Minister for civil society Nick Hurd faced a barrage of questions and concerns about how the new government’s cuts and plans are impacting the sector, at a roundtable event organised by the Directory of Social Change yesterday.

Twenty-one charities who had posted comments on the recent Word with Hurd feature in DSC’s enewsletter were invited to attend the roundtable, and ask questions or make observations.

The minister heard about problems with TUPE, competing with the private sector, budget uncertainty and local authority inflexibility during the hour-long discussion.

What follows is a summary of some of the concerns raised and the answers given.

Difficulties with tendering

Stacy Smith, director of women’s advice and advocacy service Her Centre, raised the issue that charities are being told by local authorities that they have to go through a formal tendering process, yet the local authorities themselves are unclear about what their legal requirements are and so are insisting on a more extreme tendering process than is legally required.

“There needs to be some clear guidance for local authorities about what their flexibility is in terms of their legal requirements,” she said. “The government could give that steer, rather than just saying ‘do it all local’.” 

Smith said that by paying lower wages and providing lesser infrastructure, it would always be easier for the private sector to undercut voluntary sector providers, and in the current climate, commissioners will always choose big contracts at the cheapest price.  “You won’t see more voluntary sector delivery unless that’s addressed,” she told the minister.

Nick Hurd said the government wanted to create more space for sector to participate in delivering services, but how this should happen would require a lot more work.  He said a document would be published in the new year which will set out in more detail what the coalition means by reform of public services, and how to reduce the disproportionate bureaucracy charities face. Other challenges the government knew needed to be addressed is how to get commissioners to consider factors other than cash costs, and that if central government tries to get economies of scale by awarding national contracts, as DWP has done, all that falls from the top table to smaller local providers is “crumbs”.

He said government might have to provide a steer to commissioners about funding those organisations that work with the most complex cases, and mentioned the possibility of price differentials for that work.

“These are the discussions we are going to have,” Hurd said. “But our objective is clear – we want to create more space for voluntary organisations to ensure greater diversity of supply.”

Budget cuts and spending timeframes

Kevin Davis, chief executive of community development trust the Vine Trust, explained that the voluntary sector in Walsall in the Black Country was trying to turn a whole area of its town centre into a youth quarter – “very Big Society”.  But its funding from the regional development agency has been cut from £700,000 to £40,000 and the time lapse caused by budget reviews has jeopardised the entire scheme. Main investor Futurebuilders has been told by the government that it has to spend all its money by March next year, yet the Vine Trust cannot physically spend all the money it’s been allocated, within that timeframe.

“Without agreement from the Office for Civil Society that we don’t have to spend all the money within that time period, the project won’t happen,” Davis said. “It needs someone in authority to cut the red and tape and just to say, ‘ok you don’t have to spend all the money by the 31st March’.”

Hurd said he was “happy to look at it” and ask the question.

Transfer of Undertakings for Protection of Employment (TUPE)

Linda Roberts, chief executive of advocacy and support service Wired, outlined the problems created by TUPE, the obligation to abide by an employee’s previous contractual obligations when you take on staff made redundant by other organisations.

“TUPE is a real barrier,” she said. The biggest issue is not salaries, but the requirement to match civil service pension provision and pay sick pay. “If someone’s off on long-term sick leave, that doesn’t change the fact that I have obligations under service level agreements and contracts to provide the service. But I can’t pay two salaries out of the same pot.

“There’s also very little you can do about job descriptions and job roles so you can’t redesign services.”

Stacy Smith added that once a new provider has TUPEed all the staff, this usually means their staff costs go up “and then you don’t get the savings you had planned”.

Nick Hurd said the government was aware TUPE was a big stumbling block, and that the document on reform of commissioning to be published in the new year, would include detail on how to address it.

Funding uncertainties

Phillip Linnegar, chief executive of Hertfordshire Hearing Advice Centre, highlighted the budget uncertainty that is pervading every layer of government funding.

“For the first time ever I am finding that the commissioners on the other side of the table are in the same place as me - they don’t know whether they will have funding in a few months either.  Clients are looking to my staff for reassurance about services and my staff are looking to me for reassurance about their jobs.”

