How good social care can be funded: a handy guide to the options

Fatalism about lack of funds is not the right response to the crisis in social care

There are plenty of ways in which more money could be raised for better social care services. This aims to be a handy guide to some of the main ones. They all have pros and cons and none is easy. It is a matter of political will as to whether we choose to fund social care properly or whether we should give up and get used to a deteriorating crisis in state services as numbers of very fragile elderly people rise.

The main reason I disagreed with the new year letter to the voluntary sector from Sir Stuart Etherington, NCVO’s highly respected Chief Executive, is that it based the case for a bigger role for volunteering principally on an implicitly fatalistic view that we must get real about the limitations of the state and accept that state services cannot be supplied in the future as they were in the past. The days of tax and spend as a response to rising demand are over, is Sir Stuart’s apparent assumption, so we need more volunteers to step up to the plate instead:

https://andrewpurkis.wordpress.com/2017/01/24/problems-with-ncvo-chiefs-new-year-message/

  1. Yet it is charities such as The Kings Fund, Joseph Rowntree Foundation, the Institute for Fiscal Studies (IFS), the Nuffield Foundation and the Health Foundation who have led the way in demonstrating how, if the political will were there, funding for social care could be found, and not just from taxation. I recap some of the options briefly here.

Council Tax. Council tax in England is currently based on house valuations from, absurdly enough, 1991. Since then house prices have increased by over 240 per cent. Many lucky occupants have seen their wealth soar but have not had to contribute notably more in council tax. Successive Governments haven’t dared to do the necessary revaluations, despite being urged to do so by the European Union and the British Property Federation among many others. The current situation is particularly unfair on less wealthy homeowners compared with the wealthy and on those on low incomes, according to the IFS. Higher council taxes where equitable could also help reduce excessive house prices and take some of the weight off Stamp Duty, paid by those who move and buy a new house but not by the lucky majority who sit tight. Scotland has already uprated the upper bands.

There are other ways of increasing the contribution from council tax. The Government has already allowed local authorities to impose a 2% and latterly 3% additional levy on council tax earmarked for social care, and in principle such levies could be more generous and subject to less central government restrictions. Surry Council is taking the brave step of asking its voters to back a 15 per cent precept for social care in a referendum.

The trouble with relying on council tax alone is that, as the Kings Fund have pointed out, it raises least in the areas that need it most. But it does not have to be the only arrow in the quiver.

Shift priorities within existing taxes

The Government has already earmarked some of the NHS budget to the Better Care Fund, which is to rise to help meet social care needs. One of the solutions urged on the Government by the Nuffield Trust, Health Foundation and King’s Fund in a joint statement of 8 November 2016 was to bring forward the longer term planned growth in the Better Care Fund.

Scotland has decided to spend more money on its policy of free personal care (contrasting with England’s means tests) than on other demands on its devolved budget – a political choice about priorities.

Another option is to hypothecate a planned total for health and social care, as recommended with due caution recently by a former Treasury Permanent Secretary, Sir Nick MacPherson. Creating a single budget of this kind was also a key recommendation of the Commission (chaired by Dame Kate Barker) set up by the Kings Fund, in 2014 and again in an urgent and angry statement in November 2015. This could protect a given amount of resources for social care as well as health, in an integrated way, instead of ring-fencing the NHS and leaving social care vulnerable to cuts. These demands have been accompanied by recommendations for ways of raising additional resources (see next section) so they are not simply diverting money away from other Government requirements. The Barker Commission comprised, not naïve idealists, but such veterans as economist Dame Kate, former Permanent Secretary Lord (Michael) Bichard, former Age Concern Chief Executive Baroness Sally Greengross, social policy academic  Sir Julian Le Grand and local authority Chief Executive Geoff Alltimes. They considered that the overall budget for health and social care should rise to between 11 and 12 per cent of GDP by 2025 – a level already met for health alone in many developed countries.

Raise More Central Government  Money for Social Care

There is a growing body of opinion that the baby boomer generation has been privileged over younger generations and that the current tax system is unbalanced, contributing to this inequity. The ONS has said recently: “While retired households’ incomes have soared in recent years, non-retired households still have less money, on average, than before the crash”. There are many options, drawn on by the charities already mentioned, for asking the more fortunate generation to pay somewhat more into the public purse.

Sir Nick MacPherson says that the triple lock on state pensions is the biggest constraint on the ability of the Government to respond flexibly to where the need is greatest whilst making the necessary savings. So one option is to loosen the lock whereby pensions are raised by consumer prices, or earnings, or 2.5 %, whichever is the bigger, costing over £74 billion per year.

Personal tax allowances for older people are bigger than for younger people. That could be adjusted. People over pension age no longer pay National Insurance contributions. Is that necessarily right? Tax allowances for pension saving and for pensioners paying higher rate income tax could be looked at. Inheritance tax arrangements may be politically difficult but are not sacrosanct. At present, no capital gains tax at all is paid on someone’s primary residence, regardless of how much house prices have shot up: is that sacrosanct? And there is the rumbling question as to whether it makes sense for well off older people to receive the Winter Fuel Allowance and free TV licences.

A second approach can be seen as a more or less prominent part of the solution, depending on your point of view, but certainly many civil society bodies including the Tax Justice Network, Tax Justice UK, ActionAid, Christian Aid, Oxfam and others involved in tax justice campaigns, as well as the Public Accounts Committee, see major scope for increasing public revenues by more vigorous pursuit of tax evasion and limiting the scope of tax avoidance, depriving the Exchequer of eye-watering sums. There is proper concern about this across party lines, in a manner inconceivable a decade ago, largely due to civil society’s strong contribution in getting it on the political agenda.

Thirdly, those advocating a hypothecated or ring-fenced budget for health and social care have put forward specific ways of raising additional taxes to help fund it. Sir Nick MacPherson believes that increased National Insurance Contributions could be a good candidate. This could make more palatable tax rises that would otherwise be too politically unpopular. The Barker Commission also made this and other suggestions, some of them already touched on.

Funding from Private Sources

There will always be substantial funding from many individuals for social care. This can take the form of means tested charges, or private payment for care, and they can be incentivised and complemented by different public policies to secure good quality care and equitable overall outcomes. It isn’t just taxes or nothing.

