National charities are undercutting local organisations, warns chief of Birmingham Settlement

Martin Holcombe says they use tactics such as 'asset stripping' staff when bidding for contracts

Birmingham Settlement
Birmingham Settlement

National charities are undercutting local organisations that have more expertise and "asset stripping" staff when competing for contracts, the chief executive of a local charity has warned.

Martin Holcombe, chief executive of the Birmingham Settlement, a charity that provides community services in the city, said in a blog on his organisation’s website that the settlement had recently lost out on price to the crime-reduction charity Nacro when bidding to run a money advice service commissioned by the Staffordshire and West Midlands Probation Trust.

Birmingham Settlement had delivered the service since 2008, but lost out to Nacro despite the national charity having no experience delivering money advice services, according to Holcombe. He added that Nacro did not have the necessary licences and planned to deliver the contract by taking advantage of the transfer of undertakings regulations, or Tupe, which allow organisations to take over the contracts of staff who deliver services.

Holcombe said: "How asset-stripping local charities that have spent years building trust, local understanding and knowledge sits in terms of Nacro’s value base is another question. I do know they are not alone in using this tactic to win contracts or to enter new markets in the ‘dash for cash’."

Holcombe said that in addition to pressure from national organisations, local charities also faced problems with commissioners who "put cost over client" and did not understand the service they were commissioning.

"Having discussed the situation with colleagues in similar organisations, it seems bad commissioning is something that happens on a regular basis and needs to be addressed," he said.

He said that the way the money advice contract had been commissioned was "so poor I find it hard to comprehend".

Paul McDowell, chief executive of Nacro, said: "This is not a question of asset stripping. As with any competitive tendering situation that Nacro is involved in, we submitted our bid in good faith and at an appropriate price.

"We base all of our tender responses on our ability to deliver a quality service, provide value for money and use our expertise."

A spokeswoman for Staffordshire and West Midlands Probation Trust said it was not true that its money advice contract was contested on price alone, but that it was based on a range of criteria. "Commissioning staff have expert knowledge of the subject area," she said. "We have been commissioning money advice contracts for more than 20 years."

She said the trust worked with all sizes of organisation, ranging from local to national.

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