Voluntary sector needs to ‘do things differently’ in the new contestability environment
In recent years, the dominant driver of the voluntary sector’s growth has been public sector contracts,
with research indicating that contract funding from statutory sources in 2006/7 went up to £7.8bn from a mere £3.8bn back in 2000/1[i].
Addressing delegates at NCVO’s conference on 3 March 2009, ‘Innovation, public services and the voluntary sector’, Stuart Etherington, NCVO chief executive warned that the sector was going to have to ‘do things differently with less money’. He warned that organisations highly dependent on public sector contracts were likely to face ‘considerable difficulties in the next spending round from 2011 to 2014’. Part of the answer is innovation from within the sector but also a rethink on what commissioning is about, with the focus being on the delivered outcome rather than the process.
As the youngest ever former director general of the Prison Service, Martin Narey, CEO of Barnardo’s explained that his anti-competition principles had to be rethought when he saw that the prisons contracted out to the private sector ‘didn’t cost very much, demonstrated a genuine enthusiasm for rehabilitation, and treated those we choose to lock away with dignity’. Competition had delivered huge improvements despite it not being ‘much fun for those of us in the voluntary sector’.
The real threat in the current contestability environment, he said, was not charities fighting each other for contract wins, but tthe prospect of the voluntary sector losing out to the private sector. ‘Some private sector organisations’ he explained ‘can and do delivery high quality public services very competitively despite having to turn a profit because their overheads are so rigorously controlled’. Charities cannot assume they will continue to get contracts just because of who they are, but need to provide clear evidence why they are the best choice. For example third sector organisations are well placed to get public services to those hardest to reach.
When he was at the Home Office, Narey invested all of his budget in drug treatment services delivered by charities such as Addaction and RAPt. Their meticulously delivered and well-presented programmes not only reduced drug abuse in prisons but lowered reoffending rates.
He remains appalled, however, at the ongoing issues of short-term funding. ‘Working a year at a time, with the knowledge that funding might evaporate and a contract just won might be tendered again in months, not years, is just part of the deal for staff in the voluntary sector. He shared his resentment at having to treat voluntary sector staff in a way (such as precautionary redundancy notices in the January of each year just in case funding dries up) that would not be tolerated in the public sector. ‘How are we expected to recruit and retain the best staff with so little job security?’ he asked. He concluded pointing out that longer contracts mean better services for the public sector at lower costs, citing an example of one the Barnados childrens centres in Brent. The 20-year contract has enabled them to deliver outstanding
The awkward balance between service quality and service cost is set to remain an ongoing challenge for the sector. ‘Commissioners will need to see us at the cutting edge of efficiency of delivery if we are to continue to be at the heart of public service delivery. They don’t see us that way yet’, Narey concluded.
Author: Clarissa Dann
Clarissa Dann was the editor of Caritas as well as an HR and management online service,he People Bulletin until July 2011.
She is now the editor of the specialist trade finance magazine, Trade and Forfaiting Review which can be viewed at www.tfreview.com but does write on charity finance and investment from time to time.
Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from
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