§ 6.47 p.m.
§ Lord Joffe rose to call attention to the 25 per cent fall since 1992 in charitable giving as a percentage of gross domestic product; and to move for Papers.
The noble Lord said
My Lords, there is a widespread illusion that the British give generously to charity. Sadly, however, the statistics tell a very different story.
It must be said that, for a number of complex reasons, the statistics for voluntary giving are far from satisfactory. However, they are reliable enough to reflect trends, as outlined in a telling speech last year by Stephen Ainger, the chief executive of the Charities Aid Foundation. Those trends sparked off today's debate, in respect of which I declare an interest as the chair of the Giving Campaign.
The trend period upon which I will focus runs from 1992 to 2002, the most recent year for which statistics are available. During that period, personal incomes have risen in real terms on average by more than 25 per cent; personal wealth has more than doubled; the Chancellor of the Exchequer, Gordon Brown, has introduced a range of very attractive tax benefits with the objective of stimulating giving; the charitable sector has become much more professional in fundraising; and the very wealthy have prospered as never before. With all those positives, one would have expected the level of individual giving as a percentage 1390 of GDP to have increased dramatically. Instead it has fallen from 1.2 per cent in 1992 to 0.9 per cent in 2002, a fall of 25 per cent.
In seeking to explore the reasons why the level of giving has not risen in line with the growth of incomes, it emerges that the poor who give to charity give on average three times as much as a proportion of their income as the better off, the top 20 per cent of whom give on average only 0.7 per cent. So, we find that the poor, who cannot really afford it, are considerably more generous than the well-off, who can. This is even more astonishing when regard is paid to the statistics that show that the wealthiest 1 per cent of the population own close to one quarter of the total marketable wealth, while the poorest half of the population own between them only 5 per cent. It follows from those statistics that if the level of giving is to increase significantly, that increase must largely come from the well-off substantially increasing the level of their giving. Unless the very wealthy set an example, it is unlikely that this increase will happen.
The definitive guide to the richest 1,000 people in Britain today is the Sunday Times 2004 Rich List. The qualification level to make the list is wealth of £40 million or more. In this year's list, it is recorded that Britain's super-rich have never had it so good, with their wealth in excess of £200 billion having almost doubled in the past four years. The Rich List also contains the Sunday Times Giving Index, which ranks the 30 most generous philanthropists in the Rich List based on the amount that they give expressed as a percentage of their wealth. The top seven in that index were generous, each having given more than 5 per cent of their wealth in recent donations, headed by the splendid example of Tom Hunter, the Scottish industrialist, who committed £100 million, which was one fifth of his wealth, to charity.
However, of the 10 richest billionaires in Britain, with wealth ranging downwards from £7.5 billion to £2.2 billion, only two, the noble Lord, Lord Sainsbury, and Hans Rausing, figure in the Giving Index. The other eight, including such well known billionaires as Sir Richard Branson, Philip Green and Bernie Ecclestone, either have not qualified or have failed to provide information as to their giving. If it emerges that in fact they were very generous, that would be good news. It is important to recognise that those who have provided information as to their giving in the Rich List have done so not in order to flaunt their wealth, but rather in the hope that they are setting an example for others to follow. It would be encouraging if next year the others in the Rich List followed this example.
It is instructive to compare what the wealthy in the USA give in relation to their counterparts over here. In December last year, Business Week published a list of the 50 most generous philanthropists in the USA. Bill Gates headed the list, having given away 23 billion US dollars over five years, which is about half his present wealth, while Gordon Moore, cofounder of Intel, at number two donated 7 billion US dollars, which is more than his current wealth. In the top 50 in the USA, 30 had given away more than 10 per cent of their 1391 current wealth. With such generosity among the very wealthy in the USA, it is easy to understand why over the period 1992 to 2002, charitable giving has increased by 15 per cent as a percentage of GDP, in contrast to our own 25 per cent fall, although I should add that it is not in all respects a valid, like-by-like comparison.
The reason for the disparity in giving compared to the USA is a difference in culture. In the USA, it is generally accepted by the well-off that they have a responsibility to give at least part of their wealth to the society that made it possible for them to accumulate such wealth. As a result, in the USA giving is celebrated. Those who give earn and deserve respect from their society for their generosity. In the UK, unfortunately giving is not a defining characteristic of the well-off. It is argued that in the UK many of the well-off prefer to avoid publicity and give anonymously, and that as a result their giving is not taken into account in the statistics. This is true in some cases, but it is often the excuse of those of the well-off who do not give generously, or at all, but prefer not to admit it.
The question arises as to whether we should be seeking to influence the well-off to increase their giving to charity. After all, giving is a personal matter, and there is no way that we can compel individuals to give more than they wish to. Whether we decide to try to influence them depends on the kind of society that we would like to have in this country. Is it to be one where the wealthy and the well-off focus solely upon their own gratification, and accumulate yachts, homes, personal jets, fleets of motorcars and other playthings, and show little regard for those less fortunate than themselves? Or do we want a caring society, in keeping with British tolerance and sense of fairness, where everyone contributes as generously as they can to make it a better society for all? It is the latter for which we should be aiming, and the initial objective for which we should aim is to double the level of giving to charities over the next 10 years. As to the range of initiatives that should be taken to achieve this, a new book to be published next month, Why the Rich Give written by Theresa Lloyd of Philanthropy UK, a project of the Association of Charitable Foundations, is essential reading.
I do not believe that the majority of the well-off are mean and uncaring. They do give, but unfortunately their giving is reactive rather than planned. If they see pictures on TV of starving children, or if they are asked to give, they often respond—sometimes generously. However, they seldom plan their giving by relating the amount that they give to their income and wealth. If they did this periodically I do not doubt that they would spontaneously wish to increase the level of their giving. I recall Michael Brophy, a previous chief executive of the Charities Aid Foundation, making a point at meetings of asking the people there to put up their hands if they gave more than 1 per cent of their incomes to charity. It was astonishing how few put up their hands, but how many subsequently said that having thought about it, they had immediately increased the amount that they intended to give.
1392 The natural starting point in changing our approach to giving by the well-off is to establish benchmarks. Many people just have no idea of how much it would be reasonable for them to give. I suggest an initial benchmark for our society as a whole of an average of 1.5 per cent of income or wealth. Within that general benchmark, the starting figure for the well-off—whom I define as having incomes in excess of £100,000 a year—would be 2 per cent, going upwards depending on the wealth and income of the individual concerned and going down to virtually nothing for those who struggle to survive on annual incomes of £10,000 or less.
Surprisingly, there is considerable opposition to benchmarks, mostly, I suspect, by those who do not give generously, or at all. The rationale for this opposition is difficult to follow. While no one has a right to determine how much somebody else should give, it is not unreasonable, in a society where we are all dependent on one another, to suggest guidelines as to what may be reasonable. It is not as if benchmarks on giving are something new. Most faiths lay down specific guidelines. Christian faiths often follow 10 per cent, with 5 per cent to go to the Church and 5 per cent to other good causes. For Islam. the starting point is 2.5 per cent, with charity beyond this encouraged. For Hindus, it is according to ability and position and up to 50 per cent, while for Sikhs 10 per cent is specified in the Code of Conduct, and the amount for Jews is also 10 per cent. I am not suggesting that we should leap to these levels at this stage.
However, having established benchmarks we should, as in the USA, celebrate the giving of those whose giving matches these benchmarks, or even more those who exceed them. Naturally, the key players—whose job it is to influence both the well-off and the not so well-off to give to charity—are the charities themselves. They must face up to the challenge of proving to donors that they are making a real and positive difference to society; that they are efficient and effective; and that they appreciate and value the support of those who contribute to their work. Having accepted this responsibility, charities must tailor the level of their "ask" to the income and wealth of the donor, and not be frightened to ask for generous donations from those who can afford them. Increasingly, charities should take potentially generous donors out to show them their work so that such donors gain an understanding of what it is like to live in poverty, or to be without shelter or food, or dying of AIDS. When the wealthy have seen such suffering and realised that they can make a difference, I believe they will want to give generously.
The corporate sector and the Civil Service also have an important role to play in individual giving through encouraging payroll giving. This is an extremely tax-effective way for employees to give. In the USA, 32 per cent of employees are enrolled for payroll giving. The corresponding figure in the UK is only a tiny 2 per cent.
The Government have done a great deal to encourage individual giving through the generous tax incentives introduced by the Chancellor of the Exchequer and by their wide-ranging support of the 1393 voluntary sector. While there is a limit to what government can do, a change in the legislation relating to new trust structures based on the American experience—enabling donors to get immediate tax relief on gifts, but to draw income as well for a prescribed period—would attract very substantial endowments.
The media too have increasingly made a positive contribution in profiling generous donors—and, in the case of the Sunday Times, in creating a giving index—and will. it is to be hoped, focus more on the positive aspects of the charitable sector in future. If the charitable sector, the business sector, government and the media work in partnership to spread the message of the importance of planned giving—with an emphasis on relating the level of giving to wealth and income—I believe that over a period of 10 years it should be possible to meet the target of doubling the level of voluntary giving in real terms. Although individual giving in the period 1992–2002 has fallen so dramatically as a proportion of GDP, the potential is there greatly to increase this level. Already in the past three years, despite the crash of the stock market, the level of giving has begun to rise.
