[These notes are those prepared from which the Minister spoke and actual delivery may have differed]
It is a great pleasure to be here with you today. I am sure that you have all been having some very fascinating conversations over lunch. I hope that I will be able to maintain your energy levels.
This afternoon I want to talk to you about the relationship between the state and the voluntary and community sector.
To start with, it is important to acknowledge our key common interest. Whether we dedicate our lives to public service or the voluntary and community sector, we are all motivated by a desire to make a difference, to help people and communities to overcome the problems they face and achieve their potential.
There are those in our society facing hardships that most of us are lucky to have never experienced. Although I would argue that, in my case, having grown up in a very poor household, it made me the person I am. But most of us haven’t faced generational unemployment, poor mental health and addiction. And it is problems like these that we are working to overcome.
Too often in the past it has been assumed that the state should take the lead in responding to these challenges. But the fact is that government alone has never had all the answers and it has been a mistake to pretend that it does.
Most public officials cannot fully understand what it means to live in a household where no-one works. They cannot know what it is like to live in fear of violence, or to grow up without the encouragement to achieve, factors which so many of us take for granted.
Without this understanding or a real connection to the communities in need, it is unsurprising that these problems persist.
What is needed is a fundamentally different approach. A different relationship between Government, the voluntary and community sector, communities and individuals.
- An approach where individuals, charities, businesses and the public sector can work together to help communities to tackle their problems;
- Where charities and communities have the power to create innovative solutions to address the challenges they face;
- Where these solutions can be supported to become mainstream public services; and,
- Where funding and resources are available to support and sustain this important work.
This is a bigger, stronger society. One where communities can be the agents of change.
This is why Government is committed to giving people the power to improve things where previous governments have too often failed in the past. And to allow the voluntary and community sector to do more of what it does best: improving the lives of individuals and their communities.
However, for the sector to continue to deliver its vital role and meet its full potential, reform is needed.
I am sure I don’t need to remind any of you of the events over the past year, which have been extremely damaging for the sector.
Following the initial media storm last summer, research by NfPSynergy found that public trust and confidence in charities had fallen to below that of supermarkets. This is an extraordinary finding.
Whilst the findings may be restricted to a specific group of organisations, the damage that is being done will affect the whole of the sector to varying degrees.
All of the sector’s leaders have to be part of the response, by ensuring that they operate to the highest standards, not only in fundraising but across the board.
The sector needs to invest in its leadership and governance. In the various investigations that followed the coverage, the sector has been criticised for failures in these areas, which have allowed poor practice to emerge and continue.
Too many charities are still dependent on a single source of income, always just one cheque away from insolvency.
Many also continue to rely on grants from the public sector, a model which the events of the last decade have proven to be unsustainable in the long-term.
I want to see a sector that’s even more capable, resilient, self-confident and independent. Whilst charities themselves must take the lead, it is central to Government’s relationship with the sector that we work to support reform.
This is why we have introduced the Charities Act. This will strengthen the protection of charities against abuse, by disqualifying unsuitable people from being charity trustees or senior managers. It also gives the Charity Commission new powers to more effectively tackle abuse.
We have also supported the sector in reviewing its approach to self regulation of fundraising. Government accepted the recommendations of Sir Stuart Etherington’s review and is supporting the sector to establish a new regulator, which will hopefully start to rebuild public confidence.
I am pleased to see that the sector has now recognised the importance of this and is showing its support by helping to establish the new regulator.
Alongside this we have introduced new reserve powers in the Charities Act. These will enable Government to intervene should self-regulation fail to protect vulnerable people or meet the public’s expectations.
Our efforts are by no means limited to improving the regulatory environment. I am also passionate about helping the sector to change the way it operates, to make it more sustainable and to provide opportunities for the sector to do more. In doing so we can help to strengthen the relationship between the state and the sector.
There are four areas in which Government is taking steps to help achieve this.
- Firstly, by continuing to help secure new sources of sustainable finance, growing our world leading social investment market. This will include maximising the potential of social impact bonds, to help resource innovative approaches to public service delivery.
- Secondly, by finding ways to improve how Government works with the sector, opening up new opportunities and breaking down barriers, to allow charities of all sizes to deliver public services.
- Thirdly, helping the sector to access the resources it needs to deliver effective services. This includes supporting the sector to make the best use of volunteers and to engage in appropriate fundraising practices;
- And finally, by supporting the sector to build firm foundations and transform its ways of working, so that it can thrive and grow in the future.
Firstly, we know that VCSEs struggle to access the finance they need to grow and deliver their services. We also know that many struggle to access public service contracts where there is an expectation of payment by results.
