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When home secretary David Blunkett unveiled the Treasury's The Role of the Voluntary and Community Sector in Service Delivery last week, he wasn't pulling any punches over the enormity of the task ahead.

For the review and its 42 recommendations set out an ambitious plan to, as Blunkett put it, "reinvent" the ability of the sector to plan and deliver local and national services.

The three-year blueprint aims to enable the voluntary sector to play an increased role in public service delivery. It will also invest in the sector's infrastructure, change funding arrangements, and create a more stable partnership with statutory organisations.

Nearly half of the £188m grant allocated to the government's active community unit is to be used to implement the plans, helped by a further £125m for the creation of the "futurebuilders" scheme, which aims to help voluntary groups in their work with the public sector, announced in July's spending review.

It promises to fundamentally change the way voluntary and community organisations work with local authorities, health trusts, learning and skills councils, and Connexions.

To enable this to happen, the government is going to reform its "compact on relations" with the sector and encourage compacts to be set up locally. Established in 1998, the compact sets out codes of good practice, but according to some it lacks teeth.

"The compact has often been ignored and the knowledge of it at voluntary and community sector and government level hasn't been there," explains a spokesperson for the National Council for Voluntary Organisations.

"It needs more of a public commitment by the government as where it has been implemented it has been working well," he adds.

Trevor Hazelgrove, chairperson of the National Association of Councils for Voluntary Service, says strengthening the compact marks a "cultural shift" in the way the government and the sector work together. "I believe the NACVS network should be seen as its champions," he adds.

The Local Government Association will be working with the active community unit and the deputy prime minister to increase the number of compacts.

But there are mixed views from councils on the compact, says LGA community and voluntary sector project officer Dave Evans. "It's seen as a useful tool for defining the relationship between the two sectors but the real test of it is what the relationship is like. Where it works successfully is when it's frank, open and mutually beneficial," he says.

A number of people also believe that the compact should be the basis for an arbitration service that could adjudicate on funding decisions between local authorities and the sector. NCVO runs a compact advocacy service, which takes up cases of voluntary organisations that have problems with government providing advice and support and lodging complaints with departments.

"There's good practice guidelines around funding arrangements and working practices in the compact - arbitration could be a place to go if they were breached," says John Routledge, chief executive of umbrella body the Urban Forum.

Evans shares this view, but says local compacts act as an arbiter already. "If relationships are working properly it shouldn't require arbitration, but we're dealing with a lot of organisations and there's going to be instances where it's going to be an appropriate way to go," he explains.

Krishna Sarda, chief executive of the Council for Ethnic Minority Organisations, is "dead against" the idea of an arbitration service.

"Both sides would invest time and money into fighting each other. We need more transparency, and for councils to develop key priorities and work with partners to deliver them."

Two problem areas the government has tried to address are recouping the core costs of delivering services and the restrictive nature of contracts.

By 2006, all government departments should ensure that the price for contracts reflects the full cost of the service, including overheads. The sector hopes this will finally banish the idea that it is a cheap alternative to statutory organisations.

Sarda believes most voluntary and community organisations are so desperate to win contracts they don't realise the full cost of providing services. "We need access to information and knowledge, provided by the local authority, that reflects the true costs," he says.

But John Routledge at the Urban Forum says this is na‹ve. "It's a great idea, but realistically if you're commissioning public services you have a very limited budget," he adds.

Instead, he believes organisations should concentrate on the skills they can provide which the statutory and private sector can't.


Trying to move away from one-year contracts is also critical if they are to develop continuity and experience of delivering services, and costs are to be kept under control.

"Maybe local authorities are taking a more longer-term view than previously. If the voluntary sector is to develop we have to tackle the way contracts are planned," says Evans.

The extra investment coming as a result of the review will aim to build much needed capacity in the sector. Even some of the bigger organisations rely heavily on grants, while infrastructure is also weak.

Later this autumn, there is to be a review of the sector's infrastructure with a strategy in place by next summer. An advisory group is going to be set up and organisations consulted at four regional meetings.

The active community unit will be working on the consultation which should identify where support is needed to build capacity.

"We're going to be looking at second-tier support such as what the leadership and management skills are like," says a unit spokesperson.

Hazelgrove says voluntary and community organisations have felt the pinch more than most from the rise in service users' expectations.

"There's increasing demand on our services combined with a reduced amount of money, which in turn puts pressure on our infrastructure," he says.

Sarda says 70 per cent of the 9,800 voluntary and community organisations it has contact with are struggling with very old IT equipment.

"Those that deliver services on the ground often do it with poor equipment. If the review doesn't achieve long-lasting change then it will compound the problem," says Sarda.

One of the spin-offs from expanding the sector's capacity would be enabling smaller non-statutory organisations to get more involved with shaping local services.

"They just want to know who to talk to when the services aren't working properly. They want to be involved in the planning and evaluation of services," says Routledge.

For many of the voluntary sector organisations working with ethnic minority groups, a change of culture is also needed if smaller groups are to be given a louder voice.

Sarda is critical of local strategic partnerships and believes they must do more to engage minority groups. "The language of local government hasn't changed and this can sometimes prevent people from participating in discussions. We need to create pressure on a local level to get our voices heard," he adds.

Ultimately, however, most agree that what will make or break the reforms will be the willingness of local authorities to embrace change.

Hazelgrove says the compact provides both sides "neutral territory" to work on. "Voluntary and community organisations need to understand the pressures on local authorities as much as they need to understand about our pressures," he adds.

Others believe councils need to be given incentives to engage more with voluntary and community organisations. "I'd like to see central government match local funding arrangements," Routledge says. "Without councils' co-operation and assistance nothing will work."

- The Role of the Voluntary and Community Sector in Service Delivery at www.hm-treasury.gov.uk

Consultation meetings: 30 September, Somerset County Cricket Club, Taunton; 9 October, Centre for Life, Newcastle; eastern England 14 October, venue to be confirmed; West Midlands 12 November, venue to be confirmed.

Main government recommendations

• Deputy prime minister and the active community unit to produce a tool kit to help councils assess voluntary sector capacity and strengths and weaknesses.
• A senior official in each government department will "champion" the compact agreement.
• Increase the number of local compacts and evaluate existing ones.
• Reduce the barriers to voluntary and community organisations in delivering and shaping local services.