Local Government and Communities Committee pre-budget scrutiny

About SCVO

The Scottish Council for Voluntary Organisations (SCVO) is the national membership organisation for the voluntary sector. We champion the sector, provide services, and debate big issues. Along with our community of 2,000+ members, we believe that charities, social enterprises, and voluntary groups make Scotland a better place.

Scotland’s voluntary sector

The Scottish voluntary sector encompasses an estimated 40,000+ organisations, from grassroots community groups and village hall committees to more than 6,000 social enterprises, nearly 25,000 registered national charities, and over 100 credit unions. Scotland’s voluntary organisations are focused on delivering vital services and empowering some of Scotland’s most marginalised communities. They also have a big role to play in protecting Scotland’s environment as well as campaigning and advocating for change. Together, they employ over 100,000 paid staff, work with over 1.4 million volunteers, and have a combined annual turnover that reached £6.06b in 2018. This includes a range of mixed-income sources such as contracts, grants, and fundraising.    

Summary

National and local government and the voluntary sector share the same complex system, and the pandemic has shown once again that our collective ability to achieve outcomes with and for people and communities across Scotland is interconnected. Our finances are also interconnected.  In considering local authority finances, we must also consider the impact of these decisions on the finances of voluntary organisations.

We invite the Committee to consider the ways in which the budget process can contribute to the aspirations of the Scottish Government, local authorities and the voluntary sector to work more collaboratively, helping to encourage partnership rather than reinforcing silos.  Our response highlights several examples of good practice when it has come to working collaboratively in response to the coronavirus crisis; there is a unique opportunity to now lock in these positive changes.

To deliver on this opportunity, we cannot return to business as usual or, even worse, to a more harmful version of what came before. The interventions taken by governments in response to the pandemic can be the starting point in building a more balanced and inclusive economy and society. For the voluntary sector to play its part, two priority areas must be addressed in addition to focusing on new, proportional relationships between the sector and local and national governments; they are funding and procurement, two significant areas of focus when it comes to the Scottish Government’s settlement with local government.

Our position

Question three: What help will councils need in future from the Scottish Government or others to overcome the ongoing financial strain?

While local government finance is in and of itself a huge and important topic, we would urge the Committee to consider the wider complex system in which local government operates, where Scottish Government, local government and voluntary organisations work together towards the common goal that people and communities across Scotland are enabled and supported to live good lives.  Our collective ability to achieve outcomes is interconnected, as are our finances. 

The choices made by both local and national governments in the months ahead will impact the ability and success of the voluntary sector in the years to come to contribute to those outcomes. Similarly, decisions taken by the Scottish Government will affect local government finances. At the same time, the outcome of this autumn's UK spending review and the autumn budget will determine the fiscal wallet available to the Scottish Government. While this is an obvious statement, these tensions will undoubtedly arise once more during the 2021/22 budget scrutiny process — they do so each year, however, explanations of the failings in the current system and justifications of why the problems exist only take us so far.

Last year, the committee heard that the 2020/21 UK budget process was making it difficult to plan for the year ahead. The Cabinet Secretary for Finance said: 'as part of discussions and negotiations with COSLA, there is still a commitment to try to provide as much multiyear funding as is possible, but uncertainty around 20/21 budget makes it difficult to plan for next year, let alone three years.' We can anticipate that the immediate concerns to be considered in this year’s budget will make this even more difficult.  Meanwhile, COSLA explained to the Equality and Human Rights Committee that national priorities and demand on specific services mean 61% of local authority budgets are classified as protected. COSLA went on to say: 'councils have no choice but to take any necessary savings from service areas that fall within the non-protected area." Funding of third sector organisations falls predominantly within the "unprotected" portion of council budgets.

Last November, the Equalities and Human Rights Committee inquiry into voluntary sector funding highlighted the complexity and the instability of this situation for voluntary organisations, and made a number of recommendations about sustainability of voluntary sector funding, noting the vital role the sector plays in improving outcomes for people and communities across Scotland.  We are still waiting for a response from Scottish Government to these recommendations, and draw these recommendations to the committee’s attention.  We welcomed the Scottish Government's commitment to longer-term funding for the voluntary sector in its response to the Advisory Group on Economic Recovery, and would urge the committee to consider how this commitment can be reflected in the funding allocated to local authorities, alongside consideration elsewhere of the Scottish Government’s direct funding of the sector.

