Social care charities must adapt to survive spending cuts

Social care charities will need to become less reliant on public funding or go into partnership with each other to win public contracts if they are to survive a "maelstrom" of government cuts and funding changes.

By Mithran Samuel on October 15, 2010 in Adults, Mental Health, Social care leaders, Workforce

Social care charities will need to become less reliant on public funding or go into partnership with each other to win public contracts if they are to survive a “maelstrom” of government cuts and funding changes.

That was the message from a report launched today by think-tank New Philanthropy Capital (NPC), and it comes despite the government’s Big Society agenda to increase the sector’s role in public service provision.

NPC predicted that tomorrow’s comprehensive spending review would result in cuts of 25% to 40% in government funding to charities, with social care, children’s services or domestic violence charities funded by councils particularly at risk.

Councils were warned not to “pull the drawbridge up on the voluntary sector” by slashing funding, in a speech last week by decentralisation minister Greg Clark.

But the NPC report said: “Social care is one area that will be heavily affected by local authority cuts. Local authority funding will be slashed, so charities with local authority contracts will be under pressure to reduce prices or may even lose contracts.”

It said some care charities funded by councils and the NHS were “finding themselves caught up in lengthy and protracted negotiations on who will pay for what” as public money became scarcer, while council commissioning methods were also in flux, causing “confusion” for charities.

Government plans to move towards paying providers by results in contracts, which will affect welfare, substance misuse, criminal justice and mental health services, will create short-term cash flow problems for charities.

NPC said charities would have to change their strategies, including through reducing reliance on public service provision and investing in low-cost volunteer-led activities, or partnering with each other or private sector providers to win contracts.

It added that charities also needed to do more to demonstrate their effectiveness, but said both government and other funders were still failing to fund good charities’ efforts to evaluate their impact.

In his speech last week, Clark praised the voluntary sector’s contribution to social care and tackling worklessness, and said the coming cuts made the innovation charities could bring to service provision even more important.

He said the government’s forthcoming Localism Bill would include opportunitities for community groups to challenge the way councils delivered services, which he said could open up more opportunities for the voluntary sector to take over provision.

His speech coincided with the launch of a government strategy to support voluntary groups, which also stressed ministers’ desire to open up the delivery of public services to more competition, increasing charities’ role.