The New Political Landscape

This policy briefing aims to outline recent changes to the political landscape and to map emergent trends in order to help inform Skills - Third Sector’s current work.

The inability of any political party to achieve a decisive majority in the recent General Election and the imminent need to address the public budget deficit has combined to create an uncertain operating environment for many organisations.

This has been clarified somewhat by the release of a Coalition Agreement between the Liberal Democrats and the Conservatives, more detailed plans from the Treasury of where the cuts will fall and the list of Bills within the Queen’s Speech, but there are still many questions around the future viability of organisations and public funding.

Coalition Agreement

The Conservative-Liberal Democrat coalition laid out their programme for government on 20 May. The programme carries numerous implications for the third sector, promising to “promote the radical devolution of power and greater financial autonomy to local government and community groups.” [1] Perhaps of greater consequence though is the consensus reached on immediate action to tackle the deficit, which is to be achieved by £6.2bn of cuts to non-frontline services in 2010/11.

In terms of specific policy agreements, the coalition has promised significant public service reform. In order to increase transparency, all central government spending and contracts over £25,000 will be available online and all councils will be required to publish full contracts, tender documents and all items of spending over £500.

The coalition also plans to further open up the provision of public services, including a requirement for 25% of government contracts to be awarded to SMEs. Much of this is aimed at the voluntary and community sector, including the introduction of a community “right to bid” for state-run services and new community powers to save facilities threatened with closure. The agreement also promotes the right for public sector workers to form their own co-operatives to bid for and deliver services.

With regards health, every patient will be allowed to choose any provider that meets NHS prices and standards, and local communities are promised greater control over public health budgets (with providers paid by the outcomes they achieve in improving local health).

School provision will also be opened up in response to parental demand and free nursery care will be offered by a diverse range of providers.

In criminal justice, a “rehabilitation revolution” will expand the involvement of independent providers. In welfare, a single welfare-to-work programme will be created with contracts aligned to reflect providers’ results. The creation of Service Academies to offer pre-employment training and work placements and Work Clubs for unemployed people to exchange skills and provide mutual support will also most likely be aimed at third sector provision.

In terms of further education, the agreement promises improvement to the quality of vocational education, including the creation of Technical Academies. Colleges will be given greater independence and many of the further education quangos will be abolished. A review of support for part-time students in terms of loans and fees has also been promised.

The coalition agreement proposes various financial reforms of relevance to the voluntary sector. Mutuals are to be promoted in order to achieve a more diverse banking sector and a free financial advice service is to be created via a “social responsibility levy” on the financial services sector.

The creation of a Green Investment Bank and a “green new deal” to offer incentives for domestic energy efficiency will help further the low-carbon agenda.

The National Lottery is also set to be reformed so that more money goes into sports, the arts and heritage and a Big Society Bank is to be created from dormant accounts to provide finance for NGOs. These new sources of funding will be vital for the voluntary sector as they run alongside proposals to train significant numbers of community organisers, a National Citizen Service for 16 year olds, and a national Big Society Day to encourage voluntary action.

Spending Cuts

More specific proposals for spending cuts were laid out by the Treasury on 24 May. There is to be a total of £6.2billion savings in 2010/11 in order to tackle a £156billion deficit. The Treasury is adamant that these savings will only be made to “non-frontline services”. Furthermore, £500 million of the savings are set to be reinvested, including £50m for Further Education colleges and £150m to fund 50,000 new apprenticeship places.[2]

Proposed savings are to occur across the following areas:-

Consultancy and Travel (£1.15bn)
IT (£95m)
Discontinued projects and renegotiated contracts (£1.7bn)
Property Costs (£17m)
Civil Service recruitment freeze (£120m)
Quangos (£600m)
“Low Value Spend” (£520m)
Local Authority grants (£1.165bn).

The category of “low value spend” includes the phasing out of Child Trust Funds by 2011, savings to the Government’s housing pledge, “ineffective elements of employment programmes” (including further rollout of the Future Jobs Fund), Regional Development Agency spending, and Department for Education quangos.

