The Government knows it is reliant on the voluntary sector, yet it persists in being inconsistent in its policies, says Mathew Little.
In 1999, in a keynote address to the NCVO conference, Tony Blair issued a mea culpa on behalf of the state.
The relationship between voluntary organisations and the Government was "at best unequal, at worst oppressive" he confessed. Contracts were seldom fully funded and mere lip service paid to consultation.
Blair promised to "rectify these mistakes" through a fair funding framework, the right to criticise, and "direct involvement in policy making".
Perhaps he forgot to forward the memo to the Department for Culture, Media and Sport. Tessa Jowell's decision to railroad through the merger of the Community Fund and New Opportunities Fund in February, despite the well-documented opposition of the voluntary sector, was a classic example of the Whitehall-knows-best school of policy making.
Consultation results from the DCMS revealed that the "vast majority" of the sector opposed the merger, fearing it would cause "huge disruption".
The Government's decision to carry on regardless, while issuing a promise to consult with the sector on the nature of the new merged lottery distributor, prompted one charity sector chief executive to comment: "What are they going to consult us on - the colour of the door of the office or the size of the form?"
But rather than heralding a new era of exclusion from the corridors of power for the sector, the lottery merger episode may show that when technical policy issues become feverishly politicised, the views of charities take a back seat.
The lottery review was hijacked midstream by a front-page Daily Mail campaign to abolish the Community Fund because of its grants to asylum seekers. Talks on merging the Community Fund and NOF mysteriously began two months before the results of the review were announced. It seems that voluntary sector interests were sacrificed to placate the angry voice of middle England.
"I think the lottery consultation was a bit of a one-off and not symptomatic of the relationship between the Government and the voluntary sector," says John Knight, head of external affairs at Leonard Cheshire. "But it wasn't the greatest moment in that relationship and the Government has to do a lot of work to repair the damage."
Knight believes the voluntary sector has not realised how important it is to government. "The sector has an enormous amount of power," he says.
Serious partnership with the voluntary sector is not just desirable from the Government's viewpoint; it is also unavoidable.
"The Government has an interest," says Knight. "The capacity of local government to deliver services has contracted and it is reliant on the voluntary sector. These changes are being led by the market and the voluntary sector is locked into them. The sector could shape the agenda but it has to be careful not to follow someone else's agenda," he says.
The signs of this new dispensation within government are unmistakable - there is the two-year Cabinet Office review into charity law and status which the Government says it will bring into force through a charities bill next year, as well as last year's Treasury review of the sector's involvement in public services which resulted in the £125 million futurebuilders fund to prepare charities for their enhanced role.
On Home Secretary David Blunkett's instigation, the Active Community Unit has also been relaunched with a £93 million budget and a brief to build the infrastructure of the voluntary sector and enforce the Compact across government.
According to Knight, who served on the steering committee which oversaw the Treasury's public service review, the Home Office, Treasury and Department of Health all understand the voluntary sector and are receptive to its views. "They have strong bonds with the voluntary sector. They respect us," he says.
But there is still something of the Jekyll and Hyde mindset to the Government's dealings with the sector. The same Chancellor who introduced radical tax-effective giving incentives in his 2000 budget has also proved utterly unmoveable on the subject of the sector's irrecoverable VAT burden. A Home Secretary who intervened to save 30 volunteer bureaux and councils for voluntary service with a £500,000 grant has also shown an explosive sensitivity to anti-government campaigns, as the Community Fund affair illustrates.
Paul Palmer, professor of charity finance at South Bank University and former finance director of drug charity Phoenix House, believes that on some issues the Government is not open to argument. "There is a difference between consultation and changing someone's mind," he says. "People think that consultation means a veto and it doesn't. On the lottery the Government had made a decision which outweighed the view of the voluntary sector."
Palmer says that when the Government says "consultation" it can mean different things. The Cabinet Office review of charity law and status was genuine consultation, and the lottery review was a Government decision that amounted to a foregone conclusion. On the issue of withdrawal of advance corporation tax credit, the needs of the sector weren't even considered.
Nonetheless, Knight sees progress in the Government's attitude. "I don't think it understood the sector in the past, it was just a huge blob occupying a part of the economy. We have to make the most of our opportunities through the Treasury or Strategy Unit reviews, but we should go into them with our eyes open," he says.