During last year's pre-budget scrutiny, the Cabinet Secretary for Local Government and Communities said: 'we talk of how we can make better use of funding pots we have in a number of places', and the 'Christie Commission challenges us to move from silos in which public finance sits and to use more collective resource to maximise service delivery and impact of that funding – regardless of where pots of money sit across public life.'  We would encourage the committee to consider how the 2021/22 Scottish budget and budgets in the years that follow can help to break down silos and maximise our collective resources through partnerships and collaboration.

It is vital that the financial strains faced by all parties – national government, local government, and the voluntary sector – are considered in open and equitable relationships. The pandemic has shown that a range of people and organisations are at the centre of improving outcomes for our society. The voluntary sector has provided services and support in the early months of the coronavirus pandemic that eased the burden on statutory services while providing high-quality person-centred services in parallel. Though not a universal experience, where these relationships have worked well and the different strengths and needs of actors in the system have been understood, people and communities on the ground have benefited (see examples in our response to question four).

The situation is complicated for all parties, but we must find a way forward that limits the shifting of responsibility from one party to another, which ultimately cannot move us beyond discussing the limitations in the system that national and local government and the voluntary sector share. We are hopeful that the Scottish Government's commitment in response to the Advisory Group on Economic Recovery to strengthen collaboration with the voluntary sector and local authorities will focus on addressing this, but would also invite the Committee to consider its role in encouraging and overseeing progress towards this new way of working.

Question four: What can local government sector do, in the short and long term, to manage the financial impact of the crisis? What positive examples can councils and others share about the good work done at local government and community level to lessen the crisis? 

SCVO welcomes the Scottish Government’s recognition of the ‘level and scale of services’ the voluntary organisations can provide ‘and the crucial role they play in our communities’ in the 2020/21 Programme for Government (PfG). It lists how the sector offers a vital contribution to ‘community development, inclusive growth, and providing lifeline services, facilities, and employment.’

As mentioned in our response to question three, local government must look to build on the positive relationships that have developed between the voluntary sector and public sector during the pandemic. Where this has not occurred, learning from elsewhere will be essential in developing an understanding of what positive partnerships with the voluntary sector look like. This could be through dialogue with voluntary bodies in their locality or through reaching out to other local authorities, but preferably both. Collaboration at the national level between sector intermediaries, the Scottish Government and COSLA will also help with this. Innovative ways of working must be supported and expanded, particularly in a period where the economic picture and the subsequent impact on our collective resources are mostly uncertain.   

While these experiences are by no means universal, there are many examples of positive partnerships during the pandemic, where a local government and its citizens have seen the rewards from successful relationships with the voluntary sector. Even before the crisis, SCVO collated several examples of voluntary organisations and local governments working in a way where voluntary bodies have equity in partnerships and whose strengths and needs are understood and utilised; we presented these in our evidence to the Local Government and Communities Committee during last year’s pre-budget scrutiny. Turning our attention to the pandemic, SCVO has identified examples of good practice for the committee’s information.

Example A – Homelessness

Homelessness is a significant problem in Scotland, despite world-leading legislation. Several charities work across the country to end homelessness and ensure suitable, sustained housing for all. The pandemic has shone a light on this injustice and the vulnerability of people without a good home. Simon Community Scotland is one such organisation. In the period between lockdown and July, their staff, volunteers and partners supported 2,500 people experiencing homelessness or the risk of homelessness, including virtually eradicating rough sleeping for the first 14 days of lockdown from the streets of Glasgow and Edinburgh for the first time in decades. This has been achieved together with partners, including the Scottish Government, local authorities, corporate donors, and individual donors. This example highlights the value of local government working in real partnership with voluntary organisations where the unique strengths of voluntary organisations are recognised and utilised and the importance of many actors in a system coming together to overcome longstanding challenges. There is an opportunity to nurture and grow these partnerships to lock in and catalyse lasting change. 