We would be well on our way to achieving this target, if the 1,000 members of the rich list with wealth in excess of £200 billion were, on average, to increase their giving from 0.7 per cent to 1.7 per cent—which they can so easily afford. This alone would raise the current level of giving by £2 billion to £9.3 billion, and would set an example to the other 230,000 millionaires in the UK and to the mass affluent.
As a society we must do better. One hopes that the better-off, rather than the poor, will lead the way. I beg to move for Papers.
§ 7.2 p.m.
§ Baroness Pitkeathley
My Lords, like every other noble Lord who will speak in this debate, I am extremely grateful to the noble Lord, Lord Joffe. The issues he highlights are of great concern to all those of us who work in or fund the charitable sector, and he is to be congratulated on enabling us to air those concerns. It is certainly the case that we have not been successful in promoting individual philanthropy as the United States has been—either just to encourage giving, or to encourage the establishment of new foundations. It is interesting to speculate, as he has done, about the reasons for this, and I commend his recommendations to your Lordships.
However, I am more optimistic about the current situation than the noble Lord. In the few minutes available to me I will draw attention to some of the reasons why I take a more positive view of the prospects for giving. As this is my last day as chair of the New Opportunities Fund—the largest of the lottery's good causes distributors—I will start with the lottery. Let us be clear—people do not play the lottery to give money to charity. They play because they think they may win. However, what the 28 pence in the pound that goes to good causes represents to them is a consolation for not winning. It is difficult to overemphasise what that consolation has done for 1394 individuals and communities in the United Kingdom over the past 10 years. That £15 billion has a made a huge difference to every community in our country.
On my last day, your Lordships may perhaps forgive me for emphasising the particular contribution of the New Opportunities Fund. Before we were set up, lottery good causes relied largely on groups and individuals coming forward with ideas for project funding. We set out to do something different. We wanted to target the needs of disadvantaged communities, work more strategically and invest funding in specific initiatives on health, education and the environment, priority areas for government where lottery funding could add real value. I am very proud of what we have achieved. The results of our £2 billion are truly transformational: 500,000 new childcare places; 350,000 Healthy Living Centres; and £750 million invested in school and community sports facilities. I could go on. A huge impact has been made, and I know that the successor body to the New Opportunities Fund and the Community Fund—the Big Lottery Fund—will continue to encourage innovation and transform communities. No causal link has ever been shown between people playing the lottery and giving less to charity. Even if it had been, what the lottery has achieved in 10 years would surely be some compensation.
I turn to trusts and foundations. We may be worried about what we do not have in terms of individual giving, but we should celebrate the huge resource that existing trusts and foundations provide for the voluntary and community sector. The noble Lord, Lord Joffe, led one such foundation, to which I had every reason to be grateful, when I headed a carers' charity. When I speak in other countries—the United States, Canada, France, Australia, New Zealand—about the campaigns that I have run to get carers on the political and social agenda and describe how those campaigns, even those for new Acts of Parliament, have been funded by charitable trusts, my audiences are consumed with envy that we can be supported in that way in this country. It is true that some trusts and foundations are not as open and accountable as they should be or as willing to embrace new methods of working or encouraging different ways of supporting the work of charities, but many set an excellent example, and many others will follow.
As the noble Lord, Lord Joffe, reminded us, we must also accept that many charities are reluctant to accept change as readily as they ought to. They are too set on constantly complaining about how much more money they need and the circumstances in which they should get it. That is not always helpful. Many charities, though, constantly seek and find new ways of getting individuals, companies, trusts and statutory funders involved in their work. They are realistic about what they seek and honest about what they can offer in return. Above all, they recognise that giving of any kind is a two-way street. We must understand and meet the needs of our donors, as the noble Lord reminded us, as well as expecting them to meet ours.
I shall mention one other area that fills me with optimism. I have the honour to be the president of Volunteering England, a charity that is willing to 1395 embrace change, however painful—mergers are often painful, as I have reason to know—in order to make itself more responsive to constituents and stakeholders. In the view of Volunteering England, willingness to make charitable contributions is alive, well and living here, not only in terms of money but—even more important—in terms of time. A huge amount of time is donated to communities every week. Recent surveys suggest that between 39 per cent and 48 per cent of the adult population volunteer their time through an organisation. If we widen the definition to something more like a good neighbour-type scheme, the figures can nearly be doubled. That means that communities benefit from 88 million hours of volunteer time each week. If we were to equate that with money, it would mean that the country benefited to the tune of between £16 billion and £40 billion a year.
We should recognise that the Government have done much to support and further volunteering and voluntary action. We have every reason to be grateful for that. There is, of course, more work to be done. We know that there are barriers to people's participation as volunteers and that they need to be addressed. However, there are things that we can do, and one of them is to keep volunteering on the policy agenda and in the public eye. That is why, when we talk about giving money, we should also take the opportunity to acknowledge the tremendous generosity and resource that is volunteer time.
§ 7.10 p.m.
§ Lord Brooke of Sutton Mandeville
My Lords, it is as ever a pleasure to follow the noble Baroness, Lady Pitkeathley, who made a characteristic speech on a subject on which she is much better informed than I am, and on a day of personal moment. It is only sad that so little of the £750 million for school sports facilities has so far been spent.
The whole of your Lordships' House is in debt to the noble Lord, Lord Joffe, for securing this debate. That is not so much because of the coincidence of the draft charities Bill pre-legislative scrutiny—this Motion by the noble Lord, Lord Joffe, is concerned with inputs whereas the draft Bill obviously goes wider—but because it is the sort of Motion that your Lordships' House handles well, which reflects on a serious issue being looked at with the perspective of a decade's passage. His Motion is an exception to C S Lewis's observation that if you hear someone going round doing good to others, you can always tell the others by their hunted look.
I should declare an interest as the founder of two tiny trusts under the Charities Aid Foundation umbrella.
We are paying a small price for the other excellent mega debate put forward by another Cross-Bencher, so my remarks will be confined to three brief points. First, this is a subject where we are comparatively bereft of statistics. I am sure that noble Lords will be familiar with the chart which shows charitable giving at just under £5 billion in 1992, rising to £7.3 billion in 1396 2002. Firm figures for 2003 are not yet available. Those are not, however, the figures on which the 25 per cent decline over the decade referred to in the Motion is calculated. To those bare figures, which represent specific donations, have been added in the calculation both legacies and taxback returns, which have also individually benefited charities. On those cumulative figures, both of course constructed on the same lines in 1992 and 2002, the 25 per cent calculation was made. The taxback return has played a disproportionate role since the Chancellor's revision of gift aid in 2000, which I welcome.
Secondly, there are incidental factors that may have played a particular part in the decline identified by the noble Lord. Lord Joffe. The base year of 1992 saw the country still in recession, which provided a lower denominator for the GDP. The approach of the lottery in the decade's early years alarmed the NCVO for its potential effect on charitable giving, a subject addressed by the noble Baroness in her speech.
We visited that subject in detail with the noble Lord, Lord McIntosh, at Second Reading of another recent Bill. I shall not weary your Lordships by returning to that now. But it is worth remarking that the purchase of a lottery ticket, as the noble Baroness, Lady Pitkeathley, said, involves a donation to good causes, albeit not one that is susceptible to gift aid treatment. If the audited ticket sales of the National Lottery are added up from its inception in November 1994 to the end of March 2003, to run with the year 2002, and then apply a 28 per cent multiplier— I appreciate that 28 per cent applies to the main lottery draw and not to other sales; but 28 per cent is a rough and ready proxy—an average annual donation of £0.45 billion is produced.
Of course, I acknowledge that not all good causes will have been charities, but those considerations are also against the background of a study by the Institute for Fiscal Studies which found that,neither the number of people giving to charity nor the level of donations has changed significantly following the Lottery's introduction".The noble Lord, Lord Joffe, has identified a series of qualitative as against quantitative factors, which might be described as cultural: I shall not rehearse them again. However, I shall make one point about the decline in traditionalist giving, as for instance exemplified by falling congregations in churches, and the rise of modernisation, which is exemplified in the fact that it is the strong brands in the large charities which are at a relative advantage in attracting growing donations. The latter is a function of more professional fundraising, but that has a genuine read across to the world of traditionalist giving. In that context, I wonder how many of the 43 dioceses of the Church of England have dedicated officers who encourage legacies from their diocesan population. I suspect that the one where I largely worship does not.
Thirdly, I recall a leading article in the Economist in the aftermath of my noble friend Lord Lawson reducing the top rate of tax to 40 per cent in 1988, when I was at the Treasury. The article, in approaching the final decade of the 20th century—the decade that is the subject of this debate—drew its readers' attention to the first 1397 Edwardian decade of the century when the bourgeoisie had flowered and blossomed in cultural generosity. I am genuinely admiring of this Government's streamlining of tax effectiveness in giving, which built on the previous government's own pioneering efforts.
