Eric Pickles’ Mechanism for Passing the Buck

As Secretary of State for Local Government and Communities, Eric Pickles has been long enough in politics to know that his agreement last week with the Chancellor on further cuts to his Departmental Budget for 2015-2016 is the easiest part. Deciding how further cuts will fall on and within Local Councils’ and Voluntary and Community Organisations’ spending is much harder.

Though the Chancellor’s 2013 Spending Review won’t be published until Wednesday 26 June, so far Local Government bodies have followed the Government’s line, typified in Public Finance on Wednesday 29 May 2013:

  • “The Government has confirmed that Whitehall cuts agreed yesterday will not affect Council Funding, which is still being negotiated by the various departments”.

The Local Government Association on Tuesday 28 May 2013 also followed this line:

  • “DCLG has confirmed that today’s announcement does not relate to local government funding, which is still being negotiated between departments. The ambiguity around today’s announcement highlights why in future local government should be much more directly involved in negotiating the settlement.

Perhaps someone should tell them that the seven Government Departments which have so far agreed to further cuts represent a mere 20% of the £11.5bn total sought by the Chancellor?

Institute for Fiscal Studies

The Institute for Fiscal Studies’ observations on The Rapidly Changing State, which accompanied the Chancellor’s Budget on Wednesday 20 March 2013, were unequivocal:

  • “Spending on Debt Interest, Social Security Benefits and Health accounted for just over half of total public spending in 2003–2004, but all bar £14bn of the £125bn increase in public spending is forecast to be accounted for by these components. Real spending on all other areas, including Education, Defence, Public Order and Safety, and all other Non-Health Public Services, is forecast to increase on average by a fairly meagre 5% between 2003–2004 and 2017–2018, and to take up an ever smaller proportion of total public spending”.
  • “The Government is currently making big choices about the shape of the State as well as about its size. On current plans, we are moving ever more rapidly towards a state focused on welfare and particularly on health and on pensions. As the population ages, this focus on health and pensions will become still more evident. However, whether spending a diminishing fraction of national income on other public services is a sustainable choice is an open question.”

The New Local Government Association

Projections like these have already made by the New Local Government Association in Gaming the Cuts: Any Borough in 2018. In its Introduction on page 9:

  • “With the NHS, Schools, International Development and Defence Equipment ring fenced from cuts the savings burden will again fall disproportionately on Councils. Therefore, it now seems likely that Local Government, along with some other un-ringfenced services, will face real terms reductions of at least 50% of expenditure over the period 2011-2012 to 2017-2018”.
  • “At the same time growing demand pressures will become particularly acute in Adult Social Care, and costs will increase by a ‘very modest £7bn’ or about 15% over the decade. As the graph below shows, the funding gap opens out immediately the projections start and reaches £16.5bn by the end of the decade”

In other words, irrespective of the Chancellor’s 2013 Spending Review Statement on Wednesday 26 June, we already know that less and less of the Government’s overall spending will be available for local service delivery by Voluntary and Community Organisations.

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The Pain of Voluntary and Community Organisations

NCVO’s Civil Society Almanac

Already, the pain of the Voluntary and Community Sector is shown in NCVO’s analysis in its detailed UK Civil Society Almanacs for 2009-2010 and 2010-2011. In basic terms, this shows that between these two years, in England alone, around 1,000 Organisations disappeared. Though overall UK Charities real income hardly changed, there was a real terms spending fall of £800mn.

In NCVO’s Counting the Cuts May 2013, further projections are made, based on Compact Voice Freedom of Information Requests in 2012 (more details below):

  • Figure 4 on page 15, even when based on “proportionate cuts”, shows that Voluntary Sector Organisations between 2010-2011 and 2017-2018 could lose £1.7bn or 12.5% of income.
  • Figure 5 on page 17 shows that under a “disproportionate cuts” scenario between 2010-2011 and 2017-2018, the Sector could lose £2.1bn or 15.3% of income.

No wonder that in its Conclusion on page 18:

  • “On balance, NCVO anticipates that austerity policies will continue beyond the 2015 General Election. The depth and pace of cuts may change; but it is unlikely that Government funding of Voluntary Organisations will ‘bounce back’ to levels seen prior to the 2008 financial crash”.

The Compact and Compact Voice

The Compact, December 2010 is supposed to represent a partnership between Government and Civil Society Organisations.

Compact Voice proclaims that it “represents the Voluntary Sector on the Compact – an agreement between the Sector and the Government to ensure better working together”.

Section 3 on page 10 of The Compact includes:

    “Undertakings for the Government:
    “3.1 Ensure that CSOs (Civil Society Organisations) have a greater role and more opportunities in delivering public services by opening up new markets in accordance with wider public service reform measures and reforming the commissioning environment in existing markets.

