How important is the voluntary sector in public service delivery?

As we approach the chancellor’s autumn statement and a likely general election in Spring 2010 the debate over public spending levels is in full swing. What’s more, the language of cuts is now official government terminology: it’s no longer if, it’s now when, and how much. Everything is under review, which organisations in the voluntary sector – who are both delivering services to users and fighting for their rights – both fear and welcome. The mood is one of both trepidation and anticipation. Why so? Here’s some thoughts that I recently wrote for egov monitor, which has some interesting articles from other voluntary sector contributors.

First, the trepidation. In a new publication, The State and the Voluntary Sector, research by the team here at NCVO reviews just how voluntary organisations have largely prospered under New Labour: perhaps a tired refrain, but one that needs repeating if only to repudiate the gloom currently engulfing the sector. With an annual income of £33 billion and a paid workforce of 634,000, the voluntary sector approached the recession in relatively good health.  The sector’s income has been growing at an average of 5.4% every year since 2000, whilst the paid workforce (much of whom deliver social care) has increased more quickly than in the private or public sectors. In other words, after reaching such heights there is potentially further to fall.

Government funding, whether in the form of grants or contracts, has undoubtedly driven this expansion. In 2006/07 statutory sources made a contribution of £12 billion to the voluntary sector’s work, with local statutory bodies accounting for £5.7 billion of this amount, with much of the remainder from central government. The news that over a third of your annual income is under review is worrying for any organisation (not to mention your service users), particularly as it closely follows a recession that has hit other income sources. In what for many organisations has been a pincer movement, levels of need in service areas ranging from advice provision to housing have increased during the recession, meaning talk of cuts in public spending arrive at a time when need is greatest. Incidentally, I’ve seen any number of reports from the US, Canada, Australia and so on, all of which are highlighting the phenomenom of increased need.

But here’s the rub: my team’s research suggests that voluntary organisations account for only 2% of government spending on public services by value. In a world where voluntary organisations are significantly more dependent on the funder and purchaser of services than vice versa there is clearly scope for political arbitrage or, more likely, the sort of accidents that result from the red ink of an accountant’s pen. It’s a point not lost on Stuart Etherington, our CEO, who is concerned that statutory bodies will make the sort of knee jerk reactions that we’ve seen before: “Ill thought out cuts would ravage communities across the UK. When developing spending plans government – nationally and locally – must understand the vital contribution services run by voluntary and community organisations make. These services are not just nice add-ons; they are critical to the well-being of communities across the UK.”

Past experience of politically expedient cuts in funding means that many commentators are already expressing concern about what is going to happen at the local level. Here, trepidation surrounds not just amounts (with particular fears for discretionary spending) but also funding practices. A trend away from grants, towards contracts, has particularly hit small voluntary and community groups that frequently provide support for those whom it is hardest to deliver services to. The State and the Voluntary Sector illustrates a £300million fall-off in local grants from local government over the last two years: it could be argued that this was mitigated by a much larger increase in contract income, but our evidence suggests that public service contracts are being awarded to fewer, larger organisations. Julia Unwin, CEO of the Joseph Rowntree Foundation, thinks this wholesale shift from government as ‘kindly godparent’ to ‘demanding shopper’ has meant that, on balance, “yet again the pendulum has swung too far”. Another aside here is that I don’t think as a sector we’ve been good enough at producing empirical evidence about what is happening here, but then as a researcher I would say that.

But is it all doom gloom? Are there reasons to anticipate to anticipate a more positive role for voluntary organisations in the delivery of public services? The government funding relationship may yet prove more stable over the next year than we hope, for which three arguments are offered.  The current ‘refresh’ of The Compact (which provides the rules of engagement for collaboration between government and the voluntary sector) suggests an ongoing commitment to working with and funding the sector. Secondly, whilst the increasing reliance on contracts as a mechanism for the transfer of resources is often seen as a bad thing (and yes, we still need grants), contracts potentially offer certainty in a way that grants cannot. Finally, governments of all colours still will need to provide public services: indeed, one of the political points of debate is the extent to which frontline services can be protected within the overall context of reduced public funding. Quite simply, in the new austerity voluntary organisations may offer the best value for money.

Therefore, it’s unsurprising that some commentators are arguing for a more deeper, wider role in public service delivery for voluntary organisations. We in the sector aren’t at one over this – dividing lines are currently being drawn up around the role of organisations in prisons and offender management – but should such visions come to pass, then the upwards growth trajectory of the last decade is likely to continue.

There are many counter arguments to the above, not the least of which is the threat of the private sector taking a more aggressive stance in areas where the voluntary sector operates. Moreover, the roll-out of personal budgets is adding to the sense of uncertainty for some organisations. With an election by July 2010 at the latest, and a comprehensive spending review immediately after, expect voluntary organisations to be actively joining debates on what services citizens can expect the state to fund, and how those services are delivered. For our partners in the public sector, creating an environment where this campaigning role can be balanced with a service delivery role will ultimately produce the sort of partnership that benefits the communities we jointly serve.