Economy Committee - AGER inquiry - SCVO response

Our position

SCVO were pleased to see the Advisory Group on Economic Recovery’s (AGER) report note the importance of the voluntary sector where it called upon the Scottish Government to take action to protect the capacity and financial sustainability of our sector. Notably we were encouraged to see AGER urge the government to consider the implementation of long-term funding models, a flexible approach to procurement and the incentivisation of private investment into the sector. For these three recommendations within the AGER report to be progressed then action is required on a number of fronts.

Taking forward the Scottish Government Advisory Group on Economic Recovery’s report recommendations (Question 1)

In November, the Scottish Parliament recommended that a ‘working group’ be set up to examine the longer-term funding models available to statutory funders  and for its conclusions to be made available before the end of this parliamentary session. The ongoing coronavirus pandemic has restricted progress in this area, however, this proactive work needs to be taken forward as soon as possible a part of the recovery process. Prior to the pandemic, voluntary organisations were already struggling to deliver services or adequately plan their workforce due to the short-term approaches to public funding. Consistent core investment is needed by the sector for the long term. We urge that the recommendations within the Scottish Parliament’s recent funding inquiry are adopted and actioned by the Scottish Government. This would go some way in ensuring that the capacity and financial sustainability of our sector is protected.

For the voluntary sector the success of the recovery will largely be dependent on the relationships between voluntary organisations and the public sector. The positive partnerships between voluntary organisations, local authorities, the Scottish Government, regulators and funders, which have been forged as a result of coronavirus, need to be maintained and built upon. SCVO helped to develop the Positive Partnerships guidance, published earlier this year by Evaluation Support Scotland, which can act as a great basis for funders and fundees to initiate revitalised and strengthened relationships. However, this partnership approach should be pursued by all those contributing to the recovery process. For too long have organisations and bodies worked in silos, the recovery process will require egos and logos to be left behind with all focus poured into improving outcomes for everyone. A competitive funding environment is not beneficial to or in alignment with the ideals of wellbeing economy.

In relation to the AGER report’s consideration around procurement, SCVO believes that there should be a shift to person-centred procurement models that put the needs of beneficiaries of services ahead of driving down costs through competition. A relationship based approach is vital in service delivery, and the contracting body and the service provide must be able to work with an individual to establish what is needed to achieve the best outcomes. Approximately 20% of voluntary sector income comes from public sector contracts, however, the short-term nature of these contracts also makes them unsustainable. Existing models pitch organisations against each other and depersonalise the process. The client/contractor model reduces services to a transactional contract that values number more than people. This type of approach is in direct opposition to the ‘wellbeing economy’ future proposed by the AGER report. Payment by results processes in relation to employability services, for example, measure success by the number of people getting jobs, regardless of the quality or sustainability of that employment with little to no regard for the person’s journey in terms of self-esteem or mental health. New procurement models are required should Scotland wish to build the wellbeing economy cited in AGER’s report and truly implement a phase of recovery and renewal.

Utilising enterprise agencies and the Scottish National Investment Bank (Question 1)

SCVO and Social Enterprise Scotland have made a joint submission to the Committee’s consultation on the role of enterprise agencies and the Scottish National Investment Bank (SNIB). This emphasised our shared view that these agencies should incorporate dedicated support for voluntary organisations and social enterprises. The submission asks the Committee to seek to understand how enterprise agencies and SNIB will support the wellbeing economy through its offer to a sector whose contribution to the Scottish economy is rapidly evolving.

The sector is willing and able to work with these bodies to improve our impact on shared outcomes across Scotland. This collective effort is vital to the success of how a circular economy operates. Scotland's economic development system must shift from a relatively narrow view of a thriving economy that sees traditional private sector business first, and citizens and their wellbeing second. For this to happen, we need a flexible economic development system in Scotland that builds on our experiences from the pandemic over recent months and that maximises the roles of all actors across the strategies, methods and instruments available to develop and stimulate the economy.

Recognising the sector’s economic footprint (Question 2)

The voluntary sector also needs to be taken seriously as an economic actor and contributor. The AGER report rightly points out that the sector needs support to continue service delivery. However, there is an ongoing lack of recognition with regards to the sector’s role in stimulating and contributing to Scotland’s economy. The voluntary sector’s contribution is not limited to human, social or natural capitals. The sector is a significant economic actor and employer, and given the pressure on resources over the past few months this will only increase and will be further enhanced should Scotland adopt the wellbeing economy approach outlined in the AGER report.

The voluntary sector in Scotland employs approximately 100,000 people, works with 1.4 million volunteers and sector turnover is estimated at £6.06bn annually. These numbers are significant and demonstrates the often unmeasured but vital economic and social impact of the voluntary sector in Scotland.

If Scotland is able to pivot its economy to one which is centred on wellbeing outcomes, then the understated economic contribution of the voluntary sector will become even more significant. The 6,000 social enterprises in Scotland putting profits and surpluses towards social and environmental missions are another example of the sector’s contributions across the economy and its capabilities and capacity to support economic recovery in a way that is inclusive, sustainable, and good for environmental and human wellbeing.

