The downturn may cause an accelerated shift towards charities delivering government services, says Nick Seddon, but the sector needs to stay on its toes if it is to avoid being exploited
Now is a good time for public policy smuggling. We've witnessed the disintegration of almost the entire investment banking industry and the nationalisation of commercial banks, insurance companies and mortgage lenders. Our Prime Minister and Chancellor have injected £500bn into the banking sector, for which we're grateful, I'm sure. But with debt like that and the economy on a downturn, there's always a chance that government local and national might try to make things look better than they are. Hide things. Or, more to the point, hive off things.
Let's take a step back. These are distracting times. The collapse of Icelandic banks has had an impact on many charities. Legacy giving is likely to dip as property and investment assets fall in value. To add insult to injury, government may cut funding to the sector. In the last recession, according to Karl Wilding, head of research at the NCVO, there was widespread experience of funding cuts. PricewaterhouseCoopers has even predicted that there could be a £2.3bn shortfall in charity income in 2009.
There may also be opportunities. Andrew Haldenby, director of think tank Reform, recently wrote in Prospect magazine that the downturn may provide an impetus for an accelerated shift towards public service delivery by independent agencies – the private and third sectors. "Ultimately the credit crunch will do for outsourcing what the Blairites could never push through," he wrote. "The new drive for efficiency will create an outsourcing boom." And yet that very opportunity may conceal big risks.
So here's my point. Local authorities are going to look for opportunities to get assets and liabilities off the balance sheet. The perfect precedent was the Charity Commission's ruling in 2004 that Wigan and Trafford councils could convert their cultural and leisure trusts into charities. Same funding, same bosses, same staff, new nameplate. Dodgy charities. Now in the Wirral, following a ‘strategic asset review', the local council is closing libraries, leisure centres and museums, and reputedly transferring some to ‘community ownership'. We can expect a lot more of this.
Is it legal? Yes. Is it a threat to the long-term health and good name of the sector? Also yes. These are distracting times, but let's not miss this trick. This is the charitisation – not the privatisation – of government.