March 11, 2010
Nick Hurd winds up the debate for the Conservatives focussing on the relationship between Government and third sector organisations.
Mr. Nick Hurd (Ruislip-Northwood) (Con): I am still reeling from the shock, as I think I have just listened to a predictably excellent speech by my hon. Friend the Member for Stone (Mr. Cash) that contained no mention of the European Court of Human Rights. I suspect that he will correct that. It was an excellent and passionate speech that reinforced the point made by all speakers in different ways, which is that in this place we do not talk enough about the value of independent civil society to our sense of national wellbeing. The hon. Member for West Bromwich, West (Mr. Bailey) was entirely right-Members of Parliament are uniquely placed to articulate that point, because we know from our day-to-day work that what we call the third sector is often the glue that holds our communities together. If I think about what would happen if volunteers did not turn up to the Ruislip scouts group, the churches, the Northwood police station or the Michael Sobell hospice, I get a sense of what we would lose, and it something vital. I am also conscious that I represent a relatively lucky community where that glue is strong. As most of us know, there are too many parts of the country where that glue is weak and needs strengthening.
We must think collectively about how to tackle the stubborn social problems that carry such a big financial and, more importantly, human cost. Whether we like the broken society narrative or not, we are all aware that the problems out there are stubborn and expensive. Most of us recognise from our day-to-day work that if we are looking for solutions, the first place to start is often the voluntary sector and what are frequently small organisations that are that much closer to the people whom we are trying to help, and which enjoy a different relationship of trust and therefore a greater capacity to make an impact.
I am sure that we all have our favourite organisations. I am continually inspired by a social enterprise on the edge of my constituency called Blue Sky, which is the only company in the country where someone has to have a criminal record to work there. It does extraordinary work in helping prisoners to work, under contract to Hillingdon council, so that they can prove to a future employer that they can be trusted. It is a critical stepping stone on the journey off the reoffending cycle. That solution works and could be replicated elsewhere if other local authorities contracted on the same model. At the moment, an important political consensus is being developed that we need to try to create more space to allow those kinds of organisations to do their magic.
Political consensus is important, too, in the role that the Government have to play in helping to support the sector and unlock its potential-again, an expression used by the hon. Member for West Bromwich, West-to help more people and to improve more lives. I suggest that that is why we are here. In their role of supporting the sector, we believe that the Government should focus on three questions.
The first is about what we are doing to make it easier to run a charity, a social enterprise or a voluntary organisation. The hon. Member for South-East Cornwall (Mr. Breed) was entirely right. We believe that, over time, we have allowed an increasingly dense thicket of regulation, bureaucracy and hidden costs to grow for those organisations. The risk is that that will stifle much of the innovation and creativity that we want; it will turn off exactly the sort of people we want to turn on. It is complicated, because a lot of that stuff is there for understandably good reasons, but we have lost sight of the cumulative effect on the sector. We are determined to thin that thicket. The hon. Member for South-East Cornwall was right, too, to highlight Gift Aid as a place to start. It is undeniably an excessively bureaucratic process. The burden of that administration falls on charities, with a disproportionate part falling on smaller charities, which are struggling.
The second question for the Government is what we are doing to get more resources, both time and money, into the sector. The time bit is crucial. The right hon. Member for Cardiff, South and Penarth (Alun Michael) and the hon. Member for High Peak (Tom Levitt) were eloquent on that question. I totally agree with the right hon. Gentleman’s analysis when he spoke of the potential for more employee-led volunteering, and the need to engage more businesses by structuring their role and inspiring their people to give more time.
What excites me in talking to that community is that more and more businesses see that it is not about public relations or ticking a box on corporate social responsibility. They are doing it because they can see that it is absolutely in their commercial interests to do so; it is about developing their most important assets, which are human. Barclays, KPMG and the people leading on this see that clearly. The challenge is to inspire other business leaders. I shall return to the issue of money later.
The third question, on which I shall focus, is what are we and the Government doing to make it easier for the organisations in that sector to do business with the state? I have been shadow spokesman for just over a year, and everything that I have heard suggests that too often it is a bureaucratic nightmare. To give a specific example, the excellent report by the Select Committee on Communities and Local Government, which we were encouraged to read for the debate and which the Minister mentioned, is deals with the Supporting People programme. The report brings to light a substantial problem-how difficult it is to get the relationship right consistently across the country. The programme is aimed at vulnerable people, and, as the report makes clear, the third sector has a central role in delivery. However, the report shows how difficult it is get it right and make the relationship work.