Topically, Laing and Buisson have shown recently that those who pay for their own care home place are cross subsiding those paid for by local authorities to the tune of £1.3 billion per year. That may be unfair, but the scope for cross subsidisation and funding from public and private sources is there.

Another distinguished Commission brought together by the King’s Fund, this time chaired by Sir Derek Wanless, and in collaboration with the LSE, reported in 2006[1] to look at the best overall system for funding good social care in England. They looked at the following main options:

  • Universal entitlement not means tested (as for personal care in Scotland)
  • Various social insurance schemes, where the state acts as insurer
  • Partnership models, where both state and individuals contribute. For example, the user not on benefits has free care up to a certain level of cost, then a matched contribution from the state up to a higher level, and finally pays privately for anything more expensive. Those on low incomes would be supported through the benefits system.
  • Limited liability, where you are means tested for 3 or 4 years, after which the state pays
  • Existing means tested models, as in England, with adjustments to threshholds and charges.

The Wanless Commission decided that the partnership model was best, taking into account quality of care, support for carers, fairness, affordability and reaching people in need. 45 per cent more people would be reached than under the current arrangements. The overall net increase in public spending would they reckoned be £1.7 billion per year. They acknowledged that each model had its pros and cons and that in the end a value judgement had to be made.

There are other ways of leveraging more private funds. The Joseph Rowntree Foundation led by Richard (now Lord) Best did some excellent work in the 1990s on a compulsory insurance system whereby everyone over a certain age would pay into a social care fund, so that the lottery of who turns out to need long term care, who has to spend many years caring for a disabled person or who has to lose their inheritance could be replaced by a fairer, collective system based on values of solidarity. Other ideas that have been put forward at different times include offering incentives to insurance for social care through the tax system, and facilitating the easier use of housing equity for paying care costs.

It is worth noting that in Germany, for example, the resources of children are included in assessments for paying for aspects of social care, on the assumption that children have a duty to look after their parents financially if necessary. Maybe this is what Minister David Mowat meant in his remarks to a Select Committee reported today, if he was not trying merely to shift expectations so that family carers can expect even less support from the state than hitherto.

CONCLUSION

This has been a quick canter round the various options that exist for overcoming the current shaming crisis in social care services. The instruments are there. Charities are to the fore in creating the public awareness and the collective political will to address the issues. This personal blog by Patrick Hall of The Kings Fund makes some good points about promising ways of making the case: https://medium.com/@patrickjhall/politics-as-unusual-46718434003c#.4crnxdio4

Charities are hard at work as I write modelling the effects of these and other instruments. Their continuing efforts should in my view be celebrated and supported. I am emphatically not an expert and cannot myself evaluate all the comparative advantages and disadvantages. But I conclude there is no justification for fatalism, as if it were naïve and out of date to think that decent state services for a rising number of very frail elderly are possible any longer.

There are all sorts of valid, important reasons for celebrating volunteering and thinking more ambitiously about their contribution, as Sir Stuart urges. Fatalism about paying for social care for highly dependent people is not one of them.

 

Andrew Purkis,

January 2017.

[1] Securing Good Care for Older People, King’s Fund, March 2006

Problems with NCVO Chief’s New Year Message

Sir Stuart Etherington, NCVO’s veteran Chief Executive, has sent a new year’s letter to NCVO’s members and the wider sector. I have been trying to think why it leaves a mixed taste in the mouth.

The main theme is that the voluntary sector and wider society should value volunteers more highly and be bold and ambitious for the contribution volunteers should make to future delivery of the services people need. There are times when he describes volunteers as complementary to state workers, adding their own value, but the main thrust is that we should get real about the limitations of the state. We cannot for ever be waiting for more public expenditure to fill the gaps: it’s time for a rethink. Volunteers are not the whole answer, he says, but are an important part of it, especially in health and social care. “With a government preoccupied by Brexit”, he writes, “it is up to us to find the answers to the problems we face” (rather a tall order when you think of the nature of the problems). He continues: “We need a far greater focus on supporting and enabling communities and neighbours to look after each other, rather than waiting or hoping for a public service to do it”. And most strikingly bullish: “I don’t believe in putting limits on what volunteers can do, especially not based on ideological arguments about the role of the state.”

I have long admired the strength of Sir Stuart’s intellect, his sophisticated judgement and political nous. We can be sure that he has thought very carefully indeed about the positioning of NCVO and the most promising areas for advancement of the voluntary sector contribution at this time, drawing on the insider relationships that he is so good at building within the Government and wider influential circles. It is an unwelcome surprise to me, who usually agrees with Sir Stuart on nearly everything, to find that I am unhappy with this message, even if its purpose is to stimulate a debate.

The first possible disappointment is that there is nothing in Sir Stuart’s new year letter about major issues of great concern to many in the voluntary sector: nothing on growing inequality, on women’s rights and opportunities, on global warming, migration and refugees, homelessness or most other issues outside the purview of NCVO’s predecessor, the National Council for Social Service. Fair enough, perhaps, he cannot cover all big issues in one letter? But is it defensible to get through a whole message on upgrading volunteering as part of the solution to social care without mentioning the race to the bottom in wages, zero hours contracts and working conditions – which might even be one of the next big scandals affecting the charity sector itelf? Are issues about low pay, society’s very low valuation of caring roles, and the burden on women of unpaid care, really not worth a mention, or are they just worthless “ideological arguments” about the role of the state? Is the postcode lottery point about the very variable resources of money and volunteers in different places and communities another “ideological” argument?

Secondly, Sir Stuart is in other contexts a redoubtable champion of campaigning, and he makes welcome points early in his new year message about how the sector must be the voice of those who cannot manage at all, as well as the Just About Managing people prioritised by Theresa May. But taken as a whole, his message about volunteering here is deliberately focused on practical action and problem solving, as an alternative to unrealistic hopes of relying on state action for which we might be campaigning. This plays into a restrictive (and politically loaded?) definition of volunteering as something different from campaigning, advocacy and influencing.

Thirdly, look how Sir Stuart frames his discussion of social care problems: “Social care is consuming an ever greater proportion of local government spending. The trajectory appears unsustainable”. Tactfully, there is no mention of the savage cuts that have been imposed on local authority budgets. Perhaps, a voice cries, it is the degree of austerity in those budgets that is unsustainable? No, we should according to Sir Stuart’s new year’s message implicitly stop that unproductive line of questioning and think more creatively about volunteering (of the practical type).

