Analysis: Labour and the sector

Ahead of Labour's party conference, Gareth Thomas, the shadow charities minster, tells David Ainsworth about some of the new ideas being fleshed out in opposition

Grant Thomas
Grant Thomas

This time last year, the Labour Party published preliminary findings from a review group that suggested the last Labour government had achieved some success with its voluntary sector policies, but had run out of ideas in its last days.

This year's party conference kicks off in Manchester on Sunday, and Gareth Thomas, the shadow charities minister, says fresh ideas to support the sector are emerging. There is no plan to publish the review group's conclusions, he says, and no fixed timescale for the production of policy. But there will be further "think pieces" on aspects of the sector, he says: "Getting policy right, and working through all the aspects, takes time."

Thomas has now formed a new policy team with Jon Trickett, the shadow minister for the Cabinet Office, and other MPs. One plan Thomas is ready to lay on the table is what has been called a 'community reinvestment act', outlined in the recent Labour policy document, Open Banking: building a transparent banking system, which was written by Thomas and Chris Leslie, the shadow financial secretary to the Treasury. This would make banks reveal the extent of their lending in each community and ensure that they lent money in deprived areas.

For many parts of the third sector, Thomas says, this would offer opportunities. "Potentially, it's a new role for charities and a new source of income for the sector," he says. "We believe there should be an obligation on banks to lend into every community. Where they won't do it themselves, they should work with the sector - for example, with anti-poverty charities or credit unions."

The banking policy document says there is scope for massive expansion of the UK's already growing community lending sector. Community lenders and credit unions in the UK are worth tens of millions of pounds, but in the US - which has had a community reinvestment law for more than three decades - they are worth billions of dollars.

The policy is still being developed and there will be no attempt to introduce the legislation while in opposition, says Thomas: the government is opposed to the idea, and it would be "like pushing mud uphill". But he says it has the potential to become policy if Labour comes to power.

Another policy area the party hopes to address, Thomas says, is public service delivery. "The way the government issues contracts seems to me to make it harder for charities to have a big stake," he says. "Government is trying to transfer much of the responsibility and the risk to the private sector."

He is reluctant to be drawn on whether Labour would reverse this trend or would introduce measures to make it easier for charities to win contracts, saying only that a Labour government would "have to look at the way we do contracts in the future".

Thomas would also like to see the sector gain ground in local decision-making through community budgeting schemes, in which all major players in an area - including the council, the police, the health service and representatives of local business - discuss priorities together. "Excluding charities from discussions about local priorities is poor policy," he says.

He would also like to see better co-regulation between the Charity Commission and HM Revenue & Customs.

So how much does Labour dissent from the government's sector policies? Thomas agrees the two main parties have much common ground, but says the government is continuing much of the work Labour began - but allocating smaller funds to each initiative. He says he is not necessarily opposed to the largest completely new government initiative, the National Citizen Service, and does not envisage that it would be scrapped under Labour. But he says it is necessary to "think whether this is the best use of money available for volunteering".

Labour, he says, would also have to assess whether the NCS is being delivered in the right way. "It was sold as an opportunity for charities to have more scope to bring young people together," he says. "Instead, we've seen private sector delivery."

He says that both parties support the sector, but Labour has been willing to give it more resources. "I think there's a difference in ethos," he says. "The idea that the Conservatives have the same commitment to the sector doesn't stand up when you look at the scale of the cuts."



Hazel Blears1. The idea of a bill that would force lenders to reveal what they lend, and to lend more in deprived communities, was first proposed by Hazel Blears (right) in her role as communities secretary under the previous government.

The concept has been used successfully in the US, where it became law in 1977 as the Community Reinvestment Act. That legislation has led to a sea change in bank funding for community development finance institutions.

By contrast, the British CDFI sector is still in its infancy. Only about 60 lenders exist and most of their funding goes to social enterprises, rather than to individuals and businesses in deprived communities.

Ian Best, policy officer at the Community Development Finance Association, the umbrella body for CDFIs, says it has worked closely with Thomas on transparent banking. "This would have substantial benefits for us," he says. "Perhaps the main one would be clear information about where there isn't sufficient lending and where there's the greatest need for CDFI services."


2. Community budgets involve the planning of service delivery and budget priorities across a local authority area, involving all the major stakeholders in that community.

In Scotland, the concept has been enshrined as "community planning partnerships". In each of the country's 32 local authority areas, a single "third sector interface" - usually a council for voluntary service - is designated to sit on that partnership and take part in local decision-making.

But in England, community budgeting is still in an experimental phase: four pilots have so far taken place in Manchester, west London, Cheshire and Essex.

Alex Massey, senior policy officer at Acevo, says that the pilot areas showed considerable variation in third sector involvement. "We feel that any attempt to involve the community more closely needs civil society," he says. "It is a way for otherwise disenfranchised groups to have their voices heard."


3. Gareth Thomas says he is concerned about the growing regulation of charities by HM Revenue & Customs and wants to see its activities more closely dovetailed with those of the Charity Commission.

An estimated 180,000 charities are not registered with the commission, despite being regulated by it, and HMRC may in effect be the primary regulator for many of them.

HMRC registers charities that want to claim Gift Aid and other reliefs, vetting trustees and senior managers using a "fit and proper person test". It receives accounts from charitable companies and trading subsidiaries. In many cases, charities must also submit the same information to the commission.

Those working with both organisations have said that HMRC has on several occasions in recent years increased its role in monitoring charities without informing the commission - mainly because it is nervous about fraudulent use of charity tax reliefs.

Thomas's view is backed by Jane Tully, head of policy at the Charity Finance Group, which supports standardised registration.

"A charity should be able to register with the commission and register for Gift Aid at the same time," she says. "We believe there are tens of thousands of charities registered with HMRC but not with the commission."

She says the two bodies "do not speak with one voice" on charity issues and that closer communication would benefit the sector.



- Who else is influencing policy?

Jon Trickett Jon Trickett - The MP for Hemsworth and shadow minister for the Cabinet Office is working closely with Thomas and is the other main architect of Labour policies for the voluntary sector. Trickett is an opponent of many public service reforms and says he is against the "marketised relations" that the voluntary sector has with the state.

Chris LeslieChris Leslie - The MP for Nottingham East and shadow financial secretary to the Treasury is working with Gareth Thomas on the development of Labour's transparent banking policy. Thomas is also working with Leslie and other Treasury colleagues on a series of amendments designed to simplify and improve the Small Charitable Donations Bill.

Susan Elan JonesSusan Elan Jones - The MP for Clwyd South is co-chair of the All-Party Parliamentary Group on Civil Society and Volunteering. She spent 15 years in the charity sector before her election and has been a frequent speaker on charity issues on behalf of the National Council for Voluntary Organisations.

Clive Betts Clive Betts - The MP for Sheffield South East and chair of the Communities and Local Government select committee of MPs, has been one of the leaders of a campaign to oppose local council cuts to the sector and has fought for greater government protection against "disproportionate cuts". He is an advocate of greater sector involvement in communities.

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