11:29am Tuesday 15th June 2010
By Barry Nelson
The cuts are coming and charities that provide vital services could be in the firing line. Barry Nelson found out more from the boss of a successful North-East charity.
ANDREW PIKE, from Hartlepool, is a typical Disc success story. The 25- year-old had no idea what he wanted to do for a living and was pretty directionless until his local Jobcentre referred him to the County Durhambased charity.
Thanks to them, Andrew, has found his vocation in life and is now working full-time in a Blackhall care home for people with physical and mental disabilities. He has made such an impact already that he has been given a High Sheriff’s Award.
Andrew got a new direction in his life after he joined a New Deal programme run by Developing Initiatives Supporting Communities, otherwise known as Disc.
With the help of Disc, Andrew started volunteering at Hartlepool Prop, a drop-in centre for people with mental health problems. Much to his own surprise, he loved it, didn’t miss a day during his 13-week placement and even went in to help on his day off.
On the strength of this experience, Andrew signed up with Hartlepool College for a parttime NVQ in health and social care, which led to him getting the care home job.
Receiving his award from Steve Johnson, chief executive of Disc, Andrew said: “I’d never thought about working in social care until Disc encouraged me to give it a go. Now I love it.”
Andrew is just one of about 7,000 people Disc helps every year.
The award-winning charity specialises in developing partnerships and services to help people get a better start in life. Some of their clients have had their lives blighted by factors such as unemployment, family breakdown and substance abuse.
New Deal is only one of a large number of programmes run by Disc designed to combat deprivation and promote social inclusion.
Disc has enjoyed a great deal of expansion, with its budget increasing by 17 per cent a year for the past three years. Now it has a turnover of £17m and employs 440 staff.
But Steve is bracing himself for a potentially very difficult couple of years because of the indirect impact of public spending cuts on charities such as Disc.
Like many charities, Disc relies heavily on winning contracts from local authorities and health trusts to provide a range of services. But with the new Government warning that the country needs a period of severe belttightening, Steve fears that, as councils and trusts try to reduce costs, the thousands of people who rely on his charity’s services will bear the brunt.
While no projects have been cancelled so far, Disc has been told not to expect “cost of living”
increases for existing programmes.“This means we have to absorb the extra costs,” says Steve, who founded Disc 26 years ago after graduating from Durham University at a time of high unemployment in the North-East.
The usual procedure to win contracts from local authorities or NHS trusts is to take part in competitive tendering, but this process is already being disrupted.
“In one case, we were well advanced into the tender process and they stopped it. We have several other tenders out at the moment but we don’t know whether they will proceed with them or not.”
Steve says at least one local authority has warned the charity that it was freezing all spending until a review could be carried out.
Ominously, the Government has quietly introduced changes which means that funding for one of the most successful programmes – Supporting People – will no longer be ringfenced.
Steve fears that councils under increasing pressure to cut costs will be tempted to reduce budgets for programmes like Supporting People.
“With funds being freed up in this way we have this great fear that local authorities will start diverting money away from programmes like Supporting People and into other things.”
For him, it will be a tragedy if the Supporting People budget is cut. “The programme has prevented massive homelessness and has been a particular success in Darlington,” he says.
Recently, the National Council for Voluntary Organisations came out with the gloomy forecast that up to a third of the voluntary sector’s income could be at risk in the current squeeze.
While much of this relates to a reduction in charitable giving and legacies, a lot of the expected shortfall is public sector money. “We still don’t know what level of contract reduction to expect,” says Steve.
One development which is already happening is that local authorities and health trusts are saying they want to see the same level of service, but for less money.
Another way to shift the burden of the cuts on to charities is to tweak service contracts so that there is a greater emphasis on payment by results.
THIS could mean a charity could spend a lot of money preparing someone to take a job, but end up short-changed because the client leaves the employment before the deadline specified by the commissioners.
“They are now talking about changing payments so that clients have to be in employment for longer periods. This basicially means we are being asked to carry more of the risk.”
To offset this problem, the Government is offering a form of loans called social impact bonds. But, as a charity which does not carry big surpluses every year, Steve says Disc is reluctant to borrow money.
To respond to the deteriorating situation, Steve says Disc is preparing a number of strategies.
One possibility is to have a two-tier wage structure to make some projects more affordable.
This would involve retaining a core of people paid at current rates but supplementing them with new staff on a lower pay scale.
Steve is determined to do all he can to avoid losing any of the 440 people employed by Disc.
“Where possible, we will redeploy people. If we do have to shrink in size, we will try to do this through natural wastage.”
More than anything else, Steve hopes that his clients will not bear the brunt of the seemingly inevitable cuts.
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