By David Williams
3 March 2010
Charities are declaring that their time has come, with Whitehall lauding their merits. But, although greater service provision could improve quality, it is unlikely to make savings
If the recession and subsequent imperative to slash public spending has given anyone cause for optimism, it is the reformists who live by the aphorism, ‘never let a good crisis go to waste’.
The looming threat of funding cuts is causing many in the public sector to reconsider how services are provided. At the same time, third sector leaders are beginning to feel bullish.
Self-confessed ‘serial pragmatist and born optimist’ Victor Adebowale is among them. The cross-bench peer is also chief executive of Turning Point, a social enterprise providing a wide range of services to people with complex problems, including drug addiction. He is part of an increasingly vocal third sector that senses the fiscal squeeze offers opportunity, rather than calamity.
The sector’s time has come, Adebowale tells Public Finance. Over the past decade, ‘the whole concept of the third sector has been legitimised. There’s been a realisation that actually it’s not just about the standard form of charity, of fundraising to provide services that may or may not exist in a year’s time.
‘What my clients want is a service that is safe, efficient and run by people who know what they’re doing and give a damn, rather than people who are wonderfully kind but actually a bit amateur.’
The fiscal squeeze presents a chance to ‘relaunch what public service is about’, he says, and many charities and social enterprises now have the capacity and management skills to get more involved.
‘I run a business,’ he says. ‘When I get up in the morning I’m obliged to improve the lives of my clients, and it would be a good idea if we were viable, safe and growing. If I work for a private sector health company I would be obliged to improve shareholder value. [But] that demarcation is not as large as people think it is.’
Adebowale’s business-centric language will offend those committed to the idea of publicly run public services – particularly trade unions opposed to outsourcing, which believe charities should stick to a complementary, peripheral role.
Unite argued last week that Tower Hamlets’ proposals to provide community health services through a social enterprise – which have subsequently been shelved – would have amounted to ‘semi-privatisation’. The union also said that while contracts initially go to social enterprises, the third sector is often out-bid by private firms when the service is retendered.
The union is also planning a meeting with third sector minister Angela Smith on March 9 to set out concerns over deteriorating working conditions for charity workers.
Unite’s national officer for the not-for-profit sector, Rachael Maskell, says a survey of members’ working conditions showed that current practices are ‘unsustainable, with workers over-stressed and working long hours’.
‘This isn’t the answer,’ she adds. ‘The third sector is often seen as a panacea for all things in the public sector but this is proving it isn’t.
‘There’s something which glues staff together which you cannot buy,’ she adds. ‘And unfortunately that’s being lost.’
Chief among the union’s complaints are the short-term contracts typically given to third sector providers, which Maskell contrasts with the relative job security in the public sector.
Adebowale agrees that commissioning could be improved. ‘What we experience often isn’t commissioning, it’s purchasing,’ he says. ‘And that’s often “can we get more of the same, but cheaper, please?”.’
Nevertheless, Whitehall appears to be leaning increasingly towards the third sector as a source of creativity and specialist expertise.
A report published on February 25 by Anne McGuire MP, the Cabinet Office adviser on third sector innovation, describes how independent bodies are more able to tailor services to the individual by joining the dots between health, social care and prisoner rehabilitation.
‘The third sector potentially has a crucial role to play as offenders may be more likely to trust and engage with them,’ she writes. The report also found that charities, in all their multiplicity, are better placed than the public sector to offer choice to service users.
On the day McGuire’s report was released, representatives from across the sector met the chancellor to discuss what charities have to offer and the possibility of outsourcing more services to them.
Ralph Michell, head of policy at the Association of Chief Executives of Voluntary Organisations, says charities and Westminster are in broader discussions.
Acevo is talking to both the government and Opposition about involving the third sector more to ‘transform’ public services, he says.
Michell sets out a range of reforms needed in the way services are commissioned to ensure maximum involvement of the third sector in public services. Encouragingly for voluntary organisations hungry to expand, progress is being made on many of the proposals.
The increasing use of devolved personal budgets for service users is one such area. This would allow more small organisations – currently unable to bid against the heavyweight likes of Capita and Serco – to enter the market if personal budgeting were adopted more widely.
However, he says, if ministers ‘simply reduce the money going into the system, the third sector will probably lose out’. And, he adds, the sector’s ‘role will be to pick up the pieces when services are of lower quality and able to help fewer people. That would be catastrophic for our members.’
Such a blow would come as some of the UK’s most high-profile charities are reporting underlying financial problems. A survey by actuaries Alexander Forbes found that many had black holes in their pension funds, the worst case being Barnardo’s, with a £141m shortfall.
However, Michell says a government that chooses to transform public services rather than salami-slice budgets could bring about a ‘massively increased role for the third sector in health, social care, reducing reoffending, and tackling long-term areas of unemployment’.
He says some Acevo members are potentially able to save the NHS billions of pounds by better managing long-term conditions among elderly people, thus reducing the number of avoidable hospital admissions.
All potential savings are very exciting, but they are also risky, and public sector commissioners might become more risk-averse with tight budgets looming.
The fiscal crisis could easily result in charities taking a leading role in public service provision. But there is little to suggest that it will become a cheap option without exacerbating the problems already being reported by Unite and the Alexander Forbes report.
Commissioners might well want to use the current fiscal crisis to reshape the services they provide. But as they do so, they might want to remember another often-quoted cliché: you get what you
pay for.
