How will Government cuts impact on services provided by local authorities?

The impact of the recession since 2008 has long been a major concern to the charity sector; particularly for those involved in social care, health care and support for vulnerable people.

A report from the Joseph Rowntree Foundation (The cost of the cuts: The impact on local government and poorer communities, to be found at http://www.jrf.org.uk/publications/cost-cuts-impact-local-government-and-poorer-communities) has brought this issue into sharp focus and raised some serious questions about the future. The report was published in March, before the first 2015 Budget, but its overall findings will continue to be relevant to the funding and activities of the voluntary sector over coming years.

The theme of the report is the impact of Government cuts on services provided by local authorities, and thereby on the people who depend on them. The report identifies six ways in which the cuts affect the voluntary sector:

  • direct cuts to the funding of voluntary organisations affecting staffing and services
  • funding losses leading to more ‘entrepreneurial’ activity, concern about ‘mission drift’ and commercialisation
  • new contracting arrangements stifling entrepreneurial activity
  • relationships changing between voluntary organisations and also between voluntary organisations and public agencies
  • expanding workloads as the result of stepping in to fill the gaps in council services
  • a new level of involvement in capacity-building to facilitate active citizenship.

Many voluntary sector organisations are funded by local authorities, but even where large parts of the funding come from elsewhere a reduction in local authority support has a large knock-on effect. The report gives the example of a counselling charity that received money from the local council, the health board and Children in Need. When the local authority stopped its £10,000 annual funding, the health board stopped its matched funding, as a result Children in Need assessed the charity as too high-risk and stopped its grant of £67,000. Luckily, the charity was able to change its model and start making money from providing training for which it is able to charge. However, that type of response can lead to the second problem above.

While many voluntary sector organisations have found a move to a more entrepreneurial model of fund-raising liberating, giving them greater independence, others have found that it diverts scarce resources away from the delivery of the service. A whole new set of skills is required and organisations who depend on volunteers will recognise that the time of volunteers is a precious resource. They may not want to divert that resource away from providing services.

Where some voluntary organisations have found a move to different funding models liberating, others have had the opposite experience. Where reasonably broad service level agreements are replaced by contractual arrangements, the new contracts may be more prescriptive and leave less freedom for innovation for the charity.

The reduction in funding from public sources has increased the move towards partnerships between voluntary organisations, but this is also seen as having mixed results. One view which has been expressed is that collaborating to submit funding bids can lead to attempts by charities who are not a natural “fit” trying to work together. There is also an increase in competition between charities for a diminishing pool of funds. As a result, there could actually be a reduction in partnership working.

One of the main concerns for voluntary organisations is that, as local authorities reduce their level of services, the voluntary sector has to step in to fill the gaps. This has always been part of the role of voluntary organisations, but increasingly they have to assume the role of “lead professional” in complex cases, including families with children on child protection plans where in the past statutory care would have been provided. The increased training needs for voluntary sector staff are not matched by increases in training budgets.

Finally, where in the past staff from the local authority might have taken the lead in “capacity building”, this role is also now falling to the voluntary sector. By “capacity building” the report is referring to encouragement, training and direction given to community self-help groups. Where council provision is reducing, more dependence is being placed on such “self-help”, but there still needs to be an overall plan to accomplish this.