Volunteers taste contract culture: The public and voluntary sectors are having to redefine their relationship in the provision of services. Paul Gosling reports

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THE RELATIONSHIP between the public and voluntary sectors is going through a crisis. Voluntary groups have lost vital funding as local authorities cut spending. Yet many councils and health authorities may be unable to implement the Government's care in the community proposals, which begin operation next April, without the assistance of the voluntary sector.

Over the years, a strong and positive relationship has been established between the public and voluntary sectors. This has allowed volunteers to provide many services that councils and health authorities, in particular, could not afford to provide. It has also allowed users to have much more say in the way these services are provided, through the users themselves being involved in managing and delivering services. With the onset of community care, the Government intends voluntary groups to have an even more important role in service provision.

However, the cash squeeze faced by the public sector is having a severe knock-on effect for voluntary organisations. According to a recent survey for the National Council for Voluntary Organisations, the level of grants given to voluntary groups was cut in 1991-92 by pounds 29.4m, around 5 per cent of their council income. The grant reduction in the current financial year is expected to be an even more severe pounds 42m.

Worse still, the councils cutting back on grants to voluntary groups are for the most part urban authorities, particularly those that have been poll- tax-capped, or are at risk of being capped. It is often in these areas that the voluntary sector has played the most important role in delivering services. This has led to criticisms of local authorities by voluntary organisations, but it is not the only conflict.

A separate survey undertaken by the Community Service Volunteers, based on reviewing half of local authorities' community care plans, has shown, they say, that councils 'consistently ignore widely available volunteer help'. Only 14 per cent of the authorities had developed a clear strategy for recruitment and deployment of volunteers, using them across all areas of community care, according to CSV.

While community care is a key area for involving volunteers, groups are also involved in a wide variety of other activities that have an impact on council services. There are around a quarter of a million groups, thousands of them funded by local and health authorities, which provide a range of services - from self-help groups for victims of illness, racial attacks and other crimes, to council tenants' associations, and welfare and training agencies.

Many of these groups are genuinely voluntary organisations, where everyone involved works free of charge. Other so-called voluntary groups have grown to employ staff, but with overall management responsibility being undertaken by volunteers.

This voluntary sector has been far from immune from the public services revolution. The 'contract culture' has been exported from local and health authorities into the voluntary sector. Where organisations had been grant-aided, increasingly they are awarded contracts instead. This has many potential advantages for both parties.

Nigel Holmes, a contracts manager for Wiltshire County Council's social services department, was involved in implementing the authority's pilot experiment with contracts and service level agreements, which specify what services an organisation will provide and what results the council can expect. 'We started over two years ago,' he said. 'The first step to establish a contract culture was to set up a volunteer forum to discuss the idea.'

Mr Holmes reported that the initial response was wary, but soon many of the voluntary organisations saw benefits from their side.

'Our obligation is to provide funding, at current levels plus the rate of inflation, for three years, which can be renewed once every three years or annually on a rolling basis. In the past the groups got grants yearly, which involved uncertainty and re-applying each year. This system removes some of that anxiety.'

Naturally enough, there are also advantages for the council. 'It brings greater clarity, in knowing what we get for our money,' Mr Holmes explained. 'We need an indication of how service users are involved in management and service delivery; proof of an effective equal opportunities policy; and a complaints procedure. A lot of groups were already doing these things, of course.'

Mr Holmes sees this process not as one that is essentially imposed by Wiltshire council on the voluntary sector, but rather as a collaborative, two-way process. 'It demonstrates the inter-dependency of the two sectors,' he said. To prove the point he quoted the agreed code of practice, which commits the council to good practice, as well as making demands on the voluntary groups. Council staff must, as a result, provide clear information, guidance and support to voluntary organisations.

A key problem in the introduction of service level agreements, whether with voluntary groups or with the commercial sector as a result of compulsory competitive tendering, is how to define service standards. This is especially true when the areas covered by the contracts are in such delicate matters as day-care provision for people with learning disabilities. Defining measurable outcomes is problematic, as the quality of care is partly a question of judgement. Many objective measures, such as the number of users going on into employment, may not apply.

Peter Newell, director of Wiltshire Community Council, which represents the voluntary sector in the county, said this difficulty was recognised. 'The council has to define its objectives, and the quality measure has to reflect this. It can't be just the number of days of day care. You have to say, 'Has there been any qualitative improvement in their lives?' and check on this for each client. It is a highly complicated area, which most voluntary and statutory bodies are only just coming to terms with. With Meals on Wheels it's no good getting it there on time if no one likes the food. You have to ask users for their views, and check on nutritional value, for example.'

Mr Newell emphasised that the process of changing from a grant-aided to a contracted relationship had been a traumatic one, especially for many smaller organisations, which had to devote considerable time and effort to negotiating a suitable contract. 'There have been points of stress,' he said. 'It has been tough but beneficial. We've had an excellent relationship with the council. Authorities should not try to impose service agreements and contracts on the voluntary sector, as has been done in some other places.'

One of the unexpected problems that has surfaced for voluntary groups is that a contract for services is eligible for VAT, where a grant is not. This means that organisations with a 'turnover' of more than pounds 36,600 are required to make VAT returns, and to charge VAT to the council. However, discussions are still taking place with Customs and Excise, in the hope that a ruling can be made to avoid this.

Wiltshire County Council agreed with the local voluntary sector when implementing the new contracts system that the initial 10 groups would be reviewed by the National Council for Voluntary Services, to ensure that the arrangements were not detrimental to the groups. The first part of that survey has just been published.

The author of the report was Ann Meadows, of Rural Community Work Associates, who says that the lessons to be drawn from Wiltshire's experience should influence the public and voluntary sector across the country. 'It should not be a question of abandoning grants and moving to contracts and service agreements. What's come out of the report is that there should be a range of options between those two extremes. The two parties need to sit down and agree the best relationship in their particular circumstances. Formalised agreements must be negotiable. People in the voluntary sector tended to feel the change was beneficial, provided it wasn't imposed on them.'

Ms Meadows says that deciding where, in that spectrum between unconditional grant and exactly defined contract, a particular relationship should be pitched will depend on many factors, not least the level of funding. 'Money is one factor; the more that is provided, the more control the authority will want. But a CVS (Council for Voluntary Services) may get a lot of money, but it doesn't need to be very precise about how it is spent. A contract may be more appropriate when a local authority has a specific service in mind, which it has a responsibility to provide. Where a service is user-controlled, there needs to be a more flexible agreement.

'A lot of government guidance notes prescribe user involvement, but contracts can mitigate against this. They ensure a level of bureaucracy, which will put users off, and users want a flexible service, so that they can better control and change it. There is not a simple answer. It has to be talked through. Too many authorities - not Wiltshire - say to voluntary groups, 'This is how it's going to be.' '

'Reaching Agreement', by Ann Meadows, published by NCVO, pounds 7.50.

(Photograph omitted)