Spending review provides opportunities for third sector specialists

While many commentators have decried the extent of cuts to public services announced in the Chancellor’s comprehensive spending review, one Birmingham accountancy firm believes there’s real opportunity for those looking to start new businesses in the social sector. 

Heidi Harris, founder of Harris & Harris Accountancy Services, which specialises in working with social enterprises and charities, identified the ‘work programme’ and ‘new rehabilitation programme for offenders’ as real opportunities for third-sector providers. 

“Although £80billion of cuts are planned over the next four years, there are many opportunities for third sector service providers, old and new,” Heidi said.  “The work programme and new rehabilitation programmes for offenders are both potential areas where the sector could benefit, with payments based on reductions in re-offending and welfare benefit spend savings.”  

The programmes are part of a wider commitment by the Government to pay and tender for more services by results and include plans to agree proportions of services that will have to be delivered by external agents. 

“Initially this will include adult social care, early years, community health services, pathology services, youth services, court and tribunal services and early-intervention services for the neediest families,” Heidi said. “Plans announced to invest an additional £250million for adult apprenticeships, extensions to early years education and an additional £2billion for social care also represent an opportunity for the sector.” 

With Community Asset Transfers set to continue, communities will also have the right to buy or run public assets and services that are facing closure or reductions in service levels.

Heidi continued: “Introducing a right for public sector workers to create employee-owned co-operatives and mutuals to take over services will go some way towards off-setting job cuts within the public sector. 

“Hopefully, this won’t just be restricted to co-operatives and mutuals but will also include the right to set up other types of entities, such as Community Interest Companies, which were created precisely to support organisations conducting business activities with a community or environmental benefit.

“The key for many organisations will be to make sure they get the right advice at an early stage so they have the flexibility to evolve services to meet changing demand and effectively report both the social and economic impact of their activities.” 

Heidi concluded:  “The Government has put in place a wealth of initiatives to support new service providers, including an endowment fund for local organisations, a £100m Transition Fund offering short term support to organisations providing public services, the creation of the Big Society Bank and the development of innovative equity investment opportunities in public services.  

“The key will be to ensure that advisers understand the full range of initiatives available, as well as which business vehicles represent the best option for different organisations. 

“With payments based on performance, proving the impact of the services an organisation provides will become ever more important.  Techniques such as social accounting and Social Return on Investment are likely to be increasingly required, as will support to set up new organisations, Community Interest Companies, social enterprises and co-operatives to deliver these services.”