    “3.2 Consider a wide range of ways to fund or resource CSOs, including grants, contracts, loan finance, use of premises and so on. Work to remove barriers that may prevent CSOs accessing government funding, thereby enabling smaller organisations to become involved in delivering services where they are best placed to achieve the desired outcomes.

    “3.3 Ensure transparency by providing a clear rationale for all funding decisions.”

Despite this, Compact Voice is forced to rely on Freedom of Information Requests to secure information from Central and Local Government in England.

For Local Government, Compact Voice: Local Authorities and the Voluntary and Community Sector, December 2012 shows:

  • Response Rates (page 9): 60 Local Councils (17%) did not reply and 39 (11%) refused to reply to Compact Voice Freedom of Information Requests .
  • Comparisons between 2011-2012 and 2012-2013 (page 22):

    “When considered together, this results in an overall reduction in expenditure with the VCS of £60,711,392 of the 173 authorities (49%) who provided information to enable comparison. This results in an average reduction of £350,933 per local authority, but given the different range of spending involved, does not provide us with a meaningful figure”.

Clearly, many Local Councils in England took little notice when in September 2011, the Department of Communities and Local Government issued its Best Value Statutory Guidance, including page 6:

  • “4. Authorities should be responsive to the benefits and needs of voluntary and community sector organisations of all sizes (honouring the commitments set out in Local Compacts) and small businesses”.
  • “5. Authorities should seek to avoid passing on disproportionate reductions – by not passing on larger reductions to the voluntary and community sector and small businesses as a whole, than they take on themselves..”

So no wonder that Compact Voice: Local Authorities and the Voluntary Sector, December 2012 concludes on page 21:

  • “When using grant funding as a specific example of support for the voluntary and community sector, it is clear that the Best Value Guidance is not being upheld. Compact Voice urges CLG and the Secretary of State to do more to ensure that this guidance is being enforced.”

Reporting on Central Government Departments, Compact Voice: Central Government and the Voluntary Sector, October 2012 is equally depressing. Pages 7 and 8 show that out of 15 Government Departments to which Freedom of Information Requests were sent:

  • 5 refused partially or completely
  • 4 did not respond or supplied no information
  • Only 2 supplied full or nearly full information

The Compact and Compact Voice are supposed to represent the “Coalition Government and Civil Society Organisations working effectively in partnership for the benefit of communities and citizens in England”. But it’s clear to all that Compact Voice is just being given the “run around”. No wonder that James Allen, its departing Head, wrote a farewell piece called ‘The End’ – on Thursday 09 May 2013, which included:

  • “Cuts – no surprises here but clearly set to continue to 2017 and beyond. These cuts, particularly at local level, will start to bite deeper as any remaining easy targets are long gone.”
  • “An era of austerity means more pressure on everyone, with fewer resources. Getting people’s attention and persuading them to work with us is getting more challenging than ever”.

Though all this shows that for Voluntary and Community Organisations the Compact process is not working, Huckfield and many others have noted that the Board of Compact Voice includes ACEVO, Social Enterprise UK, NCVO and NAVCA – all organisations in a position to do something about this sad state of affairs.

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Few Voluntary and Community Organisations have any real choice

Huckfield writes this piece as a strong supporter of Social Enterprise, Cooperatives and Third Sector Organisations, wherever these emerge through genuine democracy and where their governing bodies and employees are all part of a democratic decision taking process. Huckfield doesn’t support organisations’ being forced or cajoled into becoming Social Enterprises.

So against an increasingly desperate background described above, it is dismaying that Social Enterprise UK and others seem to believe that many Voluntary Organisations and Charities have many choices for their future survival.

Social Enterprise UK

Social Enterprise UK’s Survey of Charities, May 2013 shows:

  • “In a survey of more than 100 charities, 92% said they would like to increase their income from trading and government contracts in the next three years”.
  • “When asked how they feel when they hear about social enterprise, 52% chose ‘excited’, 29% chose ‘interested and want to know more’, 12% chose ‘confused’ and only 7% chose ‘nervous’.”

From this Survey, in “Charities Happy to Trade” in Pioneers Post on Wednesday 29 May 2013, Social Enterprise UK Chief Executive Peter Holbrook writes:

  • “The fact that more than half of the Voluntary Sector’s income is now earned through trading (selling goods and services and delivering public contracts), rather than giving through donations, legacies and grants, may come as a surprise to many”.

He concludes:

  • “But it’s encouraging that the research points to a positive attitude, and it’s the job of organisations like Social Enterprise UK and NCVO to provide support and help charities navigate what at first may seem like a long and winding road”.