That brings us to the nature of the health and social care crisis. Naturally, a wide definition of social care includes all levels of need requiring prevention or response, and I totally agree that there are abundant ways in which volunteers could do more to address many of them. But this is where some distinctions are needed. Already, local authorities have had to whittle away many services for less dependent people. Most adult local authority services are now focused on highly dependent people, and this is the end of the spectrum where things have gone most grossly critical. The core of the social and health care crisis is in large measure about people who, for example, cannot get themselves out of bed, or on and off the loo,  or who are suffering from dementia and mental health problems. Time and again, even for the most loving close family members (let alone volunteers and neighbours) the real crunch point comes when problems about peeing, shitting, dealing with soiled garments and bedclothes can no longer be dealt with. Such people, time and again, are not getting the care they need with a modicum of dignity. If they are in hospital, they often cannot go home because the local services cannot cope with them, causing bed blockages in the NHS. If they are lucky enough to have access to services allowing them to go home or stay at home, they may need to include regular visits from trained carers for toiletting, washing, and dressing, professional assessment of their requirements, provision of physiotherapy and of the right aids for daily living like chair lifts, frames, new rails and the like,  and sometimes sustained nursing care plus the right pads and means to avoid bed sores. Families above all, but also volunteers and neighbours, may have a highly valuable role within such a framework, but not instead of that framework. The core of this problem is not uncreative thinking about volunteering, it is a failure of collective arrangements that we make as a society. Many of its manifestations  are indeed far beyond the contribution that can fairly be expected of volunteers and neighbours. I  believe in recognising the limits. Overplaying their role is itself an ideological position about the role of the state – with bleak implications for many vulnerable people.

The number of very frail elderly people continues to grow. Sir Stuart seeks to cast doubt on the “predict and provide” approach as used in road-building, but this is a false analogy, because providing more roads arguably merely increases traffic and pollution and is therefore counter-productive. That is not true of making adequate provision to provide reasonable care for very frail elderly people. As with children attending school, predict and provide is not an optional extra, it is a social and political responsibility. That being so, there is something not quite right about bigging up the claims of practical volunteering on the back of a social care crisis that requires political determination and action.

The trouble is that, as David Cameron found with The Big Society, if you start a debate at the wrong time and in the wrong way it can go off the rails. As Sir Stuart comments: “Perhaps it was always too ambitious to embark on this journey [Cameron’s Big Society] at a time of spending constraint”. The same may be true of his own bullish demarche against the background of an unfolding, shaming crisis in health and social care for some of our most dependant fellow citizens.

 

 

 

 

How a big campaigning charity improved the lives of deaf people

Big charities are getting a bad press. It was a few big charities that were found to have adopted unacceptable fundraising practices and misused the personal data of supporters. Some of the principal betes noires of right-leaning opponents of campaigning by charities, who see uncontentious service delivery as the “proper” role of the sector, are also big charities. The Chair of the Charity Commission hardly ever praises the sector’s campaigning role and has recently singled out “kitchen table charities” as “wonderful”, as if to deflect the focus away from the more troublesome big guys. Within the charity sector itself there is a popular narrative that the big guys attract a lot of money and attention to themselves, sometimes to the detriment of smaller and more local organisations where you will find the real heart and soul of charity.

Well, gather round children and listen to this brief summary of what happened to the lives of many deaf people in  2000 to 2005. It is not a fairy story. It is based on a case study in the Journal of Social Enterprise, Vol 5, no 2, 2009 by Alex Murdock, Professor of Not for Profit Management at London South Bank University, and Brian Lamb, then Director of Communications at the Royal National Institute for the Deaf (RNID – since rebranded as Action on Hearing Loss).

Some 11 million people in the UK are directly affected by hearing loss. This brings with it stigma, loss of social networks, isolation, and poor employment prospects. In the late 1990s the NHS’s auditory services were a Cinderella, typically housed in low quality buildings resembling old fashioned Sexually Transmitted Diseases clinics. The ambience and quality of private sector provision was much better, as well as expensive, catering for about 25 per cent of users but leaving the 75 per cent behind. Analogue hearing aids were inexpensive but s0 ineffective that they often lay unused in drawers. They magnified all sound, like a Victorian ear trumpet, rather than responding flexibly to the individual’s particular need. The new digital hearing aids provided this flexibility, vastly superior sound quality and greater comfort, but they were also expensive: about £2,500 each on the high street. Since the NHS was the biggest purchaser of hearing aids in the world, the RNID were convinced that its purchasing power could drive down the price of digital hearing aids and make them accessible to the many.

Against this background, the RNID could have opted to try to expand its own services funded from charitable sources, but this would have had relatively little effect on the mass of people with hearing loss. The Trustees assessed that they could pursue their charitable objects far more effectively by influencing public provision, ie by political activity as defined by the Charity Commission. They used what Brian Lamb called an “insider/outsider combination” of influencing methods, as many other charities do. The insider bit was getting close to Ministers, civil servants, NHS leaders, Select Committees, parliamentarians and other influential allies on the inside track, and put well-documented arguments about efficiency, practicability, economics and the political bang for a relatively small investment by NHS standards. They also offered their expertise, user experience and technical know-how to help the NHS get things right for deaf people. Yet they also campaigned hard, using the independence and power given by their 300,000 supporters to raise public awareness and deluge MPs and Ministers with postcards, getting Questions raised in Parliament and points made in debates and in the media.

This campaigning activity was crucial in getting the first pilot programme underway in 2000: over £10 million from the Government to transform 20 auditory service sites, with the RNID managing the change in partnership with the NHS, independently evaluated. It was a big success, with the unit costs of digital hearing aids driven down from £2,500 to £165 and 20,000 patients fitted with them and reporting a big rise in customer satisfaction with the modernised services. But at this point, momentum stalled when a new Minister was appointed. The private sector tried to take advantage of this, saying in their advertisements that: “It will be years, if ever, before digital products are  available to all on the NHS” (Evening Standard, 3 September 2001). So the public campaigning swung into action again. In addition to a general hubbub, strategic bodies including the Audit Commission and NICE were converted to the cause. Ministers responded by deciding to roll out a national programme of modernisation costing £125 million in all, jointly managed with the RNID, in further waves. By 2005 the whole country had been covered, and 1.5 million people were fitted with digital hearing aids. The price had been driven down further (to as little as £55 by 2008), forcing the private sector to reduce their prices also. Over 30,000 more people were being fitted with digital aids each month. Patient satisfaction with auditory services continued to rise.

