One of the areas addressed in the comprehensive report of the House of Lords Committee on Charities was the commissioning of public services. This is a big issue – worth around £12bn a year to the sector.
ACEVO has a long history of supporting and encouraging charities to engage in the delivery of public services. We believe that civil society organisations driven by delivering the best outcomes for their beneficiaries are best placed to provide services to those who need them. Government has the money to deliver social programmes, and charities have the expertise. And, in my eyes, this is doubly the case with the alternative providers of services often being private profit-driven companies. Commissioning should be a way to create better services, not just cut costs to the exchequer.
But, as the Lords Committee has recognised, the reality is rather messier than this. Commissioning practices are often far from ideal, with the rise of government contracts also marking a fall in the funding provided to smaller charities. According to the Lloyds Bank Foundation, charities with an income between £25,000 and £1 million saw their income from government fall by 38% between 2008 and 2013. The move to a ‘contract culture’ has been accused of creating mission drift within the sector, as (with government grants an increasingly scarce beast) pursuing contracts is seen by some charities not as a strategic choice, but a financial necessity.
The Committee heard from a number of sources that the system at the moment simply does not work for small providers – be they charitable or otherwise. Whether it’s because of payment by results and the risks that brings, or contracts which are simply too large, the public services market has become a dangerously closed shop. This isn’t just a threat to the financial sustainability of the charity sector. Many small charities are working hand in hand with some of the most vulnerable in society on a daily basis. They account for the vast majority of charities, and have a level of knowledge commensurate with this. By shutting out the expertise and experience of small charities, we are doing harm to our public services and, with them, the public as a whole.
The recommendations made in this section of the report are wide ranging and ambitious. A stronger Social Value Act would help promote good services at the expense of those which are merely inexpensive. Reforms to payment by results would help reduce uncertainty. Less prescriptive contracts would allow charities to run services in a way they know works, not just the way they’ve been told to.
The fact that these recommendations are aimed at government does not mean there isn’t a role for charities, especially infrastructure bodies, to play in keeping the pressure on government to meet the ambitions of the Committee. We at ACEVO will be monitoring the situation closely over the coming months (and years, if needed) to push for, and monitor, their implementation.
But we do need to be realistic about what can be done. The one area I feel has been – possibly understandably – neglected, is the lack of funding facing government, especially at a local level.
The reality is that better services are not always going to be cheaper. Smaller contracts do mean that efficiencies of scale are lost. Accounting for the social value delivered by a provider means not always pursuing the most cost-effective solution. This is, if you like, my challenge to the Committee members. Where do they expect compromise to be made? They cannot expect everything they have suggested to be delivered within the funding regime. As such, are there recommendations they expect never to realise, or are they looking to get more funding for commissioners?
This may be too ‘political’ a question for a cross-party committee from a house which has no financial privilege. If this is the case, maybe this is where the sector can usefully contribute. Charities need to be unapologetic about the value of their work, and the costs it entails. If we don’t speak out, we risk becoming the bogey man held up by the hard left – a silent partner enabling the downgrading of our public services. And this wouldn’t do charities – or their beneficiaries – any good.
By Simon Dixon, Policy Officer