a brass strip in the courtyard of the observatory. But this is not the only meridian at Greenwich. To demonstrate that this does not matter the noble Lord will be aware of what happened about 50 years ago when the Ordnance Survey repeated the triangulation of the country which originally took place in the late 18th and early 19th centuries. As part of the new survey, observations were taken to connect other stations with the instrument sitting on Airy's meridian, the one indicated by the brass strip. To the surprise of the surveyors there was a discrepancy in longitude equivalent to about eight metres—far greater than could be attributed to errors in observation, even in the 18th century.
The discrepancy was explained by the Royal Observatory's then chief assistant. In 1840 the seventh Astronomer Royal, Sir George Airy, had decided to install a larger meridian instrument and wished to operate both instruments for a while to ensure continuity of measurement. As a result, Airy's instrument was installed six metres to the east of Bradley's. To this day, Ordnance Survey maps still use Bradley's meridian. But the fact that different meridians are in use does not matter as long as we know the relationships between them. Physics has moved on in the past century, and it continues today. Because the earth's crust is constantly moving, a meridian line firmly fixed to the ground in one place is not ideal for work of the highest accuracy. The scientific community therefore now uses for practical purposes a frame of reference known as the Terrestrial Reference Frame of the International Earth Rotation Service. This reference frame is based on observations of satellites and celestial radio sources known as quasars made from various co-ordinated stations around the globe. It is designed so as not to rotate as the tectonic plates move around with respect to each other. The effect of this is that any meridian fixed to the surface of the earth will move with respect to the reference frame.
At the latitude of Greenwich the meridian of the International Terrestrial Reference Frame is about 100 metres to the east of Airy or prime meridian. The movements of the tectonic plate on which we sit are quite small—only a few centimetres a year—and do not explain the 100 metre difference. However the International Terrestrial Reference Frame was a successor to an older reference frame that used about 80 observatories around the world. The positions of these were determined using the astronomical methods and time measurements available at the time, and it appears that an error crept in somewhere along the way. But, as with the meridian used for Ordnance Survey maps, it does not matter which meridian is used provided we know where it is. I hope that that deals with the noble Lord's concerns about the meridian.
I turn to the question of time. Time and longitude were for centuries intimately connected. The noble Lord is an expert on time. He will be aware that for most
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practical purposes we now use a time scale based on atomic clocks. In theory this is independent of position. I say "in theory" because the time scale in question, Co-ordinated Universal Time, is not pure atomic time, but a timescale which, by adding occasional leap seconds, has been kept to closer than one second of what I shall call familiarly Greenwich Mean Time. By these means the link between time scale that we all use, often without realising it, and longitude has been maintained.
I cannot speak for the British Horological Federation, but I do not think that either the National Physical Laboratory or the Ordnance Survey, which is the body that I believe the noble Lord means when he refers to the national mapping agency of Great Britain in the title of his debate, has ever claimed that we will be celebrating the next millennium on the wrong meridian with the wrong time scale. What they have done is to describe what happens for scientific purposes, and that may not be the same as people's perceptions. I ask the noble Lord, Lord Tanlaw, to be a little tolerant of people's perceptions. The Government have to be, and perhaps that explains some of our actions.
When and where will the 1st January 2000 begin? The basis for the beginning of the universal day was decided at the International Meridian Conference in 1884 when it was decided that the universal day would be a mean solar day beginning at the moment of mean midnight at Greenwich. Today, this can be interpreted to mean many things. On the one hand, perhaps it means that we should refer to the time according to a mean sun on the meridian currently used for astronomical purposes; namely, the one that is 100 metres to the east of the brass strip. On the other hand, perhaps we should apply the same principle as we apply to Ordnance Survey maps and Bradley's meridian and refer to it as the meridian in use in 1884. If so, we would refer to the brass strip in the courtyard. Whichever meridian we use as our reference, at most it is 100 metres from the brass strip in the courtyard at Greenwich. A difference in longitude at Greenwich of 100 metres is equivalent to a difference in time of about one third of a second. Moreover, whichever time scale we use—Co-ordinated Universal Time or one of the three forms of universal time—we would be within one second of Greenwich Mean Time. All in all, there may be an uncertainty of a second or so at the start of the millennium celebrations, but I join the right reverend Prelate in asking: does it really matter?