But as we look forward in this decade, I hope that a government of one colour or another can look with favour on the recommendation of Sir Nicholas Goodison in the report Mr Boateng, the Chief Secretary, commissioned from him. It concerned the extension of acceptance in lieu where the donation of cultural objects of pre-eminent quality could be set against ordinary income as well as against inheritance tax, as they now can be. Cultural objects are not just works of art but can embrace books and archives as well.
That can already be done in the United States. But perhaps even more importantly and relevantly, it can already be done here for gifts of shares. Common sense suggests that as both shares and cultural objects are subject to inheritance tax where acceptance in lieu applies, common treatment of gifts in life could sensibly be harmonised. not least in the interests of the admirable Motion of the noble Lord, Lord Joffe.
§ 7.15 p.m.
§ Lord Phillips of Sudbury
My Lords, I, too, thank the noble Lord, Lord Joffe, for this debate. I congratulate him on his chairmanship of the Giving Campaign, which is just coming to a close after a tremendous effort to raise awareness and donations. I regret to say that although the list of speakers says that I have 10 minutes, I have six like all other noble Lords. My noble friend Lord Shutt has the extra four minutes. I shall give my brief overview in the form of necessary generalisations.
If one was brought up on the notion of faith, hope and charity, today one would have to talk about scepticism, angst and greed. The acronym of that is "SAG", which is happening to donations. I am grateful to the noble Lord, Lord Joffe, for looking this full in the eye. There is far too much triumphalism in the voluntary sector. Perhaps I may dare to say to as distinguished and experienced a speaker as the noble Baroness, Lady Pitkeathley, that I think that there was a touch of that in what she said about volunteering.
I, too, am a patron of the organisation to which she referred. Although the statistics on volunteering do not have an exactly common base, in 1997 the National Survey of Volunteering showed, for example, that 48 per cent of the adult population took part in formal voluntary activity. The Home Office Citizenship Survey in 2001 showed that figure dropping to 39 per cent. The proportion undertaking informal voluntary activity fell from 74 per cent in 1997 to 67 per cent in 2001. I emphasise that there is no precise commonality of base. But, none the less, that is not a jolly tale on any reckoning.
We need to be honest with ourselves about what is happening. I would say that there is heart failure in the question of giving. It is stunning that the poorest 10 per cent of income earners are giving more than three times more of their income than the top 10 per cent. 1398 One has to ask why. I shall spend a minute or two addressing that issue because unless we have some understanding of the reasons we will not get far.
The first thing that strikes me is that we work in a world where both parents work. The role of women who used to stay at home, bring up families and look after the home has changed. That has had an impact. Pressure at work has had a huge impact on giving and the attitude towards giving. The pressure under which many people work now, the hours that they work, the commuting that they have to undertake separates them from a community existence where they cannot see that they need to make a contribution in order for that community to thrive. There is a disconnectedness about so much of that lifestyle, particularly of the richer section of the population. I suppose that the City of London is the great exemplar of the decommunalised existence that so many people now lead.
With that, one must face the fact that the values of our day are excessively materialist and consumerist. The idealism, belief, philosophy or faith, call it what you will, that most of us grew up with and are aware of is no longer as evident. If one looks at the media, of whatever kind, one sees reflections of that.
Let us look at the values of business, in particular big business. In the City life is nasty, brutish and short; it is short-termist to the last degree. The value of stocks and shares is driven exclusively by what they can deliver to the so-called bottom line. The shareholding community and the share-broking profession have little or no regard for anything other than the accretion of profit. So, too, the view held of salaries is quite shocking. If anything reported last week in the Sunday Telegraph about the pay-off made to the boss of Shell, who so disgraced that great company, is true, that is but the latest example.
That whole world is unsustainable. It has become demoralised, in the literal sense of the word. Until we do something about the prevailing culture and restore to it a measure of the sense of value and purpose which, without being too nostalgic, did exist to a greater degree in the past, I do not think that much can he done to increase giving by the rich. Ultimately, charity is about caritas, the word for love, and it is about feeling and heart; it is not about tax breaks or mechanistic considerations. Indeed, as the noble Lord, Lord Joffe, indicated, tax breaks have themselves become extraordinarily generous over the past decade or so. They should have a countervailing effect that would be likely to increase the level of giving.
I believe that we cannot look to the Government to bail us out of this situation. In some ways, the Government have become too involved in the charity sector. The independence, diversity and voluntary nature of this sector is a priceless jewel which must be preserved against any tendencies working in the opposite direction. Some of those tendencies may crop up in the charities Bill.
Above all, we have to try to restore balance to the lives of many people in this country. They would give more if they experienced community existence. That would 1399 point them in the direction of need and put them in juxtaposition with it. Without that, the giving proposition is too theoretical and intellectual.
I end by thanking once again the noble Lord, Lord Joffe, for raising this subject for debate.
§ 7.23 p.m.
The Lord Bishop of Southwell
My Lords, we are grateful to the noble Lord, Lord Joffe, for drawing attention to the fall in charitable giving in real money terms in this country, despite an upturn in giving in pure money terms. I am conscious, as a Bishop in the Church of England, that I speak from a privileged position. The Church of England has been a beneficiary of the generosity of women and men for countless generations down the centuries, and continues to know great and, indeed, sacrificial generosity from those of today's generation.
The noble Lord, Lord Brooke of Sutton Mandeville, said that he would like some more statistics. I am prepared to give him one or two to help him along. The Charities Aid Foundation shows that the average monthly donation to charity in 2002 was £12.93, while the Church's data show that the average monthly planned giving to the Church in the previous year, 2001, was £30.46. That statistic is mirrored in CAF's finding that average giving to charity by the population as a whole is 0.9 per cent of income, while average giving to the Church is around 2.8 per cent of income.
The Church of England, like many others, uses gift aid well. Information suggests that 13 per cent of the total tax refunded by the Inland Revenue to charities comes to the Church of England.
The Church is, however, an agent rather than merely a beneficiary or recipient of charitable giving. It is an agent of mission, ministry and education, one that looks to serve local communities in their quest for hope, mercy and justice in society; and it is an agent in having a special concern always for the poor and the marginalised. Furthermore the Church holds in guardian trusteeship for the whole nation a wealth of heritage buildings in the shape of the cathedrals and parish churches of the land. It has a built heritage that I am glad to say is increasingly visited and valued while playing a vital role in the life, education and enjoyment of whole communities.
The Churches, along with other faith communities, shoulder considerable social responsibilities within the many communities that comprise our nation. The local church, funded by the charitable contributions of local people, uses money to counsel those who are bereaved and sick, to visit the sick and those in trouble, and to work with schools. In the Southwell diocese we sponsor an activity in our cathedral twice a year in conjunction with local schools. It is called "Time Travelling". Some 8,500 children visit Southwell Minster over two weeks each year as a part of their national curriculum key stages one and two studies. Since 1995, some 85,000 children have taken part in this exciting project, one that is funded by charitable moneys.
1400 Similarly, over the past two years the Church in my own diocese has funded two new secondary schools post-Dearing in partnership with Nottingham City Council for one school and Nottingham County Council for the other. The Church also uses money to run youth projects, holiday clubs, after school clubs, mums and toddlers groups, social clubs and luncheon clubs for the elderly. We provide premises, often at low or no cost, for local groups such as the scouts and guides, social groups, Alcoholics Anonymous and so forth.
In isolated rural communities the local church is often the only focus for community activities. In one parish in my diocese, St Bartholomew's, Kneesall, in the absence of a village hall or any kind of public facility, the church—a heritage building—after much difficulty has been reordered so that the whole of the chancel is available as a space for the use of the community to carry out all its activities.
The case is similar in our urban areas. In my diocese charitable giving has helped to establish a multi-racial centre at St Stephen's, Hyson Green, with particular emphasis on work with asylum seekers. The Vine Community Centre houses lots of projects which are both cross-cultural and cross-generational. One such is a young families' project, PALS, which provides a breakfast club, daily pre-school and lunch club from Monday to Friday for local children aged from as young as two years and upwards while supporting their parents and carers through a drop-in café with family worker support. Many of the children come from Muslim backgrounds whose parents specifically choose a faith context for their children's care.
Right in the heart of Nottingham city there is an ecumenical venture, the Malt Cross Project. It serves young people who are part of the amazing nightlife culture of the city today. It is a very vibrant nightlife, but also one where there is drink and drug abuse. Activities like these are mirrored throughout the country. The Church strives to keep contact with local people.
The question is: what do we look to the Government to provide? May I suggest that good government encourages and promotes the flourishing of the good and all that makes for cohesion and social harmony. Good government at the national level models good practice and ethical behaviour, responding generously to public need in times of crisis both at home and abroad. Good government should be in dedicated pursuit of achieving our national commitment to the United Nations overseas aid target of 0.7 per cent, which we still do not reach. Good government pursues efficiency, enterprise and prudence in the workings of every department of state and tries to build capacity in communities through partnership. We in the Church of England are profoundly grateful for the partnership that we have enjoyed to date.