In total, the Department for Education has been asked to make £670m from cuts to wasteful spending and quango costs. Schools, Sure Start and 16-19 education, however, have all been declared as safe from cuts.

In terms of reductions to local government spending, there will be no reduction to the main £29bn Government grant to Local Authorities but local government will be expected to contribute £1.165bn through individual grants. In addition, £1.7bn of local government spending will be opened up to enable councils to focus their budgets on particular services.

A breakdown of individual government departments’ contributions to spending cuts reveals that BIS is being asked to make the largest individual contribution (£836m), with the CLG’s contribution divided into departmental (£780m) and local government (£405m).

The Department for Education is expected to make £670m of savings, DWP has been asked to contribute £535m and the Cabinet Office itself is expected to make £79m in savings.

Queen’s Speech

The Queen’s Speech on 25 May outlined the Government’s priorities for the forthcoming year. There were a total of 22 bills, including:

A Welfare Reform Bill to simplify the benefits system to improve work incentives.
An Energy Security and Green Economy Bill to help ensure energy efficiency measures are made to homes and businesses, and to establish a framework for secure low-carbon energy supplies and greater competition in the energy market.
An Academies Bill to enable primary and special schools to become Academies, the freedoms needed to drive up standards and automatic charity status.
An Education and Children’s Bill to introduce a slimmer curriculum giving more space for teachers to decide how to teach.
A Health Bill to take forward proposals to significantly cut the number of health quangos, cut the cost of NHS administration by a third and allow GPs to commission services on behalf of their patients.
A Public Bodies (Reform) Bill to cut the number of public bodies and allow Ministers to abolish, merge or transfer functions from public bodies back into Government Departments.
A Decentralisation and Localism Bill to turn RDAs into Local Enterprise Partnerships and return decision-making powers on planning to local councils.

On the topic of public service reform, the Queen’s Speech was especially sanguine about the potential of the third sector [3]. This commitment also came with the acknowledgement that measures would have to be undertaken to counteract current barriers to third sector involvement in public service delivery.

Organisational Changes

The formation of a coalition government and looming spending cuts entails certain organisational changes, some of which have already occurred, some are expected to occur as the civil service returns from purdah, and others are yet to be laid out.

The new Government has already removed all reference to the “third sector” from the Cabinet Office, making the Office of the Third Sector redundant in name, if not in function.

The relevant Government Minister, Nick Hurd, has been named Minister for Civil Society and Nat Wei of Teach First has been appointed as Government Adviser on Civil Society. The formal creation of the Office for Civil Society within the Cabinet Office is expected shortly.

DCSF has been rebranded the “Department for Education” under the new Conservative education secretary, Michael Gove. Whilst the Department maintains a similar remit for state schools, education up to the age of 19 and children’s services, it is to take more of a conventional focus on education and there is some concern that it could lead to the decline of multi-agency working and children’s services.

The new Department for Education has also called for a halt on the work of all government quangos in the children and young people’s sector - including the Children’s Workforce Development Council, Ofsted, and the Young People’s Learning Agency – until they have decided on their key priorities.

The Liberal Democrats and the Conservatives have both promised to create a single funding agency for further education to ensure that public funding follows student choice. In the Lib Dem manifesto, this body is called the Council for Adult Skills and Higher Education and in the Conservative manifesto it is called the Further Education Funding Council. Semantic differences aside, this new body will consolidate the functions of the Higher Education Funding Council and the Skills Funding Agency. Although this is a point of agreement, it is likely that it would take a new piece of legislation to dismantle the SFA so can be expected to occur over a longer period.

Broad cuts to education quangos are expected, with the British Educational Communications and Technology Agency (BECTA) already declared non-essential. It is understood that the Qualifications and Curriculum Development Agency will be expected to provide £8m in savings; the Children’s Workforce Development Council £15m; the National College for Leadership of Schools and Colleges £16m; and £30m will be saved from the Training and Development Agency for Schools [4]. Out of these bodies, the QCDA looks to be in most long-term danger given the shared Lib Dem and Conservative interest in giving schools more freedom over the curriculum. The future of the Young Peoples’ Learning Agency also remains uncertain.

