Longer contract plans for ‘third sector’

Charities and voluntary groups were on Wednesday promised more stable government funding in a bid to extend their role in delivering public services.

Gordon Brown said that government departments would from 2009 be expected to award three-year contracts to non-profit making organisations engaged in health, education, welfare and other activities.

Third-sector organisations have proved to be effective providers of services, particularly in palliative healthcare and welfare-to-work, but have long complained of short-term government contracts, excessive red tape and the cost of bidding for work.

The role for voluntary and community groups in delivering public services is set to be one of the key battlegrounds of the next election, with the Conservatives promising a big expansion.

In a keynote speech on poverty last month David Cameron, the Tory leader, said he wanted to see a “big shift from state to society”, with the voluntary sector taking the lead to tackle deprivation and help the unemployed into training or jobs.

Mr Cameron said local charities and NGOs, using public money, had the dynamism, ingenuity and flexibility to out-perform the “blunt, mechanical, impersonal” services provided directly by the state.

Mr Brown and his allies have claimed Mr Cameron’s ambition is to dismantle the welfare state.

The government, while welcoming the innovation charities bring, has been more cautious about outsourcing public services. Voluntary groups account for only £1bn of public spending.

Ed Miliband, the cabinet minister responsible for the third sector, said on Wednesday: “The greater involvement of the third sector in delivery must not be about government abdicating its responsibility to fund public services. Instead, it is about ensuring that, in the right circumstances, the sector can deliver services where it is best placed to do so.”

Stephen Bubb, chief executive of Acevo, the association for leaders of voluntary organisations, welcomed the promise of three-year funding, for which charities have long campaigned.

“There have been significant barriers to the sector playing a bigger role, especially on contracting. Our members have long campaigned for reform and I was delighted to hear the chancellor announce his commitment to three funding funding for the sector.”