Charities 'in crisis' as spending cuts bite

Charities have become partners of government under New Labour, funded to the tune of £12bn a year by the taxpayer, but voluntary sector workers now face lower salaries, less annual leave and longer working hours as spending cuts loom, a new report says. The analysis, by Steve Davis of Cardiff University's school of social sciences for the public services union Unison, says that the huge shift in the relationship between charities and government since 1997 was "a revolution every bit as far reaching as the privatisation of nationalised industries under Margaret Thatcher". More than half of charities' income now comes from government contracts to deliver public services, the report says. The sector is a big employer with 464,000 full-time staff. However, the twin demands of the recession and increased competition for contracts means that there is growing pressure to cut staff costs. The report says the pressures are so great that staff have been leaving the sector for jobs in supermarkets. The report predicts that charities will go "bust". "Either because the services aren't viable any more or because their costs are not competitive enough to keep up with procurement exercises." The report points out that in a couple of local authority areas, the voluntary sector was "completely wiped out of home care" by competition from private companies who "don't pay pensions, who have zero hour contracts for staff". Dave Prentis, general secretary of Unison, said the government must not view the sector as a "cut price alternative" for public services. "The findings of this report are extremely worrying. It shows the charity and voluntary sector is reaching breaking point. The sector is beset with huge problems of funding, job cuts, low pay and unrealistic targets. It's hardly surprising that it becomes too much for dedicated staff who can get a better deal working in a supermarket." The report is highly critical of the way contracting out public services has produced perverse outcomes. It highlights that although "competition is supposed to drive up efficiencies, it may just drive out small and specialist charities", pointing out that women's aid groups in the north east and Citizens Advice bureaux in Leicester and Hull have lost contracts to private sector companies. Ben Kernighan, deputy chief executive of the National Council for Voluntary Organisations, said: "Unison has highlighted a significant risk where commissioning is done badly. However, our sector makes a vital contribution to shaping and delivering public services. "There are some good relationships with public sector funders but poor ones remain and these need to be addressed urgently. With greater pressures on public spending, it will be even more important to negotiate fair and sensible contracts."