3 March 2010
Charities are declaring that their time has come, with Whitehall lauding their merits. But, although greater service provision could improve quality, it is unlikely to make savings
If the recession and subsequent imperative to slash public spending has given anyone cause for optimism, it is the reformists who live by the aphorism, ‘never let a good crisis go to waste’.
The looming threat of funding cuts is causing many in the public sector to reconsider how services are provided. At the same time, third sector leaders are beginning to feel bullish.
Self-confessed ‘serial pragmatist and born optimist’ Victor Adebowale is among them. The cross-bench peer is also chief executive of Turning Point, a social enterprise providing a wide range of services to people with complex problems, including drug addiction. He is part of an increasingly vocal third sector that senses the fiscal squeeze offers opportunity, rather than calamity.
The sector’s time has come, Adebowale tells Public Finance. Over the past decade, ‘the whole concept of the third sector has been legitimised. There’s been a realisation that actually it’s not just about the standard form of charity, of fundraising to provide services that may or may not exist in a year’s time.
‘What my clients want is a service that is safe, efficient and run by people who know what they’re doing and give a damn, rather than people who are wonderfully kind but actually a bit amateur.’
The fiscal squeeze presents a chance to ‘relaunch what public service is about’, he says, and many charities and social enterprises now have the capacity and management skills to get more involved.
‘I run a business,’ he says. ‘When I get up in the morning I’m obliged to improve the lives of my clients, and it would be a good idea if we were viable, safe and growing. If I work for a private sector health company I would be obliged to improve shareholder value. [But] that demarcation is not as large as people think it is.’
Adebowale’s business-centric language will offend those committed to the idea of publicly run public services – particularly trade unions opposed to outsourcing, which believe charities should stick to a complementary, peripheral role.
Unite argued last week that Tower Hamlets’ proposals to provide community health services through a social enterprise – which have subsequently been shelved – would have amounted to ‘semi-privatisation’. The union also said that while contracts initially go to social enterprises, the third sector is often out-bid by private firms when the service is retendered.
The union is also planning a meeting with third sector minister Angela Smith on March 9 to set out concerns over deteriorating working conditions for charity workers.
Unite’s national officer for the not-for-profit sector, Rachael Maskell, says a survey of members’ working conditions showed that current practices are ‘unsustainable, with workers over-stressed and working long hours’.
‘This isn’t the answer,’ she adds. ‘The third sector is often seen as a panacea for all things in the public sector but this is proving it isn’t.
‘There’s something which glues staff together which you cannot buy,’ she adds. ‘And unfortunately that’s being lost.’
Chief among the union’s complaints are the short-term contracts typically given to third sector providers, which Maskell contrasts with the relative job security in the public sector.
Adebowale agrees that commissioning could be improved. ‘What we experience often isn’t commissioning, it’s purchasing,’ he says. ‘And that’s often “can we get more of the same, but cheaper, please?”.’
Nevertheless, Whitehall appears to be leaning increasingly towards the third sector as a source of creativity and specialist expertise.
A report published on February 25 by Anne McGuire MP, the Cabinet Office adviser on third sector innovation, describes how independent bodies are more able to tailor services to the individual by joining the dots between health, social care and prisoner rehabilitation.
‘The third sector potentially has a crucial role to play as offenders may be more likely to trust and engage with them,’ she writes. The report also found that charities, in all their multiplicity, are better placed than the public sector to offer choice to service users.
On the day McGuire’s report was released, representatives from across the sector met the chancellor to discuss what charities have to offer and the possibility of outsourcing more services to them.
Ralph Michell, head of policy at the Association of Chief Executives of Voluntary Organisations, says charities and Westminster are in broader discussions.
Acevo is talking to both the government and Opposition about involving the third sector more to ‘transform’ public services, he says.
Michell sets out a range of reforms needed in the way services are commissioned to ensure maximum involvement of the third sector in public services. Encouragingly for voluntary organisations hungry to expand, progress is being made on many of the proposals.
The increasing use of devolved personal budgets for service users is one such area. This would allow more small organisations – currently unable to bid against the heavyweight likes of Capita and Serco – to enter the market if personal budgeting were adopted more widely.
However, he says, if ministers ‘simply reduce the money going into the system, the third sector will probably lose out’. And, he adds, the sector’s ‘role will be to pick up the pieces when services are of lower quality and able to help fewer people. That would be catastrophic for our members.’
Such a blow would come as some of the UK’s most high-profile charities are reporting underlying financial problems. A survey by actuaries Alexander Forbes found that many had black holes in their pension funds, the worst case being Barnardo’s, with a £141m shortfall.
However, Michell says a government that chooses to transform public services rather than salami-slice budgets could bring about a ‘massively increased role for the third sector in health, social care, reducing reoffending, and tackling long-term areas of unemployment’.
He says some Acevo members are potentially able to save the NHS billions of pounds by better managing long-term conditions among elderly people, thus reducing the number of avoidable hospital admissions.
All potential savings are very exciting, but they are also risky, and public sector commissioners might become more risk-averse with tight budgets looming.
The fiscal crisis could easily result in charities taking a leading role in public service provision. But there is little to suggest that it will become a cheap option without exacerbating the problems already being reported by Unite and the Alexander Forbes report.
Commissioners might well want to use the current fiscal crisis to reshape the services they provide. But as they do so, they might want to remember another often-quoted cliché: you get what you
pay for.
