SCVO response to pre-budget scrutiny 2023/24: the impact of human rights budgeting

About our response

SCVO welcomes the opportunity to respond to the Equalities, Human Rights and Civil Justice Committee’s pre-budget scrutiny call for views. Our submission focuses on the budget process, the Equality and Fairer Scotland Statement, and building on the committee’s previous work on voluntary sector funding. We draw on evidence from:

• SCVO’s engagement with the committee and its predecessor, the Equalities and Human Rights Committee.
• Parliamentary records and Scottish Government publications.
• SCVO support services (funding, digital, membership support, and information).
• SCVO policy submissions, engagement, and research with the sector throughout 21-22, including, ‘Scottish Government funding of voluntary organisations: A case study of voluntary sector intermediaries.’  
• The Scottish Third Sector Tracker
• SCVO’s State of the Sector statistics 2022.

Summary of our response

Tackling poverty and inequalities and addressing other systemic issues, such as climate change and a just transition to a net-zero economy, are intrinsic to the work of the charities, community organisations, and social enterprises that make up Scotland’s voluntary sector.

The sector is an employer, a partner, and a vital social and economic actor. The Scottish voluntary sector manages an annual income of over £8.5 billion, employs around 135,000 paid staff, and works with approximately 1.2 million volunteers to support people and communities across Scotland.

Last October, SCVO gave evidence to the Equalities, Human Rights and Civil Justice Committee. We discussed the need for multi-year funding, timely decision making and payments, and the impact of the funding environment on voluntary organisations and their staff. We had previously shared similar concerns with the committee’s predecessor. The committee recognised these pressures and called on the Scottish Government to consider how a shift to a more sustainable, multi-year funding model for voluntary organisations could be achieved, both by government and across the public sector. The 2022/2023 Scottish Budget and the Resource Spending Review did not progress these calls.

Over the last 11 months, Covid 19, inflation and the resulting cost-of-living crisis have put enormous strain on sector finances and, for many organisations, increased demand. Combined, these events have left the sector wrestling with a running costs crisis while the cost-of-living crisis fuels demand for services and undermines funds. These issues and their effects are likely to be with us for years and have been exacerbated by a decade of underfunding and poor funding practices, which have left Scotland’s voluntary organisations vulnerable and exposed to shocks.

SCVO understands the challenging outlook for Scotland’s public finances and that is why we are calling for more funding from the UK Government to the Scottish Government. SCVO and colleagues across the sector have, however, been seeking change to how the public sector funds voluntary organisations for too many years and the Scottish Government has the power to make progress on many of these calls.

In a typical year, 4 in 5 households use a voluntary sector service. Both urgent action and long-term change are needed to protect and develop these essential services voluntary organisations provide. The committee can continue to support the sector by recommending that the Scottish Government’s 2023/2024 Budget commits to:  

• fair funding that is multi-year, flexible, accessible, and sustainable to help voluntary organisations plan through the crisis   
• annual inflationary uplifts for grant funding and contracts to ensure organisations:
  • can meet rising costs to stay open
  • can pay the Living Wage as part of the expansion of the Fair Work First criteria
• timely communication and prompt payments of funds to prevent funding gaps and uncertainty
• transparent monitoring and reporting on public sector funding of voluntary organisations to enable SCVO and others to better understand how the sector is funded by government and public bodies   
• reforming public sector procurement to ensure, amongst other priorities, that social, environmental, and economic factors are on an equal footing with cost
• support for the sector to transition to net-zero and reduce the impact of future shocks from the energy market. 

Our response

Budget process

What data and information are needed to assess whether budget decisions are helping to progressively realise human rights?

SCVO is not best placed to comment on whether specific budget decisions progressively realise rights; other voluntary organisations in the rights field and with specific experience of working with different groups will provide the Committee with a more detailed response to this question. All 45,000+ voluntary organisations in Scotland contribute to realising the ambitions set by Scotland's National Performance Framework (NPF), underpinned by the UN Sustainable Development Goals (SDGs) and human rights. SCVO’s submission is focused on securing and enhancing the voluntary sector’s contribution across these areas.   

