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The wrong kind of nationalisation


8:00 am - January 28th 2009

by Alan Thomas    


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What does a charity do? It used to be the case that charitable organisations, along a rather old but not dishonourable model, subsisted from donations and did “good works” independent of the state and public services. Increasingly, especially in services dealing with vulnerable people, that is no longer the case. Let us take a classic example – the funding of organisations which in one way or another house and support vulnerable homeless or ex-homeless people. 

One of the lower-profile social policy questions of the moment is the funding of voluntary sector organisations via the state, and nowhere is this more acutely felt than in the homelessness “industry”. Since 2003, organisations providing housing support services to the vulnerable homeless and ex-homeless have been overwhelmingly funded and regulated via the Ministry of Communities and Local Government, previously part of the ODPM. The stream in question goes by the name of “Supporting People”, or “SP” to use the usual shorthand.

The idea of  SP as it was sold to organisations, was that it would sharpen up good practice and provide a measure of regulation to an industry where excellence relied upon the good will and skill of an individual provider. In return organisations working to house and support the vulnerable would be offered relatively lavish and secure, renewable funds conditional upon reasonable reviews by SP’s inspection teams. Initially this worked very well from the perspective of front-line workers: I can certainly remember the way in which the advent of SP spelled doom for several examples of bad practice in the West Midlands, either by force of the inspections or indeed the mere threat of it. Furthermore, new and more specialised teams working in specific areas began to spring up, replacing the old, giant, depressing hostels in a number of instances.

However that was not the whole story. At the same time as providing new funds, SP also began to create a dependency on the part of providers. Organisations which had previously had diverse funding, cobbling together jobs and services from various streams, began exclusively to rely on SP. After all, why scrabble around writing ten bids for £50,000 when you can comprehensively fund a service from top to bottom with a single £500,000 bid to SP? For entirely understandable reasons, SP rapidly became a near-hegemonic funding regime, turning voluntary sector organisations which relied on it into de facto public services, albeit public services with little or no direct accountability to either the public or its elected representatives. Instead charitable providers remained technically accountable to boards of trustees who at best now formed an extra tier of management, and at worst appeared to exist merely for tax purposes. Ultimately of course those providers were actually accountable to the growing bureaucracy of SP, especially its local authority-based but largely autonomus commissioners and inspectors. The ethos of provision within the sector shifted as SP regulations were tightened and incremental cuts made (£15 million in SP’s second year of existence, and further amounts in most subsequent years), so that services began to exist on a hamster’s wheel of difficult and competitive funding renewals. Ticking category boxes became the name of the game, an an effort to sustain organisations which were now by and large solely dependent upon SP funding. If the SP funding went, then so did the charitable provider – thus showing that “don’t put all your eggs in one basket” is to this day a truism. The consequences of a poor SP review, both for staff whose jobs were already less secure and often worse-paid than their public sector counterparts, and for service users accustomed to a settled key worker, could be disastrous.

This model of centralised “voluntary” sector funding has been called “nationalisation by stealth”, particularly by right-wing commentators and thinktanks. Up to a point this could be said to be true, in that public funding and regulation dominates out private donations and laissez-faire attitudes to working practice. However it is the case to that point and no further. In my view what we increasingly have in regimes such as SP, is the worst of both worlds. That public funding comes with precisely zero public accountability, and even “service user involvement”” programmes in many organisations are often little more than effective window-dressing, as vulnerable people are expected to go toe-to-toe with managing directors. It also comes with all of the job insecurity of the private sector, made worse by the fact that the determinant factor is often the back-room politics of full-time government officialdom rather than that great myth which is “market forces”. No public service ethos is encouraged, and debates about future strategy are kept away from the public sphere. That is no kind of public ownership which I would recognise – if anything it is nationalisation of the purse-strings, with none of the perks. Further, it could be (and has been) alleged that the partial handover of public service provision to the voluntary sector in many different sectors over recent years is in fact privatisation by stealth, not nationalisation at all.

What would I do instead? It seems to me very clear that the homelessness sector does need public accountability and regulation. Housing and supporting vulnerable people is not, and never will be, akin to running a donkey sanctuary or rescuing stray cats. I therefore do not automatically buy into the notions of “independence” and “freedom” which so often cover bad practice in the voluntary sector as much as elsewhere. I certainly would not wish to return to the days when sharp operators (by no means all of the sector, but certainly a notable few) could effectively treat funding streams as a pig’s trough from which to feed, in return for very little service delivery. But along with this accountability comes a requirement that continuity and security be provided to staff and service users, and this is made a nonsense by the transient nature of two-yearly bidding processes for services. What is more, if we are unwilling to entrust the education of our children or the care of our sick to the “third sector”, then why should we do so with people who are often too vulnerable to speak up for themselves?

