NCVO queries value of outsourcing guidance

NCVO has condemned as inadequate new government guidance for local councils on outsourcing services, which omits full cost recovery.

The 60-page document from the Office of the Deputy Prime Minister says councils should consider using voluntary sector suppliers to provide services.

But it does not mention the thorny issue of full cost recovery.

Without that, many charities are forced to subsidise their contracts with local authorities because payments do not cover the full cost of providing the service.

The ODPM guidance contrasts with Treasury funding guidance to central government departments issued in September, which states that voluntary sector service providers must be given the appropriate level of core costs for delivering a service.

"These guidelines do not go far enough," said NCVO chief executive Stuart Etherington. "What is needed is the kind of shakeup of the procurement system that we have witnessed in the brand new Treasury funding guidelines."

He added: "They are not thinking about the voluntary sector at all, or at least not enough at a local level."

Lack of progress on full cost recovery from local councils will be worrying to many charities because local government is the largest single source of voluntary sector income from the state.

John Knight, head of external policy at disabled care charity Leonard Cheshire, which has contracts with most councils in the UK, said: "This new procurement strategy is a welcome boost to the principles of local government purchasing. But it is limited by the fact that it appears to make no reference to the notion of full cost recovery or the Treasury's cross cutting review. What's happened to joined-up government?"

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