‘State funding of the voluntary sector needs to change to tackle crisis-driven social care system’

By Alex Fox

The recently-launched joint review of the voluntary, community and social enterprise (VCSE) sector in health and social care is already hearing passionate debates about the best ways to invest scarce resources. The review is considering how local and national government can work with and invest in the VCSE sector to deliver the collaborative, community-orientated and holistic vision for health and wellbeing set out in the strategies and legislation of the Department of Health Health, NHS England and Public Health England. It is a collaboration between those three bodies and VCSE sector representatives and we will report initially to the three bodies’ most senior officials and intend to make the case for more in-depth engagement post-election.

Balance between contracts and grants

One of the key points of debate is about the balance between using grants and using contracts to fund VCSE activity. There has been a steady move away from grants towards contracts, as outlined in the very useful paper which sector umbrella body NCVO put together to inform the review. This shows that, for instance, in 2000 grant funding and contract income were about equal, but in 2010, contracts were four-fifths of VCSE income.

Local grant funding for VCSE organisations was often not transparent or contestable by organisations without the right connections. It was not always tied to outcomes. But increasing use of contracts also reflects risk-averse (or downright wrong) interpretations of procurement law and a narrowing understanding of what constitutes worthwhile impact, which has been exacerbated by the combination of rapid budget cuts and many local decision makers failing to involve VCSE partners in designing local systems. The drift towards contracts appears to mirror the continuing drift of resources from up to downstream; from community and prevention, to acute hospital and crisis reaction.

Building capacity

There seems to be a strong argument for grant funding the work of small and grassroots charities and community groups, and work which aims to build the capacity and voice of communities and excluded groups. Health and care commissioners have a poor track record in defining meaningful outcomes in this area and building a marketplace of strong providers. To address this and deliver a health and wellbeing system, rather than an illness and care system, the VCSE will need to be valued as partners, not merely contractors.

Some VCSE organisations, however, deliver multi-million pound public service delivery contracts, where contestability and rigour around the delivery of tightly defined targets is needed. Here the debate appears to be about which kinds of contracting and procurement processes work for which kinds of organisation and activity. Framework agreements and prime/subcontractor relationships are intended to reduce central contracting costs whilst retaining a diverse provider marketplace. Does this work in practice? Many VCSE are sceptical of payment by results systems, but is this inherent in the concept or simply a reflection of the wrong results being measured? Politicians are getting excited about alliance contracting, where a commissioner contracts with a group of providers who share the risks and rewards: can it offer a balance between collaboration and competition?

Circumventing the rules

VCSE organisations have told us that commissioners who wish to co-design programmes with the VCSE often have to circumvent clunky systems, for instance by repeatedly grant-funding 50-week pilots, which allows risky projects to be co-designed by commissioner and provider through avoiding tighter local rules which apply to projects of a year or longer. This is clearly far from ideal and these attempts to avoid rules are a warning sign that systems may be broken. We’re hoping that both VCSE and statutory sector colleagues, as well as people who use local health and care systems, will help us to identify what could fix them.

Alex Fox is chief executive of charity Shared Lives Plus and the independent chair of the joint review of the VCSE sector. 

Contribute to the review by commenting on its blog.