It is for these reasons that we are growing the social investment market, to allow the sector access to a vital source of finance, which will help it to develop and grow services to tackle social problems.
The Charities Act contains a statutory power of social investment for charities, to enable them to make investments that contribute to their charitable mission, as well as providing a financial return. This is the first ever definition of social investment in legislation.
This should send a strong signal to both the charity sector and the wider investment community, that this Government is committed to seeing social investment grow.
The Government took a number of pioneering measures in the last parliament to help with that growth:
We set up Big Society Capital, the world’s first social investment bank. With contributions from the big four high street banks, it received £600m of capital to be allocated to social investments.
We established Access, the foundation for social investment. To build a long-term sustainable source of finance for the work of the social sector, we need to help more organisations to access social finance, including smaller charities.
With £100 million pounds to support more organisations to take on investment, Access will help stimulate the pipeline of social investment deals over the next ten years.
We created a Social Investment Tax Relief, modelled on the successful Enterprise Investment Scheme, to stimulate social investment by individual investors.
We also commissioned the world’s first Social Impact Bond, working on the principle that government only pays for the outcomes it wants to see and that are successfully delivered.
For example, Thinkforward is a brilliant organisation, helping young people in Tower Hamlets, Hackney and Islington move from education to employment.
Their coaches provide one-to-one support for young people, resulting in 90 percent of those who’ve participated move on to further education, employment or training.
And how is this programme funded? Not with a grant, but with a Social Impact Bond.
Social investors put their money in and returns are directly linked to improvements in behaviour, educational attainment and progression into work.
With public and private capital, this can deliver results and change lives.
Growing the use of Social Impact Bonds is one of the most exciting things that we are doing, allowing more organisations like Thinkforward to benefit.
This new model for funding public services sees Investors provide the up-front capital needed to scale up innovative services. The investor is then repaid by government when the specified outcomes are delivered.
So far in the media there has been little mention of Social Impact Bonds. I intend to talk about them frequently as they are an important part of the emerging mixed funding economy for the sector.
Social Impact Bonds, or SIBs, are increasingly being deployed to deliver public service reform that cuts to the heart of some of the biggest challenges that we face as a country.
They often focus on prevention and early intervention, which will help us to contain the ever expanding demands on our public services.
In many cases, the delivery organisations are charities and social enterprises that have the experience of delivering successful programmes across local areas.
SIBs help to foster a genuine partnership between government, Big Society organisations and social investors, bringing in the additional investment needed to support these organisations, who can innovate in ways that Government simply cannot.
Perhaps most importantly though, they focus on delivering meaningful outcomes for real people. For example, supporting a child out of residential care into an adoptive home, a young person into their first job, or a rough sleeper into supported accommodation.
The Prime Minister recently announced our new £80 million pound Life Chances Fund, an important next step on a journey that will show how social investment can transform local public services.
This is a down payment on a Social Impact Bond market that I hope and expect to be worth more than one billion pounds by the end of this parliament. The SIB model will become the norm for the way many of the more challenging public services are funded in years to come.
I have also set up a commission to look further at dormant assets. I believe there are a host of such assets which belong, in aggregate, to the public and should therefore be used to benefit the general public and not specific firms who may be, unwittingly or not, sitting on these stores of potential public value.
I expect the commission to report back later this year, and I look forward to institutional investors playing their part in unlocking their fund!
The UK is a world leader in social investment. And to remain so, we need to continue to push the agenda. Not only because of the social benefits it leads to, but also because it supports the UK economy.
To my second point, we must re-engineer the way Government works with the sector and commissions public services.
There is no doubt that VCSE organisations are often well placed to support individuals and communities to respond to the challenges they face. Government has sought to open up public services, so that those able to deliver outcomes for people in need can take greater responsibility.
However, we also know that the current commissioning landscape can be very difficult. Smaller charities and social enterprises can find it particularly hard to bid for and win contracts.
We need public sector commissioners to understand the importance of working with communities to design and deliver services.
We want them to open the door to new solutions and not prevent charities and voluntary groups from bidding for contracts.
We also need to use the influence that comes from the huge amount we spend on the various services, from cleaning contracts to housing maintenance, to deliver social value alongside core services.
Our support for the Social Value Act is ensuring social value is at the heart of national and local government, informing how we go about designing services. The Act has started to achieve some exciting results.
One example is Croydon Council, which is using its £150 million housing repairs contract to secure a range of social value commitments. These include providing apprenticeships and careers advice for local young people, mentoring support to small and medium sized businesses and volunteering opportunities for staff.
