Building the Big Society from the bottom up

Sarah Smith

 

In one sense, George Osborne said very little about the Big Society in his speech last week. He mentioned it only once, near the beginning when he announced that there would be “additional allocations to support the Big Society, establish community organisers and launch the pilots for the National Citizen Service”. Yet in his many ways, his speech spoke volumes about the Conservative’s Big Society vision.

A key part of the Big Society is involving not-for-profit organisations in the delivery of public services. This is something that the previous Labour government was also keen on. But if the Labour government had a vision, it was of a “top down” Big Society; i.e. government funding for not-for-profits providing public services through grants and contracts. This led to a big increase in the amount of income that charities received from the government, up 128% since 2000/01 and an expansion in the sector – from 120,000 charities in 1994/95 to 171,000 in 2007.[1]

Even before the public spending cuts, some Conservatives rejected this top-down approach. Ian Duncan-Smith criticized what he called the “Big charity, Big government” duopoly. Contract funding, he argued, favoured big charities, although the evidence shows that large charities have not become any more dominant over the period since 1997. He also argued that it threatened to erode the very thing that gave not-for-profit organisations their edge – their “mission”.

And now much of this government funding is under threat. The Government has allocated £100m to a transition fund to help voluntary and community sector organisations deal with the changes as part of the CSR – but this is dwarfed by the size of the cuts – an estimated £5 billion according to the Charity Commission. New Philanthropy Capital have predicted that community development, financial exclusion, and parenting work charities will be particularly hard hit.

Instead, the coalition’s vision is for a Big Society that comes from the bottom up. To replace contract funding, Ian Duncan Smith called for more volunteers with “fire in their bellies” and more stakeholder-led funding: more genuinely voluntary activity from the voluntary sector. But can this really deliver?

It rests on the belief that “bottom up” is better than “top down” as a way of involving not-for-profit organisations and ensuring public services that meet local needs most efficiently and effectively. Individual donors and volunteers have local knowledge, they have commitment and vision and they can personally derive enormous benefits from engaging with local not-for-profit organisations. But there are also risks: that the geographic and service spread of bottom-up services may be patchy and un-coordinated, that pure voluntary funding may be unreliable compared to government money, and that it may come with ideological strings attached. These risks are particularly great at a time when demand for services is likely to increase following cuts announced in the comprehensive spending review to housing benefit, disability benefit and support for families with children.

The bottom up approach is a big leap of faith. Not least, the belief that there is a lot of untapped volunteerism. One of the few economic studies to look at volunteering by Richard Freeman found that a key factor in explaining whether or not people volunteered was whether they had been asked.[2] Perhaps that is all that it takes. But much of the evidence suggests that “pro-social” behaviour is fairly concentrated. In particular, public sector and not-for-profit workers – who tend to do more unpaid overtime (“donated labour”) in their jobs than private sector workers – also typically volunteer more. In the British Household Panel Survey, 35 per cent of people working for not-for-profit organisations said they volunteered regularly compared to 21 per cent of public-sector workers and 12 per cent of private sector workers. So, perhaps the one great hope for the Big Society is that many of these public sector and not-for-profit workers will soon find themselves with much more time on their hands.

 

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[1] Figures from the NCVO (www.ncvo-vol.org.uk)

[2] “Working for nothing – the supply of volunteer labor”, Journal of Labor Economics 1997, vol 15, pp. S140-166.

 

Will Suffolk County Council’s out-sourcing of its activities work?

Paul Grout

Suffolk County Council is aiming to outsource almost all of its council services in an effort to save 30% of its budget. It has said that it wants “reduce its size, cost and bureaucracy and build community capacity to enable Suffolk citizens to take greater control of their lives”. Outsourcing has been a growing industry both in the private and public sector but what is unusual about this initiative is the scale of savings that are targeted and the fact that virtually all activities are to be outsourced.  Is it likely to be achievable?

Considerable savings from outsourcing standardised activities such as waste collection and maintenance have been identified over the years but not savings of the scale envisaged here. Furthermore, as more and more councils shift over to private suppliers there is some evidence that the gains from outsourcing are smaller, since the remaining traditional public delivery activities feel pressurised and are more efficient than in the past.  Also, as the PPP experience has shown, it is the basic stuff where the biggest gains have been identified. As outsourcing bites into more complex operations cost cutting gains are likely to be harder to come by. And one of the advantages, or disadvantages depending on how you look at it, of outsourcing is that private supply with long run contracts cannot be switched off overnight. So PPP schools are all pristine because the contract says so, whereas state schools suffer from inadequate maintenance because it is an easy way to cut costs. But then private contracts ensure that promises are carried through, which is not the same thing as saving lots of money when needed.

So if Suffolk is going to get anywhere near the targeted savings I suspect they are going to have to shift over to volunteers in a very big way. It is not clear whether this can be done on a large scale and or whether this will be sufficient to reduce cost by a third. There is evidence that the idea of ‘social enterprise’ delivery sells well with the public compared to private delivery of public services but it is less clear that it is more efficient. There is clear evidence that employees who ‘go the extra mile’ are far more common in third sector organisations than for–profit. However, what evidence there is suggests that these employees are drawn to the third sector and that they ‘go the extra mile’ wherever they are. This may also be true for volunteers. If someone volunteers for the local library instead of going to the Oxfam shop the local library is now cheaper but there is a cost for someone else, in this example for children in Africa.

It appears that Suffolk may have set itself an overly ambitious financial target.