FINANCE NEWS: Voluntary finance initiative is widely welcomed, says Acevo

Mathew Little

There is considerable support for the introduction of a voluntary finance initiative among cabinet ministers, according to chief executives' body Acevo.

Acevo has been in "unofficial talks" with government ministers over its VFI proposal, which envisages long-term contracts of 10-25 years for charities carrying out public services.

Education secretary Charles Clarke has expressed support for the idea, as have Cabinet Office Minister Douglas Alexander and Education Minister David Miliband. Talks have also taken place with the Cabinet Secretary and Treasury civil servants.

"There is considerable interest in the idea but we need to sort out the practicalities and put flesh on the bones," said Acevo chief executive Stephen Bubb.

Bubb described Alan Milburn's public backing for the VFI idea at NCVO's political conference last week as a major breakthrough.

The former health secretary is thought to have been put in charge of developing ideas for Labour's third term election manifesto. He claimed that the voluntary sector could become the "third stool" in Labour's plan to reform public services, and endorsed a voluntary finance initiative to work alongside the controversial private finance initiative.

"He is the first major politician to envisage a mixed economy of provision, with mainstream competition between the voluntary and public sectors," said Bubb.

Under VFI, voluntary organisations would be guaranteed funding from the state for a set period of time, enabling them to seek further investment from the private sector.

"Potentially the VFI is the next stage in the funding battle. We are winning on full-cost recovery - the next stage is long-term contracts."

Bubb said the controversy that has raged around the private finance initiative would not arise with a voluntary sector equivalent because charities would not make a profit out of the contracts.

Acevo's proposals are set out in the book Replacing the State?, which was published in September.

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