Over recent weeks there have been many calls from the community and voluntary sector - and indeed the wider third sector - for local authorities to protect their services and organisations from savage cuts. The Communities Secretary, Eric Pickles, courted the sector with his speech to the National Council for Voluntary Organisations conference last week, saying that he would be willing to instruct local authorities not to cut their spending on the sector by more than central government has cut their grant.
There are a multitude of legal, practical and ethical flaws in this statement. How will the Secretary of State or anyone else determine the right level of expenditure – contract or grant/capital or revenue – for any local authority to commit to the third sector? Will he distinguish between grants and contracts or between local small organisations and bigger national ones? What constitutes the third sector – voluntary, community, social enterprise, etc? How will the variations in the scale, competency and role of the sector, and traditional levels of funding in different locations be factored in when any intervention is made from Whitehall?
Truthfully, it is highly questionable that the Secretary of State has such powers to intervene now and if he does not have them how would these be legislated for? Surely a very tough challenge for a parliamentary draughtsperson? And it would certainly be ironic if the government sought to give itself these powers by an addition to the Localism Bill – such central direction most certainly not being ‘localist’. And the ethical concern arises from the fact that in some cases, by specifically being obliged to protect budgets for the third sector, a local authority may be forced to make cuts to services which have a greater social benefit.
The intervention that the government has threatened will not help create the positive and mutually respectful relationship that is so vital between local government and the community, voluntary and wider third sectors at national and local level. In fact, it will be more likely to cause long term damage. The Secretary of State's statement could have raised false expectations.
In no way whatsoever am I defending those local authorities which are taking what they see as the politically and practically easier route of hitting the third sector when this does more harm than good to the local society and economy. It is absolutely wrong, in my view, for any local authority (or any other public body for that matter) to deliberately protect its own in-house services at the expense of the third sector if the only reasons for doing so are ideology or self-interest. In making cuts to expenditure, just as when increasing spending, decisions should be driven by the overarching values and objectives of the authority and the pursuit of affordable outcomes as identified through inclusive, user-led strategic commissioning. Such commissioning and/or de-commissioning should be neutral as to who provides the service as long as they can deliver the outcomes with the confidence of the service users and the wider community whilst offering value for money and meeting any specified wider social objectives.
Local authorities also have to take into account the need to ensure that key organisations can survive if they have a wider role in the local community, be it as a service provider and/or as a voice for key groups within the local community. They should also be mindful of the imperative to sustain community and voluntary sector infrastructure organisations that can build the capacity of the sector. Too many local authorities and their local public sector partners appear to be seeing grants to such groups as easy targets for their cutting. Such views are extraordinarily short-sighted. These groups are not some bureaucratic luxury. Without them, local authorities will face a serious gap in support and local capacity, and in time, will have to find and fund other ways of doing what these groups historically have done on behalf of the community.
For decades – in fact centuries – the community and voluntary sectors have served local communities and been part of them. They innovate and experiment in ways that the public sector finds hard or impossible. They have provided services and in many cases have increasingly been commissioned and procured by local authorities to deliver public services to contract. So have larger third sector organisations. This long-term trend is unlikely to be reversed but if local authorities are unwilling to fully fund the costs of service delivery and investment for such groups, they will not be able to meet the required quality standards and indeed may well simply go bust and disappear. Such an outcome will be completely contrary to the government’s ‘Big Society’ objectives for a greater diversity of supply and will instead diminish choice and opportunities in localities.
Although some authorities have increased this budget for 2011/12 I am not suggesting that the third sector can usually or should be immune from the cuts. This is unrealistic and will merely add to tensions when we need to diffuse them. But – it is a fact that all too often it is the community or voluntary organisation that can best meet a need in a flexible, responsive and cost-effective manner - in ways that the public and indeed private sectors just cannot.
The government and many local authorities of all political persuasions have stated that they wish more public services to be contracted to the community, voluntary, third and social enterprise sectors There is likely to be some form of a 'right of supply challenge' but unless this is carefully designed, it is unlikely to result in a level playing field between well-resourced businesses and third sector bodies, since the business sector is more likely to be able to ‘play the system’. Access to affordable capital, adequate revenue funding and appropriate procurement processes will prove far more helpful to the third sector than the right of supply challenge. Accordingly, if local authorities want to develop and encourage third sector supply, they must take care not to kill it off.
Too often we forget that community and voluntary organisations, and the wider third sector are about more than just service delivery and contracted services. Such organisations offer/articulate ‘voice’ – sometimes for the most marginalised in society; advocate for communities and individuals; and campaign and challenge the public sector, the establishment and orthodoxy. These are vital roles for an independent sector – and by no means in conflict with receiving some public funding. This is the essence of a vibrant civil society.
It is deeply disturbing to detect increasing signs of a growing rift between some local authorities and some members of the third sector – created in part by the public expenditure pressures enhanced by government cuts to and abolition of a raft of specific grants to local authorities which have disproportionately hit revenue streams which funded third sector organisations. There are other underlying reasons (some historic) for tensions between the sectors and these will vary from place to place. But the last thing that will build stronger links between local government and the sector is central government diktat.
I believe that there is a strong case for every local authority to take the initiative to re-negotiate a 'compact' (and it would be good to use a new term for such an arrangement if this one is locally discredited) – between itself and the wider local public sector and the community, voluntary and social enterprise sectors.
Ideally, as in County Durham, this will be a cross-public sector initiative involving the police and NHS as well as local government. Indeed, why not all agencies with responsibilities and interests in the place?
Such partnership agreements ('compacts' – or whatever) could address issues such as:
- recognition and mutual respect of each partner to the other and their complementarity
- respect for the third sector’s role as voice, advocate and campaigner
- guarantees for consultation and engagement in budget decisions
- jointly agreed criteria for grant programmes and to maintain such programmes
- defining the right of and means for third sector involvement in strategic commissioning, de-commissioning and planning – so that both partners can maximise outcomes for local people because they share an understanding of what is needed and what is available from each other
- commitments to support infrastructure organisations; and to invest in capacity building
- opening up contract opportunities on terms that do not exclude the sector; and encouraging private sector suppliers to involve the third and social sectors in their supply chains in ways that are mutually beneficial
- commitment to full cost recovery plus realistic margins to enable investment in staff and volunteers; and capacity building
- supporting the sector to secure capital
- how to handle the 'right of supply challenge'
- the local authority’s role in encouraging local volunteering (as in LB of Harrow) and facilitating relationships between the third and social sectors and local businesses (as in LB of Hammersmith and Fulham)
- the provision of shared support services to and use of premises by the third and social sectors
- community asset transfer and the opportunity for the sectors to use the local public estate and to be integral to local strategic asset planning
- cross-sector talent and skills development, with two way secondments and mentoring
- develop and implement systems to measure the social impact of public services and investment
This list is not exhaustive and it will be for each place to identify what is most appropriate given its circumstances and its likely future. However, if local authorities cut funding in ways that cause long term damage to the sector or if central government attempts to drive behavioural change from Whitehall, then all the advances of the last decades risk being lost at the expense of many vulnerable people and our communities. No one wants that!
John Tizard is director of the Centre for Public Service Partnerships