Another key step towards making the most of how we contract services is the Commissioning Academy, which is working to improve the quality of commissioning across the public sector. Most importantly, this includes making sure commissioners’ understand the value and importance of opening the door to the voluntary and community sector.
We have also made sure that organisations are able to maximise new opportunities by delivering commercial master classes for smaller charities. These can help organisations understand the changes they need to make to move away from a reliance on grant funding and to start to access new public service opportunities.
We are looking to see what more we can do over this parliament. I want to break down barriers, to enable small and medium charities to apply their innovative solutions to improve outcomes in public services.
As part of my desire for open policy making, My officials have organised a series of roundtables to look at these issues. I hope this process will inform policy options that can be taken forward in the future.
We kick started this process off last month with a fascinating workshop chaired by Sir Martyn Lewis, and I look forward to hearing the outcomes of these conversations as they progress.
My third point is that, in addition to better commissioning, we need to make it easier for the public to support the work of community groups and charities. This will give them the resources they need to scale up their services and reach out to more people in need.
The UK is already a generous place. The Community Life Survey shows that 75% of people gave money to charity in the four weeks prior to being interviewed.
Charitable giving continues to be a major source of income to the sector, providing £12.8 billion in 2012-13.
When managed appropriately, public fundraising can form a strong part of a healthy income mix. But we know that many smaller charities can struggle to get a share of this pot. We have therefore launched the Small Charities Fundraising Training Programme, to help charities with an annual income of up to £1m to gain more out of fundraising.
We also want to help create the next generation of community leaders, who will give their time and money to sustain a stronger society for the longer term.
The National Citizen Service is giving us more confident, capable and engaged young people. Over 200,000 young people have taken part in NCS, where individuals are being brought together to work with local charities and community groups.
In the Autumn 2015 Spending Review, we committed to growing National Citizen Service further to guarantee every young person a place.
Finally, it is essential that as well as unlocking the potential of voluntary and community groups to go further, we must provide a firm foundation for the sector to build on.
We know that many organisations that are delivering vital services can struggle to commit to adapting to the rapid pace of change.
It essential that organisations struggling to plan for the future are supported to find the time and resources to transform their ways of working, by addressing the challenges holding them back, and explore new ways to diversify their income.
Recently we announced the names of over 260 charities that will receive funding from our Local Sustainability Fund. This Fund will help small and medium sized charities to secure those services that work. It will provide a firm foundation on which to build better services and take on more responsibility from the public sector.
I am sure that everyone here is well aware that strong leadership and governance is central to an effective organisation. The sector has always had passionate and committed leaders and trustees. However, during periods of unprecedented times of change, even the best leaders will be challenged.
We know that for many it is difficult to prioritise investing in leadership and governance, when front line services are under strain. Therefore, over this parliament Government wants to work with our partners in the sector to identify ways of ensuring this is the best it can be, capable of securing and enhancing the role of the sector in a changing world.
I have outlined some of the core pieces of work that we are taking forward to help the sector to achieve its potential. But as I said at the start, the central responsibility for securing the future of the sector lies with the organisations at the front line.
Running an effective organisation with limited resources isn’t easy. As a former small businessman I know this only too well.
- As well as strong leadership and governance, voluntary and community groups need robust and up to date strategic plans, which set out what the organisation is trying to achieve, how they will go about it and how they will know they have been successful.
- They also need effective business models that enable them to secure the diverse range of resources they need to sustain services, including supporting them to explore new markets and income streams; and,
- They need the right staff and volunteers with the time, knowledge and experience to deliver both effective services and business plans.
As I am sure that everyone in this room is already aware, the sector will only be able to continue to help its beneficiaries if it invests in its development.
I hope you have heard some clear and consistent messages from me today:
- That a strong relationship between the state and the sector is central to building a bigger, stronger society;
- That only by working together and in partnership with individuals and communities, can we respond to the problems faced by our communities;
- And that, whilst reform is clearly needed to help realise this vision, Government is committed to working with the sector to overcome the challenges it faces.
I know that many in the sector feel severely bruised by the events of the last year. I also know that some might be questioning the value that the Government places on the sector. I hope that I have been able to respond to some of these concerns today.
Whilst the challenges the sector faces can sometimes be great, the sector is not alone. Government wants to do its part to help the sector to achieve its full potential. It is only through a strong relationship that we can achieve our collective desire to see real change in our society.
The voluntary and community sector in this country is one of our greatest assets. Together we can build on its success and help it to do even more.