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It was a pleasure to speak last night at the Cumberland Lodge and Third Sector Research Centre conference. I was very grateful to both Cumberland Lodge and the Third Sector Research Centre for organising such an insightful programme of events.

The event formed part of what have been a truly informative series of discussions and I was very pleased to be able to join in the debate and offer thoughts and my own experience as Shadow Civil Society Minister. Below is my speech in full:

In many ways, Cumberland Lodge, an educational charity which has been organising such conferences of this kind for over sixty years, gives testament to the innovative capacity of the voluntary and charitable sector in this country – something that I come to appreciate more and more as I engage with third sector organisations every day.

And can I, by way of similar means, highlight the excellent work and research of the Third Sector Research Centre. Having such a dedicated and informed resource is of immeasurable benefit to the encouragement of a healthy third sector and robust civil society. I’m very grateful to be able to speak tonight.

 

Tradition of civil society

We can be very proud that there is a great tradition in our country, from a long time before it was even known as ‘civil society’ and before the term ‘third sector’ had anything like a common coinage, of encouraging and supporting civil society groups and organisations.

Whether it is faith groups, voluntary clubs, social enterprises or networks of community organisations – such organisations have for many years helped form part of the fabric of community life in our country. Such work does not just help the organisations concerned, but creates a greater sense of community life, a social fabric and to me as a Labour Shadow Minister, is a fundamental part of living in a better society.

This is testament to the ingenuity and generosity of those involved in voluntary groups, social enterprises and community organisations – rather than any particular government of the day. But as recent debates around the Big Society have shown, the question increasingly is: what can the Government do to help encourage a thriving third sector? I hope to explore some of these important issues tonight.

Big Society; What the Government is doing

Firstly, I want to talk a little about what the Government is doing. Their ambition, to quote Francis Maude, Minister for the Cabinet Office, is clear:

  • ‘We want to decentralise power and put it in the hands of local communities. We want to open up public services to small and medium-sized enterprises, voluntary organisations and mutuals, and support the growth of civil society organisations.’

In many ways, the Big Society is the Government’s attempt to do this. It is a central tenet of the Government’s agenda; a flagship policy and certainly carries with it the supervision of the Prime Minister.

As part of this, we have seen the establishment of a National Citizen Service, a community organisers programme, the encouragement of growth of organisations such as mutuals and employee-led organisations, a Big Society Bank, a greater emphasis on philanthropy and giving and the opening up of public services to competition. The reality is that although the Government coined the term the Big Society, they did not invent the concept. Indeed, many third sector organisations and voluntary and community groups allude to the fact that this is not a new idea.

I want to say from the outset that the truth is that for volunteers and for charitable and voluntary organisations across the country, the Big Society already exists and has done for a long time. They know that, because every day throughout the country they are already delivering the Big Society in our communities.

Nevertheless, it is certainly true that much of the language of the Big Society builds on a rich tradition in this country of community, localism, reciprocity, co-operation and building a better society for all.

The reality on the ground of the Government’s proposals

However, I want to argue tonight that there is something of a dichotomy between the language of the government – in empowering communities and civil society – and the reality of their decisions on the ground.

The facts behind the headlines give light to this discrepancy. ACEVO (the Association of Chief Executives of Voluntary Organisations) has estimated that the reality is that civil society will see its income cut by more than £1 billion this year, and by at least £2.9 billion per year by 2014/15. The Government has allocated some capital funding and £260 million of capital over the next couple of years is certainly very welcome, but this amount is neither going to fill that gap nor come close to. The reality is that there is trepidation across many in the third sector community for the short, medium and long-term futures. An NCVO survey of charity leaders recently showed that 55% of charity chief executives plan to cut staff and 35% plan to cut services by June.

We are left with the question: if the government is really so keen on establishing a thriving third sector, why are so many third sector organisations struggling unable to cope with such drastic spending reductions and the lack of time available to them in order to plan for the future? Only at the end of last week, the Charity Commission have reported that the number of registered charities has fallen by 1,600 this year, and by 700 in March alone. This number has been relatively stable over the last decade, representing approximately 1% of the UK’s registered charities.