What was the RNID bringing to bear in achieving this result? Its concentrated passion for the rights of people with hearing loss. Its deep knowledge of user experience. Its independence, underpinned by its 300,000 supporters and diversified funding base. Its professional staff and expert allies, working long hours on the research, the communications, the personal lobbying, the fundraising, the management expertise and credibility to win over so many sceptical organisations and politicians and help manage the modernisation process; its long term staying power (still working for the cause when individual Ministers are long forgotten); its status as a great national charity.

A few years. ago, this case study was seen principally as an example of successful partnership between Government and the Third Sector in delvering change. And so it was. Contemporary Ministers (Paul Boateng and Fiona McTaggart) also drew the lesson that “It is possible to combine a campaigning role – that of achieving better quality of life for deaf people and hard of hearing people – with a service delivery role”, and that Government should embrace both. That is also true. But in today’s diminished discourse, even more basic lessons stand out. Trustees should consider whether political activity may be the best way of pursuing their charitable objectives, as the RNID’s Trustees did. Service delivery funded by charitable donations alone is not the only “proper” way of advancing charitable causes. Big charities offer different skills from kitchen table charities and may have a scale of impact for good that is impossible for smaller local bodies. They may be just as passionate and determined, and be just as “wonderful”, in a different way. And influencing, including campaigning and lobbying, can be at the very core of what a great charity is there to do for its users, and how it serves the wider society. That is how digital hearing aids and much better auditory services became available to millions of people with hearing loss.

Charge charities for the Charity Commission? Key issues on one page.

William Shawcross confirmed at the Charity Commission Annual Public Meeting that they will be consulting on charging charities for the costs of the Commission as the necessary way forward. Here are the pros and cons in a nutshell:

PRO:

  1. Successive budget cuts have reduced the ability of the Commission to do its job properly and such is the financial pressure on the public purse that this position is unlikely to change.
  2. The Commission is too dependent on the Government of the day partly because of the power of Ministers over appointments and partly because they have the Commission by the short and curlies each time the public expenditure round approaches.
  3. It is in charities’ interest to have a reliably funded Regulator independent of Government.
  4. There are good models of regulators paid for by the sector but demonstrably independent and found to be so by the courts (eg the university ombudsman called the Office of the Independent Adjudicator of Higher Education).

ANTI:

  1. There are fiendish practical questions about a sliding scale of charges: what should be the scales, what to do about endowed charities, do you take the size of assets, endowments and reserves into account, what sanctions are to be applied and by whom.
  2. In principle the regulation of the charity sector is principally in the public interest and has always been seen as a proper use of public expenditure voted by Parliament
  3. It is not in charities’ interest to pay for a Commission that, at present, is not independent of Government, has  virtually no working experience of the sector and in key respects does not enjoy its confidence.
  4. It is unfair to Trustees and donors of organisations that make few demands on the Commission to pay for the disproportionate costs of the Commission’s time devoted to a few bad apples. Donors may object to paying for the Commission’s regulation of other charities of which they may strongly disapprove.
  5. If larger charities pay for the Commission, there is a danger of “capture” so that, over time, the Commission absorbs their mindset and priorities.

The Trouble with Corbyn’s New Year Messages

New Year messages from Jeremy Corbyn bode ill for a broadly based, inclusive, progressive coalition (whether within or beyond the Labour Party) as the way to achieve major reform of our economy and national priorities.

For example, in a new year tweet he says “Let’s make 2017 the year we come together to take on the establishment and build a Britain for all.” So the named enemy is the establishment. If the term means anything, that must include the Queen, the Church of England, other church and faith leaders, the senior ranks of the armed services, the security services and the police, the House of Lords, the Judiciary, senior civil servants, the upper ranks of business organisations and professional bodies of all kinds. Many charities are part of the establishment. Many head teachers across all sectors of education are part of the establishment. Does he really want to “take on” this lot? Might it be that important segments and individuals in this capacious category should be part of the solution, not lumped crudely together as the problem?

Nor is this a flash in the pan. In his scripted New Year Message, he says that he understands why people voting for Brexit didn’t trust politicians nor the European Union because “I’ve spent over 40 years in politics campaigning for a better way of doing things, standing up for people, taking on the establishment….” And no doubt we are given to understand that among “the establishment” that he kept “taking on” was the Labour Government and his own Parliamentary Party against whom he rebelled so frequently.

But it is not only the whole establishment in the cross-hairs. It’s the political system itself. “Every day”, says his New Year message, “I see the political system letting down the people of this country”. The Westminster decisions that, he believes, result in homelessness or low pay and insecurity in the economy, are ascribed not just to bad policies or a bad Government. Corbyn names the political system itself, along with the establishment, as the guilty parties. Not so long ago, in similar sweeping language, he blamed the “failed economic and political model” (see my blog of 14 November 2016 “Corbyn’s sweeping talk post Trump”).

Maybe Corbyn and his advisers have a deterministic vision that popular disillusionment with politicians, the Westminster and Whitehall elite, the political system, the whole establishment and the economic model is an ever-swelling historical tide that will lead a bottom up Labour Party, accountable to its own progressive membership, resembling an unstoppable social movement, to sweep all before it?

There have been so many political upsets that nobody can completely discount another one. But here are some of the snags with this way of thinking.

Firstly, it doesn’t seem to be working yet outside the Labour Party membership. A YouGov poll in December put the Conservatives on 42% and Labour on 25%, the lowest since 2009 and the lowest while in Opposition since 1983. An ICM poll gave the Conservatives a 14  point lead. An Observer poll was better for Labour, but still gave the Conservatives a 7 percentage point lead overall with far higher leads on most subjects including the economy, the EU, Brexit, immigration and (by 37%) terrorism. Moreover, Corbyn should be careful about claiming to understand popular distrust of politicians when according to the same Observer poll he is trailing Theresa May by 16% to 42%.

Secondly, History is a notoriously fickle ally. Nearly all of those who believed that they were riding irresistible tides of history ended up beached and broken. Labour has to make its own history the hard way. Moreover, truckling to populist prejudice, eg distrusting the politicians to a ludicrously unfair extent,  or rubbishing the political system, or the whole establishment, is a risky tiger to ride because that suits a lot of nasty populists of a different political stripe.