The answer then, for me, is either full and democratically accountable public ownership of the UK’s homelessness support provision, or at the very least a far more direct structure of democratic accountability for the voluntary sector, coupled with more secure and stable funding from government. By all means retain individual organisations’ forms, structures of provision, names and unique characters where they are worth preserving. Further, by all means keep independent the self-organised service user groups and services which give a voice to those vulnerable people when they need to speak out against those who house and support them. Let charities do what they do best in the modern age – namely providing “value added” services over and above the statory provision, rather than replacing it. The homeless of this country owe no loyalty to a “sector”, and nor should they be held hostage to competing ideologies which either sell their vunerabilities to often unscrupulous private-sector landlords or to a “third sector” which relies on the state for funding whilst having few of the benefits (for staff or service users) that the state provides to its own employees or those under its care. It seems to me a basic social-democratic idiom that the state is there to catch people when they fall. It is time for that to happen.

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About the author
Alan Thomas is a regular contributor to Liberal Conspiracy. He is a blogger, a political activist and a lay member of Unite-TGWU. His main interests outside of UK left politics are in Turkey, Kurdistan and the USA. And is also always delighted to write about wine and fine food when he's in less of an intellectual mood. Also at: Shiraz Socialist
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Reader comments


State funding of voluntary and charitable organisations should stop entirely. Government should operate within public sector structures to achieve it’s clearly defined aims and leave the privately funded, voluntary sector to do as it sees fit.

When public money is diverted to this sector, I am less concerned about the lack of accountability (though that is an issue) than the effect that the funding has on such organisations. It tends to transform them from being streamlined, focussed organisations motivated to achieve their aims to becoming sluggish and bloated. Policies are altered to fit in with the funding requirements. They lose their focus and become reliant on and paranoid about their funding. Like a heroin addict, securing the continuity of the money supply comes to absorb much of their energy and becomes an end in itself.

They do what they were set up to do less well.

Of course, the other way in which the government has undermined the charitable sector is by setting up a multitude of single issue quangos and calling them “charities”.

Stonewall, ASH, Alcohol Aware etc are almost entirely publicly funded and do nothing useful. They fund dodgy research and campaign on their particular issue- spending huge sums of money on websites nobody reads and lobbying to change the policy of the Department that spawned them!! If you want a laugh (or a cry) have a close look at EnCams.

The problem is that the average member of the public cannot erasily differentiate between real and fake, good and bad and the quite logical response is to cease charitable giving entirely. Instead of being, as it should be, a voluntary altruistic action- an expression of concern and an an attempt to provide help in a particular area, charitable donation in the current environment has become little more than a voluntary tax supplement.

2. Mike Killingworth

I am confused. Does Alan think that the present arrangements are better or worse than what existed before? Why does he think that local authorities could run hostels and other forms of supported housing better than voluntary agencies? Fieldworkers and campaigners will always think that funding is insufficiently “secure and stable” as well as just insufficient!

If SP has, as he says, got rid of the crooks and dumbos that is a pretty clear gain to me.

I agree there is a problem with ensuring the service-user voice is heard in this area, because of course “vulnerable” is a euphemism for “mental health problem”. But I don’t see the connection between that and the funding régime.

Oh, and there is at least one example of the care of the long-term disabled being outsourced to the private sector – the Royal Hospital for Neuro-Disability in south London. They’re generally considered to be a beacon of good practice and in my experience of them with reason.

I would hope that the funding arrangements in the homelessness sector (and others) would seek to encourage innovation as well as to uphold standards: since SP has, on Alan’s account, done the latter perhaps he can provide examples of how it has discouraged the former. And if he can devise a better compliance régime, great – but I suspect it’s a lot easier said than done.

Very interesting – there’s lots to talk about here. One quick thing:

“What is more, if we are unwilling to entrust the education of our children or the care of our sick to the “third sector”, then why should we do so with people who are often too vulnerable to speak up for themselves?”

Voluntary and community groups provide a lot of education and care services.

I’m also not sure that it helps to conflate the issues of funding or participation with those of whether services are better run by the public or voluntary sectors – there are examples of services that are under-resourced and/or unresponsive to the people who use them in either sector.

I think as a starting point, the public sector should provide the services which we democratically decide should be available to everyone regardless of where they live, and then voluntary and community groups provide additional services in local areas to meet particular needs. That seems better than closing down thousands of groups as pagar seems to be suggesting.

“I think as a starting point, the public sector should provide the services which we democratically decide should be available to everyone regardless of where they live, and then voluntary and community groups provide additional services in local areas to meet particular needs.”

That is precisely what I was suggesting.


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