Communities secretary urges councils to look beyond cost of contracts

Charities may not be cheapest but can meet social outcomes, says John Denham

Communities secretary John Denham has urged councils to consider contracting services to third sector organisations even though they might not be the cheapest option.

In a speech to a conference organised by think tank the New Local Government Network in London yesterday, Denham said: "I have a real concern that the third sector is not getting the opportunity to play its part in the big issue of public service reform locally."

He said it did not make sense for councils to exclude voluntary sector providers. "They may not offer the cheapest contract in terms of narrowly defined costs and benefits in the short term," he said.

"But they can deliver important additional social outcomes, such as jobs for the workless and marginalised and better quality services, which saves money in the long run."

Third sector organisations "must have the chance to show how they could deliver the outcomes local people want by new ways of working and delivering services – not just be asked to compete to deliver the current services at the lowest possible cost", he added.

Denham has arranged a meeting with third sector and local government representatives to discuss the issue.

Meanwhile, third sector minister Angela Smith has called on local authorities to consider the wider benefits charities bring to their communities before deciding to cut their funding.

Speaking during yesterday's Cabinet Office questions in the House of Commons, Smith acknowledged the future of local government funding had caused the sector considerable concern.

"One thing I would say to all local authorities is look for the value for money from the sector, but also look for the contribution the sector makes to the objectives of the council overall and the benefit to that area overall," she said.

"I'm convinced that when those issues are taken into account and councils really see the value the third sector gives to their area, that will impact on their funding decisions."

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