There are arguably two priorities at the heart of government: deficit reduction and the ‘big society’, and there are obvious potential tensions between the two. It is true that government is significantly reducing public spending on the voluntary and community sector at the same time as ambitions for what the sector will do in future are growing. The VCS has been hit by significant reductions to statutory funding at the same time as challenging economic circumstances, including significant reductions in giving and the combined hit of a VAT increase and the ending of transitional relief on Gift Aid.
The Counting the Cuts report launched in August is our best attempt at identifying what the overall impact of reductions in public spending will be. Our report shows that:
• The UK voluntary and community sector will lose around £911 million a year in public funding by 2015-16.
• This means voluntary and community sector stands to lose £2.8 billion from government over the current spending review period running from 2011-16.
Crucially, we know that these are likely to be very conservative estimates and that the real totals could be much higher. Also, some parts of the sector are in receipt of greater levels of state funding than others – including education, employment, training, advice, advocacy, social services and housing. This means that the impact will fall unevenly across the sector and across the country. These same parts of the VCS that have higher levels of state funding often tend to be where demand has risen the most and where fundraising to replace lost income is difficult, if not impossible. There is no pain free, quick or easy alternative in these areas and the reduction in state funding is undeniably having an impact. It’s important to remember that the VCS invests considerable time, expertise, energy and resources in preventative services. Without these, there will be inevitable future costs, often to be borne by the state and wider costs for society.
It is true that the VCS has seen levels of funding from the state increase considerably in recent years. This isn’t, however, because the state became incredibly generous toward the sector but because there has been a growing recognition of the unique skills and attributes of the sector in shaping and delivering high quality public services. That’s why 75 per cent of the money that the state spends on the sector is for paying for services delivered under contract. Those contracts are usually won after a highly competitive process, where a voluntary sector provider has beaten the competition to win the contract.
NCVO has never argued that our sector can, or indeed should, be immune from spending reductions. We recognise that cuts have to be made and we’re realistic enough to know that our sector should take a share of responsibility. We also recognise and support the government in many areas in which there are greater opportunities for the sector, including in delivering public services.
The problem, however, is not just in the overall amounts being cut but how the cuts are being implemented. It isn’t reasonable to expect organisations to be able to adapt to vast changes in their funding with little or no notice. The reality is that many organisations are having to close their doors altogether or to scale back their activities and that will have knock-on economic and social consequences. We realise that there will be some pain as part of this process and we know that, in common with all parts of the economy, there is room for efficiency. We support efforts for the sector to collaborate and to come together to do what we can with more limited resources. All we ask is that the impact of cuts is mitigated where possible to allow the VCS to play its vital role in society and to ensure that more good organisations are not lost due to short term, sharp reductions in spending.
Whether this exercise is called the ‘big society’ the ‘Good Society’ or anything else doesn’t matter to us nearly as much as wanting to still be here in future to serve our beneficiaries.
Our cuts report is available for download on the NCVO website . We’ve also recently published our ‘seven deadly charity myths‘
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James Allen is policy manager at the National Council for Voluntary Organisations and is co-author of the Counting the cuts report. NCVO is the largest membership body for the voluntary and community sector in England with over 8,300 members.
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