Thirdly, if you frame yourself as a campaigner outside the establishment and the political system, you have a credibility problem if you claim to be an effective Government in waiting. Being a good Government requires different skills and temperaments from being a popular campaigner decrying the whole system.What prospect is there of making Government work for more of the people if you describe both the political system and the whole establishment as the enemy? Perhaps the opinion polls are reflecting the perception among the people at large that they want their Government and Prime Minister to be able to work with the levers of power, make the economic and political system work better rather than rubbish it, offer credible solutions rather than a posture of campaigning from without?

Fourthly, there is a problem of vagueness about what to expect of you if you ever win power. If you are taking on the whole establishment, what are you going to do with it? What are you going to do to the judiciary? What are you going to do to the Queen and royal family? What are you going to do with the churches? What are you going to do with our civil service and our armed services, and our security chiefs? And if you are against the political system, what is your alternative political system: is it PR? Is it fewer or more MPs? Is it a removal of some of the checks and balances of the current system? Is it diminishing the power of MPs as opposed to party activists? Is it radical devolution from Westminster down to municipalities and local government? It must be something pretty big if it is the system itself that is to change, just as it must be something pretty dramatic if the whole “failed economic model” is to change, but this creates insecurity and anxiety if we don’t know what it means.

Finally, what if Corbyn is wrong to think that radical change is best achieved by positioning himself and his party as campaigners against the establishment and political and economic system? What if the best way is to construct a broad coalition of different kinds of people of different backgrounds and places across the UK, including people of goodwill in different parts of the establishment, making compromises where necessary in order to win power and use it for the common good? The more that the Labour Party is seen as a campaigning organisation accountable to its own enthusiasts and taking on the establishment and the whole political and economic system from outside, the more difficult it becomes to construct that broader coalition.

Can we hope that Corbyn’s messages by the end of 2017 will be different from the New Year ones?

 

 

 

 

 

 

New Charity Commission appointments: a missed opportunity?

The Department of Culture, Media and Sports has announced three new members of the Charity Commission Board, as reported in Civil Society News of 1 December. They are able individuals who will undoubtedly strengthen the skills on the Board in significant respects. But they do not address the Commission’s current credibility problem with a substantial and influential part of the charity sector.

Laurie Benson is CEO of a media consultancy firm and has excellent publishing experience and knowledge of matters digital. Paul Martin is a former senior staffer in MI5 with security expertise.Catherine Quinn is CEO of a Business School and has been Chief Executive of Middle Temple, Head of Grants Management at the Wellcome Trust and Director of research services at Oxford University.

None of them is steeped in the charity sector. They have some experience as Trustees, but none of them has work experience as staff of a mainstream charity. Managing multi million pound budgets for medical research, or running a Business School, may technically count but is highly specialist. As experience from the staffed charity sector, this is probably less relevant than that of the isolated Claire Dove who is being replaced and who runs a vigorous charitable social enterprise embedded in the community and voluntary sector of the North West.

So one of the Commission’s key problems is probably slightly worse than it was for the previous three years. That is the lack of understanding and rapport with an influential part of the charity sector, that has the lion’s share of resources and staff. Can you imagine a media regulator with no personal experience of working in the media, or a regulator of business with no experience of working in business? When the Charity Commission was modernised in the 1990s, one sign was bringing in Chief Executives and some Board members whose working experience included years of personal knowledge and commitment as charity staff. This now applies, so far as I know, to no senior staff and (with the heavily qualified exception of Catherine Quinn) no Board member of the current Commission.

Why does it matter? Because a Commission lacking that dimension will struggle to eliminate the deficit of respect and confidence that many staffed charities feel towards their regulator. Because a Commission lacking that dimension can put out negative, restrictive and insensitive guidance on participation in the EU Referendum and be surprised by the reaction it received, and then have to hastily revise it. Because such a Commission will be at sea trying to regulate charities’ political activity of which none of them has personal experience at staff level. Because such a Commission will be incapable of offering a calm, understanding, impartial, authoritative voice when issues arise that affect public confidence in charities. Because a Commission that thinks of itself (simplistically) as a policeman will find that successful policing requires sufficient rapport with the community it is trying to police.

The Commission needs to be independent of the Government of the day and of the charity sector. Its job is not be cheerleader for the sector. But its job is to regulate the sector effectively. To do that when hardly anybody in the Commission has ever worked as staff in the mainstream sector is too difficult. However excellent the three new Board members may be in many respects, the failure to address that major problem looks like a missed opportunity. It may make it less likely than ever that the charities with the resources to pay for a regulator will want to do so.

Tony Blair brought his own narrative to British politics

Here is my letter published in The Guardian today:

George Monbiot says that Tony Blair (like Bill Clinton) did not possess a narrative of his own with which to combat neo-liberalism and preferred merely to triangulate among other narratives (The deep story beneath Trump’s triumph, 14 November). Yet Blair repeatedly articulated a narrative in contesting both Thatcherism and Clause 4 socialism. This was that people do not thrive as atomised individuals, but when they are part of a strong society where people take care of each other and seek the common good. He embraced individual effort, meritocratic competition and people’s strong desire for their own families to be successful and secure; but only as part of a society where people could rely on the basics that every person needs if they are to reach their potential.
We may believe that Blair and his colleagues made misjudgements (as well as many good calls) about how best to translate this narrative into policies, and about the dubious compromises they made along the way. We may agree with Polly Toynbee that, scarred by the many dreadful years in the wilderness when Labour failed to attract a strong, progressive coalition, they were too timid as time passed about championing explicitly the strong statist and redistributive elements of their policies, for fear of frightening the horses. But the reason that they won three elections and achieved so many advances for our society is that they conveyed an underlying narrative which combined the merits of a strong society, commitment to the common good and the efforts and aspirations of individuals, families and businesses.
Post Trump, post Brexit, no narrative that departs too far from that synthesis is likely to attract a winning, progressive coalition in future.

Corbyn’s sweeping talk post Trump

Trump’s shock victory is a test of judgement of politicians as they react and recommend a way forward. I have been pondering Jeremy Corbyn’s. One can only welcome his uncontroversial advocacy of “working together, social justice and economic renewal” as the hallmarks of the alternative world for which he calls us to work, but the accompanying analysis is troublingly sweeping and imprecise.