Continual creativity, imagination and vision are required on the part of government, working with charities, if we are to harness the generosity of spirit that has long been a feature of the people of these islands. I believe that unless government energetically 1401 strives to create and regulate well the whole world of charity, we run the danger of losing the enormous amount of pro hono publico work that characterises many parts of our society.
§ 7.30 p.m.
§ Lord Puttnam
My Lords, I declare an interest as president of UNICEF. It is very much in that context that I should like to address the House.
I thank the noble Lord, Lord Joffe, for drawing the attention of the House to what is, on the face of it, a grotesque anomaly. It is all the more grotesque because even the most casual observer of what is going on in the world cannot fail to be struck by the vast and ever-growing gap between the rich and the poor. You also would have to be deaf, dumb, blind and stupid not to understand the clear relationship between poverty, desperation and social unrest, leading in many cases to what we now describe as terrorism. It is my belief that, in every sense, poverty is the breeding ground, the constant recruiting sergeant, of terrorism.
There are those who prefer to hide behind the old adage that the poor will always be with us. To them I say that the new, corrosive element in the mix is the growth of visible inequality. It is the constant "in your face" reminder to the poor that another world exists in parallel to theirs—a world of apparent endless plenty—conveyed through the television set that flickers somewhere in even the poorest village. It is that constant reminder that makes today's poverty very different from that which existed 100 years ago.
We have created a situation in which the very poorest are all too familiar with the world that they are missing out on while, at the same time, no similar message is grabbing the attention—let alone stirring the sympathy of—the world's wealthiest people; certainly the UK's wealthiest people.
At UNICEF we try very hard to attract the attention of this important and influential group. By far the best way of doing this is by getting individuals of high wealth to give up a week, or sometimes less, of their lives to look at how the other half—or, should I say, the other 95 per cent—live. Those few that do so never forget the experience. It stays with them for life and, as often as not, affects their attitude to giving dramatically. I have also observed that they tend to feel a great deal better about themselves.
Having spent most of my life as a storyteller, using film as my chosen medium let me end by telling the House of what I learnt during a recent visit to Nigeria regarding the dreadful issue of child trafficking. An all too common scenario would probably go something like this. A village that had been afflicted by AIDS would be visited by a trafficker, who would seek out the children of, say, a family of five or six children where both parents were dead. Ideally, he would pose as a relative, pick a 10 year-old boy and a 16 year-old girl and convince the rest of the children that he will take them off and get them an education, and that they will return to good jobs. It is not at all uncommon in Africa for relatives of the extended family to take such responsibility.
1402 But, far from getting the type of job the family had in mind, the children are trafficked north. En route, the boy is probably dropped off in one of the Gulf states, or even in Europe, to be a slave—a 10 year-old working 15 or 16 hours a day for food and lodging. If he is lucky he may escape after a few years.
But the girl is a much more valuable commodity. She is brought, normally, through Morocco to Spain, across Spain into Europe—the destinations of choice most recently have been Greece, Turkey and Italy—where she will be effectively sold into prostitution. But not the kind of organised prostitution you see in the movies; she will be dumped at eight o'clock at night on an autostrada to be picked up by any passing lorry driver. It is to be hoped that she will make her way back the following morning to whatever house she is being forced to live in, only to return to the autostrada the following night.
She will have been told that she owes the traffickers 45,000 US dollars—I do not know why it is always 45,000 dollars; the figure just kept coming up—and that that needs to he repaid because it represents the enormous cost of her illegal papers. So she will work for a year—maybe two—to repay the money. The day she has repaid it, she will not be allowed to go free; she will be "shopped" to the police because the traffickers do not want her as it were "freelancing" in their territory. So she will be sent back to Nigeria, probably to remain in prostitution, and certainly she will not he welcome in her own village.
The story that I have described is commonplace. UNICEF estimates that more than 1 million children a year are being trafficked into slavery, prostitution or some other form of exploitation—some 100,000 from West Africa alone. As I see it, only an almost complete failure of imagination can explain the reaction to this story being anything other than an urgent and angry desire to do something—to do anything—that might eradicate that particular blight on humanity.
Unless and until we, the comparatively wealthy, are made as aware of the distortions that exist in society, as are the dispossessed aware of our world of comfort and plenty, then the present decline in charitable giving is likely to continue. The lamentable situation described by the noble Lord, Lord Joffe, is unlikely to be reversed until we become far more imaginative. I believe the real issue here is an increasing poverty of imagination on the part of the wealthy, who fail to comprehend the true nature of the world in which they live.
§ 7.36 p.m.
§ The Earl of Dundee
My Lords, I join other noble Lords in congratulating the noble Lord, Lord Joffe. His debate today enables a timely discussion of the current threats and challenges to, as well as the future direction of, United Kingdom charities.
I should like to comment on three aspects and the connection between them. First, as a number of noble Lords have observed, there are the ways in which the Government can further help charities themselves; secondly, there is the increasing scope for partnership 1403 between charities and the Government if the latter should set out to work alongside them; and, thirdly, within the wider European Union, there is the new challenge to the role of charities and their partnerships, which is to enhance delivery and well-being at national and local levels.
On government remedies to assist both large and small United Kingdom charities, not least is sound advice offered by the Institute of Philanthropy. Small charities are, of course, beset by two difficulties: under-capitalisation in the first place and borrowing restrictions thereafter. Clearly under-capitalisation would be less of a handicap if such charities could draw from a national fund for approved projects. Equally, with appropriate safeguards, the present Charity Commission's borrowing restrictions could now be relaxed.
Does the Minister support the notion of that expedient as well as the establishment of a government capitalisation fund, also contributed to, perhaps, by the private sector?
As the noble Lord, Lord Joffe, emphasised, evidence may indicate that future growth in overall figures relies upon large charities and affluent individual donors. If we matched the United States levels where individual giving amounts to 1.75 per cent of GDP, we would produce £17 billion, about two-and-a-half times what we give to charity now. Does the Minister therefore concur that we should seek to adopt similar incentives to those deployed in the United States in order to narrow the gap between its performance and ours?
My second theme is that of charities and government working more closely together. Within all our communities we are only too familiar with the problem of young people and those of them who, as a result of drugs, difficulties at home and with school leaving, require to be deterred, guided and inspired into constructive purpose and away from crime.
Certainly there are a great many charitable initiatives which set out to address this area. To their credit, the Government are trying to devise necessary solutions. However, to achieve proper results we should see many more informal yet focused partnerships between government and independent charities. Does the Minister agree? If so, what such joint ventures are the Government planning in order to reduce recidivism and to prevent young people turning to crime in the first place?
My third point is that, within the wider Europe, a useful impact can be made by charities and their partnerships. No doubt the stronger the central bureaucracy, the more likely it is that funds will be prescribed and allocated for spending in an inflexible way. By contrast, improved practice and benefit will often more assuredly derive from flexible initiatives and partnerships at local levels. That is exactly where the relevance of charity partnership lies.
During the civil war and its aftermath in the former Yugoslavia, we witnessed the achievements of non-governmental organisations in Europe. I declare an 1404 interest in my own small charity which works there and seeks to promote education exchanges with the United Kingdom. Does the Minister agree that charity partnerships of different kinds, including those with national institutions and governments, should be encouraged within Europe? What steps are the Minister and his colleagues now prepared to take to promote this objective?
In summary, as the noble Lord, Lord Joffe, stressed, much can now be done to increase significantly the UK level of charitable giving. Charities must retain their independence, yet governments should work alongside them much more. On that resolve depends enhanced well-being here and elsewhere.
§ 7.41 p.m.
§ Lord Moser
My Lords, I too express my thanks to the noble Lord, Lord Joffe, for initiating this debate. The subject is extraordinarily important and also very difficult. I declare various interests on both sides of the philanthropic divide—in asking for money for many charities and in giving it away in the foundation with which I am involved. It is clear that life has got much harder for everyone. There are more charities around and things are getting much more competitive. The economy has been up and down and, in various ways, this world has become more tricky.
I am also grateful to the noble Lords, Lord Joffe and Lord Brooke, for mentioning statistics. I had feared that I would be the only one. The statistics in this field are disgraceful. One can piece them together from the various bodies involved, such as the Charities Aid Foundation and the Institute of Philanthropy, which probably does the best analytical and research work on this subject. NCVO and other bodies such as the CSO, or ONS as it is now called, are all active. As I said, the Institute of Philanthropy is quite energetic and rather skilful in its work and deserves every support.
However, it is extraordinarily difficult to piece together not only the totals but the components of the philanthropic world in this country. Given its importance to charities and, indeed, society, that is something that should be improved. Perhaps the Minister can comment on the problem and come up with some brilliant ideas on how, by bringing all these different bodies together, the picture can be improved.