Liz Roe, scheme manager at family support service Home-Start Crawley, Horsham and Mid-Sussex, echoed this problem. “We’ve stopped taking in volunteers who want to work with us because we don’t know if we’ll be around beyond April next year.  The PCT told us that they won’t be funding us next year, because there will be a joint commissioning programme but we’ve have no timetable for it yet. 

“We’ve had letters from the district council and the county council warning of cuts, and the problem is that budgets have to filter down through various councils before they get to us. But by this time we may already have sent out redundancy letters to our staff and are looking at reducing a service which is oversubscribed.  We have volunteers we can’t train at the moment because we haven’t got the capacity, and it just all seems a topsy-turvy way to go about it.” In conclusion, Roe said, those organisations that might be able to rise up and create the Big Society are really under threat.

Hurd said there was recognition within government, and “much higher up the food chain than me”, that there is huge anxiety out there among voluntary organisations about the funding cuts. But he said the Comprehensive Spending Review necessarily meant there was also uncertainty at local authority level about how much funding they would have; “that is the reality of the process”.  However, it wouldn’t be long now before councils did know how much they had to spend, and then reform of the commissioning process could begin properly. 

Hurd also reminded the grassroots organisations around the table of the scale of the task of reform. “You wouldn’t expect us to rush it because we have to get it right. But this is the dilemma we have got – trying to manage it as sensibly as possible.”

Red tape in tendering

Miriam Lantsbury, chief executive of acquired brain injury charity Headway East London, complained about the difficulties of trying to satisfy the tendering requirement of 13 different London councils, all of which had different tendering processes, different pre-qualification questionnaires, and also of trying to secure funding that doesn’t tick conventional boxes.

Headway looks after people with acquired brain injuries, but because there is no neurological category in disability services, many councils simply say no. “How do we ensure that the people making the decisions are flexible and open-minded enough to engage with us in the first place?” she said.

Hurd said he had a “huge amount of sympathy” for her plight and admitted “the onus is on us to do what we can to simplify the bureaucracy, and to work out what we can do to encourage greater standardisation of processes”.

He said there were examples of good practice that could be learnt from, and cited mental healthcare provision in Merton, where the council’s mental health team had realised the current provision was rubbish, and had got the relevant providers around a table to see how they could stop people falling through the gaps. By thrashing out the problems they had managed to “create a net beneath the net” and now had a much better system in place, he said.

In an effort to encourage more of this lateral thinking, and to stop councils “pulling up the drawbridge and protecting their own empire”, the government would be requiring local authorities to publish accounts of how and where they are spending their budgets, “in granular detail”, and the new Localism Bill will contain a ‘right to challenge’ so that councils can be required to justify their decisions.

The government was determined to encourage much greater local flexibility and eradicate the existing “rigidity on the system” which has been driven by too much central government intervention, Hurd added.

Increasing giving from other sources

Ian Clark, from the Church of England, pointed out that the sector was much more than just service delivery organisations and that monies flowing in to the sector was much greater than just statutory funding.  The government hasn’t said much yet about what it planned to do to persuade the public to increase their commitment of time and money to civil society, Clark said.

Hurd acknowledged that while the day’s debate had been focused on service delivery, bolstering the resilience and independence of the sector was actually more important. “Service delivery is just one part of the story, the bigger one is to support that voluntary activity,” he said. “Creating a step change in the giving of time and money will underpin the long-term resilience and independent of the sector, and that is the real goal.”

He said the government wanted to grow the social investment market, by engaging the large amounts of capital in charities’ bank accounts and in institutional and retail portfolios, that is not currently engaged with the sector at all. “We need to tell them that they have a chance of getting their money back but can also make a fantastic difference in terms of social impact.”

He went on: “You may not have heard much from us yet about stimulating more giving of time and money, but we are determined to pull this together into a proper piece of work, together with DCMS, universities, and wider civil society. This is about a big culture change. This work is coming down the track, it goes to the heart of the Big Society.”

He said that currently the UK gives 0.7 per cent of national wealth away in donations – “if we could move that to 1 per cent then we could move billions”.