Out of bath - Vince Cable looks into the future at NCVO's annual conference
March 2009
Vince Cable makes some predictions about the economy and the voluntary sector at this year's NCVO's Annual Conference
The voluntary sector is in danger of drowning in a bath of warm words, warned Vince Cable, deputy leader of the Liberal Democrats, when he addressed the NCVO Annual Conference on 18 February 2009. ‘All the political class wants to say nice things about you, regardless of their background and everyone has an interest in talking you up’, he said. The fact of the matter is that people on the left identify with the voluntary sector because they believe that there is such as thing as society and people on the right like you for the opposite reason; because they want to cut back on the state. It is easy to say “there are those cosy nice organisations out there who will look after you instead”. '
Dr Cable went on to outline the main challenges facing the sector which he characterised as a ‘scissor crisis – two blades: diminishing income and resource coupled with rising need. Sick balance sheets are a problem for the majority of community and voluntary groups and the difficulties of funding voluntary activities were not going go away. And on the other side there seems to be a quantum leap in the expectations of what the sector can deliver.
Brave new world?
The rapid surge in unemployment places enormous pressure on homeless groups and because of the surge in repossessions. Huge numbers of people are quietly drifting from the margins of integration into financial society into financial exclusion – banks are cracking down on lending and overdrafts and have no alternative but the extortions of the ‘payday’ lender and racketeers. In these times, goodwill towards recovering drug addicts, people who have left prison, asylum seekers and the mentally ill becomes stretched, putting more strain on the sector.
Later in the speech he recounted how a group of women in his Newcastle office came to tell him about the problem of getting skills and training. Bizarrely, factory workers laid off when they went to job centre they were told that until they had been unemployed for six months they could get no help with adult education and training. This, according to Cable ‘seemed wickedly foolish’. Surely , he went on ‘people needed contact and training to keep spirits positive. Continuing education is crucial and it is quite brutal to cut back in adult education when it is most needed. People don’t want vocational training at times like these.’ In response to a question he made a comment than when governments made cuts to public spending, the least fashionable bits tended to be the target, even if they were the most productive.
He reminded delegates that the effects were not all negative, and that in his own constituency families are looking at the bank accounts, realizing they can’t afford private school and getting passionately concerned about their local state schools. This was just one example of a better sense of solidarity and people trying to rebalance their lives in a healthy way.
A whole generation of people who were financially well off now find themselves with more time – and are finding themselves involved in voluntary activities – this is a positive outcome. And there are those, he said, that the crisis would pass unnoticed – they would retain secure jobs and not have mortgage problems. Their resources need to be tapped.
The economy
Dr Cable’s prefaced his view on the economic downturn with ‘while I have made a few good calls in my time, I can’t predict the future and in the kingdom of the blind, the one-eyed man is king’. He then shared a helpful image, where the recession was likened to a shape of a bath; we are currently on the steep downward slope to the bottom of the bath. There follows a flat period at the bottom for quite a long time. Eventually, conditions improve and a steep upturn will happen. None of us know how deep it will get or how long it will last. I am inclined to disregard ministers who see “green shoots all over the place” but also the pessimists who describe it as the ‘worst crisis for 100 years’.
He pointed out that there are some positive things happening – governments, including our own, are being very active, unlike in the 1930s where they passively watched the crisis unfolding. Now there is fiscal and monetary policy intervention and control is being taken of the banks. He thought the reasonable degree of co-operation between the parties was very encouraging.
However, Dr Cable observed that public sector finances were in ‘a truly awful state’, because the combination of the recession and the structural problems in the banking system is resulting in huge losses to the public purse. This means that while the public sector is a relatively safe haven in the short term, providing employment and activity that is keeping the economy going; in two to three years’ time there would be an abrupt correction where government funding would be severely curtailed. So this means we cannot rely on the government to go on funding the economy.
He went on to predict that the banking system would emerge from the crisis quite different in character, with high street banks broken up into regulated utilities, with financial mutuals in the mix.
Outside of the UK, there was, according to Dr Cable, a worry that oveseas development could suffer as the UK turned inward to deal with domestic issues. The countries that were to be hit worse by the downturn, he said, were the poorest nations. The voluntary sector is, he said, in a good position to maintain the wider sense of community and investment. This was later developed in one of the workshops on ‘futures for civil society’ where Kumi, Naidoo, honorary president of CIVICUS: World Alliance for Citizen Participation and Geoff Mulgan of the Young Foundation tackled engagement in this wider issue.
Great expectations
Much is expected of the voluntary sector, stated Dr Cable and challenge for community organisations meeting the demand that everyone is crying out for. He suggested three key areas of support:
- Financial advice. Many people – especially younger people who have not experienced previous recessions - just don’t have the financial information they need or know where to get it. The government has an opportunity to roll out independent financial advisory centres which would be delivered by the voluntary sector.
- Social housing. The Lib Dem MP highlighted the problem in social renting because of the slowdown in private house building. In his opinion this can only be revived if housing associations work with local councils and obtain government support to buy up empty properties from developers. This means housing associations working together with local councils to buy the properties and to provide let-back arrangements for those who have been repossessed. The voluntary sector has a real opportunity to drive this forward.
- Access to finance. The other key area of support was to the financially excluded, and it is the creation of community organisations such as credit unions and mutual organisations with scope to expand quickly and prudently to support those with no other access to finance.
Caritas readers may be interested to note that Vince Cable develops some of these views in his viewpoint - see Caritas, issue 15, page 11, February 2008
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