Example B – Community support

Due to the unprecedented load on the Department for Work and Pensions systems and the local Citizens Advice volunteers, many vulnerable people are trying to access benefits without support. These are often first-time signers with no experience of the system. Many people are still unsure of their entitlement and where and how to claim. This, combined with what can be a lengthy process to gather and input all the relevant information, is creating an ever-increasing wait to access benefits. A unique delivery partnership between East Ayrshire Council's Vibrant Communities Team and Auchinleck Community Development Initiative has continued to provide vital benefits advice, support and information to vulnerable people affected by the pandemic. New and additional support has also included essential food supplies and deliveries to vulnerable residents; prescription collections from the local pharmacy, fuel card top-ups, mobile phone top-ups and "befriending calls" to older and shielding residents. Voluntary organisations play a crucial role in ensuring that people do not fall through the cracks altogether, and this example highlights the council's recognition, confidence, and reliance of the vital role the sector can play.

Example C – Social care

The Coalition of Care and Support Providers in Scotland (CCPS) recently held several workshops with local authority chief finance officers and voluntary sector providers on the issue of partnership working around finances, funding, and claiming additional costs to run services caused by the pandemic. Many local authorities have been working well with voluntary sector providers, particularly where local authorities are relaxing monitoring processes and taking a light-touch approach to financial reporting from providers. Other examples are where funding has been made available for a range of additional costs due to the pandemic (additional support hours, staffing costs and PPE). Commissioners and finance officers have also worked closely with providers to ensure payments are made to support the sustainability of the sector and its crucial work during this time. In particular, East Renfrewshire Health and Social Care Partnership's commissioning and finance teams have worked flexibly to support voluntary sector care providers, with strong communications and trust being essential. CCPS members have also reported positive relationships and processes for claiming additional costs for COVID in various local authority areas including Dundee, East Lothian, Stirling, and Argyll and Bute.

Example D - Struggling households

Another example of voluntary organisations working in partnership with local authorities to ensure people get the support they need is a collaboration between HomeAid West Lothian and West Lothian Council. HomeAid West Lothian was successful in securing funding administered by the Hunter Foundation for pandemic related support activity. They worked with West Lothian Council to identify those who fell into the gap of needing access to the Scottish Welfare Fund (SWF) but unfortunately did not meet the criteria. The council’s Scottish Welfare Fund team referred these people to HomeAid West Lothian, as well as to the Council’s Advice Shop and Women’s Aid. HomeAid West Lothian was able to provide white goods or furniture free of charge, which was extremely helpful for those who were on low incomes but did not qualify for the SWF. They were also able to supply a number of fridges and fridge freezers to people to help those not able to get to the shops as regularly to store food for longer. Particular instances where support was most needed were for those recently made unemployed as a result of the pandemic and woman fleeing from domestic violence having to leave everything behind. While the council could not help these people under the current criteria of the SWF, by working in partnership with the voluntary sector, they fulfilled their role to ensure these people were not left behind.

Example E: Employability

The pandemic has been a challenging period for young people, and the economic outlook and impact on jobs is uncertain. Values in Action Scotland (VIAS) is committed to ensuring people with learning disabilities or autism have the same opportunities as everyone else and are supported to achieve these goals, including work. While their planned events were halted due to the lockdown, VIAS’ already strong relationships with Renfrewshire Council was integral to their efforts in moving these vital services for young people with learning disabilities or autism online. Their first online Young Scotland’s Got Talent event in July (delivered in partnership with Scottish Commission for Learning Disability) was a huge success, and the Economic Development Department at Renfrewshire Council ran a Project SEARCH workshop for virtual attendees. Together with Glasgow City Council and North Lanarkshire Council, all three councils provided role models to discuss employment and opportunities for young people. Positive partnerships between VIAS and Renfrewshire Council have also supported communications for Project SEARCH, a one-year transition programme which provides employability training and education. Having noticed some vacant placements remaining available, VIAS and the council have worked together on a communications plan to promote the project and opportunities online. Positive relationships stretch beyond Renfrewshire, with North Lanarkshire Supported Enterprise having commissioned VIAS to deliver autism awareness and creating an inclusive workplace training online after recognising their innovative approach to co-produced training at a recent VIAS event. This example highlights the importance of strong ongoing relationships between local government and the voluntary sector, and how continued dialogue can foster new opportunities even in the most challenging of times.

