Public spending cuts are "knocking out the voluntary sector capacity" needed to support the government’s big society agenda, Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations, has warned.
In a speech at the NCVO’s annual conference in London today, Etherington also said he feared the Work Programme, the government scheme under which charities and private firms are paid to get unemployed people back to work, "may be a slow motion car crash."
Etherington said in his speech that charities would be £1.2bn a year worse off by 2015 if public sector funding cuts were passed on proportionately to the voluntary sector.
"I know that saying no to any cuts is not an option," he said. "But I am convinced that these decisions, particularly where they are sudden and disproportionate, are delivering poor value for money for taxpayers. They are knocking out the voluntary sector capacity that will build the government’s bigger society."
Etherington warned that the cuts were hitting many charities hard. "There are now 70,000 fewer paid staff in the sector than a year ago," he said. "That’s nearly 200 staff losing their jobs, every day, for a year. As the NCVO member Newcastle CVS recently wrote to us, we have only got through the last year by using the 3 Rs: reserves, reorganisation and redundancy.
"Whilst there are some bright spots – inflation is falling, donations are recovering – we have had not just had one annus horribilis, but a succession of horrible years. Let’s hope it’s not going to be a decadus horribilis," he said.
Etherington also said he was concerned about the Work Programme, in which 412 charities act as subcontractors to private firms and are paid by results. "I fear we may be seeing a slow motion car crash in the form of the Work Programme," he said. "And I shudder at the thought that other government departments believe that this is the model for the future.
"Bigger and bigger contracts are leading to a situation where involvement in public service delivery may exclude all but the largest charities with the strongest balance sheets."
Etherington also warned in his speech that "the pendulum has swung too far away from grants to contracts," saying that in 2008/09 charities lost £500m in grants. "Grants deliver value for money for taxpayers, despite what some people think," he said. "They fund innovation at the very time when there is premium on finding and testing new ideas. And for small organisations they are an appropriate mechanism when contracting arrangements are overkill."