Public service contracts: easier path for charities pledged

23 Feb 11
Charities have broadly welcomed indications that ministers are attempting to remove some of the obstacles they face in entering the public service market
By David Williams

24 February 2011

Charities have broadly welcomed indications that ministers are attempting to remove some of the obstacles they face in entering the public service market.


In his interview with PF, Cabinet Office minister Francis Maude  said the government was looking at ‘what progress could be made’ in this area ahead of the forthcoming public service reform white paper.

He admitted that VAT costs, which public bodies can claim back from the Treasury while charities cannot, were ‘inhibitors’ to third sector involvement. He also acknowledged that transferring staff pension liabilities to non-public sector bodies posed an ‘obstacle’ for many voluntary organisations.

Ralph Michell, head of policy at the Association of Chief Executives of Voluntary Organisations, welcomed the signals from Maude. But he cautioned that while pension reform is likely, changing the rules on VAT would be ‘very, very complicated’.

Maude also told PF that the government’s Work Programme, currently being put out to tender, would open up new opportunities for the voluntary sector – which is losing £1bn of government grants in 2011/12.

He said consortium bids from third sector organisations would be considered favourably. The contracts available were also smaller, and so more accessible to voluntary bodies, than the programme’s predecessor, the Flexible New Deal.

Michell agreed there were likely to be long-term opportunities in areas such as community care but said these would not outweigh the cuts.

James Allen, senior policy officer at the National Council for Voluntary Organisations, said the contracts were still too big to attract charities experiencing problems accessing capital. But he acknowledged that the Big Society Bank was ‘part of the solution’.

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