Policy briefing 28 February 2011
(15 February – 28 February 2011)
The past week saw the announcement of lower-than-expected figures for economic growth. The latest release from the Office for National Statistics has shown that GDP fell by 0.6% in the last quarter of 2010. This was accompanied by the finding that employment also fell by 68,000 down to 29.12 million, whilst the numbers of unemployed and economically inactive people both continue to increase. Not only do such figures put increased pressure on the forthcoming budget (to be announced on 23rd March), but they also contain significant implications for the government’s recently-announced welfare reforms.
The release of the Welfare Reform Bill brought the formal announcement of the government’s plans to “make work pay” by reforming the array of out-of-work benefits into a single Universal Credit. Such reforms intend to take 950,000 people out of poverty and reduce the costs of welfare by £5.5bn over the next four years. There will also be tougher sanctions and conditionalities for claimants who refuse work or training. In light of the latest figures announced on growth, however, there are significant concerns surrounding future job creation and more details on how the new system will work with training providers to meet employer demand.
In other news, the Prime Minister re-launched the Big Society agenda at a high-profile event at Somerset House in London. At the event, David Cameron spoke of the need for a “social recovery” to match the economic recovery and strongly urged local authorities to avoid cuts to voluntary sector funding wherever possible. This was accompanied by the publication of the Government’s strategy on social investment.
Skills and workforce
The Time to Train scheme will no longer be extended to small and medium-sized enterprises due to the government’s concern over excessive regulation of small businesses. The scheme, which officially recognises an employee’s right to request time for training, will continue to operate in organisations with 250 or more employees.
An evaluation of publicly-funded business support has been published by BIS. The report, which focuses mostly on Business Link services, found that a third of SMEs had recently accessed publicly-funded support. It also discovered widespread concern over the proposed reduction in face-to-face support and a poor understanding of alternative sources of support.
The Government has launched a review of the sickness absence system in a bid to tackle the £100bn lost in economic productivity each year. The review will explore proposals to reform the Employment and Support Allowance to share the costs of long-term absence between the individual, the employer, and the state.
The Skills Funding Agency has published a briefing note to summarise how the Approved College and Training Organisation Register will operate. The Agency intends to use the register to procure new European Social Fund learning provision in the first half of 2011. This has prompted the Third Sector Learning Alliance to write a letter to the Skills Funding Agency on the detrimental affects to third sector learning organisations as funding is increasingly restricted to well-established providers.
A joint-inquiry has been launched into the role of colleges within local communities. This will cover economic and community well-being, place-based budgeting, use of college premises, and the role of informal learning. The inquiry is being jointly-run by the 157 Group, the Association of Colleges, and NIACE, and will be gathering evidence until 18 March 2011.
The Learning & Skills Improvement Service (LSIS) has received news of its funding settlement for 2011-12. LSIS, which develops and provides resources for colleges and training providers, will receive £31m - a reduction of around 50%. The long-term plan is to make LSIS financially self-sustaining.
It has been announced that LLUK, the recently-abolished Sector Skills Council for lifelong learning will transfer its responsibilities to the Learning and Skills Improvement Service from 1 April 2011. This includes work-based learning, adult and community learning, and careers guidance.
The Association of Learning Providers has launched a sub-contracting toolkit for the learning and skills sector to adapt to new funding arrangements. The toolkit explores the benefits of voluntary sector provision as well as various models of collaboration.
The National Skills Academy for Social Care is currently seeking views on the development of a leadership strategy for social care. The strategy will aim to develop a common approach to leadership across the sector at a time of dwindling resources and will seek to define what is required of leaders at all levels. The consultation will last until 28 April 2011.
A referendum on voting reform is to be held on 5 May 2011 following the successful passage of the Parliamentary Voting System and Constituencies Act. Voters will be asked to choose between keeping the existing First Past the Post system or move to the Alternative Vote. Constituency boundaries are also set to be redrawn to become more equal and the number of MPs will fall from 650 to 600.
A strategy on social investment has been published by Francis Maude and Nick Hurd of the Cabinet Office. The strategy, “Growing the Social Investment Market”, further explains the role of the Big Society Bank and a range of case studies. The Big Society Bank will be financed by an estimated £400m from dormant accounts, including the £200m promised by high-street banks. It will act as a wholesaler and use its balance sheet to co-invest, underwrite or guarantee investments along with private sources of capital. It is not expected to start lending until the third quarter of 2011, however, as it requires approval from the European Commission under state aid rules which cover its potential to distort competition and affect trade).
The publication of the Welfare Reform Bill has heralded a number of significant changes to the way welfare operates, including a Universal Credit to replace out-of-work benefits from 2013; an overall cap on benefits; the restriction of housing credits; removal of child benefits from higher earners; time-limited Employment Support Allowance; and the introduction of new medical assessments for benefit claimants. The new Work Programme will operate on a payment-by-results basis through a diversity of providers.
The Public Accounts Select Committee, the ministerial group responsible for scrutinising policy, is to hold an inquiry into the Government’s Big Society policy programme in light of widespread criticism. Conservative MP Bernard Jenkin, Chair of the Committee, said “We will be looking to separate the inevitable hostility to spending cuts from the positive elements of the Big Society policy.”
The Department of Health has published a strategy on how to reduce the overall costs of regulating the health and social care profession. Proposals will reduce the level of governmental involvement by devolving more power over the process to regulators themselves; constraining the growth and costs of the regulatory system; promoting assured voluntary registration; and simplifying the overall regulatory structure. The reforms also include the planned abolition of the General Social Care Council and withdrawal of funding for the Council for Healthcare Regulatory Excellence.