Corbyn says “Trump’s election is an unmistakable rejection of a political establishment and an economic system that simply isn’t working for most people”. But most Americans voted for Clinton – more than have voted for any other President in history except Obama. Most poorer Americans, for whom the economy works worst, voted for Clinton, not Trump. And most richer Americans voted for Trump. “Unmistakable”? Or a more complex than Corbyn suggests?

“After this latest Global wake-up call”, he continues, “the need for a real alternative to a failed economic and political system could not be clearer”. The rhetoric is revolutionary: what is wrong is the whole failed system, not just a particular set of policies or assumptions about how best to make the system work. So people will think he wants a completely different economic system: but what?  Nationalisation of the means of production? Something more like China with human rights? Surely he doesn’t think that changed fiscal and monetary policies, re-nationalisation of the railways and a public investment bank constitute a new economic system?

But it is also the whole political system that he wants to change. What does he mean? The US electoral college system? Representative democracy as practised in the USA, or the UK and Europe? Does he mean the international political order with a relatively weak United Nations? Is he saying that the world, or the UK, should be run by a popular social movement accountable to its members alone rather than the political party system? No more elites? maybe a bit of each?

All this is so unclear that people can think what they like about what he actually means. It puts off those who do not believe in the overthrow of the whole economic and political system and those who distrust sweeping  revolutionary rhetoric. We do indeed need a broad coalition standing for “working together, social justice and economic renewal”. But how likely is such a coalition to be built on vague, revolutionary rhetoric? 

Charity Commission’s exoneration of IEA undermines its own priorities and guidance

In a recent (19 October) response to concerns I raised on 9 March about the IEA, the Commission seems to undermine its own strategic priority to encourage transparency and accountability. It also weakens its previous guidance on what it means to advance education rather than promote a particular point of view or prescription.

A wider issue is at stake: whether charitable status and privileges should be used by certain “educational” think tanks to advance specific points of view and persuade people to form specific conclusions (whether political or economic), which (as the Commission has previously made clear) do not constitute “education” for charitable purposes, whilst at the same time undermining the sector’s recommended standards of transparency and accountability.

In its treatment of the issue of transparency and accountability, a key pillar of its current strategic plan, the Commission’s letter to me does say that the Commission “commends” to all charities that they should publicly acknowledge the source of funding. The Commission says that it has made its views clear to the IEA Trustees, but that is all. They point out that there is no general law compelling disclosure of the source of donations, and the Commission would only direct Trustees to do so in exceptional cases which they judge should not include the IEA. They quote without comment the justifications offered by the IEA Trustees for not publicizing the sources of their donation income. These include that “it is essentially a private matter” (as if the public interest were not involved in charities’ tax privileges) and that most of their donors, if asked permission to name them, would refuse. Yet if Trustees can simply say “it is essentially a private matter” or “donors would be put off”, what is left of the Commission’s strategic priority to promote transparency and accountability?

This is indeed a marked contrast from what the Commission had to say on this exact subject not long ago in its guidance relating to the EU Referendum:

“If your charity does get involved in any political activity connected with the referendum, you should ensure that, during such involvement, you publicly acknowledge the source of your funding so that the reasons for your involvement can be fully assessed. If you do not do so, this could seriously undermine and detract from the quality of your contribution and may attract regulatory scrutiny by the Commission….full transparency about funding is especially important.” (My italics). Now, amidst recurrent allegations that the IEA may have been accepting money from people connected with the tobacco or food industries or being used to promote the views of particular rich donors – why no similar robust emphases or warnings?

The second point I raised in March was whether the IEA’s political activity (as defined in the Commission’s guidance CC9), such as its part in developing the case for the anti-advocacy clause that would prevent charities from using public money to influence Government, Parliament or any regulator, strayed beyond the proper limits of the advancement of education, which is the IEA’s charitable objective.

In its previous guidance on the advancement of education for the public benefit, the Commission states clearly that “Promoting a specific point of view may be a way of furthering another charitable aim, but it would not be education.” “If the purpose of providing information or education is to persuade people to form specific conclusions, then this is not education.” So is it “education” to seek to persuade Ministers and special advisers to adopt anti-advocacy clauses in all Government contracts with charities? Is IEA saying that its research and political activity here was not designed to lead to a particular conclusion? The same supplementary guidance clarifies that the charitable advancement of education involves “researching and presenting information in a neutral and balanced way that encourages awareness of different points of view where appropriate”. I defy anyone to read the IEA’s sock puppet reports and find them to be within that guidance.

In the recent letter to me, by contrast, the Commission advances a more ambiguous definition of what constitutes “education”, quotes a series of general assurances from the Trustees, and concludes that no regulatory action is appropriate. Here again, the effect is to weaken its own previous guidance. Why?

Paula Sussex’s letter of 19 October 2016 to me, and my response raising these further concerns, follow. Here are links to my original letter of March 2016 raising these two key concerns, and to my critique of the IEA’s sock puppets report:

https://andrewpurkis.wordpress.com/2016/03/22/charity-commission-to-investigate-institute-of-economic-affairs/

https://andrewpurkis.wordpress.com/2016/02/17/the-rotten-basis-for-government-anti-advocacy-policy/

Paula Sussex’s letter of 19 October 2016:

Dear Andrew
The Institute of Economic Affairs (235351) (IEA)

I am writing further to your email dated 9 March and our update of 15 July to let you know the outcome of our enquiries into the concerns you raised with us about IEA. I am sorry that we have not been able to respond fully before now, but we have been in continuing dialogue with IEA.

Transparency

In the overall context of giving the public confidence in charities, the Commission’s Strategic Plan for 2015-18 sets out our commitment to encouraging greater transparency and accountability by charities.

Whilst the Commission commends to all charities that they should publicly acknowledge the source of their funding, there is no legal requirement to do so – unless it is from a trustee or related party and has conditions attached to it that influence how the charity proceeds.

However, as you may know, the next update of the SORP framework is likely to take effect from 2019 and so in advance of this the Commission is carrying out research across the four charity law jurisdictions covered by the SORP (England and Wales, Northern Ireland, Scotland and the Republic of Ireland). From May until mid-December we are seeking views as to what changes should be made to improve the SORP and deliver information needed by the general public looking at a charity’s report and accounts. One of the topics within the charity regulators’ list of research topics that we are seeking view on is who funds a charity and whether this should be disclosed in the accounts.

