The Public Finance headline last week ('Charities hurt by law of unintended consequences') should be a wake-up call to politicians nationally and locally as well as to all to public sector budget managers. There is no point in increasing the volume of the rhetoric to promote the Big Society or to extend the 'right to supply" and the transfer of assets if at the same time the very means of sustaining (let alone ‘growing’) the community, voluntary and wider third sectors are being withdrawn.
Evidence is mounting that many (though thankfully not all) local authorities and other public agencies are disproportionably cutting grants and contracted funding to the community, voluntary and wider third sectors - usually pleading that there is no alternative. Really? I wonder if an equal consideration is always given to the future of an 'in-house' service as to one provided by a third sector body. And it is very likely that there will be no parity with the private sector where contracts may be deemed ‘too difficult’ to alter unilaterally. Put this altogether and what we are witnessing is blatant discrimination and actions that are contrary to both the stated policy and ethos of the Big Society.
In addition, in too many places there seems to be little strategic co-ordination of the budget process – resulting in the potential to make what seem easy short term cuts without understanding the longer term consequences or the impact on other organisations. There is a real risk that the cuts will hit hardest those organisations that are in the prevention business where results take time to be realised. As Polly Toynbee observed in The Guardian (28th January) 'So, faced with extreme crises, what gets dropped first? It's always early prevention of worse problems to come.'
Through conversations, research and advisory work around the country, I am witnessing a disturbing degree of naivety, if not prejudice, on the part of the broader public sector about the community, voluntary and indeed wider third sector. And from these same bodies, there is usually a strongly stated commitment to support and working with the sector - whilst at the same time, equally strongly stated (but in truth - ridiculous) assertions based on wishful thinking that the sectors can: easily and quickly find alternative sources of revenue funding; fund capital and increasingly revenue expenditure out of reserves and/or voluntary funding raising; cut costs by reducing employee terms and conditions – and that the staff will be more willing to do this than in the public sector - and/or using more volunteers; engage volunteers with no associated costs; secure services and some supplies through the good will of local businesses.
The reality is, of course, that all too often, the very infrastructure organisations that can and have traditionally supported local community and voluntary organisations to find alternative funding, merge, use shared support services, and improve their governance, management and systems are facing the biggest cuts in public sector support. And ironically, these are the very infrastructure organisations that can also foster the birth and growth of the new social enterprises and co-operatives that the government is championing. So to cut funding to these bodies is unbelievably short-sighted and displays a fundamental failure to understand the sector, its role, and its needs.
Clearly, there will be cuts in expenditure, and inevitably, local authorities and other public bodies will commission and procure different services. The third sector cannot expect to be immune from these changes - but it should not be taken for granted or simply trodden over in the pursuit of 'easier' cuts. A mission-led and values-driven body will all too often find it hard, if not impossible, to say 'no' or to withdraw services because they are not being properly funded by the commissioner. They will try everything they can to continue delivery and the commissioners know this. This is one of many attributes that makes the sector special. But this is also what makes for a very different contract negotiation or re-negotiation between the commissioner and provider than when the latter is a multi-national corporate.
The budget cuts for 2011/12 will by now be mainly determined but it is vital that where these will imperil the third sector, they are at least reviewed with the sector itself. There is still time to adopt a more strategic and inclusive approach for the future. There should be genuine partnerships between the community, voluntary and wider third sector - and the public sector in a locality. And the local authority, as community leaders, should lead and facilitate this.
So, what might this look like? Here are some thoughts based on current best practice in some parts of the country and conversations and recent work with colleagues in the third and public sectors:
Public sector
• co-ordinate (or better still, adopt) a common three year strategy for supporting and developing the community, voluntary and third sectors in a locality
• involve the sectors in all stages of strategic commissioning
• recognise the sectors as adding more to community wellbeing than service delivery alone
• fully consult the sectors in budget-setting on an informed basis and aim to avoid cuts that will have unintended consequences or lead to longer term increased pressures on public services
• where cuts are to be made, provide time for the organisations impacted to seek alternative funding, reduce costs, redesign services or a combination of these
• properly fund local infrastructure bodies so that they can support and advise the local sectors
• make premises and support services available on favourable or at least competitive terms
• promote and facilitate volunteering amongst their employees and those of their suppliers
• commit to full cost recovery contracts to cover operational, capital and development costs when services are contracted
• encourage or require suppliers to partner and/or involve third sector bodies in their local supply chains
• consider establishing local 'third sector development finance' to make loans, arrange social impact bonds and other services
• be prepared to transfer assets to the sectors but only when the necessary finance and capacity is available to manage these assets
• support talent development and volunteering within the locality
• invest in building social capital and encourage the local private sector to contribute
• support the development of 'incubator' arrangements to nurture and develop new social enterprises, co-operative, community and voluntary organisations
Local community, voluntary and third sectors
• co-ordinate activities, share experience and work together effectively
• adopt a sector strategy for the locality to complement the public sector strategy
• support and work with the relevant local infrastructure bodies to share experience and skills, and retain/build the capacity to engage in public sector policy development and planning
• employ or contract-in the relevant commercial, service redesign, and other (including fund raising) skills and capacity that will be required for the new contracting world through local infrastructure bodies or consortia
• support local incubator units for the sectors
• larger organisations in the sector must offer advice and support, as well as support services to smaller ones
• establish consortia arrangements to bid for and/or run services, be they contracted or not to the public sector
• be willing to merge and/or share people, resources, systems, etc.
• use/harness the skills and networks of trustees
• create local strategies and programmes to encourage the development of talent (volunteer and employee) within the sector and to encourage and maximise the contribution of employees and volunteers
• build alliances with other stakeholders with shared interests and values
• ensure that the public sector is better informed of this sector’s ambitions and local capacity so that new opportunities can be developed
• be ready to campaign for their members, users and themselves. and to support and oppose the public sector’s policies/decisions as appropriate
The tragedy is that much of the above will best be led by well-resourced local infrastructure bodies, which is why cuts to these to these bodies will reduce, rather than enhance social capital – and this is the message that must get across to government and local government leaders.
I realise that it is easy to write these words and considerably more challenging to implement the proposals. It will not be easy for either the third or public sectors because of the scarcity of resources, the focus on survival and maintaining day to day operations, and the drive to retain independence. And I am certainly not advocating that the community, voluntary and wider third sectors should not maintain their precious independence, organisations and separate identifies. I am, however, arguing that there is merit in greater dialogue with a purpose, better mutual understanding and a more rational approach to budget and commissioning decisions if the aspirations of the Big Society are not to be lost. I am also arguing for the public sector to better respect, appreciate, recognise and more effectively harness the role and contribution of the community, voluntary and wider third sectors through action and financial commitment - not just rhetoric.
This is not a case of special pleading. The community, voluntary and wider third sectors cannot and should not be exempt from the pressures across the whole of the economy and public sector. That said, neither should they be discriminated against, nor cut off before being able to make an effective and desirable contribution. Times of adversity call for genuine partnership between the sectors – some honesty, and some courage of leadership.
John Tizard is director of the Centre for Public Service Partnerships
