Voluntary Sector Funding

Lord Rennard Excerpts

Thursday 24th November 2011 Lords Chamber

[Lord Rennard]

My Lords, it is six months since I was in the very beautiful cathedral of Ripon, speaking to the synod of the diocese of Ripon and Leeds in its debate on the big society and the role of the church. I welcome the debate this afternoon. In many ways, it will mirror that debate last June, which can still be found on the very good diocese website.

The discussion in the cathedral that morning actually reminded me of rather more political gatherings in many ways, as it revolved around what first seemed to be simply a technical amendment. The main motion said:

“This Synod welcomes the opportunities for the Church's contribution to the common good represented by the Big Society".

The amendment that was carried changed this wording to say:

“This Synod recognizes the opportunities for the Church's contribution to the common good represented by the Big Society".

The difference between those two positions reflects a dilemma faced by many people, communities and voluntary organisations. This is a dilemma about, on one hand, the principles of the big society, which some of us have always called community politics and some may call the good society, and, on the other hand, the practicalities of recognising the need at present to reduce government expenditure.

My invitation to speak at the cathedral arose from the fact that earlier this year I had been asked by the Association of Chief Executives of Voluntary Organisations to chair a commission looking at the role of the voluntary sector in the big society. By the time we reported in May, I had met more than 60 charities and voluntary organisations working in many different parts of this country.

I would say that all of them and indeed all the members of the commission—they came from different backgrounds in the voluntary sector, all the major parties and the church—agreed principles about the big society that are relevant to our debate this afternoon. They all recognised that power and responsibility are shifting in our society; that individuals and communities now have more aspiration, power and capacity to take decisions and solve problems themselves; and that we all need to take greater responsibility for ourselves, our communities and each other. However, just as these principles were commonly agreed, so were the dangers clearly seen that cuts in local council budgets risk undermining many of these principles.

Although the charities and voluntary organisations that I met were very realistic about the country’s economic problems, many of them feared genuinely that they would suffer disproportionately from cutbacks and that this would particularly affect their work in many of the most deprived areas of this country where their efforts are most needed. This resulted in a debate in our commission about how far local authorities could or should be directed to provide services directly themselves or via the voluntary sector. We concluded that it was not compatible with localism to direct local councillors in this way, but we all agreed on the need for much greater transparency in the way in which local councils decide to provide services directly or via alternatives involving the voluntary sector, and how they calculate the costs and benefits of these different approaches.

Frequently, we came across problems arising from government expenditure decisions being taken at different levels and based on far too narrow a consideration of the costs and benefits to that particular part of government in isolation—what they often call a “silo” mentality. We also saw the application very often of too much short-term consideration, which prevented proper evaluation being made that might otherwise have justified some of the expenditure that was being reduced.

Early on in my role as chair of the big society commission, I was challenged on the “Today” programme about whether promoting big society values and the role of the voluntary sector in general was simply a question of spending money and that doing that was not compatible with making the savings in public expenditure that everyone knows are presently required. As ever in my experience, it is always to rebut a charge with a clear and specific example. I was able to quote in the programme the case of what was then Age Concern in south Staffordshire, an example of where funding a voluntary organisation actually led to savings in public expenditure. It was working with seven hospitals to look after older people prior to admission and again as soon as they were ready to come out. By helping to prepare these older people for going into hospital, and helping to support them at the earliest possible time for returning home, their stays in hospital were of a much shorter duration, and of course they were much happier to be in their own homes for more of the time.

The funding to help 3,000 people a year in this way was £500,000 per year, but it saved the NHS around £3 million per year, as these people were in hospital for a much shorter period. It saved £6 for every £1 spent. However, shortly after the programme, I was asked not to use the example again because the £500,000 funding had just been cut—an example of short-termism and the silo mentality. That approach in how decisions over public expenditure are taken needs to change.

The Association of Chief Executives of Voluntary Organisations, known as ACEVO, has given me many similar examples, not all of them based on local authority cutbacks but where the same issues arise. When I was chairing the commission, I spoke to many charities and voluntary organisations that needed professional support and help with things such as the cost of maintaining premises. They explained to me that these organisations could exist only with some significant help from the public purse, especially in low-income areas, but by undertaking the work that they did they could often cause significant savings to be made in the long run to the public purse. The common problem, they explained, was that the haste in which the Department for Communities and Local Government had agreed cuts in local authority budgets meant that some local authorities were able to make their cuts in the required time only by making them disproportionately at the expense of the voluntary sector, and probably also at the cost of additional expenditure to the public purse in future. Of course, some but by no means all local authorities saw the voluntary sector as a softer target in any event.

The Government’s transitional fund helped that problem to some degree and was a welcome £100 million for a year, but it was for one year only and against cuts that the NCVO estimates at about £3 billion over four years. One of the projects that I visited, the Liverpool Lighthouse project, benefited from the transitional funding. It raised substantial funds itself but also explained that it was simply not realistic to expect it to continue all its activities so successfully in future without continued significant public support. I saw for myself how it was succeeding in helping to educate young people who would otherwise be skipping school, often beginning a life of crime, at great expense to their neighbourhood and to all of us if they follow routes leading to imprisonment. The project was helping to get people off drugs and out of criminal activity through volunteering so that they had at least the prospect of gainful employment. However, the long-term value of such projects is not properly factored into how public expenditure decisions are made at present.

In our commission report, Powerful People, Responsible Society, we called for much greater transparency in how local authorities fund the voluntary sector and how they decide on the best long-term providers of services. Many local authorities are very sympathetic to these points; they want to see a rapid and massive rollout of community budgeting to reduce the problems of allocating expenditure by one part of government without taking into account the effect on other parts. Voluntary organisations always want the Government to help them to co-operate better by sharing services without the unfair imposition of VAT bills if they cross-charge services to each other and try to get best value for money. Above all, there needs to be much greater respect between government at all levels and the voluntary sector.

The compact between the government and the voluntary sector was refreshed at the end of last year. It will help and it must be fully implemented next year, and local authorities should all adopt the recent best-value guidance setting out the reasonable expectations that the voluntary sector can expect in its dealings with them. I hope that the impact of cuts to the voluntary sector will be closely monitored, especially in deprived areas, and that this subject is one to which we will return in future.