Building the Big Society

The coalition’s Big Society concept may be criticised as vague and poorly communicated, but it is built on firm foundations. The voluntary and community sector (VCS) – which Labour called the ‘third sector’, and the coalition calls ‘civil society’ – already spends £147bn in the UK annually, according to a recent report from think-tank ResPublica, delivering nearly £33bn of services to the NHS alone.

Across many policy areas, civil servants already understand the benefits that organisations in the VCS can bring to policy outcomes. The coalition’s agenda for public service reform, however, will require new partnerships to be built – both with existing parts of the VCS, and with new entrants such as the public service mutuals currently being trialled by the Cabinet Office, or non-departmental public bodies (NDPBs) and agencies being moved into the charitable sector.

This agenda will require new ways of working to make it easier for VCS organisations to engage with service delivery, policy formation and even scrutiny of government, as well as support for the VCS to take on functions previously carried out by government.

Given the need to support the VCS as it considers how it might take on new roles in the Big Society, it’s worrying that research by the National Association of Voluntary and Community Action (NAVCA) suggests that VCS organisations were disproportionately affected by cuts made to achieve the £6bn ‘in year’ savings set out by George Osborne in May.

Oliver Reichardt, head of the Compact team at Compact Voice, an association of voluntary organisations promoting adherence to the Compact (see box), says some charity and community groups are “questioning how on earth the government expects the Big Society to be implemented when all the groups they’re claiming to support are being cut left, right and centre”.

A strategy for civil society

“We understand the government has to make cuts [but] we would hope they would do it strategically,” says Reichardt, adding that public bodies should consider the overall value of services and consult with the VCS on the best ways to make cuts.

These concerns are acknowledged, and to some extent addressed, in a strategy document released by the Office for Civil Society (OCS) earlier this month, which said: “The government recognises that this is a particularly challenging time for charities, social enterprises and other voluntary organisations. Demand for services has risen through the recession and the funding environment has got even harder. Badly handled public sector cuts could significantly alter the ability of the sector to nurture social capital and support some of the most vulnerable people in society just at a time when we want to build that social capital and encourage those local support networks.”

Nonetheless, it’s clear that funding to the VCS will be reduced. A report published this week by think-tank New Philanthropy Capital said charities should expect to see a fall of between £3.2bn and £5.1bn in the grants they receive from Whitehall and local authorities. At a meeting of the All-Party Parliamentary Group on Civil Society and Volunteering last month, civil society minister Nick Hurd indicated reductions in funding are not just about budget-cutting, but due to a more fundamental philosophical concern about the voluntary sector’s “growing dependence” on state funding. “In the long term, the government should be a catalyst for enabling charities to get resources from non-state sources,” he said.

At the meeting, Hurd indicated that an upcoming review of VCS infrastructure development organisations – which has now begun with a consultation launched alongside the OCS’s civil society strategy – would result in less funding overall to these bodies. Yet there is a tension here: many of these bodies, which provide advocacy, support and advice to other VCS organisations, were established to build capacity within charities so they could compete for funds and contracts, and thereby become less reliant on state resources. Indeed, the previous government actively helped some of these infrastructure bodies to supply their VCS colleagues with benefits such as IT equipment and business skills training.

The OCS strategy document suggests a different approach to helping the VCS attract funds from new sources. Its ideas include plans to establish “a community fund”, designed to channel money to local groups and funded by “making it easier for consumers to donate to local good causes through restaurants, shops and other retailers”.

Getting to know you 

While the OCS considers new ways to fund and support community groups, civil servants across the rest of Whitehall will need to consider how they can build good partnerships with civil society organisations – both to deliver better services, and to achieve the coalition’s policy of localising decision-making.

Key to these partnerships will be a better mutual understanding of how organisations in government and the VCS work. Lord Mawson, a veteran social entrepreneur who set up the Bromley by Bow Centre (BBBC), which provides a range of health, education and social services to over 2,000 people each week, believes civil servants should spend more time working with social enterprises to understand the on-the-ground realities for community groups.