Example F – Support for families

Yipworld is a voluntary organisation supporting families through the provision of activities for children and young people, particularly from families where parents and carers have underlying issues such as mental health and find it difficult to cope without external assistance.  During the pandemic, they also provided telephone and ‘garden gate’ social distancing support for vulnerable, lonely and isolated residents throughout Cumnock and surrounding areas.  Yipworld’s strong relationship with East Ayrshire Council was vital in helping them to secure funding and reach those who needed their support.  They were nominated by East Ayrshire Vibrant Communities as the preferred provider for the a holiday hunger programme funded by Youthlink Scotland across a number of local authorities, and through working with headteachers from a range of local schools they were able to ensure that their project to help parents living in poverty or at the edge of poverty to purchase training shoes and clothing from a local sports shop (funded by Corra Foundation) benefited families most in need.  This case study highlights that positive partnerships between local government and the voluntary sector need not involve the direct provision of finance by the local authority.

Example G – voluntary sector, local authority and businesses

Engage Renfrewshire works in partnership with Renfrewshire Council’s Procurement Forum to ensure that the value of community benefits from contractors is maximised. One example of this saw four hundred individual pieces of personal protective equipment (PPE) donated by Alexander Workwear to organisations in the third sector.  A representative of environmental Social Enterprise organisation ‘Eadah’ said: “it has made such a big difference to kit out all our staff and volunteers with the proper PPE, this ensures that we are able to go onsite and comply with health and safety regulations, as well as delivering our services locally”.  Again, this shows the ways in which resources can be brought in from elsewhere through strong local partnerships between the voluntary sector and local government. 

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.  Local government must draw upon voluntary organisations' experiences and expertise when considering what a broad range of services might look like as we emerge from the pandemic. The voluntary sector must have a role with public sector partners in designing the services we need for the future, and in safely reintroducing existing services. Voluntary organisations know the people we work with well and understand their needs; they can also play a valuable role in ensuring that service design processes include the people who engage with those services. We have learned from the initial response to the pandemic about what works and what could be improved. We know from experience what did and did not work in the previous system; the voluntary sector can help to ensure that the public services of the future meet communities' needs.

The same is true when it comes to making decisions over what services may not be required or are perceived not to be needed. COSLA's evidence to the Equality and Human Rights Committee during 2020/21 pre-budget scrutiny highlighted how voluntary sector services are often the most at risk of being cut to drive savings. This is because funding often falls within the "unprotected" portion of council budgets, but this is not a methodology in keeping with a person-centred outcomes-based approach to service delivery. When it comes to decommissioning, the committee heard during last year's pre-budget scrutiny that the voluntary sector is often not included in these discussions, and that the process often leads to confusion around responsibility, transparency, and the decision-making process. Evidence heard by the Equality and Human Rights Committee concerning the lack of impact assessments carried out when decommissioning services supports this. While the financial strain felt by local government often leads to cuts in services, Equality Impact Assessments must be involved in service redesign and ending functions, as the Equality and Human Rights Committee recommended. The committee also noted that the voluntary sector is willing and can contribute to developing impact assessments, and this knowledge should be drawn upon.   

To deliver the best outcomes with the collective resources at our disposal, national government, local government, and the voluntary sector must come together at all parts of the process. These relationships are often curtailed by unnecessary bureaucracy and a lack of flexibility, but we have seen the reduction or complete removal of this in many cases during the pandemic. National and local government and the voluntary sector have also tried new approaches that did not work as well. We must capture that learning now so that it is not lost, or a rationale retrofitted later. Despite the devastating impact of coronavirus on our society, there are things which have happened quickly and successfully. We will want to hang onto these in the future, and they must not get lost in an urge to "return to normal."

Question five: How soon do you think the sector will be back to normal? Or is this time for a “new normal” in the way we deliver some council services or practice local democracy? If so, what will it look like? 