The need for urgent action (Question 3)

Over the immediate future (6 months), SCVO believe that the economic impact of coronavirus will outweigh that of the 2008 financial crash given that it is occurring in tandem with the UK’s withdrawal from the European Union. Both the virus and Brexit will have a substantial financial impact on people, communities and the resources of voluntary organisations in Scotland.

This economic downturn will have a disproportionate impact on already marginalised people in our society. The immediate response to the virus highlights how far Scotland is from becoming an inclusive and sustainable wellbeing economy. The Fraser of Allander Institute cited that the government’s response to the pandemic is the ‘first step’ for a new social partnerships between the state and organisations focused on tackling inequalities and sharing economic proceeds more evenly across Scotland. This is an approach and way of thinking SCVO would like to see continue over the next six months and well into the future.

Delivering on environmental targets (Question 4)

Ambitions around net zero greenhouse gas emissions should not be impacted by the economic fallout of coronavirus. SCVO believes that Scotland should be looking beyond the current net zero targets in order to facilitate the meaningful recovery of nature and living within planetary limits. During the recovery, we expect to see the introduction of new policies and regulations to support Scotland’s emergence from the crisis. As such, the impact of new policies on the environment should be assessed at the very beginning of the decision-making process. Environmental justice principles should be built into the foundations of all policymaking.

For medium to long term policy and budgetary decisions made as part of the recovery process, environmental stress testing should be implemented with sustainability moved into the heart of all policymaking. This could include Scotland adopting a Future Generations Principle approach which moves beyond political and economic short sightedness and recognises the need to curate a cross-sector solution to address long term challenges such as climate change in a non-partisan way.

Learning from 2008 (Question 6)

Voluntary organisations in Scotland play an integral role in the delivery of employability programmes. These support people to become economically active, reduce unemployment and tackle issues such as the disability employment gap. Additionally, more specialist employability programmes will be vital in the context of increasing unemployment and a transition to a wellbeing oriented economy where skillsets will need to adapt. The role voluntary organisations play in caring for people also means that many families can remain economically active at a time when they would otherwise have significant care responsibilities. Continued support and the expansion of employability programmes, such as Community Jobs Scotland, administered by SCVO, will make a significant difference in preventing 2008-like unemployment rates.

Additionally, Scotland should be implementing evidence-based approaches to taxation, borrowing and investing rather than pursuing further cuts to our economic foundations and public services. A thorough evaluation of the existing fiscal framework – due to be reviewed in 2021/22 – must inform future proposals and decisions. Scotland has an opportunity to rebuild and scrap previous measures which contributed to inequalities and work towards the delivery of a more balanced and inclusive economy.

Implementing fair work policies (Question 7)

Current work being undertaken with the more vulnerable groups in society needs to be adequately supported. The implementation of the No One Left Behind model should be seen as a priority in order to help those who are becoming longer term unemployed. To address unemployment and associated inequalities, partnership working across all sectors is required. The voluntary sector can address unemployment both as service providers, employers and in amplifying the voices of people and communities using the services.

The Scottish Government must continue to promote the Fair Work principles during the recovery process and make every effort for Fair Work to be the norm across Scotland’s labour market. Too many people were already trapped in poverty by low-paid and insecure work. As with the 2008 crash, it is likely that the debt burden will fall on future generations with young people’s prospects hit the hardest. The creation of Social Security Scotland also provides an opportunity for us to ensure that those that are both in and out of work are appropriately supported.

Supporting digital inclusion in Scotland (Question 9)

SCVO has been at the forefront of delivering digital inclusion programmes prior to and throughout the coronavirus pandemic. The pandemic’s impact on daily working lives and schooling has shone a light on the digital inequalities that are rife throughout Scotland. SCVO has seen the disadvantages faced by the least digitally engaged. Many are unable to access the benefits of being online because of the affordability of technology and connectivity challenges, or they simply lack the confidence and skills required to use the technology. Before Scotland can even consider utilising the digital skills of its people to support economic recovery, support needs to be given to those with no digital skills through increased and expanded inclusion programmes. 

Committee questions:

1. What are your views on the Scottish Government Advisory Group on Economic Recovery’s report?  If the recommendations are to be implemented, what practical action is needed now? 
2. Are there areas of economic recovery not covered by the Report which you believe should have been included? If so, please provide details.
3. What needs to be done in the next a) 6 months b) 12-18 months c) 3-5 years to promote economic recovery? 
4. How can longer-term ambitions, such as net zero greenhouse gas emissions targets, be achieved whilst responding to the immediate economic crisis?
5. To what extent might future ways of doing business change? And might this be a catalyst for a more considered view of how our economy interacts with wellbeing and tackles inequalities? 
6. What lessons were learned from the 2008 economic downturn that could be applied now?  How resilient is the labour market since 2008 downturn? What type of interventions are needed to prevent increasing unemployment rates?
7. How can fair work policies be promoted and protected whilst promoting recovery to the economic crisis?
8. Does the crisis provide an opportunity to change relationships between employers and workers? What type of changes could be beneficial? What steps could be taken to promote these changes?
9. What action is needed to ensure that Scotland has the digital infrastructure and skills to support economic recovery?