Access to transparent data is essential for voluntary organisations to assess the positive, negative, or neutral impact of the Scottish Government’s spending decisions on the rights of people and communities across Scotland. Without the tools to measure the impact of budget increases, decreases, and preventative measures, it is difficult to understand the actions taken by the government and how and why funding flows from the government to different parts of the voluntary sector.

For example, the 2022/2023 Scottish Budget reduced the Third Sector Budget Line by £800,000, to £25.8 million. This budget line funds infrastructure support across the voluntary sector, including the Volunteering Action Plan, the Social Enterprise Action Plan, and a range of intermediary bodies. Beyond this, SCVO and colleagues across the sector do not have access to information about the projects, programmes, and organisations this budget line funds. The impact of the budget reduction is therefore unclear. Similarly, forecasts to increase this budget line up to £27.2 million in 2027 and the impacts of this increase cannot be assessed. If this reflects additional funding, then the increase is welcome, but it may simply be existing money moving across budget lines. 

Funding transparency would support voluntary sector intermediaries, such as SCVO, and others to:  

• understand Scottish Government decisions  
• assess the impact of budget changes   
• understand any Scottish Government action to mitigate risk and the extent to which these actions are successful. 

To enable colleagues across the voluntary sector to understand spending decisions and assess their impact, the Scottish Government should:  

• collect information across all government departments to get an accurate picture of how much funding flows to the voluntary sector and from which budget lines
• calculate and publish its total direct funding of voluntary organisations for grants and procured contracts
• produce a breakdown of which Scottish Government budget lines provide funding to the voluntary sector.

Small-scale change could be made relatively quickly by holders of budget lines. The Third Sector Unit should have a role in gathering this information and should publish an accurate picture of how their budget line – the Third Sector Fiscal Resource Budget Line – flows to different projects and organisations.   

The Social Renewal Advisory Board’s Third Sector Circle recommendation that Scottish Government funding of the voluntary sector across all Scottish Government departments and local government should 098be published on the 360 Giving platform - a platform where organisations openly publish grants data- should also be implemented. The Scottish Government published its emergency funding awards on 360 Giving during the pandemic, and the Scottish Government and other public bodies should roll this out across budget-lines. The Scottish Government could link these actions to its existing commitment to Fiscal Openness and Transparency in the Open Government Action Plan.   

What needs to change to increase meaningful participation in the budget process, particularly for marginalised groups?

SCVO is not best placed to comment on how to increase the meaningful participation of specific marginalised groups and would encourage the committee to consider the responses of voluntary organisations with experience and expertise in these areas and of those with lived experience.

One way to reach communities and encourage participation is by working through voluntary sector organisations and the people they work with.  Recognition of the vital role of voluntary organisations is needed to ensure that our sector, and the communities we work with, are included in the budget process.

SCVO does not hold figures on the number of organisations working with specific communities, however, our research shows that:

• in a typical year, 4 out of 5 households access a charity-run service
• 1/3 of voluntary organisations work in rural or remote areas
• thousands of voluntary groups work in areas of high deprivation –7,000 are located in the 20% most deprived areas.

Consistent approaches to partnership working between the sector and Scottish Government would enable the Scottish Government to reach the many marginalised people and communities organisations across the sector work with.

Ensuring that there is adequate investment in voluntary sector infrastructure is also vital. Voluntary sector intermediaries provide a crucial entry point for government, parliament, and the wider public sector. They provide an interface between voluntary organisations working in communities and public bodies to involve citizens in the design, delivery, and scrutiny of policy, projects, and services. Intermediaries can serve as a bridge into the Scottish Government and the Scottish Parliament for voluntary organisations that feel less able to speak openly about issues. Intermediaries also connect civil servants and politicians with beneficiaries who they otherwise have no access to.

What can be done to make budget information more transparent and accessible?

Improvements to fiscal data and information accessibility are already underway involving key Scottish Government experts in the Scottish Exchequer. This work covers public spending, procurement, fiscal transparency, and the budget. Enhancing the accessibility of information relating to the Scottish Government’s voluntary sector funding fits with the Scottish Government’s existing commitment to budget improvement – its Fiscal Transparency Programme – including a Fiscal Portal and its development of the Procurement Management Information Platform. We believe the Third Sector Unit and Scottish Exchequer must work together to deliver joined-up practical solutions.   