The noble Lord, Lord Joffe, was very skilful in telling us about the situation regarding individuals, about whom other Members of your Lordships' House also spoke. I was glad to hear the references to the enormous strength of our foundations and trusts, something about which we can really be proud. There are some good signs, although perhaps not so much in relation to individuals. For example, in the arts world—as we know from Arts and Business, another excellent organisation—in the past year, giving has increased by some 8 per cent both from individuals and from the corporate sector. There are other pieces of this jigsaw where, if one digs very hard, one can find a reason for enthusiasm and optimism.
I will use my remaining few minutes to talk about something that has not yet been mentioned in detail. I think that the greatest possibility lies in the corporate 1405 sector. I am aware that that does not directly fall under the term "philanthropy", as it is more partnership and support of various kinds. However, at the moment, 3 per cent of all charity income comes from the corporate sector. That is not a high figure. There is room for serious advance in this field. We should accept that giving by the corporate sector is not necessarily stimulated by the highest charitable thinking; it may be more a matter of competitiveness, corporate image or marketing. I find nothing wrong with that. I am happy as long as firms give to charities and get involved. There is real room for major advance in the corporate sector.
Noble Lords will remember the I per cent club which was founded many years ago. Marks & Spencer and other companies were active in it. It was a simple idea. Each company gave I per cent of its net profits. It lost its energy and appeal over the years, so it fizzled out. Now, under Business and Community— another worthy organisation— the so-called PerCent Club is alive again. It is working very hard to recruit members. I am not sure about the latest figures, but something of the order of 60 to 80 companies are involved, out of countless thousands.
Again, one is handicapped by statistics. I have looked to the Institute of Philanthropy for the best guidance. However, it looks as though only a small number of the very big companies are involved in very serious giving—perhaps 500 top companies give an average of just under I per cent per annum. One does not know how many smaller companies are active, because the information is part of net profits and does not have to be disclosed. There is a real challenge here and there are routes towards achieving it.
Noble Lords will immediately wonder about shareholder concerns— about which I am of course conscious. Some shareholders would cut up rough if their distributed profits were reduced. On the other hand, some companies—I will not begin to mention names—are very active in giving and get away with it happily. The answer surely is that it must become a matter of serious corporate pride. It already is for a number of companies. It is often written about as something about which a company should be proud— about getting involved in the local community and so forth.
The noble Lord, Lord Puttnam, spoke about a change of thinking among wealthy individuals. I look for a change of thinking in the corporate world, so that giving becomes a matter of pride and of improving the corporate image, attracting graduates and appealing to employers and the local community. That is the direction in which I hope we will go. I hope that the government spokesman will comment on such possibilities.
§ 7.48 p.m.
§ Lord Haskel
My Lords, I also congratulate the noble Lord, Lord Joffe, not only on moving this Motion, but on his chairmanship of the Giving Campaign. Together with the noble Lord, Lord Brooke, I also congratulate my right honourable friend the Chancellor of the Exchequer on his use of the tax system to create the generous environment for charitable giving. Certainly, people are encouraged to give if they feel that they are 1406 getting one over on the tax man. However, as the noble Lords, Lord Joffe and Lord Phillips, said, there must be a culture of giving in the first place.
Tax incentives and the culture of giving need each other. I learnt that some seven years ago when I was trying to raise some money for a medical charity dealing with research in heredity and genetics. The research was being carried out at St Thomas' Hospital, just across the river. Through my membership of your Lordships' House, I was on nodding acquaintance with many hereditary Peers, so I organised a lunch, a presentation and an appeal here at your Lordships' House. The result was disappointing— very disappointing. The explanation was that the money was not theirs to give away; they were holding it in trust for future generations, as their fathers had done. That was the culture.
Elsewhere in society, however, the culture is different. I have the honour to be president of the Institute for Jewish Policy Research, which is an independent think-tank. Our task is to inform and influence policy, opinion and decision making on social and cultural issues affecting Jewish life. Central to this is the pattern of charitable giving among the community.
Major surveys have been carried out in the past few years, and the results confirm many points made by the noble Lord, Lord Joffe. Yes, 80 per cent of charitable donations come from 20 per cent of the donors. Yes, the more religious one is, the greater the proportion of one's wealth one gives away to charity. Interestingly, that applied to all causes: orthodox Jews are more generous to secular charities than non-orthodox. Perhaps that is an echo of the old tithing obligation.
The research also discovered that young people today are less generous than older people. Perhaps that is in general because they are more secular and believe that the state should provide more support; or perhaps it is because we have the wealthiest generation ever of over-50s, and they can give more. We found the same pattern repeated in volunteering: the older and the more religious do more of it.
The research seemed to show that giving is also linked to involvement and governance. There is no doubt that the increasing regulation, bureaucracy and legal responsibilities all act as disincentives to involvement. When people do want to become involved, they often set up their own small charitable institutions, in which they know what is going on and feel that they are less at risk from legal or social matters. Our research identified an amazing 5,000 charitable organisations in Britain within a Jewish community of some 350,000 people.
We learned that family tradition plays an important part in a culture of giving. In some families there is a strong sense of obligation. Once that chain is broken, it is difficult to rebuild. That is why starting people early and educating them in the importance of charitable giving needs to be emphasised. Jewish schools and other organisations incorporate and emphasise that in their citizenship curriculum.
1407 To encourage a culture of giving, we are not urging everyone to become more religious, but we urge the community to build on what it has already achieved, with special attention to the young, to encourage people to do their own thing and to let many flowers blossom. And yes, we should target the top 20 per cent and the over-50s.
I finish by dealing with the point that is often made that the decline in interest rates and the decline in the stock market partly explains the 25 per cent reduction in giving. That may be correct arithmetically, but the logic of the trustees is faulty. Professionals advise that trustees should give away the income but preserve the capital. Why? Here I must declare an interest as a trustee of a modest charitable foundation. When we were advised to reduce donations to preserve the capital, we thought about it carefully and decided to reject that advice. We felt that our duty was not to preserve a fund but to support charitable causes. In fact, we decided that we would double our donations and liquidate the fund over 10 years, confident that in that time others would come and take our place. We felt that was the right decision.
The Government are right to encourage a culture of giving, but they should also encourage benchmarking, as suggested by the noble Lord, Lord Joffe, for the duration of the fund as well as the amount of money given out. That will maintain the level of charitable giving which is such a civilising part of our society.
§ 7.55 p.m.
§ Lord Judd
My Lords, I should declare an interest as someone who has worked in the charitable sector and who remains a trustee or honorary officer of a number of charities. The noble Lord, Lord Joffe, presents us with a living challenge; his life has been about not only putting money where his voice has been tonight but putting his life where his voice has been tonight.
During my last year as director of Oxfam, I recall visiting Mexico and talking with a very courageous bishop who had been working with the Indians of Chiapas in a very fraught and difficult situation. We had a very intense and searching conversation, and two things from it will live with me forever. At one point he challenged me and said, "In Oxfam, you use the language of equality, but how equal are the people with whom you work in Mexico or how far are they the indispensable objects for your institutional needs?".
The second thing that the bishop said to me was that the real meaning of charity was solidarity; it is identifying with those whom one seeks to help, not just impersonally giving them money. That relates to the point made by the noble Lord, Lord Joffe, about the poor being more generous than the rich. The poor are closer to the problems, realities, dangers and hazards than the insulated rich, who are busy insulating themselves from those dangers and hazards. There is a lesson there. If I have one quarrel with my old friend it is that I hope that he is not suggesting that yet again leadership should be yielded to the rich in this area. It 1408 seems to me challenging and qualitatively significant that in our society it is the poor who are leading, and we do not want to discourage their commitment.
We live at an interesting time. Increasingly, there is talk of charities and voluntary organisations being used as mainstream providers of social services. However, we need to beware of pitfalls in that direction. It could too easily lead to a subcontracting culture, with an adverse impact on priorities—whose priorities would voluntary organisations be following? On advocacy, would self-censorship begin to creep in for fear of upsetting funding? How will it affect public perception? Will the public begin to see the charities as government agencies?
I believe, after a lifetime of work in this area, that the words that we should always associate with charity include words such as "challenge", "excitement", "pioneering", "innovation", "imagination", "originality", "creativity'', "commitment" and "belief'. Yes, additionality is vital, but the quality of that additionality is absolutely indispensable. When we think of our forebears in this place, we can see that Wilberforce did not make his contribution to the elimination of slavery because he wanted a career in the voluntary sector. He made his contribution to the elimination of slavery because of a passionate commitment to eliminating slavery. That is the key to successful charity and, I would argue, to successful fundraising. At the heart of it there has to be the passionate conviction of those involved.
There are dangers in all the new management-speak and the new impersonal mass fund-raising techniques, which frankly fool very few when they are dressed up as personal by the new IT systems available. The concept of a donor base is hazardous terminology. Fundraising is not primarily about money; sustained and successful fundraising is about relating to individuals and winning their commitment and trust. Identification, involvement and stakeholding matter. They matter for the long-term success of the charity, but they are also a matter for the character of British society. They breed understanding, enlightenment and compassion.