Commissioning and the Role of the State

A large part of the Government’s intentions for the third sector were laid out in its Green Paper last year which set the framework for the modernisation of commissioning. This itself takes forward commitments made in the Coalition Agreement to ‘support the creation and expansion of mutuals, cooperatives, charities and social enterprises, and enable these groups to have a much greater involvement in the running of public services.’

Indeed, the Government’s intention is very clear. It wants to shift the commissioning model ‘from consultation alone to increased citizen and social sector participation within policy development and design, commissioning and (co-)delivery’.

This presents opportunities as well as huge challenges for third sector organisations. As Kindle, the umbrella partnership of national charities led by Community Matters, has stated:

‘The Big Society agenda and public spending reviews will require a shift towards more effective and efficient public services. This shift will require a critical examination of what, how and who delivers public services with a greater emphasis on the involvement of citizens and civil society organisations.’

This context presents new funding streams for third sector organisations that can play a key role in identifying local needs and gaps in service provision, as well as an opportunity for them to shape effective services, deliver the services, and evaluate their effectiveness.

However it will also mean that the annual grant funding streams on which many social enterprises and voluntary and community organisations depend will be scaled back. There are also wider challenges for the third section such as the need to build relationships with local authorities and across the public and private sector.

Nevertheless, I have serious concerns that the Government’s actions, by simultaneously seeking huge efficiency savings whilst reorganising the infrastructure for commissioning, will be to the detriment of local service provision and so the Government must be extremely careful.

We had already begun to place more emphasis on social enterprises and mutuals, particularly in the period post the banking crisis, in order to move towards a more responsive mode for the delivery of our public services much earlier. However, the biggest concern is that we know that communities, particularly disadvantaged ones, do need support from government, and they need this from the state at central and local level, and that actually what is key is putting frameworks of support in place for voluntary and community activity and often need to do this in  partnership with others.

Giving & Philanthropy

What the Government has exerted much time and energy on is the promotion of giving and philanthropy. Certainly, I would never seek to dampen any individual who wants to contribute to charitable and voluntary causes and we recognise that, as part of this, the Government has talked enthusiastically about the need to make progress in highlighting the need to expand philanthropy and individual generosity.

However, this cannot, nor should not be the whole story. Again, we have the language of generosity and reciprocity on the one hand and the reality of the situation on the other. The Government’s proposals put forward in its recent Giving White Paper are likely only to make a modest contribution, and will do little to stem the tide of financial crisis that charities are currently facing. Let us take one case as an example. In the first year of this Government, giving from the wealthiest individuals in society has fallen by £818 million to a total of £1.67 billion, representing a 33% fall. Even after the tax incentives in the Budget, the Government is increasing taxes on charities, who will pay £225 million more this year, and £125 million next year. This again gives us some indication that withdrawing the supportive functions of the state not only has a detrimental effect to the sector, but that philanthropic mechanisms in its place are limited in scope.

Big Society Bank

Examination of the proposals for the Government’s Big Society Bank helps develop this theme. Labour recognises that the Government is, with the Big Society Bank, taking on our idea of a social investment bank – but we also know that it is not going to be operational until much later this year and that the money it will dispense will not make up for the huge amount being lost to the sector through reductions in central and local government funding.

Indeed, it is because the Big Society Bank is unlikely to be operational both before the third quarter of 2011 (or later) and as a wholesale bank, that the NCVO have warned, that there will be a gap in time before any funds can reach the frontline. There are also questions that remain unanswered about the Big Society Bank such as a what form will the capital from the major banks take and it is unclear what working rate of return the Government is expecting to provide to the banks. Not surprisingly, Sir Ronal Cohen, who is advising the Cabinet Office on the creation of the Big Society Bank, has said it may even have to change its name as it may not even be a bank. There are therefore not only serious questions about the operational timetable of the Big Society Bank but how it will actually operate for the benefit and enrichment of the third sector. The Chair of the Philanthropy Review Thomas Hughes-Hallett, also the Chief Executive of Marie Curie Cancer Care, has suggested that there may be a danger that the Big Society Bank could potentially produce a system which encourages vulnerable charities to borrow money with little knowledge of the operation of the financial instruments that the bank is using. This is a lingering worry and a significant qualification that the Government must seek to address relatively quickly.

