The government and civil society must “commit to collaboration” if the government’s Civil Society Covenant is to succeed, the president of the National Council for Voluntary Organisations has told peers.

Baroness Delyth Morgan, who was formerly chief executive of Breast Cancer Now, told the House of Lords yesterday that the government’s Civil Society Covenant presents a “vital opportunity” to redefine the sector’s relationship with government, but collaboration is needed for success.

Opening a debate on the contribution of the voluntary sector to society, the crossbench peer said: “Charities and volunteering are essential, as we know, for building a healthy, resilient society, yet the relationship between the voluntary sector and government has become truly strained in recent years.”

She said this is especially true for small charities, which are “heavily reliant on local government support”, which has been “continuously cut over recent years”.

Morgan said that NCVO and the charity leaders body Acevo were working together to change the dynamic with the government, adding that the recently announced Civil Society Covenant presented a “vital opportunity to redefine how we all work together”.

She said: “The new covenant has a real chance to build meaningful, long-term partnerships for social change.

“For this to succeed, both government and civil society must commit to collaboration, ensuring that charities can continue their mission while helping shape a more equitable, engaged society.”

Labour’s Baroness Jill Pitkeathley, who was president of NCVO prior to Morgan’s appointment, said that although she welcomed the covenant, the “huge variety of the sector” made it “very difficult to consult in any meaningful way”, despite the “magnificent” work of sector bodies.

She urged Stephanie Peacock, the charities minister, to consider implementing an advisory body for the third sector, similar to one that she chaired up until 2010, which acted as a “sounding board and a conduit for issues of concern to both the government and the sector”.

Pitkeathley added: “If I had £1 for every time I had heard governments, the NHS and local authorities say they wanted to work in partnership with the voluntary and community sector, I would be a rich woman. 

“We have to ask what partnership means. It does not mean deciding what services you want to provide for your citizens, progressing those plans, and then throwing a crumb or two out about what you want the volunteer sector to do when it was never even in the room when the plan was devised.” 

Peers also discussed the implications of the Autumn Budget on the voluntary sector, with the crossbench peer Baroness Shaista Gohir, who is also the chief executive of Muslim Women’s Network UK, saying that some of the announcements will “hit the charity sector very hard”.

She said: “The rise in employer National Insurance contributions is going to significantly increase the wage bill. 

“If you take that in combination with the rise in the National Living Wage, plus pay rises that charities would like to give their workers in line with national inflation, even with the employer allowance it is going to be a significant increase.”

She added: “The charity sector will probably have no choice but to scale back services, close down some of them and make staff redundant, and unfortunately many charities will end up closing.”

But the Liberal Democrats’ Baroness Liz Barker said she hoped the proposed covenant would mean that the government will “properly treat charities as professionals”, and urged the government to “dismiss the suggestions in the last few days that the NI increase should not apply to charities”.

Barker, who is also the president of the National Association of Care Catering, said: “We are professional bodies; we employ professional people. Yes, we do a lot as well and have a very different role and approach to what we do, but we are at heart professional.

“I hope that we will stop treating charities as organisations that subsidise public services but instead as ones that bring value to them.”

Responding to the debate, Labour’s Baroness Fiona Twycross, parliamentary under-secretary of state at the Department for Culture, Media and Sport, said: “The government highly values the work that the sector does and the social value it delivers; it is an incredible force for public good.”

She added: “This government, led by our Prime Minister, is committed to resetting the relationship with civil society and ensuring that the sector is recognised and valued for the crucial support it provides to so many people.”

Responding to the debate about the Budget’s effect on the voluntary sector, Twycross said: “These decisions [national insurance contribution] and the minimum wage increases were necessary as part of the package in the Budget to restore economic stability.”

She said: “However, the government recognises the need to protect the smallest businesses and charities, which is why we have more than doubled the Employment Allowance to £10,500, meaning that more than half of businesses with National Insurance contribution liabilities will either gain or see no change next year.”