Social Justice and Social Security Committee

Meeting date: Thursday, September 28, 2023

Official Report 641KB pdf

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Pre-Budget Scrutiny 2024-25

Welcome back. Our next item is a pre-budget scrutiny evidence session.

Last week, we discussed budget priorities in general terms and explored the context for decision making with regard to the Scottish budget. Today, we will focus on more specific budget priorities that are covered by our remit and consider what a wellbeing economy would mean for those areas.

I welcome to the meeting our panel: Paul Bradley, policy and public affairs manager at the Scottish Council for Voluntary Organisations, and Alison Davis, business manager at Saheliya. Thank you for joining us. I invite members to ask questions, starting with Bob Doris.

Good morning, Paul and Alison. I should say thank you to Alison and Saheliya, which has a wonderful facility in my constituency of Maryhill and Springburn, for the great work that you do there.

Thank you for that.

As Mr Balfour does, I like to put these things on the record.

Clearly, both of our witnesses will have a real insight into the impact on the voluntary sector of the cost of living crisis. I know that you could probably both talk at length about that, but could you put some of those challenges on the record as concisely as possible before I ask follow-up questions?

Yes, of course. Thank you for inviting us along today. Before I go into some of the figures and the impact, it is important to remind ourselves of the role of the voluntary sector in Scotland. The committee will be familiar with that, and, as MSPs, you go into your constituencies and meet many people from voluntary organisations.

Voluntary organisations cover many things, but they often become the voice of the forgotten—the people who are less able to act but who are most impacted by the decisions that this Parliament and the Scottish Government take. Voluntary organisations are at the heart of our communities, whether that is through delivering community care or employability programmes or through overseeing and maintaining programmes for village halls, museums and galleries. At the moment, the staff and volunteers of those organisations are going above and beyond, even when they themselves are facing significant challenges due to the cost of living crisis. That is further exacerbated by the funding challenges that you will hear about from me today.

At last week’s evidence session, the committee heard from Bill Scott, who said that the Poverty and Inequality Commission had visited 20 organisations, all of which said that they had never seen such pressure or demand before. That is reflected across the entire sector by those who are delivering front-line services.

The figures speak for themselves. In May, nearly all voluntary organisations—around 94 per cent—reported rising overheads. That is usually down to staffing and energy costs. Also in May, 71 per cent of organisations said that they are experiencing financial challenges. That was up from 67 per cent at the time of the last Scottish budget, so things have worsened. Half of those who said that rising costs are having an impact on their finances said that that is having an impact on their ability to deliver their core activities and services, which is a real issue across the board.

With regard to the sector’s finances, we had the pandemic and we now have the cost of living crisis. You will hear from me today about the years of underfunding and poor funding practices. In May, a third of organisations reported that they are now using their reserves to top up services and pay staff decent wages. Half of those who are doing that say that that usage is unsustainable, which is not a surprise, given that around 60 per cent of charities in Scotland have less than six months’ reserves. That is not long-term sustainability; they are just getting through each year as best they can.

Those challenges are not new in the slightest. My first evidence session on behalf of SCVO was in 2019 at the then Equalities and Human Rights Committee. In its report, that committee recognised

“a clear need to investigate how the third sector is coping under tougher financial conditions.”

I am very familiar with that report, but I have not seen the changes that were called for by that committee in relation to funding practices, fair funding and multiyear funding, and that report was published four years ago.

The sector’s efforts have been vital, but we cannot mistake short-term perseverance, with its human cost for the workforce and volunteers, for long-term resilience. I hope that we will see in the budget not just an acknowledgement of the sector—we are always acknowledged for the work that we do, which is fantastic—but progress on funding and on seeing the voluntary sector as a true partner in the delivery of public services.

Thanks for that. That was very clear.

For those who do not know about us, Saheliya supports women from racialised communities who have mental health issues resulting from gendered abuses and who are unable to access mainstream services. The reasons why they cannot access those services include illiteracy, limited English language skills, severe and complex trauma, not knowing their rights and not knowing the systems and services that are available or how to access them. We are a specific niche group. We support just over 1,000 women each year from more than 50 national backgrounds. Those women are some of the most vulnerable; their children are often at risk and the women themselves are often at risk.

At the end of 2020, we saw a loss of 80 per cent of our funding because of a variety of issues. Brexit meant that we lost very large moneys from the European social fund and the European regional development fund. We also lost funding because we contract on a competitive level with very large mainstream organisations. We thought that that was fine because we could rely on income generated from our Edinburgh childcare provision, which was burgeoning. Then, of course, Covid hit.

The Covid lockdown vastly increased demand for our services and hugely reduced our ability to deliver them. We already had massive demand, but there was a quadrupling of demand in Glasgow and a doubling—an increase of around 110 per cent—of demand in Edinburgh. That increased demand was from women who could not go anywhere else. We are funded to support women who cannot go anywhere else.

I will give you an idea of what that means. Earlier, the cabinet secretary talked about the Government’s laudable efforts to make its services open and accessible to all. The Government has consulted Saheliya and our service users at some length, but our service users cannot access any of those routes. We only support women who cannot access any of those routes except through interpreters. We would always caution against the use of interpreters. I can go into that at some length, if you wish.

I am rather more concerned about how, as a society, we gather information on hard-to-reach—or what we would consider to be easy-to-ignore—service user groups. With our service user group, a range of issues come up. In looking at the implementation, delivery and evaluation of human rights model funding, equalities delivery and so on, a variety of issues need to be considered, one of which is reliance on census data for information on our service user group. The census is, by definition, 10 years out of date. That period is now longer, because of Covid. The census is not accessed by most of our service users because they come from backgrounds where authority is scary. In addition, as I have said, they are often illiterate in any language and they have low-level English language skills. Therefore, there is no baseline information.

