Voluntary sector organisations winning just 5 per cent of government contracts, report indicates

Voluntary sector organisations won just 5 per cent of government contracts between 2016 and 2020, a new report indicates. 

The paper, produced by the government contracting information company Tussell and published by the Department for Digital, Culture, Media and Sport, says 12,500 voluntary, community organisations and social enterprises were named on either a public sector contract awarded or invoice paid between April 2016 and March 2020. 

It says those organisations have won 7,330 government contracts worth £17bn, equal to 5 per cent of the total value and volume of contracts awarded over the same period. 

The report says local government awards “significantly more contracts to VCSEs by value and volume than other parts of the public sector, both in proportional and absolute terms”.

It says 82 per cent of identifiable VCSEs active in public procurement are charities.

It finds that 14 per cent of the VCSEs involved have an annual turnover of more than £36m but those organisations earned 37 per cent of total public sector spending on VCSEs. 

The report cautions that identifying VCSEs involved in procurement is difficult because there is no dataset of UK social enterprises, unlike registered charities, meaning it likely under-reports procurement through social enterprises. 

Rebecca Young, lead policy and influencing manager at the National Council for Voluntary Organisations, said: “We know that charities, and particularly smaller organisations, face a number of barriers to accessing funding to deliver public services. 

“Complex competitive commissioning processes are challenging for charities, particularly smaller organisations. 

“These processes are often used as a cost-cutting exercise and time scales often don’t give enough time for charities to work in partnership with other organisations.”

Young said underfunded services were not sustainable and her organisation had seen some charities using voluntary income to ensure services were high quality or stepping back from delivery because the service was not deliverable or the risk was too high.

“In the current system, services that support people are organised and procured in the same way as any other commercial purchasing,” she said. 

“We don’t think this is the best way to organise services that often need to be personalised and often support people dealing with complex and difficult life experiences. 

“We need a more collaborative approach that is focused on achieving the best outcomes for communities and involves them in decision-making, that is open and transparent, and allows organisations to be really flexible in response to what people using services need.”

Peter Holbrook, chief executive of Social Enterprise UK, said: “We welcome efforts to understand the levels of spending with social enterprises by the government and the data shows that there is significant potential to ramp up spend with our sector.

“At a time when we have seen, in areas such as children’s services, failing services with high levels of profit extraction, social enterprises provide a route to higher quality outcomes and efficiency for the public sector. 

“Spending more with social enterprises should be a central part of the government’s strategy to level up through public spending.”

It is not clear whether the report has taken into account subcontracting by private sector organisations to VCSEs. 

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