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From Public Accounts Committee Transcript of Evidence 23rd November 2005

Sadiq Khan MP questioning Sir John Gieve (Permanent Secretary, Home Office) and Ms Helen Edwards (Director General, Communities Group, Home Office)

Q46 Mr Khan: You said in answer to one of the earlier questions that the third sector accounts for around 0.5% of central government's expenditure and you referred to the trend. Is the trend upwards, downwards or about the same?

Sir John Gieve: The latest figures we have show that it has gone upwards in the last two years, since that figure of 0.5, to about 0.6, so not spectacular but still up.

Q47 Mr Khan: To give us an idea in relative terms, ten years ago what sort of percentage of central government expenditure was being spent in the third sector?

Sir John Gieve: There is a chart on this somewhere.

Ms Edwards: As you can see, if you look at Figure 6 on page 16, spending has fluctuated over the period quite a lot. It started at quite a low level. We saw a peak during the 1990s and then it fell back quite sharply. It is now starting to rise again. Since we had this information which the NAO used, we now have some provisional figures for 2002-03 which show a 16% increase and in 2003-04 a 12% increase, so the trend is going back up in terms of actual spend. As a proportion of spend obviously it is affected by how much has been spent in total on public services, so that is why we tend to track the actual spend rather than the proportion because the proportion could be misleading.

Q48 Mr Khan: To follow up the Chairman's theme, the third way has been very generous to the third sector! On another point, Sir John gave examples of areas in the Home Office where there had been increased involvement of the third sector. Can you give us some examples, away from the Home Office, where there could be greater use of the third sector?

Ms Edwards: Certainly the Department of Health is looking at the potential of the third sector. The third sector already does a lot in terms of the Department of Health.

Q49 Mr Khan: Give us some examples.

Ms Edwards: In terms of work in the field of disability, for example, in terms of social care. They are looking at the potential of equipment and aids that are provided to people in the community, helping people potentially to leave hospital with support earlier than they might. I think there is quite a lot of potential there.

Q50 Mr Khan: Is there a process whereby you ensure that the large national charities do not disproportionately benefit as against the smaller regional, local charities?

Ms Edwards: I think it has probably been easier for the large charities to move ahead faster than the smaller ones, and we are aware of that. For example, what we have done with funds like Futurebuilders, which are aimed to build the capacity of organisations to deliver public services, if they want to, is to make sure that the proportion of spend which goes to the smaller organisations is monitored quite closely, and to multi-ethnic minority organisations who can find it difficult also to gain access to funding to build their capacity. In building the capacity for a sector to compete we have tried to make sure that we have skewed it towards the smaller organisations which might otherwise have difficulty. Of course, a lot of funding is dispersed locally, so sometimes it is the smaller, locally based organisations which will have the relationship with the Primary Care Trust, with the local authority. We hope we are taking that into account.

Q51 Mr Khan: If anybody monitors, for example, the local authorities, the Learning and Skills Councils, the NHS, how do they make sure that their funds are spent in the way that you have described?

Ms Edwards: I think, as you will have gathered, gathering data in the field is very, very difficult for us. We are taking steps to improve the quality of data that we gather at the moment so we can be more confident about totals but also the type of funding and where it is going, but that will take us some while.

Q52 Mr Khan: Who will be in charge of it?

Ms Edwards: We are doing some work on that. We have set up the State of the Sector Panel, which is a panel of 4,500 organisations which covers the whole range of bodies from the very small through to the large. We ask them at regular intervals about their experience of doing with government, how their funding is going, how they are finding the relationships with different sectors of government, we can ask the smaller organisations particular questions on that. What it has done is opened up a way of us having a dialogue, we hope, with a broad cross-section of the sector.

Q53 Mr Khan: You are the right person for me to ask how third sector groups in Tooting are benefiting from monies from government, local authorities, the NHS, the European Union and the Learning and Skills Council?

Ms Edwards: No.

Q54 Mr Khan: Who is?