Ten years of austerity have already seen inequalities widening and levels of poverty increasing in Scotland. If we do not act now, the question is when? We cannot return to business as usual or, even worse, to a more harmful version of what came before. We cannot afford to undo the social and environmental gains we have made.

The interventions made by governments in response to the pandemic can be the starting point in building a more balanced and inclusive economy and society. As discussed in question four, this includes embedding a partnership approach between local government and the voluntary sector, but for the voluntary sector to play its part in this “new normal”, attention must also be paid to voluntary sector funding and the procurement of services. 

Rethinking funding

As covered in response to question three, SCVO welcomed the Scottish Government's commitment to long term funding for the voluntary sector in its response to the Advisory Group on Economic Recovery, as well as the commitment to strengthening relationships between national and local government and the voluntary sector. We hope this will address the longer-term funding models available to statutory funders when funding the sector, as recommended by the Equalities and Human Rights Committee in November. The Local Government and Communities Committee should have an active interest in this work.

There needs to be proactive work taken forward as soon as possible to look at funding streams for beyond the initial crisis to provide stability to the sector, and the wider sector must be part of those discussions. Shrinking public sector budgets and the direct and knock-on effect of local authority cuts on voluntary organisations and the communities they work with have long been hitting people and communities hard. Several services and activities are being limited, stopped, or expected to fill gaps left by cuts to statutory services. We welcome the announcement in the Programme for Government of a £25 million Community and Third Sector Recovery Programme which will help organisations adapt their operations and income generation to increase sustainability. In this response to the committee, we are focused on the long-term funding environment that needs a rethink, as recommended by the Equalities and Human Rights Committee, to achieve better outcomes with our collective resources.  

The Equalities and Human Rights Committee recent inquiry on sector funding reported that short-term public funding, sometimes for one year or less, means that organisations can struggle to deliver projects and plan their workforces. Competition for funding can lead to an organisation straying from their purpose in their efforts to survive. Longer-term funding agreements that move us beyond a one-year cycle are vital to planning effectively. The recommendations of this recent inquiry into voluntary sector funding should be acknowledged and responded to by the Scottish Government in full. We recognise the Scottish Government's commitment to longer-term funding in its response to the AGER; the committee should be interested in understanding how this will be taken forward in partnership with the voluntary sector and statutory funders, including local government.

Rethinking procurement

There must be a significant 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 commissioning body and service provider must be able to work with an individual to establish what is needed to achieve the best outcomes.

Around 25% of voluntary sector income comes from public sector contracts; however, as with grant funding, short-termism makes income sources and our way of delivering person-centred services unsustainable. Sustainability is critical, and we need longer-term approaches to contracts that build in flexibility and trust that allow these services to pivot in times of crises and be agile in their response and recovery as what we know about the future evolves. This also gives voluntary organisations space to determine how to achieve what public authorities have invested in.

Existing commissioning and tendering models pitch organisations against each other and depersonalise the process, something quite different from the new, balanced relationships we are requesting. The client/contractor model reduces human services to a transactional contract that values numbers more than people. Payment by results approaches to employability services, for example, measure success by the number of people getting jobs, regardless of the quality or sustainability of the work and paying no heed to the person's journey in terms of self-esteem or mental health. That leads providers to cherry-pick the people they bring onto their programmes and leaves behind the people most in need of support, who are furthest from the labour market.

Existing procurement models often do not respect the harsh realities that voluntary organisations are working in. Many voluntary organisations already heavily subsidise underfunded critical services and core operational costs are often left out. There is now the factor of additional pandemic-related costs that will continue to fall on voluntary sector services when needing to operate these services in new ways. Traditional procurement models also do not take account of the capacity issues felt by many specialist organisations who are otherwise well placed to deliver these services. Local Equality Impact Assessments on procurement must take this into serious consideration.

We know that it is easier to change outcomes when bureaucracy and process come in second place to healthy relationships and partnership working. This relationship-based approach between the commissioning body and service provider can also support the widespread use of a service design approach where the voluntary sector is an equal partner in co-design as well as co-production. The Scottish Approach to Service Design ensures that those people supported by a service are at the heart of decision making.