From this, Huckfield and many others ask a simple question. If Social Enterprise UK really wants to help Voluntary Organisations and Charities to become Social Enterprises, why does it spend so much time propogandising Big Society Capital and Social Investment, which are utterly irrelevant to the real needs of these Charities in their desperate straits?

Bates, Wells and Braithwaite Charity Law Conference, Thursday 16 May 2013

Equally perplexing were contributions at the Bates, Wells and Braithwaite Charity Law Conference, reported in Civil Society where:

  • A delegate from St Andrews Healthcare had been told by Charity Commissioners that calling itself a Social Enterprise would help it win contracts.
  • Another delegate knew of a Charity calling itself a Social Enterprise to apply for grant funding.
  • Stephen Lloyd from BWB was reported as saying that “Social Enterprise enhances the Charity brand.”

‘Hooray Henry’ contributions like these don’t help the cause of Charities or Social Enterprises, especially when Big Society Capital and others want to keep the “Social Enterprise” definition wide enough to include private for profit companies because there are few takers for their Social Investment.

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Enough Pain Already for Voluntary and Community Organisations

If any Social Enterprise ‘Hooray Henries’ still don’t understand the pain in Voluntary and Third Sector Organisations, they should read Michael Bell’s From Cooperation to Competition and Fragmentation in the NCIA Bulletin, November 2012 about the Patchwork Project in Newcastle bidding against Barnardos:

    “There are people still meeting together in order to position themselves as a consortium to win money at the expense of their colleagues, reflecting values focused on competition – in their process destroying other projects. This assumes we can play this game, be canny and become business like – while what in fact we are doing is, firstly, making it too easy for decision makers to choose commissioning rather than use grant aid to allocate what is public monies; and, secondly, exposing ourselves and the neighbourhoods we represent to far stronger competitors”

Is it any wonder that after experiences like this, the trade union UNISON warns its members that Social Enterprises are Bad for Your Health:

  • “Patient care will suffer as the race to provide the cheapest service will affect the quality of care – and teams from different organisations will find it increasingly difficult to cooperate with competitors over a patient’s care”.
  • “If these small Social Enterprise businesses fail, the NHS will not be able to bail them out. This opens the door for multi-national companies to step in, meaning that your healthcare will be run for profit. Any surpluses will go into shareholders’ pockets rather than into improving the service”.

As shown above, especially in England, these are desperate times for Voluntary and Community Organisations:

  • They know more cuts are on the way.
  • They know they won’t get much protection through the Government’s Best Value Guidance or through Local or National Compacts when they see that Compact Voice is being given “the run around” by Central Government Departments and some Local Councils.
  • They understand the difficulties of the commissioning process, so they don’t want to be told that this is their way forward.

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Don’t Forget the Shareholders

Before its survey above, in October 2012 Social Enterprise UK published its own Why Social Enterprise? A Guide for Charities. On page 11 under Structure/Options, the Guide lists:

  • “Limited Liability Company (limited by Guarantee or Shares)”.

So the Guide says that shareholders and for profit companies are OK. On page 15, there is even:

  • “Setting up a Social Enterprise owned by your organisation to generate income for it: You can set up a business that has no direct connection to your
    social mission but generates income that you can spend on fulfilling your social mission”.

Whatever this means, Guide for Charities advertises the services of Bates, Wells and Braithwaite and is written by ‘Social Spider’, David Floyd?

But at least this Guide lets us know clearly where everybody stands. We anticipate eagerly the next posting on David Floyd’s Beanbags and Bullshit site to tell us all where he differs in all this from Social Enterprise UK and Bates, Wells and Braithwaite.

Microscopes and micrometers may be used.

And, Finally

Independence under Threat – the Report of the Panel on the Independence of the Voluntary Sector, published by the Baring Foundation in January 2013, says on page 34:

    “For example, we asked Clive Martin, the Director of Clinks, an umbrella organisation for voluntary bodies working with offenders and their families, about the impact of Government contracts on freedom of action and purpose. He said that Voluntary Organisations were the A&E of society but that, over the last ten years, that part of the sector increasingly saw its role as winning contracts, with the expertise of boards and staff shifting to support this goal. He said that he thought that it was the role and mission of the organisations he worked with to represent those on the margin”.

Survey after survey shows that many small and medium Voluntary and Community Organisations are going to the wall, never to be seen again.

They deserve better than Social Enterprise ‘Hooray Henries’ and wannabes with smart alec tips about trading and earned income. They had 13 years of that from New Labour and the Coalition Government just repeats the same message.

When it comes to cuts, no one has ever called Eric Pickles a ‘Hooray Henry’ or wannabe.

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