Transparent, accessible data would also highlight the Scottish Government’s significant investment in voluntary organisations. Ministers and civil servants regularly use SCVO figures to underline the scale of the Scottish Government’s direct funding to the voluntary sector – approximately £500m a year. The use of these figures suggests official figures from the Scottish Government are not available. Addressing this significant gap in the Scottish Government's understanding of funding flows to the voluntary sector is essential for the spending in the 2023-24 Budget to be appropriately identified, tracked, and understood.

The Equalities and Fairer Scotland Statement

Do the nine key opportunities and challenges identified in the Equalities and Fairer Scotland Statement correctly identify the key opportunities and challenges around building a fairer Scotland?

The Equalities and Fairer Scotland Statement identifies nine worthy priorities that need to be focused on. Our response will focus on those where SCVO can provide evidence.

Priority 1. Support an economic recovery which continues to progress action to tackle structural inequality in the labour market, including through good green jobs and fair work.

As the cost-of-living crisis bites, Fair Work for the Scottish voluntary sector’s workforce must be a priority. SCVO welcomes the Scottish Government’s plans to become a Fair Work Nation by 2025 and to extend the Fair Work First criteria to include the Living Wage. Years of underfunding, followed by Covid 19, and the running costs crisis, however, mean these ambitions cannot be achieved without additional resources. 

To support organisations to pay the Living Wage, public grant funding and contracts should include a Living Wage uplift to ensure the skilled and experienced voluntary sector workforce can be paid the Living Wage. In its recent Programme for Government, the Scottish Government recognised the cost for businesses in paying the Living Wage; such costs apply to the voluntary sector and recognition of these higher costs must be met through a Living Wage uplift in grant funding and contracts.

Similarly, annual uplifts in grant funding and contracts are essential to keep the lights on, secure services, and uplift wages to protect the living standards of those paid above the Living Wage rate. SCVO want to ensure Scottish voluntary organisations have the tools and support they need to provide Fair Work. Current funding and procurement models are not conducive to Fair Work aspirations.

As the committee understands, voluntary sector funding is dominated by short-term funding, which creates uncertainty for voluntary sector projects and roles, resulting in short-term contracts and frequent redundancy notices, particularly at the end of the financial year. Delayed decision-making from the Scottish Government and other funders exacerbates these issues, creating unnecessary uncertainty that impacts organisations, staff and volunteers, and the communities the sector works with. Staff experience job insecurity while organisations and the communities they work with lose staff and volunteers with skills and experience.  

Similarly, unsustainable funding for the voluntary sector undermines pay security. When voluntary sector contracts and grants are not uplifted for inflation, organisations are often unable to uplift wages. In the current context, rising inflation and the resulting cost-of-living crisis are exacerbating this issue. In this environment, the Scottish Government’s plans to extend the Fair Work First criteria to include the Living Wage, while welcome, has the potential to put further financial pressure on voluntary organisations. SCVO continues to engage with the Scottish Government to get clarity on what the extension of the Fair Work First criteria to include the Living Wage means for voluntary organisations, and how this will be resourced and implemented, ensuring organisations will be supported.

The budget can support job and financial security for the voluntary sector workforce, their volunteers, and the people and communities the sector works with through:

• multi-year funding for the voluntary sector
• timely communication and prompt payments
• a Living Wage uplift for grant funding and contracts
• annual inflationary uplifts for grant funding and contracts, recognising the impact of rising inflation on the voluntary sector workforce. 

To become Fair Work employers, voluntary organisations also need resources to understand and implement Fair Work. Fair Work First, the Fair Work Convention, and the Fair Work Dimensions are not well understood in the sector. Raising awareness of this is essential. 

Fair work can make Scotland’s economy fairer, productive, and efficient. Addressing the unsustainable voluntary sector funding environment benefits voluntary sector organisations, their workforce, volunteers, the communities they work with, and Scotland’s wider economy.

Priority 4. Build digital services that are responsive to individuals and address inequality of access to digital participation.