The Department for Education has announced the recipients of its voluntary sector grants. Overall grants will be worth around £120m over two years and will aim to put organisations onto a more sustainable footing. It has also announced its 5 Strategic Partners – 4Children, Barnardo’s, Children England, Council for Disabled Children, and NCVYS.
Funding for face-to-face debt advice has received a short-term reprieve through the announcement of £27m in funding over 2011-12. This money compensates for the closure of the Financial Inclusion Fund. Announcing the fund, Vince Cable called for additional sources of income to support Citizens Advice Bureaux in the future. Currently around 70% of debt advice is publicly funded, 20% is from charitable sources, and just 10% is from the market.
Details of bidding for the first round of the Regional Growth Fund have now been released. There were a total of 464 bids for the first round of the fund, worth £2.78bn overall. Three-quarters of the bids received were from outside the south of England. The three-year fund is worth £1.4bn and will support private sector-led growth in lieu of the RDA network. In related news, Local Enterprise Partnerships are being invited to bid for a £4m capacity fund to support regional research on business demand and social demographics.
The Department for Education has published statutory guidance for Sure Start children’s centres. The guidance entails a newly-reduced focus on acute disadvantage and the transferral of the Sure Start Budget into the (un-ringfenced) Early Intervention Grant.
The Government has published revised adoption guidance and is exploring how the inspection of adoption services could be strengthened. The reforms aim to enable local authorities and voluntary adoption agencies to move a higher proportion of children in care into adoption. This will have a particular on older children, those from BME backgrounds, and those with disabilities.
Housing Minister Grant Shapps has announced a new social housing scheme whereby landlords will be able to offer fixed tenancies to those on housing waiting lists at 80% of local market rate. The Government will also be investing £4.5 billion to deliver around 150,000 new affordable homes over the next four years
The consultation on the future ownership of England’s forests has been withdrawn following widespread criticism. An Independent Panel has been established to explore the future direction of woodland policy in England and is due to report back this autumn.
The Church Urban Fund has received £5m in public funding for its scheme, Near Neighbours. This will provide small grants to community-based projects which bring together people of different faiths. Near Neighbours will run from later this year in locations in the Leicester, East London, Birmingham and the Pennines, drawing on the resources of established local churches and community groups.
The voluntary sector
The Government has announced that Locality will be responsible for training Community Organisers. The organisation (recently formed from the merger of DTA and BASSAC) will have responsibility for developing a training framework and establishing an Institute for Community Organising. Up to 500 senior organisers will be trained and given initial bursaries of £20,000. These will be supported by a further 4500 part-time and voluntary organisers.
The results of the Charity Commission’s recent consultation have now been published. Respondents to the survey - which asked how the Commission will implement a 33% cut to its services - mostly expressed that the registry processes should remain rigorous and that regulation should not become too “light touch”. The Commission is expected to withdraw from activities such as the promotion of good practice and provision of one-to-one advice.
The transitional relief for Gift Aid, worth around £100m a year to the voluntary sector, is set to expire on 5 April 2011. The transitional relief was introduced in 2008 to compensate charities when the basic rate of income tax fell to 20%. This has left many organisations pushing donors to bring forward their donations to the current financial year or risk losing income.
The recipients of the first payments from the government’s Transition Fund have been announced. The £100m fund will be used to cover some of the short-term losses caused by the withdrawal of statutory income to voluntary organisations, enabling them to restructure, merge or diversify their income. A total of £1.7m has been distributed so far, with individual amounts ranging between £15k - £198k.
The Department for Communities & Local Government has announced £18.5m in grant funding to address homelessness. The money is to be divided between Crisis, Homeless Link, Shelter/CAB, UK Refugees Online, and the Greater London Assembly.
The Department for International Development will almost double its grant funding for UNICEF. The international children’s charity will receive £80m over the next two years in recognition of UNICEF’s proven ability to improve the health, protection and education of the world’s poorest children.
The Department for Education has announced that NSPCC will continue to receive £11.2m in grant funding for their Childline and Helpline services. The NSPCC Helpline offers anonymous and free access to trained child protection staff 24 hours a day. Together the services dealt with over half a million calls and e-mails last year alone.
The social investment organisation Charity Bank is currently working with Scope to develop a £20m bond scheme. According to Third Sector magazine the scheme has already secured a number of investments from charitable foundations and will operate in a similar way to those issued by commercial organisations.
The Charity Pay survey has found that charities pay their top earners four times as much as their lowest earners. This compares favourably to both business and local government., although the ratio increases to 6:1 for charities with an annual income over £5m and 10:1 for those with annual incomes over £50m.
Think tanks and research
The latest statistics published by the Office for National Statistics show that GDP shrank by 0.6% in the last quarter of 2010 (rather than the 0.5% first predicted). There has also been a rise in unemployment to 7.9% and in economic inactivity to 23.4%. The employment rate currently stands at 70.5% overall.
Households give exactly the same share of their spending (0.4%) to charity now as they did 20 years ago, according to a new report from the Cass Business School and the University of Bristol. The report, the New State of Donations, also suggests that poorer donors are more generous than richer donors and that the elderly are being increasingly relied upon for donations.
The level of work-based training available differs throughout Europe according to recent research funded by the European Commission. Higher levels of training tend to be found in the UK and Scandinavia, while lower levels exist in southern European nations. Training volume (in terms of hours of training) is lower in the UK than in many other countries, however.
Searchlight, an organisation that explores issues of race and identity has published a research report on the state of current social attitudes to immigration and multiculturalism. The report suggests that economic pessimism is the key driver for fear and hate in society and that the situation could become worse over the next few years. On a more optimistic note, the report did find that young people tend to be more hopeful about the future and more open to living in an ethnically diverse society.