4 February 2009

Rt Hon James Purnell MP

Secretary of State for Work and Pensions

Launch of Third Sector Task Force Report

The Royal Bank of Scotland, 250 Bishopsgate

Wednesday, 4th February 2009

[Check against delivery]

Introduction

Many thanks for your invitation and I’m delighted to be here.

It’s a tribute to everyone involved in the Third Sector Taskforce that you have taken on a challenging brief and responded with such a thoughtful analysis and practical set of proposals. I’d particularly like to thank Tony, David and Stephen for their contribution to this piece of work.

This event takes place against the backdrop of uncertain economic times. For the third sector, the paradox is that while the financial climate is tough, the need for its experience, innovation and commitment to people is greater than ever.

Tony writes in his foreword that: “The third sector has made a unique contribution to the Government’s Welfare to Work programmes with its local knowledge…its ability to build trust and its proven ability to help the hardest to reach”.

I totally agree. I know from experience that the third sector is the lifeblood of many communities and the source of support for many people. That is even truer in a recession, when people are looking for support and security.

I welcome this report and look forward to using this it as the basis for strengthening both the third sector itself and its relationship with government in the weeks and months ahead.

To set the context for today’s event, I want to take the next few minutes to make three simple arguments:

First – that the third sector can make a major – and indeed unique – contribution to improving the quality and building the capacity of welfare services over the coming years. We want to enable and maximise this role – and today’s report sets out some important ideas for how this can be achieved.

Second – that, more immediately, the third sector has a crucial role to play alongside government in supporting people and communities during the current downturn. We are determined not to abandon people as happened in previous recessions – and we need your local knowledge, networks and can-do attitude to make sure people are not written off.

Third – that the central lesson I take from today’s report is that any suggestion that there is somehow a choice to be made between ‘more state’ or ‘more third sector’ in meeting social need, profoundly misunderstands the nature of the third sector today and its modern relationship with government.      

1. The third sector making the most of the growing welfare market

Involving the third sector in the delivery of services is ‘business as usual’ for the DWP – we are leading the way across government in the welfare sector. One third of all DWP contracts are with not for profit providers.

The third sector has an established role and makes a unique contribution – in two main ways:

• First, its ability to support some of the most vulnerable people in our communities on their journey back to work – through their local roots, expertise and commitment – often helping those who are not reached by traditional or mainstream approaches.
• Second, its potential to inform the design and delivery of future policy through its innovation and entrepreneurialism – bringing new perspectives on problems that the man or women in Whitehall might not have realised yet was even a problem. 

In all we do, I want to protect and enhance these crucial roles – they make a contribution that the state could not replace. 

As today’s report notes, there is a period of major change ahead in the landscape of welfare services. Over the coming years we want to grow considerably the market for supporting people off benefit and into sustainable work – through our alphabet soup of reforms: FND, AME-DEL, ESF provision, Gregg pilots etc.  

This is a real opportunity for the Third Sector, with one caveat.  The caveat is that this won’t be about government giving grants directly to third sector organisations, or about those being payment for services.  However, DWP does very little of this anyway, and we would not be well placed to choose between organisations if we did.

Instead, we are going to pay for results. This is an opportunity because it plays to the strengths of the third sector, and in particular those characteristics of finding new clients and new methods. By freeing you up about how to do your job, we hope the system will help you do that job better.

That matters because we’re talking about a tough policy challenge.  Supporting people who have not had a job for a long time, maybe ever – and who may have given up on their chances of working again, and who might feel that society has given up on them.

The specialist, personalised support that the third sector offers day in day out is absolutely essential to shifting the culture of the welfare state to one which offers high quality support to people and has high expectations of them – where no one is written off.

So I am determined to ensure that the third sector is able to both shape and take advantage of this period of change. As today’s report notes, this requires the sector to expand in capacity and grow in capability.

This is a partly a challenge for the sector itself to rise to – becoming more effective and more professional. But there’s also a challenge to government too, in making sure we enable third sector organisations to flourish. Through the way we do business and the support we offer.

Today’s important report basically sets out two fundamental challenges. 

