It underlines the Government's desire to see charities play a significant role in the reform of public services. The fund, announced as part of the Comprehensive Spending Review, is intended to "increase the scope and scale of voluntary sector services". The fund will last three years.
Paul Boateng, chief secretary to the Treasury and chair of its review of voluntary-sector involvement in public services, said: "This is a first for the voluntary sector: direct involvement in the design and administration of a major new fund to remove barriers to service delivery and modernise the sector for the long term."
NCVO chief executive Stuart Etherington said: "The Government appears to have answered NCVO's call for a new framework in the relationship between the sector and the Government, which recognises its independence and the value it brings to services."
The Government has also announced the key recommendations from the Treasury's cross-cutting review of the sector's involvement in public services, which will be published in full in September.
Accepting that charity service providers have a right to demand that core costs are paid in full, the review promises that "all government departments will reflect this recommendation in their procurement policies". A senior civil servant in each government department is to be given responsibility for driving through the review's recommendations.
Acevo chief executive Stephen Bubb said: "The recognition of the aim to pay core costs is central to long-term sustainability."
The review also suggests that the Government is prepared to make concessions on the sector's VAT bill. The Comprehensive Spending Review White Paper says the Government wants "to determine whether there is an effective way of mitigating the impact of irrecoverable VAT".
Targeted relief for those charities delivering services remains the most likely option.