The Scottish Government is increasingly moving services online. The digitalisation of public services can simplify and integrate services. Delivering better digital public services is also essential to meeting the public's expectations in the current world. The people most likely to be supported by public services are also those most likely to be digitally excluded. Online public services must be accessible to all. Initiatives to ensure everyone can use and access digital services must be part of the drive to digitalise public services. 

SCVO would expect to see robust impact assessments where services are moved online, including how they will provide the service to those who cannot or will not engage in an online service. Digital transformation should also be based around the principles of the Scottish Approach to Service design, including strong user research, testing and refinement to make sure the service is as simple as possible to access for everyone. Recognising 1 in 4 people have low digital skills, public bodies must consider how they embed the support for digital inclusion as part of their work, particularly when they are working with those most likely to be affected for example, those on low incomes and people with disabilities.

Digitisation should also not solely be seen as a way to realise cost savings. If framed in this way, it may lead to the development of business cases which do not fully consider the needs of those who are digital excluded. As a result, services may become less accessible to the most vulnerable in society and/or necessitate expensive alternative solutions further down the line. A robust assessment of the impact of digitisation on digitally excluded people, and the development of effective alternatives, should be considered at the outset of every project.

Priority 8. Ensure that policies, action and spend necessary to mitigate and adapt to the global impacts of climate change deliver a just transition for people in Scotland.

Voluntary organisations across Scotland help people and communities to understand and adapt to the impacts of climate change. Our sector provides consumer advice, education, nature solutions, place-based community solutions, lobbies for climate justice, and plans for and delivers emergency responses. SCVO encourages the committee to consider the responses from voluntary organisations with experience and expertise in this area. 

Our sector, like the private and public sectors, is responsible for mitigating climate change by reducing our carbon footprint. There is little data available to demonstrate the sector’s climate impact or the support voluntary organisations to achieve net zero by 2045. However, research by SCVO and Senscot in 2021 suggests that many organisations without an environmental charitable purpose struggle to prioritise climate change, particularly after the stretching of resources by Covid 19, rising inflation, and the cost-of-living crisis. Despite this:

• 68% of survey respondents expressed an interest in measuring their organisation’s carbon footprint
• 28% had environmental policies 
• 13% had set a carbon neutral target.

More work is needed to identify the number of voluntary organisations with net-zero goals and encourage others.

Similarly, as statutory funders introduce climate requirements, such as changes to the Single Procurement Document (SPD) to Incorporate Climate Criteria, more must be done to support the sector to understand what action can be taken and meet the costs involved.  Respondents to our survey found carbon footprinting time consuming and difficult and carbon measurement tools challenging to use. 

Small charities (income of under £100k) make up 78% of the charity sector in Scotland. In 2020/21, 40% of charities spent more than their income, with that rising to 46% of smaller charities. Funding and support will be needed to prepare the sector for any changes to funding requirements and to make buildings more energy efficient, particularly as many voluntary organisations will work from poorly insulated buildings and listed buildings. Support for the transition to net zero should also recognise and reduce the impact of future shocks from the energy market on voluntary organisations.

SCVO appreciates that there is some funding available to support organisations towards net-zero. This funding landscape is, however, challenging to navigate and a lack of transparency makes it difficult to get a clear picture of what’s available. A recent research report into net zero provision for voluntary organisations in Scotland by CEiS highlighted a very complex system of support services.

In December, the Economy and Fair Work Committee wrote to the Scottish Government on support for business in the move to net zero, calling for a clear roadmap for businesses, particularly smaller businesses, backed by practical support and non-loan-based funding in next year’s budget to encourage decarbonisation. The Scottish Government recognised the need for information, advice, and support and committed to working with the business community to identify and tackle barriers to sustainable growth domestically and internationally. Voluntary organisations face similar challenges and must have access to similar commitments and action.

Building on previous committee work

Has the Resource Spending Review given the voluntary sector the funding certainty it was hoping for?