Ms Edwards: I think what I would do is ask the local authority in Tooting, or I would ask the local Voluntary Services Council in Tooting about that. I would not have that detailed information, certainly not in the Home Office. I doubt whether the Office of the Deputy Prime Minister would have it at a central level.

Q55 Mr Khan: Who, if anybody, assesses whether certain regions are doing better than others because, for example, they may have a high propensity of expert charities which can bid successfully for these programmes or have groups which are better than others? For example, how do you help citizens in certain areas who do not get a good deal because there are not charities bidding on their behalf? Who monitors the situation to make sure some areas are not being disadvantaged compared with others?

Ms Edwards: We can break down the information we get back from organisations to a certain extent regionally but it does not give us a huge amount of detail. I am not sure that information is collated centrally.

Sir John Gieve: As far as local authorities are concerned, the CPA - Comprehensive Performance Assessment - includes a series of questions about the governance and development of the local authority which include relations with the voluntary sector. That would pick up some part of that: for example, is the local authority developing its relationship in a good way. That is one of the things we have encouraged them to do. There is not a sort of umpire who is looking at every area and assessing whether all the players in that area are doing what they should.

Q56 Mr Khan: Can I put two things to you that have been put to us by the National Council for Voluntary Organisations. The first point I would like your comment on is: "voluntary and community organisations are independent and the value they contribute is rooted in that independence. Service delivery contracts should be designed to respect that independence"?

Sir John Gieve: True.

Q57 Mr Khan: The concern they raise is in relation to the way that the requirements which you and local authorities place on the monitoring, evaluation and audit systems do not do them credit in that regard.

Sir John Gieve: There is a genuine dilemma for some voluntary organisations, one of whose main purposes is lobbying the government about how close they want to get to delivery for the government. There is no getting round it, there can be a tension there and some voluntary organisations choose to keep at arm's length and not to go into service delivery for that reason. Others, including many in the immigration field, for example, who continue to campaign against government policy, nonetheless play an important role in making sure that it is delivered effectively. That is a choice. The independence point is really about that issue. I think the main problem about monitoring and audit, which was brought out in this report, is that it is too onerous rather than that it undermines the independence.

Q58 Mr Khan: Helen Goodman touched upon having annual funding arrangements rather than the three years, and you agree it should be longer, I think. What about the criticism that application forms are often lengthy and not proportionate to the amount of funding being applied for, especially if you are small group? Compare and contrast the national charities who have specialist people whose job is to apply for money, if you are small charity often with one person doing six different jobs, is that a fair way of them getting funding?

Sir John Gieve: No. I think again this comes out in the report and comes out in all our discussions - we are talking to the NCVO all the time and trying to work with them to influence funders - that application forms often are not as simple as they should be. The report brings out a number of measures which departments have been taking to simplify things. That includes the lead funder pilots and it includes two stage processes where you put in a one-page application and you only have to provide more information if, in a sense, you are a real runner for funding. There is a long way to go on that.

Q59 Mr Khan: Congratulations on meeting the robust 5% increase in the volume of public service, and I think it is robust and was well done. As a trite point, there is no way you would have met that with £35 billion worth of cuts. What sort of target would you expect to see in subsequent years, bearing in mind the trend in the last two, three, four years has been this way? What sort of target would you be pleased to be set in this area?

Sir John Gieve: We are going to come back to that, or my successor is going to come back to that, in the next Spending Review in 2007. I have not got a number.

Q60 Mr Khan: Upwards? Downwards? The same?

Sir John Gieve: I am sure we will want to continue to push it upwards. Personally, I think there is huge scope to push it upwards. What we need to do before the Spending Review is to consult the sector and the various levels of government about what a reasonable target should be. We are already giving some thought as to how we do that. As I say, keeping it going up is the first thing. Plucking a figure out is quite difficult and there is always the risk that you project forward a straight line and two years on it either looks ridiculously easy or ridiculously hard. Nonetheless, I think we should talk to the voluntary sector about that.

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