A new report published today (07 December 2016) by Lloyds Bank Foundation for England and Wales finds that central and local government are using shockingly complicated and inappropriate contracting and commissioning processes to secure vital public services. The experiences of small charities taking part in commissioning processes reveal a system in crisis which leaves charities threatened with closure and the future of public services, including homelessness, domestic abuse and mental health support, at risk.

Commissioning in Crisis report

Commissioning in Crisis brings together the experiences of small charities who have taken part in 120 tenders and shines a spotlight on a catalogue of errors and unacceptable hoops small charities are forced to jump through to be able to continue supporting local people in need. Some of the worst examples of poor commissioning practice reported by small charities include:

  • Poor scrutiny: a charity being marked down during the tender process for not explaining the process it would use to get its services accredited – because it already had the accreditation.
  • Irrelevant requirements: a charity being penalised during the procurement process for not having a hard-hat policy despite bidding to deliver mental health support.
  • Forced mergers: a charity being told it was a requirement to merge with another organisation simply to be able to bid for the work.

Paul Streets OBE, Chief Executive of Lloyds Bank Foundation for England and Wales, said:

“This report should be a real wake up call to commissioners of local public services. We are alarmed at the scale of the commissioning crisis which is engulfing small charities and threatening their very survival. Small charities are struggling to respond to bureaucratic, complex and inappropriate requests by commissioners. When it comes to commissioning services, it seems common sense has failed.  It’s not just charities that stand to lose, but communities and individuals in need. We urge the government to redress this imbalance and change how services are commissioned so that small charities can compete fairly and continue to make a difference to individuals and communities.”

The report identifies that poor commissioning practices, far from being isolated issues, are widespread. It also reveals a system that routinely discriminates against small charities on the basis of their size, preventing them from competing fairly, leaving them deprived of funding or at the mercy of larger providers, many of which can behave unscrupulously. Small charities have the local knowledge and expertise needed to deliver targeted support to local people. Being failed by current commissioning processes and the public funding that follows means they are at risk of closure with communities likely to lose critical support at a time of growing need.

Whilst highlighting major challenges faced by charities, the report recognises that commissioners themselves are under pressure operating with smaller budgets and fewer staff. Despite this, and in many cases, it is the commissioning processes itself adding cost, inefficiency and complexity.

With public funding tight and more of it being distributed through contracts rather than grants, Lloyds Bank Foundation is calling for urgent reform to ensure small charities are able to compete for contracts on a level playing field. This is vital to ensure their continued survival. Recommendations for commissioners at a local level include:

  • Getting to the heart of how small charities operate and using this to inform commissioning
  • Simplifying the process and ensuring collaboration between all involved
  • Focusing on the long-term value of effective service delivery, rather than on short-term time and cost savings

The Foundation is also calling for central government to challenge poor commissioning practices and hold commissioners to account, to introduce measurable targets and improve transparency to ensure small and medium-sized charities get a fair chance and can continue to support individuals and communities in need.

The full report can be downloaded here.