News in focus: Balancing independence with state service delivery

Joe Gill

In his speech to Acevo this month, Alan Milburn MP stated that the voluntary sector should take on more public service delivery. But does this mean losing a degree of independence?

If the private finance initiative was the theme of Labour's second term in office, voluntary sector provision will be the theme of the third, should it happen. After the endless controversy of PFI, dogged from the start by accusations of fat-cat profiteering, a voluntary finance initiative offers a more palatable way of pursuing public sector reform by involving organisations that have public service, not profit, at the core of their ethos.

Alan Milburn's speech in front of scores of charity executives and government officials on 6 May raised the stakes in the push for a new partnership between the public and the voluntary sectors.

Where the running of a public service is to be put out to tender, the voluntary sector should, in future, have an automatic right to compete on a level playing field alongside public and private sector organisations.

However, he added that greater involvement in mainstream services would come at the price of greater accountability. "The voluntary sector needs to get its own house in order in terms of how it is organised and how it is governed. In short, the sector needs to become more professional and less amateur," he said.

Michael Lake, director-general of Help the Aged, says that most charities with a social role find themselves involved in public service delivery in some way. The growth and change in emphasis naturally imposes changes on the organisation, with local authorities and central government demanding more accountability.

"The internal business of charities is becoming more and more professional because we have to live in a harsh commercial world," says Lake. "Taking on service provision requires a very high degree of professionalism, and charities need to be more hard-headed, acute and efficient."

But for the voluntary sector to be able to deliver public services effectively, it's not only charities that need to mend their ways. Most organisations involved in service provision would agree that the current hotchpotch of fundraising arrangements - short-term, under-funded contracts - have created a "crisis of insecurity", in the words of Ed Mayo, chief executive of the National Consumer Council.

Mayo is chair of Acevo's commission of inquiry into voluntary sector partnerships, which will report its findings to Home Secretary David Blunkett and Treasury Minister Paul Boateng in September.

He says: "If the state provides new models of funding, it's important to know what terms they are going to be on, whether charities still campaign for their users, and whether they are going to deliver margins for investment."

Lake agrees that models must be clear - voluntary organisations must be careful of funding public services out of their working capital, he warns.

Fazilet Hadi, the RNIB's director of policy, says that the charity is interested in getting more government funding for services, but with a caveat. "We do not want to use the charity's money to subsidise what are statutory responsibilities. People who have put their hands in their pockets shouldn't have to subsidise government contracts. This isn't to say that we can't offer added value to services we provide, but we want full-cost recovery. I think in that area, the sector has a few battles ahead."

The key issue for voluntary organisations is how much they can expand involvement in public service delivery without mimicking the lumbering bureaucratic nature of the public sector.

Milburn cited mental health charity Rethink's 10-year contract for a nursing home in Derbyshire as an example of good partnership practice.

Rethink gets a lot of its funding from government.

Can charities embrace Alan Milburn's vision of integration into mainstream public service provision, and remain independent at the same time?

Noel Flannery, Rethink's director of resources, is generally an advocate of voluntary and public sector partnerships, but even he is wary of the consequences the proposed growth could have if not managed properly. "The one thing that struck me while listening to Alan Milburn was that, while there is a great deal that is attractive, a key thing is for the sector to maintain independence," says Flannery. "What I wouldn't like to see in the long term is to turn us into something akin to the NHS, losing our capacity for independent thought, action and creativity."

One of the solutions, he feels, is to establish more long-term contracts.

"From our perspective, if we are allowed long-term contracts, it allows us to plan more effectively. For example, we could invest in human resources, and offer much better long-term employment, training and development, which will then benefit the organisation."

Indeed, many charities have found that long-term contracts can provide more equal partnerships, in which their ability to criticise government is maintained.

Simon Burne, NCH's director of marketing and fundraising, says the charity has never felt compromised by receiving a large proportion of statutory funding. The children's charity receives around 90 per cent of its funding from government. "In some cases, long-term contracts actually enable us to have greater influence over how services are provided. If you think your funding could be cut off at any moment, you are less likely to say anything against the Government or council."

However, partnerships, argues Burne, must be constructed on an equal basis. "We don't want too much overweening accountability and box-ticking."

The NCVO's director of public policy, Campbell Robb, asserts that Milburn's proposals must not be about becoming another branch of the state. "It is vital that voluntary organisations only enter into partnerships with government when there is clear evidence that it will directly contribute to meeting their users' needs. Talk of new initiatives that will enable the wholesale handover of large sections of services to the voluntary sector is dangerous."

Even Mayo, who is championing the concept of long-term contracts with Acevo's commission, admits that if charities lost their ability to campaign for the user, it would be a case of "killing the goose that lays the golden egg".

"These kinds of contracts with government are not for everyone. Voluntary organisations are going to have to think long and hard, even with the mix of security and stability being offered, about whether to get involved."

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