There are plenty of opportunities for secondments, he says, but the nature of civil service career development can detract from their value. One secondee, Lord Mawson remembers, worked with BBBC for a long time; he “really got to understand the details, and gained a lot of knowledge about the VCS on the ground”, but was placed, on his return to the civil service, in a team working on mining policy. “The public had been paying for this person’s salary and to then not use that person in areas that were relevant seemed to me not very wise and not a good use of public funds,” concludes Mawson.

Part of the reason for the civil service’s current low level of understanding of the VCS is the size of and variation within the voluntary sector. Some bits of government may have good relationships with some larger organisations, and these will continue to be important, but it may well be the smaller community groups which are best placed to contribute to the aims of localising and joining up service delivery.

Setting up a blog is one way to be as open as possible to all partners, says Simon Berry, who now works for international development charity Cola Life but was previously head of the Department for Environment and Rural Affairs (Defra) third sector team. “With a blog, anybody can ask a question, or say: ‘We’re doing this wonderful project. Can we put it on your blog?’ So you get this much richer level of interaction which doesn’t overload the system,” he explains. The blog he established at Defra is structured to mirror the department’s VCS strategy, so it can also be used as a reporting tool to monitor progress against the various commitments.

Berry also led work to get Defra involved with a work-shadowing scheme run by the National Council for Voluntary Organisations (NCVO) to spread knowledge of the VCS around the department. Launched last year by the NCVO and the Department for Communities and Local Government, the scheme this year expanded to include Defra, the Ministry of Justice, the Home Office, and the Office of Government Commerce, and a total of 388 people were paired up.

Berry describes it as a cost-effective and “absolutely brilliant” way to spread understanding about VCS. “We expected to work hard and get 50 people signed up – in the end we got 70 – more than any other department,” he says.

Silos and regulations

There are many structural reasons why it’s hard for the VCS to work well with government. Mawson is especially critical of the lack of joined-up working – or even joined-up thinking – between government departments and agencies. This, he says, can make it hard for community groups which address a number of different issues and are therefore in contact with various arms of government.The BBBC, he says, receives 75 funding streams, “a large proportion of those coming in from government”, which all operate different reporting structures and periods. “A simple thing would be to have a standard form that had the same reporting period [across government],” he says. “It may seem nothing, but actually to those of us who have to deal with this bureaucracy, simple little things like that could be really useful.”

Mawson is cautious about the coalition’s focus on the Big Society, fearing that the structures and inertia of the civil service will undermine it. “There is a lot of interest from politicians, and that’s great, but [social enterprises] can only help politicians if underneath them the civil service comes to grips with the problems that established projects like BBBC are having.”

In a move that may help address some of these concerns, the OCS has asked Lord Hodgson, president of the NCVO, to chair a “taskforce that will recommend specific ideas to reduce the bureaucracy and red tape for charities, social enterprises and voluntary organisations” – another announcement in the strategy. One particular area of bureaucracy the new OCS strategy mentions is that associated with “applying and reporting for public money”. This forms part of a wider consultation on commissioning reform outlined in the strategy, which will consider how to ensure “the most effective and efficient charities, social enterprises, mutuals and cooperatives have a much greater involvement in the running of public services”.

One question the consultation will address is how commissioners can take account of social and environmental benefits in their decisions. As Mary Rayner, head of policy and research at Co-operatives UK, says of services provided by mutuals: “They aren’t necessarily going to come in at the cheapest but they offer a very different model where there is real ownership – and that can bring benefits that don’t necessarily come out on the bottom line.”

Her remarks hold true for many kinds of VCS organisations, and Rosie Anderson, head of policy and research at Community Matters, the national federation for community organisations, says that a better understanding of how to measure social value could help government to work more effectively with the VCS. It’s an area where the VCS could do more to “lead the field”, she says. Community Matters is currently piloting a tool with Durham County Council to demonstrate social value.

“One of the problems with this is that people get quite hung up on finding the perfect metrics for social value,” she says. “We think you’re never going to find the perfect metric, so we’ve tried to create something which is a ‘good enough’ tool.” Developing these kinds of tools, or adopting existing ones and accepting their limitations, will be key to building more informed partnerships between government and the VCS.