If I may just take one other example, I recall a quite difficult time in the life of Oxfam. The noble Lord, Lord Joffe, will forgive my reminding him that he was my long-suffering chair and I was the director. We got into a controversial phase in our history. People questioned whether we were becoming too political because of our involvement in Kampuchea, the West Bank and South Africa. I recall that during that period of controversy the donating of our long-term covenanted donors increased. They felt that Oxfam was an organisation with which they were proud to be associated because it was prepared to stand up and be counted and was following through the logic of its commitment and its analysis.
This is tremendously important as we approach the whole issue of fundraising. It is not just about how we get volunteers to work for us, or get people to give us money, it is about how we allow people to identify with causes in which they can believe.
§ 8.1 p.m.
§ Lord Best
My Lords, I too am grateful to the noble Lord, Lord Joffe, for initiating this debate and for the very important work he has been doing for the Giving Campaign. I declare my interest as chief executive of the charity, the Joseph Rowntree Foundation, and as a member of the Joint Committee on the draft Charities Bill.
I should like to cover briefly two aspects of giving to charity. The first concerns young people aged 16 to 24, who may not have much cash to contribute but for whom a habit of giving can be hugely important in later life. Two years ago, the Joseph Rowntree Foundation undertook work with the Charities Aid Foundation to assist the work of the Giving Campaign to discover why there had been a decline over the past 20 years in younger people's participation in giving money to good causes.
The first finding from this research by Catherine Walker and Andrew Fisher is that young people have a well-developed sense of what charity is and what charities do and they have a greater trust in charities than in government or business. But they define charity and giving more broadly than in the formal sense. Many are engaged in altruistic, socially responsible activity— "active citizenship"— that may not be counted under the formal banner of "charity". For example, they are involved in recycling their books through Oxfam, helping older people in the community, giving goods to charity shops, giving to beggars, buying Fair Trade goods and campaigning about social issues. Most surveys underestimate this wider contribution made by younger people.
In relation specifically to giving to charity, the most popular form for younger people is through the sponsorship of others or involvement in company events, which may be sponsored by Comic Relief, Children in Need and so on, as well as events organised at their colleges, such as rag week. Much of this fund-raising is not measured by the current surveys or, if it is, it is not specifically attributed to young people but is attributed to their employers or other adults organising the events.
The research highlights the willingness of young people to do more but also highlights a feeling that charities tend to ignore the younger donor. It is natural for charities to target the better off but today's younger people are the potential big donors of tomorrow. Young people are often willing and able to do more than simply put money in a tin, yet few know how to get engaged in the work of charities around them.
The message from the research is clear. Charities need to realise that if they concentrate their efforts on those people with higher incomes, not only may they be missing out on a huge untapped resource of enthusiastic young people, often with passionate convictions, to quote the noble Lord, Lord Judd, but they may also be burning their bridges when it comes to recruiting those young people as the major donors of tomorrow. Surely more charities ought to follow the example of the best in devoting time and effort to the 1410 16 to 24 year-old age group, by targeting advertising; sending out packs; working in colleges; offering opportunities to volunteer; and encouraging even very small donations which will inculcate a habit of giving to charity that will benefit that sector later.
My second point relates to the many people who receive fees for serving on the hoards of governmental bodies of different kinds. These include people on health trusts, on new urban regeneration agencies and on national and regional quangos. Although remuneration is paid to this new army of active citizens, few of them are in it for the money and for some of them the fees are something of an embarrassment. In governance terms, many people may prefer to be working in a purely altruistic way as their contribution to society. In some cases the individuals concerned are in full-time employment and, thanks to a public-spirited employer, they are doing their quango job in their working time. From these varied circumstances, there are many individuals who would be more than content for their payment from public funds to go not to them personally, but to charity.
Having been down this route myself, I have discovered the problems in persuading the governmental paymaster to make payments directly to a charity account. There are complexities in an individual receiving a payment and then making a donation. Even when using the gift aid arrangements, one has to account for receipts and handle repayments of higher rate tax. All this imposes bureaucracy and barriers to giving. My suggestion is that, preferably in partnership with the Charities Aid Foundation, which provides its excellent charity chequebook facilities, the give-as-you-earn arrangements should be offered to every individual receiving fees for quango work. If just 10 per cent of those serving on quango boards opted to make their work wholly or partly a voluntary commitment, then millions of pounds of additional revenue would go to good causes. A simple form— which the Charities Aid Foundation tells me it would be more than happy to provide—from the appropriate governmental paymaster to all concerned would do the trick. I commend the idea to the Minister that this approach be offered and promoted to all those paid for their public service on quango boards. I suggest that this would help a little to influence the culture of giving and to meet the admirable targets for giving advocated by the noble Lord, Lord Joffe.
§ 8.7 p.m.
§ Lord Shutt of Greetland
My Lords, we are all grateful to the noble Lord, Lord Joffe, for instituting this debate. We thank him for all that he has done in charitable endeavour throughout his life. I should like to declare an interest as a giver, an asker and a holder-in-trust— that also is important. My interests are listed in the register. Two of the trusts set up by Joseph Rowntree are among them, and also the Community Foundation of Calderdale, which I started in 1991.
We have had some splendid contributions. The noble Lord, Lord Joffe, did his best with statistics. Several noble Lords have mentioned problems with the statistics. We have to be a little cautious about them. I was struck by the point that the noble 1411 Lord, Lord Joffe, made about the poor. I remember attending a gala in aid of the Community Foundation of Calderdale. I spent the whole afternoon there. I realised that the people attending the gala lived in poverty. We ran a tombola stall or some other form of modest gambling and I remember thinking how awful it was that the people who were buying the tickets had financial difficulties.
The noble Baroness, Lady Pitkeathley, reminded us of the impact that the lottery has had. The noble Lord, Lord Brooke of Sutton Mandeville, spoke of the Charities Bill. I hope that that Bill will be of assistance in this area. In the course of scrutinising the Charities Bill, perhaps something can be done, particularly as regards bureaucracy. I am hopeful that that will be the case.
I am grateful for the contribution of my noble friend Lord Phillips of Sudbury and for his reference to materialism and the need to return to a more loving approach to others. No one has done more than him to encourage and point in the right direction those who want to be generous.
The right reverend Prelate the Bishop of Southwell made clear that certainly in his diocese the Church of England is concerned with rather more than saving souls. It is good that the Church is usefully involved in those wonderful subsidiary activities.
The noble Lords, Lord Puttnam and Lord Judd, made useful contributions. The noble Lord, Lord Judd, referred to the international dimension and pointed out that charity clearly does not end at home.
The noble Earl, Lord Dundee, referred to the charitable sector and the Government working in partnership. I have some reservations about that. We must be careful in that regard. The noble Earl may be right in the context of certain circumstances. As I say, I was involved in setting up what is now the Community Foundation of Calderdale. When it was formed, it was known as the Calderdale Community Foundation. Its name was changed subsequently as people became increasingly fearful that it would be regarded as a subsidiary of Calderdale Metropolitan Borough Council. That illustrates the fear on the part of the bodies that we are discussing that charities will be viewed as providing services that ought to be provided by municipal authorities or government.
The noble Lord, Lord Moser, referred to the corporate sector. During the nine years that I chaired the community foundation I spent a great deal of time telling people, "You have done well in life, but you `can't take it with you'. How about being generous to the community in which you live?" That takes a bit of doing, but I have done it on several occasions. Some of those people responded very generously. However, I did not manage to obtain corporate contributions. The people whom I approached were corporate people but they gave in a personal capacity, not through their companies. I wish noble Lords the best of luck in pursuing corporate donations. I hope that that culture will change.
1412 The noble Lord, Lord Haskel, referred to people over 50 and donations from people who are perhaps better off. That was juxtaposed with the contribution of the noble Lord, Lord Best, who mentioned 16 to 24 year-olds. We must target both age groups. We need to target those who may become high earners as well as those who are already wealthy. The noble Lord, Lord Best, made the novel point that fees paid for public service could be donated to charity. I tell the noble Lord that I know of at least one councillor who has managed to persuade his local authority to donate his councillor's allowances to a charity. That can be done if the person concerned has sufficient resources to enable him to forgo his or her allowances.
I am glad that the noble Baroness, Lady Pitkeathley, referred to time. This matter concerns time, talents and money. I served for nine years in the community foundation, setting it up and chairing it. When I ceased working for the foundation I noted that I had more than 600 diary entries over nine years in connection with my work for the foundation. Then there are all the telephone calls on top of that. Many people put in hour after hour of toil—they have to. We must not forget that.
Charitable giving has many forms. It might be 10p in a tin, or £100 million as the start of a new charitable foundation for someone who is very rich indeed. I want to talk about incentives for giving. I accept the point about love, but the British people appreciate nothing more than an incentive. It seems a long time ago that the only incentive for charitable giving was a seven-year deed of covenant. Now we have gift aid, give-as-you-earn and so on. Those were rather restricted when they started, but have been opened up. However, we are still an incentive short.
