NEWS IN FOCUS: Government funds come at a price for third sector

Maria Clegg

The voluntary sector now receives more of its money from the Government than from any other source. But, as Maria Clegg finds, getting into bed with the state to deliver public services is not without its snags

The Government now provides 37 per cent of the voluntary sector's annual income of £20bn (Third Sector, 18 February). But in the same month that this figure was announced, charities have found that the extra funding to deliver services through programmes such as the Children's Fund and Supporting People has its drawbacks.

Earlier this month, the Department for Education and Skills ordered the Children's Fund to cut 15 per cent from its 2004 budget and 30 per cent the following year. But after pressure from charities and media exposure, the DfES unearthed an additional £20m for 2004/5. Children's charities breathed a collective sigh of relief at the temporary reprieve, but say that the crisis has undermined trust between the Government and voluntary organisations.

The furore even prompted Barnardo's UK director of operations to say that it called into question the Government's ability to deliver the vision set out in the Every Child Matters green paper.

Charities are concerned that the growing trend towards service provision is drawing the sector into an unequal partnership. "The Government talks about flexibility, but this phrase can put the fear of God into the voluntary sector," says Jacqui Martin, chief executive of Suffolk Carers and a board member of the Children's Fund.

"It can mean flexibility for the Government to pull the plug or withdraw and reallocate without notice or consultation. Alternatively, it can mean we can identify need and use the money to meet that need without being jeopardised by government interference.

"We acknowledge that we have to be accountable, be audited and deliver outcomes. It is a shame that the Government does not have to be accountable for the upheavals that these cuts cause in children's lives."

The irony is that the Government has long recognised the expertise of the voluntary sector in public service provision. But Barnardo's says that the Government has not upheld the spirit of the Compact, and it must learn to work with the voluntary sector if it is serious about tackling child poverty.

"We can reach families quickly, and people come to us because, for whatever reason, they can't go to social services," says Barnardo's senior policy officer Neera Sharma. However, this trust that is so essential between charities and their service users is jeopardised by funding uncertainties.

Changing rules

"When the Children's Fund was announced, we got communities involved in planning services, and many of our proposals were taken on board," says Sharma. "But when the rules change, and you can't deliver the services you've promised, you're really letting people down. Barnardo's wouldn't do that, but the public doesn't make the distinction of where the money comes from."

Sharma reflects on the question many charities are pondering: is it healthy that the voluntary sector is so dependent on government funding? "Put it this way, if the Government says 'here's this money, we'd like you to deliver services to disadvantaged children', what do you say? In future, we will ask more questions first."

The Government also announced a 2.5 per cent cut for its £1.8bn Supporting People programme, which aims to help vulnerable groups such as care-leavers, people with learning disabilities and the elderly to live independently.

But even before the budget cuts were announced, yet another charity found that government funding was a double-edged sword.

Richard Pacey, chief executive of the Wilf Ward Family Trust, recognises that Supporting People allowed the charity to provide far more services, but when the programme passed to the Office of the Deputy Prime Minister, masses of paperwork began to appear.

"We had to employ people just to fill out forms. We were given no indication that this would happen, and there was no funding to cover the additional costs," says Pacey.

At the time of writing, one charity is facing closure because of government red tape. The Prevention of Professional Abuse Network is the only charity in England providing support for victims of abuse by care professionals, as well as training for service providers. It relies heavily on the Department of Health for its core costs, but has been waiting for a decision on its 2004/5 funding, since January.

"Our relationship with the department has always been good," says Jonathan Coe, chief executive of Popan. "We provide a unique service and we received two new grants in the last two funding rounds. But it seems that in this case the department has missed its own internal deadlines.

"We have £119,000 project money from the Bridge House Trust, but that won't be released until we've secured core funding."

Acevo chief executive Stephen Bubb agrees that the values of the Compact have yet to become embedded in government voluntary sector relations, but says the sector is at least pushing at an open door. "At a senior level, there is a strong commitment to the voluntary sector, but things fall down on the ground through ineffective bureaucracy. The public sector has its tried-and-tested methods, which don't take account of the special nature of the voluntary sector," he says.

Dealing with bureaucracy

Last year, Acevo conducted a survey among its members about the effects of government bureaucaracy on charities operating state contracts, and found that charities that address more than one problem have the greatest difficulties.

For instance, a voluntary sector organisation helping an unemployed ex-offender with mental health problems will have to deal with primary care trusts, care, health, housing and local government regulators. Acevo is calling for streamlining of regulation, and will send a list of 36 recommendations to Sir Peter Gershon, who is leading the joint Treasury and Cabinet team working on the Government's Efficiency Review.

In reality, says Bubb, the voluntary sector provides public services with exceptional added value. "We're innovative, flexible and efficient," he says. "We're closer to communities and better placed to help people that the state finds difficult to reach." Acevo is concerned that charities are bearing the burden of risk in the provision of services by taking on all up-front capital costs.

Pacey concludes: "The voluntary sector is subject to far more scrutiny than the public sector, and there seems to be a suspicion that charities are out to make a quick buck from the Government. The voluntary sector provides up-front capital costs, and that money comes from hard work in raising funds.

"The Government is committed to the voluntary sector, but the principles of the Compact have yet to permeate to a local level."

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