Paying the piper

The consultation into commissioning reform was welcomed by most of the VCS professionals CSW spoke to. Commissioning processes present perhaps the biggest systemic problem preventing effective working between the sectors, and not just because they are often too lengthy and expensive for smaller groups to engage with.The trend towards larger contracts can also restrict entrants. Anderson gives the example of the Future Jobs Fund, which funded employers to create jobs in areas of high unemployment. It was “a wonderful opportunity”, she says, and many medium-to-large third sector groups got involved – but guidance for the fund said it was “unlikely” that bids creating fewer than 30 jobs would be considered – an unachievable number for many small organisations.

“They were told to form consortia,” says Anderson, “but unless you’re already in one – which most of our members aren’t – you’re going to struggle to do that in the timeframes required.” Anderson believes that one way around the problem would be to allow contractors to take on “what they can deliver and deliver well, as opposed to restricting bids to people who can deliver the whole project”.

Another concern is the increasing emphasis on payment by results, she says: “It’s a risky way of earning money, and it requires an upfront investment that can be quite hard if you’re a small organisation – or even a group of small organisations – with very few ways to leverage inward investment to your organisation.”

Barney Mynott, policy and communications manager at NAVCA, raises as a further concern the “steady decline in grant funding”, which he sees as “vital for supporting the smaller local groups and helping them grow eventually to be in a position where they can bid for contracts”. The coalition’s answer to this problem is the Big Society Bank, which, it is hoped, will provide investment for these kind of ventures – but this won’t be so relevant for smaller groups, suggests Mynott, and the sector will need a mix of funding sources to thrive.

Building better relationships

Mynott highlights the Department for Work and Pensions’ Merlin standards – developed to improve supply chain management of prime contractors, in response to the concerns of VCS sub-contractors – as an example of a good way in which departments can support the VCS to deliver public services.In a briefing for NAVCA, Merlin project manager Lucy Williams said the standards take into account ‘softer’ behaviours such as how prime contractors help to build capacity in smaller organisations, and will help to “stamp out malpractice such as dropping sub-contractors named in bids after the award of contracts without DWP’s permission, and passing excessive amounts of risk down the supply chain.”

The standards were developed with partners from the VCS, and meeting them will be a requirement for organisations bidding to be on the DWP’s framework for Provision of Employment Related Support Services. Meanwhile, the department is developing a website to share best practice and commercial opportunities, and an independent mediation and arbitration service to settle disputes between providers – though it’s not yet been decided how and by whom this function will be carried out. The standards are being piloted until next July, when, Williams told CSW, it is hoped that the industry will take over the management and regulation of the standards in a ‘co-regulatory’ model.

This kind of work, which builds on cross-sector partnerships and encourages the private sector to support the VCS, sits firmly within Hurd’s vision of government as an enabler rather than a direct funder; and there are other, similar ways in which civil servants might encourage businesses to work with the VCS to achieve policy outcomes. Some of them, however, might require a more interventionist stance than the coalition – with its focus on deregulation and small government – would like.

Martin Harper, head of sustainable development at the RSPB, gives an example of a 2004 change to rules on water pricing which allowed water companies to invest in upstream land management to purify water. The RSPB worked with one water company to develop agreements which paid farmers to manage their land in a more sustainable way that would improve water quality.

“That is very much a partnership between private companies, state and non-governmental organisations,” he says, “but that required the rules to change. Government is going to have to be prepared to intervene, and sometimes a regulatory fix which looks like ‘big government’ could actually deliver you some big wins and be much more bureaucratically efficient.”

Whether the civil service and VCS can work effectively together to build a stronger
civil society while diversifying and improving public services will depend in part on the willingness of both sectors to develop a deeper understanding of their partners; in part on reforms to the structures of commissioning and procurement; in part on careful analysis of how spending cuts might affect civil society. It may also depend, however, on the willingness of ministers to approve and enact measures which would facilitate new funding from, or effective partnerships with, the private sector. This provides a possible way for civil servants to square the circle presented by the coalition’s desire to build the capacity of the civil sector without making it reliant on state support.