If you would like to comment, the closing date is 11 December (Email to charities.sorp@cipfa.org). The consultation paper can be found at:

http://www.charitysorp.org/media/642814/charities-sorp-consultation-paperv4.pdf

If agreement on disclosure was agreed, the earliest we would see the results is late 2020 when 2019 accounts are filed.

Therefore, in the absence of any legal requirement to disclose, we would only consider requiring the trustees to disclose details of their sources of income in the context of individual cases. In doing so, we would take into account risk and the nature of our concerns. Where, for instance, the funding was inappropriately influencing the way that a charity operates, we might well have grounds for requiring disclosure about its sources of funding.

Nevertheless, we do consider that a charity should be transparent and accountable to their stakeholders. This means providing them with relevant and reliable information in a way that is free from bias, comparable, understandable and focused on stakeholders’ legitimate needs. This, therefore, should be the starting point. However there will be individual factors to consider in each case, including the provisions of the Data Protection Act 1998 and the wishes of donors. The decision is for the trustees to make – except in exceptional circumstances the Commission cannot direct the trustees to reveal the source of their funding.

IEA has explained that it does not place a record of the source of its donation income in the public domain for three reasons:

 the trustees judge that to disclose the identity of a donor would require their permission, and that this permission would be unlikely to be forthcoming in the majority of cases;

 the charity regards donations to charities as essentially a private matter; and

 the charity tells us that it is regularly attacked by individuals and organisations (including personal attacks) who disagree with its research output.

It says that it would take a different approach if it received public funding.

We have made our views known to IEA and will reiterate them when we send our closing letter. However, we have no grounds to insist on disclosure of donors and we do not consider that it would be appropriate for us to take regulatory action against the charity in respect of its decision not to identify the source of donations.

Whether in respect of specific and contentious campaigning and lobbying activity the IEA has been acting properly within its charitable objects.

Although you say that a charity cannot promote a particular view of economics, the position is actually more nuanced than that statement implies. As an educational charity, IEA’s work overall must present an educational, and not propagandist, perspective. Its purposes can be pursued as a legitimate and recognised (that is non-controversial) branch or aspect of the learning of economic or political science. This learning may have a particular perspective which might border on, or be seen as, consistent with a political perspective. Provided the perspective can properly be regarded as a legitimate aspect of learning in the subject matter, this may be acceptable, as would an approach to the subject from a free market economy perspective. There is also no legal rule that a
Page 3 of 4

charity of this kind (provided it is approaching its work within the rigours required of an educational charity) cannot be involved in subjects which are controversial in this sense.

From our own research, we have not found any evidence to suggest that IEA has compromised its independence and neutrality such that it would conflict with our guidance on political activity and campaigning1.

IEA is very strongly of the view that it is independent of all political parties and this is borne out by what IEA says about fulfilling its objectives on the ‘About us’ page of its website2.

The trustees have explained that IEA takes opportunities to impact public debate through reaching policymakers, opinion-formers and the wider public and that placing economic research in the public domain furthers IEA’s educational objectives and, as part of that work, it occasionally meet politicians and their advisors. Its programme of activities is designed entirely and exclusively to meet IEA’s charitable objectives.

The trustees are very clear that IEA is not and never has been a campaigning organisation and do not have an agenda beyond research into the economics of markets in which individuals can make free choices, and the dissemination of ideas thereby generated.

The trustees have also explained that IEA does not accept commissioned research projects from corporations. Its publications programme and its content is set by IEA staff under the general direction of its trustees. While IEA does accept direct funding for research from individuals and charitable foundations for research papers, these are typically acknowledged in the publication. Any corporations who donate funds to the IEA to support its work are not asked to comment on its research and no company is able to guide IEA’s research conclusions.

The trustees have assured us that individuals, foundations and companies donate money to the IEA for their own reasons and IEA’s role is to ensure that it is “blind” to these reasons and to only use funds these to support its charitable objectives. The trustees have told us that the trustees take considerable efforts to ensure that whatever the source of funding, IEA’s research is independent.

The trustees have explained that if IEA comments on political policies, it would only be in the circumstances where such a policy aligned with its charitable objectives. The trustees have been clear that IEA neither engages in policy engineering, does not engage in campaigning nor does it accept Government grants or accept commissioned research from Government.

1 Speaking out: guidance on campaigning and political activity by charities (CC9)

2 “The IEA is an educational charity (No CC 235351) and independent research institute limited by guarantee. Ideas and policies produced by the Institute are freely available from our website for any individual or organisation to adopt, but we do not “sell” policy. The Institute is entirely independent of any political party or group, and is entirely funded by voluntary donations from individuals, companies and foundations who want to support its work, plus income from book sales and conferences. It does no contract work and accepts no money from government.”

Page 4 of 4

The only sponsored research IEA accepts is from individuals or trusts who do not have a vested commercial interest in the topic under discussion. The sponsorship only goes as far as suggesting topics, not the contents of the paper or other research output. Most of IEA’s research is commissioned independently by its Academic and Research Director on the advice of IEA’s Academic AdvisndrewAory Council, whose members are listed on its website under ‘Advisory Council’ and most of its publications are peer-reviewed.

In the light of this we are of the view that there is no appropriate regulatory action for the Commission to take on this issue.

I hope this is helpful to you. Please do not hesitate to contact either of my colleagues, Neil Robertson or Anthony Blake if you would like to explore any aspect further.

Yours sincerely

Paula Sussex Chief Executive

Andrew Purkis’ Reply to Paula Sussex, 31 October 2016:

Dear Paula,

The Institute of Economic Affairs (235351)(IEA)

Thank you for your letter of 19 October, and for the continuing dialogue that you have conducted with the IEA as a result of my original letter of 9 March.

I understand why the Commission is reluctant to take regulatory action or substitute its own views when the Trustees of a charity take decisions in good faith about how best to pursue their charitable objectives. It is no good trying to exceed the powers allowed to the Commission by Parliament and the courts.

Within that framework, however, it seems desirable for the Commission to be consistent in the strategic direction, substance and strength of its guidance on important issues.