In 2019, the previous Equalities and Human Rights Committee recognised that the way the voluntary sector is funded needs to change, as discussed in depth in the Committee’s report, ‘Looking ahead to the Scottish Government’s Draft Budget 2020-21: Valuing the Third Sector’. SCVO has called for committees to consider the recommendations of their predecessors and welcome the Equalities, Human Rights and Civil Justice Committee’s exploration of what progress has been made on voluntary sector funding since 2019. Many of the issues described remain both unresolved and problematic. These issues have been exacerbated by rising inflation and the resulting energy crisis, which have left the sector wrestling with a running costs crisis while the cost-of-living crisis fuels demand for services and undermines funds.

The Scottish Government recognised in the Spending Review Framework that, in the current climate of rising inflation and the resulting cost-of-living crisis, demand for public services will be high and the voluntary sector will continue to play a crucial role. However, the Resource Spending Review did not include multi-year or other funding commitments at the scale that SCVO and others have been calling for, falling short of giving the voluntary sector the funding certainty it needs.

In our response to the Scottish Government consultation on the Spending Review earlier this year, we called for the Spending Review to address the disparities that have widened over many years between public services led by public bodies and those delivered by voluntary organisations, making the case for fair funding that is multi-year, flexible, accessible, and sustainable. During last year’s pre-budget scrutiny, the committee heard from the Scottish Government that the multi-year resource spending review would ‘provide certainty to the sector and support effective planning.’ The reality is that this has not happened.

The Scottish Government’s four-year plan was the opportunity to make good on repeated commitments to longer-term funding for the voluntary sector. While developments in longer-term funding in a few areas featured, such as tackling health inequalities, there were no commitments to the largescale change that voluntary organisations need, despite the increasingly challenging operating environment.

Are funding arrangements for the voluntary sector fit for purpose?

As has been discussed, and as the committee has recognised, short-term funding dominates in the voluntary sector, creating uncertainty for voluntary sector projects and roles. These issues have been highlighted for many years — most recently by the Advisory Group on Economic Recovery, Scotland’s Social Renewal Advisory Board, and by the Equalities, Human Rights and Civil Justice Committee itself.

The emergency funding provided to the sector during the pandemic demonstrated that greater flexibility in existing and new funding arrangements is possible. Both public sector and independent funders flexed models to get funds where they were needed most. Greater partnership working was also demonstrated, including the Scottish Government co-designing emergency funding models with the SCVO and others.

SCVO and colleagues across the sector were hopeful that the approach to funding demonstrated during the Covid 19 pandemic would result in progress towards funding sustainability for the voluntary sector. Instead, the pandemic, rising inflation and the resulting cost-of-living crisis, have exacerbated the challenges that voluntary organisations have faced for many years.  

Throughout our response, we reflect on the importance of a funding landscape that is fair, which means multi-year funding that is flexible, accessible, and sustainable, to ensure that organisations can provide the services and projects that are crucial to communities across Scotland.

We are calling for multi-year funding because voluntary organisations need longer-term funding models to provide security, plan effectively, and retain and develop staff. The time and resources that go towards the annual funding cycle, from organisations and funders alike, leads to vital capacity being wasted every year. We go into more detail on multi-year funding below.

In calling for flexible funding, we mean that funding should, wherever possible, be unrestricted to allow organisations to meet core running costs, providing greater stability and allowing organisations to plan for the longer-term. Greater flexibility from funders, including the Scottish Government, in areas such as project and service design, and the setting of targets, is also necessary.

In calling for accessible funding, we mean that the sector needs standardised, streamlined, consistent approaches to funding and application processes to ensure a level playing field for all organisations. Providing clearer guidance, simplifying the approach to monitoring and reporting, and making timely decisions are crucial to ensuring no voluntary organisation is disadvantaged by the process.

In calling for sustainable funding, we mean that inflationary uplifts must be built into funding to avoid the all-too-common occurrence of organisations facing real terms cuts on an annual basis. Ensuring more opportunities for full cost recovery, enabling organisations to recover more of their overheads through adequate contributions to core costs, is also vital to ensure funding, and therefore the sector, is sustainable. In recent research, organisations shared a concern that funders of all types do not recognise the importance of core funding to sustaining activity and enabling growth.