Work Programme

Although we agree with the language behind the establishment of the Work Programme, we believe that the Government could do more to encourage a resilient and thriving third sector. For example, the Government expects 508 sub-contracted voluntary sector organisations to be involved in the delivery of the Work Programme. The Work Programme, which will run for seven years, is likely to be worth between £3bn and £5bn. It is being run on a payment-by-results basis.

However, this has been criticised by the Scottish Council of Voluntary Organisations because allocated funds has only reached the third sector in a limited capacity. As an Opposition, we supports the principle of the Work Programme but there are concerns that the Employment Related Services Association – which represents almost 85 per cent of the organisations awarded prime contracts to run the Work Programme – said such welfare-to-work programmes could actually reduce by up to a third over several years.

Lack of engagement with the equalities agenda

Perhaps most importantly, the Government has been wholly lacking in giving anything like sufficient respect to the fact that communities do not start from a level playing field, and the Government needs to do more to recognise that some of the cuts have fallen disproportionately on the poorest communities, which therefore need additional support.

This is a fundamental point that the Government has simply not addressed yet: there must be the infrastructure in place which recognises that not all communities start from the same level of local capacity.

Indeed, this was a point ably picked up by the Third Sector Research Centre evidence submitted to the Public Administration Committee, in March, which draws in part from the 2008 National Survey of Third Sector Organisations, which said that:

  •  ‘Organisations in receipt of public money are disproportionately likely to be found in more deprived areas and are more likely to serve disadvantaged groups.
  • ‘If public expenditure were reduced proportionately across the board, the risk is that significant proportions of voluntary sector capacity in the most disadvantaged communities would be affected.’

Most importantly, as the evidence submitted also suggests:

  • ‘The core groups of volunteers are heavily concentrated in the most prosperous parts of the country. They are 2.5 times more likely to be found in the most prosperous decile of communities than in the most deprived decile.’

There are concerns that the Government has not framed support structures which address this question. The Government does refer to the establishment of a Transition Fund, delivered by BIG, the non-lottery arm of the Big Lottery Fund, to help struggling charitable and voluntary organisations but, as many from the within the third sector community have said, it does not reach all charities and, in any case, is hugely oversubscribed.

Uncertainty for the Future

Many third sector organisations have been left with a debilitating sense of uncertainty about their own futures and the future of the service they provide in their communities. As Julie Wilkes, chief executive of Skills Third Sector, has recently said:

  • “Charities have been holding their breath on staff cuts in the last quarter, waiting to hear if their contracts with government will be renewed. The next two quarters will be the real test of the state of the sector as they include the end of the financial year.”

But the conditions in which such organisations operate are being choked off; this is not the Big Society that the Government have talked about, but a weaker and more diminished one.

Conclusion:

We have to have confidence as a country to work with the third sector, collaborating as partners where we can, and give support to the vast number of such organisations that contribute a huge amount to our communities across the country. We, too, recognise the need to explore how to make commissioning more community-orientated, and we therefore welcome the debate has begun in government about how to commission services with greater involvement from the third sector as well as local communities.

The third sector has shown time and time again its incredible ability to innovate and take on new challenges to achieve much more than individuals alone or well-intentioned local authorities or governments.

As an Opposition, we want to see strong, well-resourced public services that are able to partner with the third sector. We also see a key role for social enterprises and mutuals in improving service delivery, and a key role for community organisers in helping communities to articulate their needs and shape services.

Communities require different levels of resources and input, and if social enterprises, voluntary and community organisations are really to be empowered to shape and deliver the services that they want, then I think we need a framework and a timetable in place to deliver that that is simply not there at the moment. It is my contention that the Government is lacking a properly worked out plan to implement the Big Society across government. So that is the challenge to the Government on the third sector.

And if we as an Opposition seek are to achieve a fairer, more just and more progressive society, then we must trust, support and harness its talents

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