We also have an incentive for someone leaving money in their will, in that there is no inheritance tax, but we are missing an incentive to bring forward the gift in the will into the lifetime. Therefore, the Minister might put to the Chancellor a way of bringing it forward so that there can be lifetime giving with a tax incentive. I suggest what I call a "lifetime gift inheritance tax exemption certificate". If someone makes a gift in their lifetime and it is properly certified, that sum should be available as a deduction from the inheritance tax bill on their death. Then they could be generous in their lifetime, while being able as testators to raise the level before inheritance tax was payable.
Among the plethora of ideas, that could be looked at to bring forward giving of capital sums. All the amounts about which we have talked have basically been tax breaks on income, and I am talking about a tax break on capital. I hope that that suggestion was worth putting forward in this very important debate.
§ 8.17 p.m.
§ Baroness Noakes
My Lords, it is a very great pleasure to take part in the debate. Like other noble Lords, I pay tribute to the noble Lord, Lord Joffe, for bringing the topic forward today. I also pay tribute to him for his work in charities, not least most recently as chairman of the Giving Campaign.
1413 I am particularly grateful to my noble friend Lord Brooke for his forensic analysis of the 25 per cent mentioned in the Motion. I had tried and failed to replicate the calculations, but decided to gloss over that rather than admit to it. Now I feel able to admit to not being able to match the calculations.
On these Benches, we are fully committed to a thriving voluntary sector. The right reverend Prelate the Bishop of Southwell gave us a really good insight into what can be achieved through voluntary means. We believe that it is a badge of a healthy society to have a good voluntary sector through which people can demonstrate their responsibilities towards their communities. At the moment, there are some barriers to effective working in the voluntary sector, and we believe that the time is overdue for a reform of charity law. We welcome the fact that a draft charities Bill is imminent, even though we do not necessarily welcome all its promised content.
The charitable sector could, however, be transformed without legislation if the Government were so minded. One of the biggest problems for charities is the bureaucracy that they encounter. Charities, like businesses, have significant costs imposed by rules and regulations. We have suggested "bureaucracy busters" who could curb the overzealous application and interpretation of regulations for charities, and would have powers to require fast communication and decision-making across government departments.
I start this evening with the Government's interaction with charities, because the public sector is not only a source of burdens but a major source of the income of charities. Indeed, in 2004 the NCVO estimated that 37 per cent of voluntary sector income came from the public sector, which is a little higher than the 36.6 per cent from the general public. The Charities Aid Foundation's latest analysis of charity trends showed public sector funding as the area of big growth in charitable income among the largest charities.
I am aware that some in the voluntary sector see that as potentially impairing their independence, which is why non-government income is so important to them. The Government's purse, coupled with compacts and codes, can be seen as resulting in subtle government control over campaigning and lobbying work—and the noble Lord, Lord Judd, referred to that. Even if there is no overt attempt at control by government, there is the strong possibility that the end result would he the same. As my right honourable friend in another place, Mr Michael Howard, has said on this subject,being smothered by an elephant is no less painful if there is no deliberate malice involved".We are absolutely clear that we will avoid the elephant trap of smothering the independence of charities. In particular, we see charities being able to gain presumptive rights to public funding as well as the control of public assets, so gaining the opportunity to improve delivery of publicly-funded local services without undue reliance on the provider of funds. That would be a more healthy relationship.
Turning to individual giving, there has been an increase in real terms but it has not matched the increase in GDP. as the noble Lord, Lord Joffe, 1414 reminded us. I am not myself sure how much this matters, provided that the voluntary sector continues to grow. In the 10 years from 1991 the total income of charities grew by 78 per cent compared with GDP growth of around 70 per cent. Overall, the charity sector grew at a faster rate than GDP. Clearly the increase in public sector funding was a major cause of that.
If one looks at giving, relative to GDP over a shorter time span than the 11 years referred to by the noble Lord, Lord Joffe, there is a nearer approximation between GDP growth and the growth in charitable giving, because the early to middle part of the 11 years included the introduction of the National Lottery, which, as my noble friend Lord Brooke has pointed out, confused the picture.
It has for a long time been possible to give money to charities tax-efficiently and the Government's gift aid schemes and other innovations have made that easier. But even so, in 2001–02 tax-efficient giving amounted to less than 30 per cent of the total and so there must be more that could be done to promote tax-efficient schemes. In that context, it is a source of regret that the Treasury sees it as its mission to track down and destroy schemes that they say abuse gift aid, such as the entrance fee arrangements. Similarly, the ruthlessness of the Treasury in applying VAT to London marathon runners beggars belief. The Government are creating confusion—giving with the one hand and taking back with the other. Our tax incentives, while welcome, are not as sophisticated or extensive as those in America. My noble friend Lord Dundee referred to those and the noble Lord, Lord Shutt of Greetland, pleaded for a new and more sophisticated approach to tax-efficient giving.
People in Britain contribute less than 1 per cent of their income and the charity sector looks enviously at the US where the average is nearly 2 per cent. But there are important differences between the UK and the US— the noble Lord, Lord Joffe, referred to the cultural differences between the two. One of the important differences is the relative tax burden. In the US the marginal rate is less than 30 per cent and in this country it is 40 per cent. Here, the overall tax burden is set to increase further under the Government's budgetary plans and we believe that further tax rises are inevitable if the British people give the Government a third term. Rising taxes are not a healthy platform for increased giving.
There are other factors at work in our economy which inhibit the scope for increased giving. In particular, we have the,continuing rapid rate of increase in consumer indebtedness",to use the most recent measured words of the Monetary Policy Committee. Personal debt is now over £1 billion for the first time. It is not entirely clear what that borrowing is used for, but I will wager that it is not being used to support higher charitable giving.
The proposition put forward by the noble Lord, Lord Joffe, is that the rich should give more. Other noble Lords spoke to that theme, too. He drew attention to the fact that the poorest 10 per cent 1415 contribute proportionately more of their income than the richest 20 per cent. That may well be true, but it is also true that the charity sector is already dependent on the relatively small percentage of the pulation—around 5 per cent—who give about 60 per cent of the total. So there are some practical issues on how to lessen that dependence by attracting more high-level donors into that club.
The noble Lord, Lord Moser, talked about increasing corporate giving, which is a relatively small source of total charitable giving. That may not be the magic solution; not all shareholders want the companies in which they have invested to make those decisions on their behalf. They would rather have the income to devote in that way themselves. It is not therefore easy to see that as necessarily the right way forward. My personal observation is that if we had fewer charity muggers—if charities sent fewer cheap pens through the mail and if more of them accurately addressed their requests through their mail-merge procedures—charities might do rather better.
One can make anything of statistics and this topic is something of a minefield, as my noble friend Lord Brooke and the noble Lord, Lord Moser, said. I discovered the different definitions, timetables and problems when preparing for the debate. But the Economist of 8 May 2004 reported that the really rich are giving more. Based on the analysis of the Sunday Times rich list, to which the noble Lord, Lord Joffe, referred, giving in 2003 at £299 million was said to be 75 per cent more than the previous year. That has probably not yet surfaced in the charity statistics and so I suggest to the noble Lord, Lord Joffe, ever so gently, that perhaps the problem is not as bad as it has been portrayed.
§ 8.27 p.m.
§ Lord McIntosh of Haringey
My Lords, I, too, congratulate the noble Lord, Lord Joffe, on introducing this important subject in your Lordships' House. I confess that I find it difficult to know what kind of speech to make in response. I would like to make a speech about social justice and charity, about the role of charitable giving as compared with collective effort through taxation policy and other social policies in well-being. Clearly, there is a role for both of them and, clearly, the boundaries between individual and corporate charity on the one hand and our collective responsibilities which we fulfil as citizens are difficult to define.
I still have in the back of my mind the image of alms houses in the 17th, 18th and 19th centuries with the names of mill owners on the front who thought they were securing their place in heaven, having been paying starvation wages to their workers all their lives. That colours my views, but then noble Lords would expect that.
I also have a duty to defend the Government's record in encouraging charitable giving. I did not think that I would have to, but the noble Baroness, Lady Noakes, can be guaranteed to bring party politics into any debate, so I shall have to.
1416 I have been impressed by the variety of experience, concerns and passions expressed in the debate and I am grateful that I have been able to listen to it. I was unable to go to the closing party for the Giving Campaign last week, but I know of the tributes that were paid to the noble Lord, Lord Joffe, for his chairmanship. The campaign has been a unique and highly successful partnership between government and the voluntary sector in promoting tax-effective giving. That success has been in no small measure due to the noble Lord. The Giving Nation project, which brings the issue of charities and charitable giving to schoolchildren in a very positive way, is an example of that. The comments of the noble Lord, Lord Best, about building on young people's understanding of the nature of charity is enormously important.
I must also refer to the wording of the Motion, which talks of a 25 per cent fall since 1992 in charitable giving as a percentage of gross domestic product. I understand that that comes from surveys sponsored by the Charities Aid Foundation. I appreciate the difficulty of obtaining correct figures, but the ones on which I am most reliant, for reasons that I shall explain, are those produced by the NCVO and NOP surveys, which have been carried out over something like a 10-year period. I am reliant on them because it was my wife who set them up as the then vice-chairman of NCVO.