What comes through-this is the main point that I wish to make-is how complex we have made that environment. The report gives a picture of different practices in different local authorities and Departments, of programmes that one minute are ring-fenced and the next not ring-fenced, of new initiatives that have to be pieced in and made coherent, of new apparatus for decision making, of new local area agreements, local strategic partnerships and regional layers, and of changes being made to the assessment regime. We may convince ourselves that things are moving things in the right direction, devolving power and everything else that we sign up to on a cross-party basis, but I wonder whether we have thought enough about what it means to the environment in which people have to work.
Mr. Cash: May I make a small suggestion? There was a time when the friendly societies and mutuals had a similar problem, which resulted from their 19th- century origins. The Friendly Societies Acts and the Companies Acts then dealt with the various circumstances that arose. If we were to have a voluntary societies Act or a third sector Act, that could, without increasing bureaucratisation, simply provide a template against which most others could be judged. That could be a way to help make things simpler and more transparent.
Mr. Hurd: That suggestion is an interesting idea, and the main point made by my hon. Friend is something that I am trying to reinforce. We ought to be in the business of making things simpler, but we are making them really hard.
Mr. Breed: I entirely agree with the hon. Gentleman. One simple way of doing that would be to ensure that there is a sense of proportionality. The problem is that we sometimes have exactly the same rules for Oxfam as for a tiny organisation in a small town. We need a sense of proportionality about the way in which charities are administered and controlled.
Mr. Hurd: I agree. The starting point is a determination that the role of the Government should be to make things simpler.
The report shows how complex the environment is, and how difficult it is for that relationship to work. It is a relationship between two people trying to do something simple and sensible-one person wishing to buy a service and the other wishing to sell or deliver a service. Both of them should be united in their purpose, as it is all about trying to deliver a better outcome to those we are trying to help. The environment in which this simple human transaction is taking place is unbelievably complex.
The problem is that the environment is about to change for the worse. We all know about the state of public finances in our constituencies, and that the funding market for local authorities has been difficult for the past four or five years, but it is about to get even harder, as the authorities know. My local authority of Hillingdon has been very effective in squeezing out efficiencies for the past three or four years-it was recently ranked as the most efficient council in London-but it is now in an environment in which it will have to do the same again. It has reached the point of saying that it cannot necessarily go on as before. It has squeezed the lemon. It almost has to start with a blank sheet of paper and think about what it has to deliver and to open its mind to doing things differently. If that is happening elsewhere, it will present a tremendous opportunity for the third sector, but also a risk and a challenge.
Tom Levitt: I hope that the hon. Gentleman will return to the question of how to make life easier for these organisations. There is nothing easier than setting up a “Just Giving” webpage, as the Gift Aid is then easily sorted out. I have not heard the hon. Gentleman suggest that charity law needs to be changed, or that the health and safety regime should be relaxed. Neither the hon. Gentleman nor the hon. Member for South-East Cornwall (Mr. Breed) have suggested changing the CRB rules on the grounds of the requirement for some checks. Will the hon. Member for Ruislip-Northwood (Mr. Hurd) be a little more specific about what changes he would make, bearing in mind that he also complains that things are different in different areas, which suggests that centralisation of the regulations is not necessarily the problem?
Mr. Hurd: I have mentioned Gift Aid, but there are specific considerations relating to making the process easier.
The most important point is that there needs to be a serious step back. We need to consider what has happened over the last 20 years as a result of increasing regulation and bureaucracy. We need to look at it in the round, because it is complex, and much of that stuff is there for a reason. There has been some progress in reducing the time associated with making CRB applications, but there is a lot of frustration about the need for multiple applications. There is a desire for things such as a passporting scheme to be considered. However, I want to talk about making things easier, the relationship between the state and the organisations, which want to step up and help to deliver services, and the frustrations that those organisations face.
The report is interesting because of the themes that it brings up. It illustrates some things that seem to be going wrong, and it is frank about some of the difficulties that the Government face-government is hard. There is clearly a lot of effort on giving clearer guidance to local authority commissioners about things such as EU procurement laws and all the excuses that can be used.
The Department is clear that there is still a serious problem at grassroots level. The guidance is still not clear enough and there is a big problem with helping commissioners to differentiate between value and cost. If that argument is won, there is a need to help with the measurement of value. The Minister knows that there is a lot of debate about measuring value, but the simple point is that finding money, whether public or private, will be more demanding when we want to measure value and impacts. The Government can play a role by working with the sector to find mechanisms to help commissioners to identify and quantify impact and value, and that will help in an environment in which the natural human tendency will always be driven by cost. If we believe that there is a distinction between value and cost, the people who are trying to make the process work will need some help from us.
Another theme that comes through in the report is the difficulty of spreading best practice. Some local authorities and commissioners are doing that well. The Compact works well in Merton, which I am sure the Minister and others have visited. There are local authorities that are very clear, nimble, flexible and agile in their dealing with EU procurement law, such as Hampshire and Westminster, which have been cited. We always talk about spreading best practice-it is one of the clichés of the political narrative-but why is it so hard in practice? The report talks about using regional improvement and efficiency partnerships, but I am sceptical about that idea, because another regional layer would be introduced and that would add to the confusion. We already have the Local Government Association, the Improvement and Development Agency and lots of people trying to help but, collectively, they are not making an impact, so that needs some thought.
