Charities foot £118 million bill for running public services

Finance | 1 Apr 2007

Voluntary organisations in Scotland are subsidising local government to the tune of at least £118 million a year in overhead costs for delivering public services, according to a report commissioned by the Scottish Executive. More than 70 per cent of voluntary organisations, which have contracts with public bodies, are not being reimbursed the full cost for delivering services.

The Scottish Executive signed the Scottish Compact agreement, which committed it to the principle of full cost recovery, in 2003. Nearly 30 per cent of Scotland's 50,000 voluntary organisations have contracts to provide services for the public sector.

Gavin Yates, head of communications at SCVO, said that £118 million was a rather conservative estimate and that it could well be much more. He added: 'The news of charities removing themselves from unsustainable contracts is starting to become a recurring theme and while local authorities and other commissioning bodies see the voluntary sector as a cheap option, rather than recognising the added value a voluntary sector approach brings, then this trend will continue. Action needs to be taken by government at all levels to ensure that quality services to vulnerable groups are fully funded and that we end the expectation that voluntary organisations must raid reserves to continue to support vulnerable people.'

The Scottish Executive said the responsibility lies with local authorities. Its spokesperson said: 'The Executive funds national bodies and is committed to predictable outcome funding which recognises the full extent of direct costs. Ministers have said repeatedly that they expect to see a similar approach adopted across the public sector, but it is ultimately for local authorities and other commissioning bodies to decide on local priorities. We strongly agree that the sector should not subsidise public work.'

Directory: SCVO

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