Those surveys show that since this Government have been responsible, in absolute terms, giving by individuals has risen from £4.5 billion a year in 1997 to £7.3 billion in 2002. That is an increase of 62 per cent at a time when there has been a 29 per cent increase in GDP, and therefore one reaches a different conclusion. I appreciate that those figures relate to individual giving; they do not include legacies or tax-back devices.
Incidentally, I did not really appreciate the noble Lord, Lord Phillips, talking about the tax system in relation to charities as being mechanistic. Anything that we do must be precisely defined, but I do not think it is any the worse for that.
§ Lord Phillips of Sudbury
My Lords, obviously I did not express myself very well. I was not referring to the tax system as being mechanistic. "Managerialist" would have been a better word—I was talking about managerialist ideas of increasing giving. I hope that the noble Lord will rest assured.
§ Lord McIntosh of Haringey
My Lords, I am grateful for that. However, I have to say, even if I say it only to the noble Baroness, Lady Noakes, that no government have done more to encourage charitable giving and support for a strong and independent voluntary and community sector than this Government. Whether the calculations indicate a decline or a rise in charitable giving, that must be the case and I shall have to demonstrate that fact.
Of course, the 10-year period chosen by the noble Lord, Lord Joffe, starts from a low period in terms of gross domestic product. It is also true that during that period, so far as one can tell, there was an effect on charitable giving because of the lottery, which worked 1417 in two directions. There may have been a reduction in some kinds of charitable giving because of the lottery, but there was also a huge increase in charitable receipts from the lottery. If one weighs those two together, one comes to a rather different conclusion. If one takes into account that in 2002–03 the Community Fund distributed £350 million to charity projects, one realises the change in the outcome, if perhaps not so much in the motivation, of those concerned.
Therefore, I do not think that the situation is as bleak as is implied by the figures in the Motion. However, I believe it is incumbent on all of us, including government, to give what encouragement we can in different ways to charities. I suggest that there are a number of ways in which things have improved.
We have removed the £250 minimum donation for Gift Aid and simplified the procedures which mean that there has been an increase in gross donations from individuals, including deeds of covenant, from £1.8 billion in 2000–01 to £2.3 billion in 2002–03. We have removed the £1,200 annual ceiling on donations using payroll giving and introduced a three year 10 percent supplement on donations. That has resulted in an increase in giving from £37 million in 1999–2000 to £86 million in 2002–03. That is very low. The noble Lord, Lord Joffe, gave the figures for payroll giving: 2 per cent in this country and 32 per cent in the United States. It is still very low, but the incentives are there. There is tax relief for gifts of shares, securities and real property to charity.
I was asked by the noble Lord, Lord Brooke, about the Goodison report. It is quite early to say but we have already started in this year's budget to extend VAT refunds to other forms of museums and the noble Lord, Lord Brooke, and others can expect more responses to the Goodison report in the months and years to come.
The noble Lords, Lord Best and Lord Shutt, suggested that payroll giving should be offered to those who do quango work. It can be offered by any employer. There is no bar on that. Anyone who receives salaries or wages— quango payments are in the form of salaries or wages— through the pay-as-you-earn system, can have payroll giving schemes applied to them.
Before I leave the individual tax side of Government's activity, I should refer to the leaflet which appears in all of our tax documents this year, Giving your repayment to charity—gift aided, which is a worth while innovation.
The noble Lord, Lord Moser, and others referred to corporate giving. Certainly, business involvement in voluntary and community activity works best when it is led by business. That is the approach by the corporate challenge. Businesses involved in the challenge are considering how best to increase awareness and spread best practice as part of the 2005 UK Year of the Volunteer. There have been more than 60 corporate challenge champions, who have come forward from a wide range of businesses to form a working group on this subject.
1418 Of very great importance here is Government direct financial support for the voluntary sector. I appreciate the points made by the noble Lords, Lord Judd and Lord Shutt, in particular that there is a danger of distortion. If charities are really dependent on Government for their income, they may seek to maximise that government income by distorting their purposes rather than doing what they would otherwise have done.
Nevertheless, there has been a very substantial increase in direct financial support which has been widely welcomed. As long as we are aware of the dangers, it is important to celebrate that.
In the 2002 spending review, the Government allocated £188 million to the Active Communities Directorate in the Home Office, around £80 million of that directly in building the capacity and infrastructure of the sector to deliver even better services. The noble Earl, Lord Dundee, made a number of valid points on that. He asked about a capital fund for approved projects. There is exactly that in the £125 million Futurebuilders investment fund to invest in better ways of delivering services by voluntary and community organisations. That was launched earlier this month by the Home Secretary.
We are also—this is a point referred to by the noble Baroness, Lady Noakes—investing millions of pounds in the voluntary and charitable sector. There has been a growth in the value of public services delivered by the sector, from £3.2 billion in 1991–92 to £7.5 billion in 2001–02.
My noble friend Lady Pitkeathley—and I do not want to congratulate her on leaving office, but to thank her for the service she has given to the New Opportunities Fund—made the point that obviously the National Lottery has had a positive effect on charity funding. Since 1997, a total of over £2.5 billion has gone into the Community Fund. In 2002–03 the fund distributed more than £350 million to charity projects.
There are other possibilities, such as further tax relief. A number of noble Lords, the noble Lords, Lord Joffe and Lord Shutt, and the noble Baroness, Lady Noakes, made reference to what appears to work well in the United States. The noble Lord, Lord Shutt— and I wrote it down—described it as a "lifetime gift inheritance tax exemption certificate". Bozhe moy, that is a wonderful phrase! I know what the noble Lord means, but surely when people in the United States dedicate capital to a charitable purpose, they still take out the income for themselves. They are still allowed to do that. I doubt whether it makes a great deal of difference whether they announce it in their lifetime or whether they leave it in a legacy.
I am not certain that there are as many differences now as there were between the United States and this country in the kinds of tax relief available either for corporate giving or for individual giving. I think the differences in outcome are much more cultural than legislative. They reflect the fact—and I am not ashamed of this—that we have traditionally thought it more appropriate for some of the things which are 1419 done on a charitable basis in the United States to be done as a matter of civic duty through the taxation system in this country. If that allows the noble Baroness, Lady Noakes, to gloat about tax and spend, so be it; it is a price we have to pay.
In conclusion, because I have less time available to me than appears on the Order Paper, I want first to express my appreciation to the speakers who lifted our horizons from this country alone to the world. Among those were the moving speeches of my noble friends Lord Puttnam and Lord Judd; and other noble Lords' speeches were of great significance. At the same time, although it is true that we have not reached our target—which has always been our target—of 0.7 per cent of GDP in aid expenditure, it has increased from 0.2 per cent to 0.4 per cent over the lifetime of this Government. That doubling is a significant increase and deserves recognition.
I end by commending a speech by Stephen Ainger, the Chief Executive of the Charities Aid Foundation, referred to by the noble Lord, Lord Joffe, in his opening remarks. He, too, wanted us to have targets. He suggested that we should have a 1.5 per cent target of GDP for individual giving. I very much support that kind of target. He suggested that although there are these very significant tax breaks for charitable giving, it was a disgrace that charities made so little use of them. The noble Baroness, Lady Noakes, made the point that only about 35 per cent of charitable giving makes use of what is available. The noble Lord wanted the charities movement and society to celebrate the achievements made by, for and with charities in recent years. I join in that celebration. I am grateful to the noble Lord, Lord Joffe, for making that possible.
§ 8.45 p.m.
§ Lord Joffe
My Lords, as a relative newcomer to your Lordships' House, I constantly admire the quality of its debates and the experience and wisdom of so many noble Lords, as has been so well illustrated by this debate. I thank all noble Lords who have spoken tonight. No one could fail to be moved by the appalling story about which the noble Lord, Lord Puttnam, spoke. I am especially grateful to the noble Baroness, Lady Pitkeathley, for drawing attention to the importance of giving time, which is in every way as important as the giving of money.
I am pleased that a great deal of attention has been given to statistics. It is clear that a great deal more needs to be done to improve statistics. In that regard, I should like to pay tribute to Cathie Pharoh, the director of research of the Charities Aid Foundation and Carl Wilding, the director of research at the NCVO, as they struggle to find their way through the haze that clouds those statistics.
Whatever the statistics, I am clear that there is vast potential for the wealthy and well-off to give a great deal more to charities than they do at the moment. I thank the 1420 Minister for his usual thoughtful and detailed response to all the points that have been made. I assure him, as I did earlier, that I do not criticise the Government for not doing sufficient; they have given magnificent support and I was pleased that the Minister was given a campaign leaflet that arrived with his tax form, for which we are indebted to the Government for their continuing support of the Giving Campaign.
In conclusion, although I agree with most of what the noble Lord, Lord Phillips, said, I do not share his pessimism about the future. I am optimistic that the culture of giving in this country can be changed, especially if the leaders of charities demonstrate the passion and determination that the noble Lord, Lord Judd, has demonstrated throughout his career in the charity sector, part of which I was privileged to share. My Lords, I beg leave to withdraw the Motion for Papers.
§ Motion for Papers, by leave, withdrawn.