The Spending Review: key facts for the sector and VSNW’s response
22 October 2010
On Wednesday 20 October, the Chancellor, George Osborne, unveiled the initial results of the government's Spending Review.
► The headline facts for the VCS
► Specific support for the VCS
► Local Authority cuts
► Our message to the sector
The headline facts for the VCS
► A further £7 billion cut from welfare spending, in addition to the £11 billion already announced.
► £470 million to be spent over the spending review period on capacity building in the VCS, including a one-year VCS Transition Fund of £100 million to support organisations with incomes between £50,000 and £10 million through financial uncertainty around public sector service delivery.
► A review of ways to increase philanthropic giving to take place later this year.
► A White Paper early in 2011 on the reform of public service delivery.
► Local Authorities facing at least 28 per cent cuts over four years.
► Ring-fencing of Local Authority funding removed, and National Indicators abolished.
► The Regional Growth Fund to receive £1.4 billion over three years.
► Commitment for over £6 billion for the Supporting People programme. Disabled Facilities Grant will rise with inflation and funding for homelessness services will remain stable
► Extra £2 billion promised for social care by the end of the parliament.
► Benefits and tax credits will be replaced by a new universal credit over the next two parliaments.
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It is clear that there are difficult times ahead for the Voluntary & Community Sector and the people and communities we work with. VSNW is analyzing the possible outcomes of the review in detail, but in the meantime, there are two specific areas that the sector should be aware of.
Specific support for the VCS
VSNW welcomes the announcement of a Transition Fund, aimed at providing short-term support for VCS organisations providing public services that are facing financial uncertainties beyond March 2011. However, we are concerned that the total of £100 million will prove to be a drop in the ocean in the light of the overall funding crisis that will hit the sector early next year.
Equally, we need to ensure that the Transition Fund actually eases the sector’s transition from public sector service delivery – and does not simply act as a financial incentive for local authorities to cut their VCS provision.
The distribution of £470 million through the Office for Civil Society for sector capacity building is welcome at surface level, but we need clarity on its distribution over the next four years; if this is to pay for the Transition Fund, Community Organisations, the National Citizen Service, the Community First Grant Scheme, contribute to the Endowment funds, and also provide capacity building, it is likely the total will not stretch very far.
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Local Authority cuts
Of greater concern are the Local Authority cuts of at least 28 per cent, which will undoubtedly impact on the sector. We need to engage with Local Authorities NOW to shape how these cuts are implemented and to ensure they listen to and value the contribution of the sector in a mature discussion of how we shape future services.
We need Local Authorities to continue to invest in the voluntary and community sector: there will be an increase in demand for many our services, which, ironically, will be facing the spectre of cuts at the same time. Sensible investment now will ensure that our communities can access the support they need at the time they need it most. We all need to work together in order that we can emerge from this together.
The effects of the removal of ring-fencing for Local Authority funding remain to be seen; if Local Authorities engage in discussions with their communities about the services necessary to protect the most vulnerable, and then develop a service model to suit, it could have a positive impact. Equally, it could mean funding for services for vulnerable people is diverted.
We hope authorities will seek to engage the sector and others in their discussions on how best to make the necessary savings while still maintaining valuable and essential services.
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Our message to the sector
Richard Caulfield, the Chief Executive of Voluntary Sector North West, has issued a message of support to the sector following this week’s Comprehensive Spending Review:
“We acknowledge the difficult times our partners and the people we work with are facing – what is clear is that it will be some time before we know exactly how the changes will affect us, and this uncertainty makes decision-making very difficult. We strongly encourage organisations to knock on the door of other organisations, of Local Authorities, of private sector businesses and ask what you can do together.
“We also know that more than ever we will all need to justify and demonstrate our value. Now is the time to be telling your story and the stories of your beneficiaries, and linking these to the wider social value your work creates for people and communities. Now is not the time to keep quiet because you fear losing a contract – it is time to speak up for those who will be hit hardest by cuts.
“For our part, VSNW will continue to promote social value commissioning, through lobbying on the new Social Value (Public Services) Bill in Parliament and using our influence in other arenas wherever possible. We will also continue to promote the message that grants are a vital ingredient in society and our economy. There are challenges ahead, but also opportunities, and VSNW will continue to strive to ensure decision-makers listen to, value and invest in people, communities and the VCS in the North West.”
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