Hurd tells charities to expect more private sector investment and ten-year contracts

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Hurd tells charities to expect more private sector investment and ten-year contracts 4

Governance | Vibeka Mair | 11 Aug 2010

Nick Hurd has told charities involved in public service delivery to expect longer contracts of up to ten years, payment-by-result models funded by the private sector, the end of full cost recovery and less money available for grants.

The minister for civil society delivered the news to a group of local charities from Brighton and Hove last month, who met Hurd at the Cabinet Office with their local Green Party MP Caroline Lucas.

According to a representative from Brighton and Hove CVS who blogged about the meeting afterwards, Hurd said community and voluntary sector organisations who delivered public services would have ten-year contracts rather than three but lower unit costs and price-based contracting, ending full cost recovery models.

He also said ways of incentivizing private sector investment in the voluntary sector through payment-by-result bonuses and social impact bonds would be encouraged.

For charities who received grants, Hurd said less money would be available but the Office for Civil Society would develop a central website of grants and funding opportunities.

Hurd also said the Office for Civil Society would start a campaign to encourage more "local giving to local charities" which the government may match-fund.

Directory: Office for Civil Society
Who's Who: Nick Hurd

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David Taylor
Financial Consultant
Cirium Consultants
12 Aug 2010

One of the local authorities I deal with arranged a meeting for a section of their service providers (charities and private companies) to tell them about planning for 25% cuts in funding this year. There were 4 senior staff members from the local authority. When the question was asked which one of their roles was going to go, there was an embarrassed silence. Are we to assume that it will be like previous cuts, nothing seems to affect the jobs of those in local government?

[Reply]

Peter Munro
Director
Scottish Borders Social Enterprise Chamber
11 Aug 2010

Price-based contracting isn't incompatible with full cost recovery, so the statement is rather odd.

The major point about full cost recovery is that by covering costs it at least ensures the provider is able to sustain the service.

Perhaps the minister meant cost-plus pricing.

Cost-plus pricing is often used on government contracts and has often meant that government contracts are over-priced.
Importantly it allows contractors to justify price increases based on cost increases and ensures they get a fixed percentage profit.
There's often no incentive for efficiency, and it tends to ignore the needs of stakeholders.

[Reply]

Pete Bass
11 Aug 2010

"For charities who received grants, Hurd said less money would be available but the Office for Civil Society would develop a central website of grants and funding opportunities."

This sounds like re-re-inventing the wheel.

Does the minister not know about Funding Central which his department already funds? http://www.fundingcentral.org.uk/ and wasn't http://www.governmentfunding.org.uk/ originally funded by ChangeUp/Capacity builders?

[Reply]

Paul O'Donnell
Finance Director
Age Concern Leicestershire and Rutland
11 Aug 2010

Mr Hurd could start by levelling the playing field.
Give charities ths same rights to recover input tax (VAT) as local authorities when delivering the same services. Mr Hurd would also do well to understand the distinction between grants and contracts.
It would appear from the above that perhaps full cost recovery has a different definition to that which I understand. All costs in providing a service are covered, plus every entity has a right to make a profit on the income that it recieves. What is important then is how that profit is distributed or utilised.

[Reply]

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