The first issue raised in my letter was about transparency and accountability which, as you say, the Commission has rightly made one of its core strategic aims. In your letter you say that the Commission “commends” to all charities that they should publicly acknowledge the source of their funding. You make clear that you have made the Commission’s views known to the IEA but nevertheless do not feel able to do or say publicly anything more about the IEA Trustees’ frequent refusal to identify where their money comes from. This gives rise to three concerns:

  • This seems a considerably weaker positioning and tone from the guidance to charities contemplating involvement in the EU Referendum campaign, when the legal constraints on your ability to act were just the same as they are now. In that guidance, you said: “If your charity does get involved in any political activity connected with the referendum, you should ensure that, during such involvement, you publicly acknowledge the source of your funding so that the reasons for your involvement can be fully assessed. If you do not do so, this could seriously undermine and detract from the quality of your contribution and may attract regulatory scrutiny by the Commission….full transparency about funding is especially important.” (My italics). Yet no similar warnings are articulated in your letter about the un-transparent funding of the IEA’s contentious political activity. This can and does give rise to damaging public perceptions (whatever the intentions of the Trustees) that charitable status is being used to advance interests connected with the tobacco or food industries or the views of particular rich donors.
  • You quote three reasons that the IEA trustees give for not publicising the sources of their donation income. They are that, if asked for permission to disclose their identity, most of their donors would refuse; that “the charity regards donations to charities as essentially a private matter”; and that the charity is regularly attacked by those who disagree with its research output. You give no indication as to whether or not the Commission regards these as justified reasons. Yet if the trustees of any charity can say “it is essentially a private matter!” or “our donors would stop funding us!”, without any public counter-argument from the Commission, your strategic aim of transparency is surely undermined?
  • You quote the Trustees as saying that “Individuals, foundations and companies donate money to the IEA for their own reasons and IEA’s role is to ensure that it is “blind” to these reasons and to only use these funds to support its charitable objectives”, but you do not take the opportunity to point out that this view is problematic for public confidence in charity. It is part of the duty of Trustees to be alert, rather than blind, to the motives behind substantial donations and to the very damaging perceptions that can arise if independence is perceived to be compromised.

In these three ways, your letter seems unfortunately to weaken the Commission’s previous strategic determination on the subject of transparency and accountability.

 

The second issue in my letter concerned the nature of the advancement of education as a charitable objective. Has the IEA’s political activity (as defined in CC9) strayed outside it? Here again, I believe your letter advances a less robust position than previous Commission guidance. You now say that it is enough if the contribution is not “propagandist”, if it is a legitimate and recognised branch or aspect of the learning of economic or political science, and if, albeit from a particular perspective, the work is “within the rigours” of an educational charity. On the basis of this, plus some assurances from the trustees that appear to be taken on trust, you decide that there is no appropriate regulatory action to be taken. Surprisingly, you do not offer any analysis of, or even mention, the specific example raised in my letter of the part IEA played in the birth and development of the anti-advocacy clause affecting charities in receipt of Government funds.

Yet the Commission’s supplementary guidance on the advancement of education for the public benefit states clearly that “Promoting a specific point of view may be a way of furthering another charitable aim, but it would not be education.” “If the purpose of providing information or education is to persuade people to form specific conclusions, then this is not education.” So is it “education” to seek to persuade Ministers and special advisers to adopt anti-advocacy clauses in all Government contracts with charities? Is IEA saying that its political activity here was not designed to lead to a particular conclusion? The same supplementary guidance clarifies that the charitable advancement of education involves “researching and presenting information in a neutral and balanced way that encourages awareness of different points of view where appropriate”. I defy anyone to read the IEA’s sock puppet reports and find them to be within that guidance.

This issue runs deep. It concerns whether charitable status and privileges should be used by “educational” think tanks to advance specific points of view and prescriptions (whether political or economic) under the pretence that they are not promoting a specific point of view and not persuading people to form specific conclusions, whilst at the same time undermining the Commission’s important strategic aims regarding transparency and accountability. I urge the Commission to grasp this nettle. I am afraid your letter tries to avoid a clearer resolution of this issue by introducing greater ambiguity and less precision than your previous guidance.

Thank you for any consideration that you feel able to give to these further concerns.

Yours sincerely,

Andrew.

 

 

 

 

 

Liberty, Shami Chakrabarti and Party Politics

Shami Chakrabarti’s rapid promotion by Jeremy Corbyn to be Labour’s shadow Attorney General has implications for Liberty, the human rights organisation of which she was an inspirational leader; and for charities and other independent voluntary organisations.

Chakrabarti left Liberty in March 2016. In May, when she took on the investigation into anti-Semitism in the Labour Party, she announced that she had become a member of the Labour Party. Having published the report in July, she accepted Corbyn’s nomination as a Labour Peer, announced in early August, and has now in early October joined his shadow Cabinet. She was fully within her rights to take these decisions. Although I do not know her, I have no doubt that she intends to use her new position to continue her brilliant campaigning for human rights.

Nor do I believe that she was motivated by party politics throughout her time as Director of Liberty. I assume she was highly professional, independent and dedicated to the cause. She has given Governments of all shades a hard time when necessary. Knowing this in her heart, her purpose now is no doubt to bring the same independence of spirit and commitment to the special role of the (shadow) Attorney General with its independent judicial responsibilities. All these may be facts. The problem is perceptions, which are also part of reality.

For Chakrabarti did not allow much of a purdah period after stepping down from a very high profile voluntary organisation, funded by both charitable and non charitable sources, before embracing Labour. So what are the perceptions likely to be? That she was not really free of party political bias all the time. That she was all along part of a (very) left wing part of the metropolitan elite. That this is further evidence that campaigning by allegedly independent charities or other voluntary organisations is a cover for a distinctly left wing world view with strong connections to the Labour Party, frequently antagonistic to the purposes of a Conservative Government elected by the people.

We know that these perceptions matter. They result in the CAF finding that well over 60 per cent of Conservative MPs think that charities should not campaign against Government decisions. They fertilise the threats of Ministers and set the climate for lobbying bills and anti advocacy clauses. They percolate through to the Charity Commission’s appointed Board members and their repeated failures to support the advocacy role of the sector as a valuable part of public decision-making.

Such visceral party political perceptions count for a lot more than many of us professionals would like.

Message to retiring Chief Executives of high profile charities and other independent bodies out there: when deciding how soon, and how prominently, to embrace a party political role, spare a thought for public and political perceptions – of the organisation you are leaving, and of the charity and voluntary sector. Your choice matters.