In their manifesto, the Conservatives promised to rename the Department of Health the “Department of Public Health”, echoing the increased tendency towards preventative and community-based healthcare. This seems to echo strongly with the stance of the Lib Dem manifesto, however the previous Liberal Democrat promise to cut the size of the Department of Health by half looks overly ambitious in light of the Conservatives promise of annual increases in funding, although both parties are sure to agree on cuts to health quangos over the coming months.

A further point of agreement between the Conservatives and the Liberal Democrats lies in the future of the Regional Development Agencies, both parties seeing them as unaccountable and wasteful. Local Enterprise Partnerships are set to replace RDAs, as joint local authority-business bodies brought forward by local authorities themselves to promote local economic development. Nonetheless, where RDAs have strong local support they may continue to operate with refocused economic development objectives. “Localism” has been a central part of the Conservatives’ policy agenda, however, so the role of local government quangos such as the Improvement Development Agency or Local Government Association is as yet unclear.

Implications for Skills-Third Sector

The new Government’s programme of action has broad implications for the operating environment of both the voluntary sector and the educational landscape. A clear focus on opening up service provision to the voluntary sector is to be welcomed, especially the obligation for 25% of government contracts to be given to SMEs as this will reward many of the smaller sector organisations currently disadvantaged within the commissioning process. Furthermore, the intention to publish local and central government contracts more widely will bring much needed transparency to the commissioning process. It is also essential that the Government delivers on measures to reduce current barriers to the voluntary sector in public service delivery.

Certain details need to be expanded upon in the agreement, such as how the community “right to bid” would work (what organisational form would such a “community” take) and how the proposals for public sector workers to establish co-operatives would be regulated. More detail is also needed on proposals to create Service Academies and Work Clubs for the unemployed and how their provision will join-up with traditional Jobcentres.

The continued emphasis on “Big Society” as an object of government is to be welcomed and highlights the essential contribution of the voluntary sector to the nation, both socially and economically. Nonetheless, there is a need to ensure that large-scale policy pronouncements such as the creation of an “army of community organisers”, a National Citizenship Service and a Big Society Day are backed up with sufficient resources.

Volunteering is not a free resource and needs the right investments in sector infrastructure such as advice, training and management of volunteers. As these elements of training (especially Volunteer Management) are something which Skills-Third Sector has responsibility for then this could provide opportunity for our organisation to shape the Big Society agenda.

With regards the spending cuts, these could have an adverse effect upon the voluntary sector. Most significantly, the proposed cuts to local authority grants will deny local infrastructure organisations and community groups a significant proportion of their income and will present barriers to the desire for their increased involvement in service delivery.

The proposed transformation to RDAs into new organisations purely concerned with basic economic development functions may also curtail the work they do in the areas of social inclusion and skills, and may well hamper the development of regional skills strategies. Furthermore, as yet there is no clear criteria against which the popularity of RDAs will be assessed.

Finally, the forthcoming cuts to education quangos will affect many of the bodies that Skills-Third Sector work with (such as CWDC) and could have wider repercussions throughout the skills sector. Most of the skills system has only just become acquainted with the transition to the Skills Funding Agency and the Young Peoples’ Learning Agency, so the likely shift back to a single skills body could be regarded to be a regressive move. The £200m savings to be reinvested in Further Education and Apprenticeships is to be welcomed, however, and aligned to the impetus for increased third sector delivery of public services could present an avenue of funding for Skills-Third Sector’s future work.

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[1] The Coalition: our programme for government (2010:11)
[2] The remaining amount will be divided between social rented homes and backdated business rates bills.
[3] “The Cabinet Office will work closely with other government departments to identify where social enterprise, charities and co-operatives can have an enhanced role in public services. The Cabinet Office Minister, Rt. Hon. Francis Maude, working closely with the Minister for Civil Society and HM Treasury Ministers, will oversee this work”. Full speech here.
[4] http://www.guardian.co.uk/politics/2010/may/24/coalition-government-education-cuts

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