• First, how we can build up the capacity of the sector to take advantage of the opportunity I outlined above.  I agree that we need to look at how we can develop the skills, such as negotiation and contracting, of third sector organisations, especially those who are aiming to be secondary contractors.  I’m attracted to your recommendations here, though of course we’ll need to look at how they can be funded.
• Second, we need to make sure that prime contractors turn their bid promises in to reality.  You’ve made the interesting suggestion that the way that they do this should affect their star rating.  Again, I’m attracted to this, and we need to think how it can be done without injecting too much subjectivity in to this part of the assessment.

Finally, your most ambitious proposal is about creating a Social Investment Bank to develop the sector’s ability to grow and take risks in these areas.  This is clearly a bit above DWP’s pay grade, but I want to discuss with colleagues whether it would be justified by its ability to meet cross-governmental goals, especially at a time when the third sector will be expected to do more with less private funding coming in.   Let me turn to that question now.
 

2. The role of the third sector in supporting people and places through the downturn

Given the current economic uncertainties, supporting people through this period of rising unemployment is clearly an immediate priority.

The government cannot prevent every job loss, but we will do all we can to help people get their next job as quickly as possible. We are investing extra resources in Jobcentre Plus and providing more help to people who are out of work for six months. Because the jobs market is going to be tougher over the coming months, we’re going to work harder to help people.

Just as importantly, I am absolutely determined to avoid the mistakes of previous recessions, when short term job loss too often became long term unemployment. This damaged lives and scarred communities. I know you know this, because you have been trying to undo this damage ever since.

So we will act to prevent the return of long term unemployment and also continue, with you, supporting those who have greater barriers to work and may not have worked for a long time. This is more important, not less, when jobs are harder to come by.

The third sector has a major role to play in delivering on these objectives – which is why I believe its work is arguably even more important during a time of economic uncertainty.

The current financial climate will clearly impact on the sector, but Acevo estimate that many will recruit more volunteers to cope with increasing demand for its services – demonstrating that the sector is capable of responding quickly to growing need. 

So I want to work with you to see how the knowledge, innovation and flexibility of the third sector can be used to help people and communities through the current period. For example:

Maximising the potential for third sector organisations to recruit the unemployed, and to offer those out of work the chance to maintain or build their work skills through volunteering.

Making sure that third sector organisations can take advantage of the extra support we are offering to people who have been six months unemployed – for example the £2,500 ‘golden hellos’ to provide an incentive for recruitment and training.

And also using the extra help to support people into self-employment, through setting up new social enterprises which in turn can create jobs and meet pressing social needs.

These are just some ideas of how we can work together over the coming months – I want us to keep talking so together we understand and respond quickly to what will be a rapidly changing economic situation.

3. The modern relationship between the third sector and the state

Before I finish, I want to step back and briefly reflect on the evolving relationship between the third sector and the state.

This is because I am struck that the core theme running through today’s report – including its recommendations – is about what government can and should do to enable the third sector to flourish.

This starting point jars with a certain strand of public and political debate which suggests that the state and the third sector stand somehow in opposition to one another in meeting social needs.

According to this argument, ‘more state’ means ‘less third sector’. That the state prevents the third sector from maximising its role – for instance by ‘crowding it out’. Or that if the state would only withdraw, the third sector would be able to take its place.

I not only disagree with this view, but believe it profoundly misunderstands – and simplifies – the nature of the third sector today and the relationship it is forging with government. For instance, third sector organisations now receive more money from Government contracts than they do from donations. 

When we look around our communities we know there is still much work to be done – so we shouldn’t be seeking to substitute one sector for another. What we need is good and enabling government supported by, and supporting, a strong and effective third sector – adding value both in the design of policy and the delivery of services.

And this is the precisely the relationship we want to strengthen – not the third sector replacing the state, not the state crowding out the third sector, but both doing what they do best to help each other to transform people’s lives.

Conclusion

So, I want thank the members of the Taskforce again for their report and re-emphasise how keen I am to work with you all to build this mutually beneficial relationship between government and the third sector – in the interests of people and communities across the country.

I know we won’t agree on everything – which is as it should be in an honest, open and challenging relationship. But I’m clear that a vibrant, dynamic third sector – investing time and energy in building bridges with some of the most marginalised and disadvantaged members of our communities – improves people lives and strengthens our society.

This is true today, in the context of an economic downturn. Tomorrow, as we expand and improve our support to get people back to work. And I hope for a long time to come.