Labour's plan to ring-fence contracts for charities is 'wrong'

Gurjit Degun
20 September 2014

A think tank that supports charities has criticised Labour’s proposal to offer a proportion of contracts exclusively to the third sector.

Instead, New Philanthropy Capital (NPC) said deals should be redesigned “to ensure charities have a fair crack at delivering some public services”.

The comments are in response to the Labour Party’s consultation Reviewing our bond with the third sector, which concluded on 15 September. The NPC said that the idea was “first floated by shadow social enterprise minister Chi Onwurah”. It added: “It would do little to address the underlying problems which too often result in poor services, regardless of the provider. In addition, it risks contract decisions being made on the basis of something other than quality.”

In its consultation response, the NPC also called for reform to the way that contracts are designed “with the specific goal of attracting more competitive bids from the charity sector”. It said such a redesign could include more time to liaise in the pre-procurement phase; and a rethink of payment-by-result contracts “so that sub-prime charity contractors are not landed with the greatest risk for the least stable income”.

NPC chief executive Dan Corry added: “Successive governments have raved about the great potential of the charity sector to help out individuals in need. Labour can prove that they really mean it. With today’s tight finances, the trend of commissioning services from third parties is only likely to grow. The crucial thing is to make sure this is done smartly so charities get a fair crack at winning them. I’m not convinced that ring-fencing contracts for charities is the best way to achieve this, when the problem so often lies with the way that contracts are designed. Any meaningful changes will need to start there.”

Onwurah did not respond to SM's request for comment.

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