The committee and its predecessor have consistently recognised the vital role that voluntary organisations play in the delivery of equalities and human rights outcomes. Fair funding is essential for a sustainable Scottish voluntary sector which delivers quality outcomes for people and communities. We hope the committee to continue to highlight these challenges and their impacts, as well as the lack of progress to date, to secure fair funding that is multi-year, flexible, accessible, and sustainable.

We cover some of the critical issues in more detail below:

Multi-year funding

As is well understood by the committee, short-term funding significantly impacts the effectiveness of the voluntary sector by creating ongoing uncertainty and insecurity on a scale unparalleled by any other sector. Voluntary organisations:

• struggle to plan for the long-term
• face barriers in recruiting, retaining, and developing staff and volunteers
• have trouble offering secure jobs, undermining Fair Work aspirations  
• are trapped in a cycle of dedicating time and resources to sourcing funding 

Annual funding challenges also distract from providing the services people and communities across Scotland rely on. Similarly, the Scottish Government dedicates significant time and resources to annual processing and decision-making when often there is little change year-to-year. Short-term funding also undermines job security - one of the five Scottish Government Fair Work Dimensions - across the voluntary sector workforce of over 135,000 people.

We are disappointed in the warm words we continue to hear about the Scottish Government’s commitment to delivering multi-year funding where possible, including in correspondence sent to the committee following last year’s pre-budget scrutiny. One year later, we have not seen ‘progress to further a multi-year funding model,’ we have not seen a Resource Spending Review that provides ‘certainty to the sector and support effective planning,’ and we continue to hear from organisations who have not received confirmation of their funding for the following year before proceeding funding periods end.  

In our recent research on the Scottish Government’s funding of voluntary organisations, organisations reported a lack of straightforward and timely processes in decision-making by the Scottish Government, presenting a significant barrier to the planning and delivery of projects and services and supporting the workforce. When decisions relating to funding are made, we heard that these often slip into the new financial year. Organisations must chase the Scottish Government for decisions, and they feel as though it is a constant battle to secure a timely decision. Even when a decision is made, organisations can be left waiting months for the payment of funds to reach their accounts.

We raise the above issue here because it highlights the value and benefits that multi-year funding would bring, cutting out the unnecessary uncertainty and bureaucracy to ensure that those unable to dip into their reserves or other income sources are no longer left in extreme difficulty at the start of each new financial year.

Fair Work

As has been discussed, short-term and delayed decisions and payments of funds undermines job security in the voluntary sector. This needs to be addressed to enable the sector to meet Fair Work ambitions. Similarly, to support organisations to pay the Living Wage, public grant funding and procured contracts should build in a Living Wage uplift to ensure organisations delivering public services are able to pay the Living Wage.

This will support the voluntary sector paid workforce, 135,000 people, which includes more women (64.5%), more part-time workers (37%), and more people with a disability (23%) than the public and private sectors. Women and people with a disability are at greater risk of living in poverty, an inequality the Poverty Alliance stressed has deepened during the pandemic. Annual uplifts in grant funding and contracts are also essential to protect the living standards of those paid above the Living Wage rate. 

In recent research carried out by SCVO, voluntary organisations pointed to the cumulative impact of consequences that come from poor funding practices on the wellbeing and consistency of voluntary organisation’s workforces. Staff morale at all levels surfaced as an area where the impact of funding challenges is felt, from those on short-term contracts to the demands of managing these tensions felt by senior leaders. One organisation said, ‘Staff morale is a big issue. The funding cycle is not good for job security. Our staff go through this hassle every year, although the money comes through in the end.”

Annual uplifts and the cost-of-living crisis

Similarly, a lack of inflationary uplifts creates an unsustainable environment with organisations expected to provide the same support with fewer funds. Many organisations have reported no increases in local or national government funding for over 10 years. One organisation reported no uplift for 13 years, a 27% cut in real terms. This is being exacerbated by inflationary pressures which impact both our sector and the communities the sector works with.

Like households, voluntary organisations are affected by rising energy prices and other rising costs. Still, unlike households, there is no energy price cap for voluntary organisations, which leaves them completely exposed to the wholesale costs of energy on the market. Between December 2021 and April 2022, 86% of organisations reported rising costs, a figure that is expected to increase as outgoings soar. The sector will need support from the 2023/2024 Budget to adapt to these challenges. Without inflationary uplifts, we risk an unsustainable environment with the expectation that voluntary organisations provide the same support with less money.