No one can deny the important role that the Greenwich Observatory has played in time, measurement and navigation. Greenwich is still synonymous with time throughout the world. What is a second or so in the context of something which only happens once every thousand years?
The noble Lord, Lord Tanlaw, spoke of the advantages of our being on European time. He pointed out that if we were to harmonise time across the European Union we would be celebrating the beginning of the millennium at the same time as the rest of the Continent. I understand from the Secretary of State for Home Affairs that there are no plans at present for the United Kingdom to move to central European time.

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The noble Lord, Lord Tanlaw, also suggested that the Committee on Science and Technology could look into the question of time. I should point out that that committee is independent of the government. This matter is best raised with its chairman, Lord Phillips. I met him today in the corridor and mentioned the matter to him. He asked me to write to him and although the Select Committee is very busy on other matters I am sure that he will take the noble Lord's suggestion into consideration.
The noble Lord, Lord Tanlaw, also suggested renaming Co-ordinated Universal Time as Greenwich Meridian Time, and he mentioned the Prime Minister in this context.
Lord Tanlaw: My Lords, that is not what I suggested. I suggested that a time zone, British civil time, be called Greenwich Meridian Time, based on the Meridian at Greenwich, which would cover 15 degrees east or west of Greenwich, that is the central parts of Europe. I did not confuse it with UTC.
Lord Haskel: My Lords, I thank the noble Lord for pointing out that matter. I shall write to him regarding that suggestion when I have looked at it in detail.
The millennium is an important occasion and it is only right that we look at what may happen. A thousand years ago ignorance and superstition were such that people thought the world would end at the end of the first millennium; indeed, preparations were made for that event. At the second millennium we are at least looking forward to the future. We are using the power of our knowledge, curiosity, imagination and audacity to see what the future holds in store. We can anticipate the future, but we cannot necessarily predict it. That is what we hope the Millennium Dome and the Millennium Experience will do.
As the celebration of the millennium is also a time to celebrate technological and engineering achievements, it is right that the celebration should be in Greenwich, which is the birthplace of the science of accurate navigation and time measurement; and this was achieved in a wonderful spirit of enlarging and extending science. Over the centuries it has effected every aspect of our lives.
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I urge noble Lords to look up from the strips marking the lines of longitude at Greenwich and join the right reverend Prelate in recognising what a wonderful feat of engineering and technological achievement the Dome will be. I cannot agree with the noble Lord, Lord Tanlaw, that it can be likened to Roman games because the Dome will be the largest cable and fabric building ever built, covering 20 acres and standing 50 metres high. It will reflect those things that will make a difference to our lives, not only science and technology but pride in our achievements, our ingenuity and creativity, our bravery and sense of justice and fair play, our modernity and confidence in the future.
I agree with the right reverend Prelate that dates and times are secondary. He is concerned that the Churches should be involved in the plans for a national millennium celebration. The Lambeth Group has been set up to ensure that the millennium celebrations are accessible and of relevance to all parts of our multi-faith society. The group involves the Department for Culture, Media and Sport, the Millennium Commission, the New Millennium Experience Company, the main Christian denominations, ecumenical bodies and representatives of other faiths.
The right reverend Prelate spoke of the Churches' new start. They have their own full programme of events focused on Pentecost 2000. The government are discussing with the churches the timing and location of national church services to mark the millennium.
The Millennium Commission is funding a wide variety of church projects which benefit the entire community and will help with what the right reverend Prelate called "people regeneration" in the Church and elsewhere. The necessity to create jobs and improve the environment, to which he referred, are not just matters for the millennium but for all time. The Government take that as a serious part of their task.
I thank the noble Lord, Lord Tanlaw, for putting down this Question and giving us the opportunity to explain the scientific facts. I thank the right reverend Prelate for introducing the more spiritual aspects of celebrating the millennium. That is a topical and important matter. I thank noble Lords for their contributions.
House adjourned at fourteen minutes past nine o'clock.