Payment-by-results statutory contracts are worth £60bn, says Lord Wei

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Payment-by-results statutory contracts are worth £60bn, says Lord Wei 8

Finance | Vibeka Mair | 24 Feb 2011

Lord Nat Wei, government adviser on the Big Society, has said government payment-by-results contracts will be worth £60bn annually.

Lord Wei (pictured) was speaking on new forms of funding for the charity sector at a conference on investing in civil society organised by the City Bridge Trust this week.

He told an audience of charity sector leaders to expect a new era of funding, with government grants being replaced with payment-by-result contracts. He said these contracts will be worth £60bn annually.

However, audience members reflected ongoing fears in the charity sector that payment-by-results models will load too much risk onto voluntary sector providers.

Fiona Ellis, chair of the NCVO Funding Commission and Sara Llewellin, chief executive of Barrow Cadbury Trust, both expressed concern that payment-by-results diverted risk from the government to the charity sector.

Danielle Walker-Palmour, director of the Friends Provident Foundation, added that she thought the Big Society agenda was transferring risk from government to individuals.

Government ministers, however, have insisted that public service deliverers must accept risk in the new government funding landscape.

DWP minister Chris Grayling said this month that it was how business worked:

“Business raises funds to get going,” he said. “They take this risk and then make enough money to cover the costs. That’s business."

Directory: City Bridge Trust | Friends Provident
Who's Who: Sara Llewellin | Fiona Ellis

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James J Paton
Director
I2WE
24 Feb 2011

There's no such thing as no risk in vol comm/charitable sector. Innovation and change, which the sector was perhaps once more known for, until it became so dependent on public sector funds, and during the past 20 years has become de facto largely an arm of government, has undermined the sectors ability to do what it does best - engage with citizens to meet unmet needs or emerging needs/aspirations, as self-interested individuals, or at best, enlightened self-interested individuals to make 'good', and often necessary, things happen - unlike government or business.
Governments, like unfettered markets, always fail the people or themselves, that is why we periodaically kick them out. Bad businesses fail because they are incompetent at what they do. Vol/comms and charities fail because people stop supporting them or their work is done or the people in them refuse to recognise they sometimes run their course and should end.The important dsitinction is that many vol comm/charitbale orgs ususally main tain some values /valued suystem. Public sector lost it a long time ago with most employees, particularly the higher paid only doing the for the money and having perhaps nver had any sense of vopcation or underatdnign what public 'service' means. We of course never expect profit driven business to have any human values, it is not businesses purpose in a liberal free market economy.

[Reply]

Maureen Tilford
GP
NHS
24 Feb 2011

if you look at the huge amount of research, you can see that when people do things purely for profit, they dont perform as well as when they do it just because its the right thing to do.
If you'd like to see this beautifully explained go to 'RSA animate Drive' It is a talk on the evidence for removing 'reward' from the motivation equation. Of course, real evidence is usually not as powerful as dogmatic belief.

[Reply]

Jay Kennedy
Head of Policy
Directory of Social Change
24 Feb 2011

“this is a time of huge transition for the sector…because of the need to move away from government funding to a greater mix of funds from different sources” – Nat Wei, 7 November 2010

“the Government is going to open up £60bn of payment by results contracts that charities can bid for” – Nat Wei, 22 Feb 2011

Need I say more?

[Reply]

Michael Walker-smith
business development manager
Nova new opportunities
24 Feb 2011

I can't believe that the DWP minister seems to ignore the whole purpose of charities and the way they are funded. Businesses are in the business to take risks to earn a profit, charities do not operate this way. In fact donors/grant makers don't expect unnecessary risks and expect charities to have completed some form of risk assessment to ensure that the grant given/donations received are not put into speculative ventures.

Having said all this it is very helpful that such a responsible grant making body such as the City Bridge Trust organise such conferences so that we in the charity section can become more familiar with others, especially, Governamnt, thinking.

[Reply]

Martin Newlan
Deputy Principal
Cumberland Lodge
24 Feb 2011

Surely it is the taking and acceptance of risk that separates commercial businesses from charitable ones. Why would trustees deliberately expose their charities to risk?

[Reply]

Carl Allen
24 Feb 2011
Response to [Martin Newlan]

Agreed, and to just place a bit more context, charities take risk not for financial profit but for non-financial reasons.

And nothing wrong if charities make a surplus for re-investment.

[Reply]

Bob
24 Feb 2011

Smacks of a man trying to justify his position by using big numbers (£60,000,000,000) !!

[Reply]

Carl Allen
24 Feb 2011

The coincidence of charitable objectives and public sector services does not make for charity.

For charity is delivered on the back of grants and donations coming in the form of financial and non-financial support.

That leaves business and government to have an argument about risk and reward to be accepted or rejected in the delivery of public sector services.

[Reply]

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