Despite recognition of these issues from Scottish Government, there has been little demonstrable progress. Voluntary organisations interviewed by SCVO explained that they do not see adjustments for inflation, making it challenging to meet cost-of-living increases and rising costs while being expected to deliver the same services or more with static funding. Organisations noted that their concerns are often taken onboard by the Scottish Government, but this often does not result in any meaningful change.

Procurement

The voluntary sector is a significant partner in delivering essential procured public services across Scotland. SCVO recognises the challenging economic outlook described in the Spending Review and the need for efficiencies in the procurement system. Efficiencies, however, should not result in a further drive to the bottom and cuts to funding for procured services. Doing so will only cause further inequity with services provided by the public sector, such as but not limited to being unable to pay the Living Wage on secured contracts.  

Around 25% of income to the Scottish voluntary sector comes from public sector contracts. Even before COVID, the voluntary sector was fragile, with procured contracts often not providing adequate funds to meet agreed contract standards and ensure voluntary organisations can deliver Fair Work. Social care intermediaries regularly report organisations handing back contracts as funding does not cover the cost of providing services. In these cases, the public sector offloads significant financial risk to voluntary organisations that cannot withstand the levels of risk that their public counterparts can. 

SCVO member surveys in 2013 and 2019 that focused on voluntary organisations’ experiences of procurement processes revealed that while the Scottish Government and other public bodies have made minor improvements to procurement practice, comprehensive procurement reform is urgently needed. Procurement contracts should: 

• place social, environmental, and economic factors on a level footing with cost in contract arrangements 
• include resources to pay the Living Wage and an annual inflationary uplift 
• offer multi-year funding 
• guarantee full cost recovery
• address competitive tendering

Fair procurement should provide the funding it costs to deliver a well-run service or programme and ensure that the processes that organisations must navigate to secure and continue to deliver contracts are accessible to small and medium sized organisations. Those accessing services should have choices available to them that suit their needs, and this is more likely to happen when voluntary organisations are at the heart of public service delivery. Employment from contracts should also support Fair Work principles, including payment of the Living Wage.    

SCVO and others provided significant evidence to the former Economy, Energy, and Fair Work Committee's inquiry into the Procurement Reform (Scotland) Act 2014. The committee provided no further reports or recommendations, likely due to the timing in 2021. SCVO encourages the committee to challenge the Scottish Government to reform public procurement to ensure that social, environmental, and economic factors are on an equal footing with cost to address these systemic challenges, as reflected in evidence to the former committee’s preliminary inquiry.  

A summary of solutions

SCVO encourages the Committee to recommend that the Scottish Government’s 2023/2024 Budget commits to:  

• Fair funding that is multi-year, flexible, accessible, and sustainable to help voluntary organisations plan through the cost-of-living crisis   
• annual inflationary uplifts for grant funding and contracts to ensure organisations:
  • can meet rising costs to stay open
  • can pay the Living Wage as part of the expansion of the Fair Work First criteria
• timely communication and prompt payments of funds to prevent funding gaps and uncertainty
• transparent monitoring and reporting on public sector funding of voluntary organisations to enable SCVO and others to better understand how the sector is funded by government and public bodies   
• reforming public sector procurement to ensure, amongst other priorities, that social, environmental, and economic factors are on an equal footing with cost
• support for the sector to transition to net-zero and reduce the impact of future shocks from the energy market. 

Multi-year funding, timely decisions and payments, annual uplifts, and a commitment to fund voluntary organisations to pay the Living Wage, are all actions that could be taken within the 2023/24 Budget that would support a more sustainable sector, make a real difference to the job and financial security of voluntary sector staff, and support quality outcomes for people and communities.

Contact

Sheghley Ogilvie - Policy and Public Affairs Officer 

Scottish Council for Voluntary Organisations, 

Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh EH3 6BB 

sheghley.ogilvie@scvo.scot  Tel: 0131 474 8000   scvo.scot