Government spending with charities plateaus as more goes to private sector

13 Dec 2018 News

Central and local government spending with charities has stagnated in recent years, while private sector procurement has increased, according to a new report.

The Institute for Government (IfG) report quotes NCVO data that shows charities received just over £12bn from central and local government in 2015/16, a similar amount to 2008/09.

Meanwhile, the report says, central government procurement overall has risen by £21.8bn between 2010/11 and 2017/18, while local government spending has grown by £3.9bn in this time.

In particular, the report says government spending with large outsourcing specialist firms such as Capita, Carillion and Amey, known has “strategic suppliers” has increased greatly in recent years.

Capita income from government bodies rose by over 50 per cent from under £800m in 2012/13 to more than £1.2bn in 2016/17.

Meanwhile, government procurement spending on Carillion and Amey more than doubled in that time.

The IfG report says many charities are effectively subsidising public services by running a deficit on statutory contracts and says that the largest charities are running the biggest deficits.

It says: “In recent years, a number of charities have closed due to losses on government work, most notably 4Children and the Lifeline Project. Like Carillion, both had grown quickly by winning contracts but were unable to generate sufficient returns to service the debt they had incurred to support their expansion.”

‘Better data needed’

The main recommendation the IfG makes is that the government should collect more accurate data on its procurement spending.

The report says current data is poor and that better data will enable the government to make better spending decisions, will lower prices, improve accountability, create new markets and expose corruption.

It calls for the government to appoints a chief data officer “as a matter of urgency”, who should develop a national data strategy which will include a plan for publishing usable data for every stage of the contracting process.

The IfG recommends that the publication threshold for monthly spend data from central government and NHS bodies is lowered from £25,000 to £500.

It also called for contracting authorities to require providers to publish all subcontracting opportunities worth over £25,000.

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