On the commissioning process and the difficulty of accessing public money, we need to revisit all the things that flow from that, such as reporting, monitoring and accountability. The example that sticks in my mind is of a gentleman who represented a community group in Dorset standing up at a conference, waving a document at me and saying, “I applied for a contract of just a few thousand pounds from my local authority, and I’m having to fill in a 28-page contract. This is bonkers.” More dramatically, a social entrepreneur told me that he had received £500,000 from a private sector grant-making organisation on the basis of four agreed desired outcomes. One piece of paper framed that entire relationship. He then got £1 million, which is a lot of money, from a Government Department, but he told me that he wished that he had not, because of what happened next. That Department hired an agency as an intermediary to manage the relationship, and the agency came in and checked his diary, e-mails and phone logs to see what he was doing.
The message that I get, and I am sure the Minister has picked up on this as well, is that our message to the sector is wrong. On the one hand, we say that we love its creativity and powers of innovation but, on the other hand, what we put it through with the contracting and commissioning process sends the message, “We don’t trust you.” The focus in the House has to be on what we can do to reduce bureaucracy and the flurry of activity in the name of accountability, and how we can introduce more trust into the process of commissioning and procurement.
My last point in that context is about more effective checks and balances in the system. The Compact is clearly very useful, but it is undermined by the fact that it can be ignored with impunity. It is time to get serious about giving the commission a clearer role and recognised authority. Greater transparency, about which we feel strongly, is another important tool in the box. There should be transparency about public money and the terms and values of contracts and grants. That is why our commitment to publish details of all public expenditure over £25,000 will be an important catalyst for driving better processes. Transparency, as we know in the House to our cost, can be a powerful force for change.
Mr. Cash: Does my hon. Friend agree that ensuring that he gets the accountability-to use that expression-right in this context does not mean doing so to the extent that the object of the exercise is lost because people spend all their time bean counting and not carrying out the job in question and the supervision that goes with it?
Mr. Hurd: My hon. Friend touches on a fundamental point: accountability to whom. At the moment, as we know, local authorities feel a tremendous sense of accountability to Whitehall. With the devolution of power, the basis of accountability will shift to the communities that they serve. Transparency is an important tool in that process.
I would like to make a final point about money, which we have not really touched on. Above all else, the sector needs money, because demand for its services will always outstrip supply. As various hon. Members have mentioned, the recession has proved a particularly demanding environment for the sector when accessing money. I see the situation relatively simply, in that there are three main sources of money for the sector.
First, there is public sector money from the opportunity to deliver services. That amount has grown and will continue to grow, because the sector’s share of the cake will grow, even if the cake shrinks. Secondly, there is philanthropy, which has struggled to make progress, and we have said that we need a concerted effort to deliver a step change in cultural attitudes to giving. The third pillar is embryonic and small, but it has fascinating potential. It is called social investment, and it is money from sources that are prepared to consider a blend of traditional financial return and social impact. That source is worth about £1 billion, but it could be worth a great deal more. We see an opportunity to connect the social entrepreneur with the strategic capital. At the moment, they are disconnected and speak different languages. For the market to grow, we need a strong intermediary that can make the connection and create the financial products that make sense for mainstream capital.
Mr. Cash: I am extremely interested in that suggestion. In a sense, it was what I was referring to. In the 19th century, people created the railways and other things out of nothing. They also created the companies that led to the building societies, the insurance companies and so on. That was driven by the very thing to which my hon. Friend is referring-social investment.
Mr. Hurd: Our instinct tells us that people are looking for the opportunity to invest significant capital for good, but that process needs help. That is why we have strongly supported the idea of the social investment bank for some time. There has been widespread consensus on that for three years, but we still do not have the bank. When will we get it? On my travels around the sector, I have heard two concerns: first, that the Government do not have a clear enough vision of the potential of the social investment bank or of what it will do; and, secondly, that the Government, in a last-minute dash to be seen to be doing something, might create something half-baked that does not capture the full potential of such an institution.
There is concern that the Government’s commitment of up to £75 million of capital is inadequate compared with the capitalisation that the sector feels is right. I would like the Minister to put on record confirmation of the Government’s intent. Will the Budget, as promised, make it clearer what model they are considering, and is the £75 million a stepping stone on a journey towards higher capitalisation? We and the sector think that the social investment bank would be an improvement, but there is frustration over how long it is taking to put into place an organisation that could play an important role in connecting social entrepreneurs with the strategic capital that they need.