By Mike Wild, Chief Executive of Macc

Judging by the phone calls, emails and tweets that my colleagues and I have received, the report in Third Sector of comments by Geoff Little (Deputy CEO of Manchester City Council) addressing the Charity Finance Group conference earlier this week has sent a shockwave around the voluntary and community sector not just in Manchester but the rest of the country too.

It’s not the best idea to respond to a speech which I didn’t actually hear but the comments as reported do raise concerns about the way the relationship between local authorities and the sector could be developing. Context, as always, is the key.

Manchester is a city which has high levels of deprivation and has faced eye watering cuts to public sector budgets. In the ‘Graph of Doom’ scenario, the point at which Manchester City Council runs out of funding to deliver anything beyond its statutory obligations is sometime in 2018 – not that far away.

The Community Budgets model Geoff describes is emerging locally as the new approach to delivering some public services: lining up evidence-based interventions from all agencies and agreeing to share risks, investment and savings to achieve shared outcomes. Nobody is going to argue with this principle but the problem is the process by which it is put in place. So far, the model has been developed primarily as a means of contracting between the large public sector agencies with the voluntary and community sector fairly invisible in the process.

The first thing which struck me is that Geoff is quoted as talking about “a much more sophisticated approach to commissioning charities” but what he actually means is “suppliers” generally. That’s an issue for me because I repeatedly emphasise to colleagues in the council and beyond that the voluntary and community sector is more than just a cheap supplier. If a council sees this as simply a commercial relationship then it’s wasting enormous potential. Our recent State of the Sector survey showed that the sector in the Manchester City Council area makes a £721.8million Gross Value Added contribution to the city’s economy. That is over twice as much as our two famous football clubs contribute to the Greater Manchester economy.

As Kevin Curley points out in his response to Geoff, if you want a thriving sector you need to enable it to plan and develop. I agree. If you want that £721million contribution, you don’t force the sector to adapt to fit a model designed for public sector agencies. Just as there is a debate about whether exams test learning or the ability to pass exams, public sector commissioners need to learn smarter and leaner ways of investing in what the voluntary and community sector has to offer.

But I don’t want to give the impression that the Community Budgets model should be seen solely in terms of a single funding mechanism. It is perfectly possible to put in place preventative community based services through light touch processes which can capture the best of what small local groups have to offer. The hundreds of smaller and medium sized charities doing fantastic work in Manchester are simply never going to be interested in social impact bonds and complex payment by results mechanisms. The Work Programme is proof enough of how processes which work on paper break down when they get out into the real world. It’s not a novel insight to say that the key must be a mixed economy in the sector based on the eminently sensible principle that the process should be proportionate to the amount of money which is changing hands. This is a simple principle of keeping transaction costs at a reasonable level for all concerned. Yes, some organisations will be able to take part in complex spot purchase arrangements at commercial market rates while other groups, which do great work in local communities, need investment in much simpler forms. I’ve said it so often it’s almost a catchphrase: grants are not the opposite of commissioning. Many, from both the public and the voluntary sector, have written off grants as a mechanism which cannot be targeted or rigorous enough. I would go further: well-designed grants could be the mechanism to achieve some of the flexibility Geoff aspires to in the Community Budgets approach.

Geoff is also quoted as commenting on the slow progress in developing consortia in the voluntary and community sector. He’s right but I can answer his question about “engineering” consortia: don’t bother. The temptation for commissioners in the consortia is that it appears to make it easier for them to engage with. But it simply shifts the problem around the economy: it creates yet more transaction costs (time, money, energy) for all those organisations which could be spent on delivery. These structures develop where there is an incentive for people to form them. The single best thing commissioners can do to stimulate them is simply tell people what they might be interested in buying and be open to proposals – but it has to be done with clarity and consistency. Too often we’ve seen huge amounts of time and money being put into establishing consortia only to find out that the expected range of service delivery opportunities never materialises. We have seen examples across the country including our neighbours at GMCVO who have been supporting the development of a health and social care focused consortium (Converge) but it has become clear that the expected opportunities it was designed to bid for simply aren’t appearing.

In that context, our biggest successes locally have been achieved by building networking and relationships within the local sector which then allow partnerships to form between groups with a lead agency. Some of these such as Big Manchester have been designed to align with the Community Budgets model by building interventions which can complement and improve the reach of what the public sector agencies offer. That’s what our sector does at its best – works collaboratively to create benefit. These opportunities happened because we got round the table and developed a proper partnership.

I know Geoff well enough to be confident that he recognises that the picture is much more complex than the selection of comments printed in Third Sector suggests. We will keep working on this in partnership with him and his colleagues at Manchester City Council. If we are to stand any chance of beating the ‘Graph of Doom’ scenario and tackling the problems faced by local communities, we need to be working together more than ever. We’ll keep the conversation going, won’t we Geoff?

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