10 Steps To Transformation

8. Help the social sector to help you

Ruth Puttick - 03.11.2010

As cuts are made and pressure on public services mounts, it is increasingly recognised that charities, voluntary groups and enterprises will be central in creating the public services of the future.

As our work has shown, social enterprises and charities are more integrated into the community and often better understand local need, providing an effective source of resources and innovative responses to social problems. Take the Northern Way pilot, for instance, which brought together a number of community organisations together to effectively tackle worklessness amongst hard-to-reach people. The UK government typically spends up to £62,000 on getting the average person on incapacity benefit back to work, but the Northern Way pilot cost less than £5,000.

Yet with government funding making up 38% of the UK charitable sector’s income, and 13% of charities getting half their income from government, charities are going to struggle to step into the central role that the Big Society has reserved for them without additional support. The Transition Fund announced to support charities facing “real hardship” may help to some extent, but there is little point developing the capacity of innovative charities if their innovative solutions cannot be incorporated into mainstream public service delivery. Rather than the state pulling back, the success of these approaches depend upon mainstream public service providers working in partnership with the social sector – something that has traditionally been notoriously difficult.

Many organisations in the social sector – and even small businesses -struggle to access public service contracts. They are seen as small scale, risky or marginal, and subsequently the demands of public contracting – such as track record of experience, size of contracts and transaction costs - tend to favour large over small suppliers. If the social sector is to be able to engage with public services, then a shakeup of funding streams and a simplification of procurement is needed, something that the newly announced Backing Small Business initiative is trying to tackle.

It is vital that the organisations that can save money in the long-term are not seen as an ‘easy target’ in a time of cuts. To provide better, cheaper public services we need to open up the innovation challenge and engage with the social sector now.