Aldous calls for support for charities competing for offender rehabilitation contracts

Waveney MP Peter Aldous yesterday welcomed the new role for the voluntary and charitable sectors in offender rehabilitation but called on the Government to make sure that charities are not at a disadvantage when competing for contracts on a payment by results basis.

The increasing move to a payment by results approach presents an opportunity for non-for-profit organisations to win public service delivery contracts. As the focus is shifted away from the specific nature of the service provided towards the outcomes produced, there is more room for innovation and greater freedom for the voluntary sector to demonstrate the effectiveness of its approach. The growth of payment by results is evident in a number of Government initiatives including the Work Programme, Innovation Fund, Peterborough Pilot and Youth Contract.

In Oral Questions to the Justice Minister in the House of Commons, Aldous pointed out the challenges for charities and social enterprises in terms of raising working capital to pay for the work it has to do in order to deliver results. He expressed the need to ensure that charities are able to compete for contracts on a level playing field.

In response, the Lord Chancellor and Secretary of State for Justice, Chris Grayling MP, gave his assurances that the Government has assigned an extra £500,000 of grant funding to support voluntary sector organisations and that it will be engaging more closely with the social investment sector to support charities competing for offender rehabilitation contracts.

Mr Aldous said:
“I welcome the Government’s strategy on transforming rehabilitation, although it is crucial that we ensure that charities and social enterprises tackling social problems becomes a reality. For charitable organisations, which are often asset-poor, have limited reserves and may be unable to access commercial finance, the working capital gap can present a real obstacle.”

Rhodri Davies, Policy Manager for the Charities Aid Foundation, said:

"We are really pleased that MPs are taking up the debate about payment by results.

Many charities and non-profit organisations struggle to take on payment by results contracts to tackle social problems because there is a gap in up-front funding. These organisations are not allowed to carry large financial reserves and have limited access to capital, so they are at a disadvantage compared with for-profit businesses.

There are an increasing number of socially-motivated investors eager to help them bridge this funding gap, but they are also being held back by the way the system operates.”

FULL TEXT:

Peter Aldous (Waveney) (Con): How he plans to ensure that the voluntary and charitable sectors play a full role in the rehabilitation of offenders. [141247]

The Lord Chancellor and Secretary of State for Justice (Chris Grayling): Retaining the expertise and dynamism of the voluntary and community sector within the justice system is central to our approach. We have already announced an extra £500,000 of grant funding to support voluntary sector organisations, helping them to compete for contracts. My team and I are meeting a large number of such bodies early in this process to ensure that they are as fully on board as possible.

Peter Aldous: I am grateful to the Secretary of State for his reply. His recent statement on transforming rehabilitation has the potential to be hugely positive for the voluntary sector, but it is crucial that charities can compete for contracts on a level playing field. What action have the Government taken to make sure that charities are not at a disadvantage when competing for contracts on a payment by results basis?

Chris Grayling: I would make two points to my hon. Friend. I absolutely agree with his premise but, first, the cash-flow element of the proposals that we have introduced will not be as tough as that for the Work programme. Part of the task is to pay for the requirements of the court, so the cash-flow situation will be rather different. Secondly, I am making sure that we really engage the social investment sector, which can play an important part in ensuring that voluntary sector organisations can compete on that level playing field and win on it.

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