In 2002, the treasury’s review, The Role of the Voluntary and Community Sector in Service Delivery, recognised the potential of the third sector of charities, voluntary organisations and social enterprises as uniquely valuable partners in the delivery of key public services. The review established both an £80m Futurebuilders fund for investment in innovation and set aside another £70m for the sector’s infrastructure, to boost the sector’s chances of winning public service contracts. Five years on, public sector contracts have grown to comprise 20% of the sector’s income and, in already established areas such as social housing and personal social care, voluntary and private organisations now account for a third of all provision. But this is, perhaps, evolutionary rather than revolutionary.
A delegation of voluntary sector chief executives met Tony Blair at Downing Street in January last year to argue that growth in the sector’s service delivery role was hampered by unequal funding arrangements. The delegation claimed that commercial organisations are incentivised to take up public service contracts with guaranteed profit streams, while voluntary organisations can struggle to cover their costs and have to subsidise the service from their own voluntary income.
One charity, Sue Ryder Care, has estimated that it has gifted the state at least £50m since 2000 through topping up under-funded contracts.
The type of public service contract that the third sector can expect to receive does not always compare with that on offer to the public and private sector. Unlike the 20-year PFI contracts, voluntary organisations often rely on one-year contracts from local authorities and primary care trusts. “The same public sector bodies that are perfectly willing to enter into seven or ten-year contracts with the private sector for back office functions,” said an incredulous Sir Peter Gershon last March, “are also perfectly willing to drip feed the voluntary sector on a month-to-month basis to provide essential social services.”
According to Richard Gutch, chief executive of Futurebuilders, “The public sector still views the voluntary sector as marginal, as add-ons that can be expected to fund services through their own voluntary income, rather than as potential business partners.”
But this could all be about to change. Last May, frustrated by the lack of progress so far, Blair told new Cabinet Office Minister Hilary Armstrong to bring about a “step change” in service delivery by the sector. In December, the new Office of the Third Sector in the Cabinet Office published a public services action plan for the sector that sought to address failings since the 2002 review.
Chancellor Gordon Brown announced that contracts of at least three years, rather than one year, would become the norm.
A training programme for 2,000 public sector commissioners was launched to ensure that the public sector understood the third sector’s needs and involved it in the design as well as the delivery of services. The action plan also indicated where third sector service delivery can be expected to converge. It highlighted five policy areas – probation, employment, children’s services, education and training, and health and social care.
After years of stilted progress, change could be rapid. The Offender Management Bill, published at the end of last year, permits the outsourcing of £9bn of probation services to the voluntary and private sectors. The welfare reform minister, Jim Murphy, has also promised that 60% of the contracts to get one million incapacity benefit claimants into work will be given to third sector organisations.
But the government has also moved to quell some of the wilder expectations about how far the sector can go in “replacing the state”, in the words of a kite-flying Acevo pamphlet from 2003.
