Treasury chief secretary Paul Boateng has agreed that a treasury official will join the 12-member commission set up by Acevo to flesh out plans for a voluntary finance initiative.
He has also agreed to look into the possibility of setting up pilot models to assess how Acevo's proposals for the scheme, which advocates 10 or 20-year contracts for charities involved in public service delivery, could be taken forward.
The pledges came in a meeting with the chief executives' body last week, during which Boateng described VFI as an "exciting initiative". His support takes Acevo a step closer to getting its proposal for VFI into the next Labour election manifesto.
"This is one of the most interesting things that has happened in the sector for years," said Acevo chief executive Stephen Bubb. "It would mean that CEOs could move away from worrying about core costs, which can interfere with their jobs running charities, and instead change the whole system."
Discussions between Acevo and head of the Office of Government Commerce, Peter Gershon, were also positive.
"Gershon said that in principle he saw no reason why there shouldn't be longer contracts for the voluntary sector, especially as the private sector already gets longer-term funding, and no corporate would consider a short-term contract," said Bubb.
The reactions add further credence to the VFI concept, which has already been backed by Education Secretary Charles Clarke, Cabinet Office Minister Douglas Alexander and Education Minister David Miliband. Former health secretary Alan Milburn, who is thought to be in charge of Labour's next manifesto, also pledged his support for the idea at NCVO's political conference last year (Third Sector, 19 November 2003).
The term VFI was first coined last September in Acevo's book Replacing the State? If the scheme is adopted, it is likely to be called 'Sure Funding' so as to avoid any association with the unpopular PFI initiatives.