Assumptions are made—for example, it is assumed that European migrants are white, yet one in four of our Sudanese service users and one in five of our Somali service users have come from another European country, having received refugee status there. We can go into that pattern of migration. It is really important to have Saheliya there, because the way in which we operate and are funded means that we can pick up on such anomalies, on routes of migration and on needs and so on in a way that other organisations, by definition, cannot. What is particularly special about us is that we generally operate under the radar, we do not advertise what we do and we have a gendered analysis of our approach to supporting new Scots communities and racialised communities.

If the only route to reaching the highly vulnerable women we are talking about, who already have severe mental health issues and whose children have severe and complex trauma, either vicarious or direct, which has huge repercussions for long-term educational outcomes, employability and so on, is through organisations such as Saheliya—I would strongly argue that we are the only organisation that reaches that specific group—funding is absolutely critical, and it must be predictable and consistent. We provide heavy-end services, but we do not know whether we will have funding for next year or the year after. We now have no long-term funding.

An issue that feeds into the understanding of the needs of the client group is the fact that racialised communities are often seen as homogeneous—Mrs Khan from Pakistan is seen in the same way as Mrs Khan from Sierra Leone, yet the risks attached to them and their children are very different indeed. It is a point of shame that we live in such a world.

I do not often answer the phone, but at least three times every year, when I do pick it up, there is an educated professional on the other end who will ask if they can refer somebody to me, and, when I ask what language they speak, there is a pause and they say, “She’s from Africa.” I ask them to help me out, because there are 700 languages in Nigeria alone, Nigeria is one of 54 countries in Africa, and the language that the woman speaks will give the best indication of whether her child is at risk of female genital mutilation. Not having fine tuning or a little bit of basic knowledge about new Scots communities in the mainstream is a stumbling block.

10:15  

Ms Davis, I feel guilty for stopping you, because what you said is very important for the committee to hear, but I need to direct us back to budget scrutiny. That was all very powerful, though, and the committee will consider it, so thank you for it.

We are doing budget scrutiny, and both witnesses have made clear the challenges, the financial pressures on the ground and the lack of certainty about financial support. The Scottish Government has some budget decisions to make. How do the witnesses believe that it should prioritise funds? Should it generate those funds or should it reprioritise funding from one stream to another?

I do not expect a hugely detailed answer, unless the witnesses wish to give one. Can you say in general terms whether the Government needs to increase the amount of money that is taken in by raising additional revenue or whether it should prioritise one area at the expense of another? How should we realign the budget to deal with the cost pressures that are affecting the voluntary sector and your clients?

There is about a half-hour answer to that.

I know.

I will be quick.

We agree with the Scottish Human Rights Commission, which spoke last week about needing to maximise the available resources. The SCVO stays clear of conversations about taxation primarily because there are organisations, both in our membership and non-members, who have expertise in tax.

I encourage the committee to look at the new report “The case for fair tax reform in Scotland”, which has come from a range of charities. We are not close to the modelling; the Institute for Public Policy Research Scotland has taken a lead on that. Although I cannot speak for it—because I am not close to it—that is an example of the sector playing a key role in debates and discussions on this. If the committee is not able to look at that report, I recommend that organisations such as the IPPR be part of the discussions on pre-budget scrutiny.

There are two things to say about prioritising. Yes, there is always a demand for more funding for voluntary organisations, but I want to focus on the money that is already sitting in the system and is not being used. We know of organisations that are still waiting for their funding five months into the new financial year and have received no communication from the Scottish Government about it.

There is a lot of talk about a lack of finances and no money being available, and of the challenges with that. We fully understand that, but it must be of concern to the committee, the Parliament and the Scottish Cabinet that there is funding sitting there that is not going to organisations when it should be.

Mr Bradley, I know that time is moving on, but I think the committee would appreciate it if you drew a distinction between money that has been allocated but not provided to organisations and money that is unallocated, because those are different things. Could you address that? I will then bring in Alison Davis before my colleagues get a chance to ask their questions.

Yes, of course. We know of organisations that have received a vague intention to fund well into the financial year but still have not received confirmation of that funding. That is not about the payment of funds; it is about confirmation of the funding. The payment of funds is also an issue—there can be late payments after getting confirmation—but some organisations are still waiting for the Scottish Government to confirm whether they will receive funding for the financial year, and we are almost halfway through this financial year.

It is really important to draw our attention to that. You are talking not about unallocated funding, but about allocated funds that have not been received—is that right, Mr Bradley?

No.

Sorry, Mr Balfour, but it would be helpful if Mr Bradley answered.

It is unallocated funding. It has not been confirmed for voluntary organisations, and therefore those organisations are not able to spend that funding.

So, it is an intention to fund but without the pound signs beside it saying how much the funding will be.

It is without written confirmation. The line usually is that there is an intention to fund, subject to final approval, and then the final approval does not happen for months and months. Organisations need written confirmation.

I am sorry for being so pernickety, but does the intention to fund, subject to final approval, tell an organisation how much it will get if the final approval is given? Does it have a budget line? That is the key thing in relation to the scrutiny. I am not trying to be awkward; I am trying to be clear.

I am sorry, but I do not know that off the top of my head. I can get back to you on that.

Funds are not unallocated if there is a pound sign beside them and they are notionally allocated to an organisation—we cannot move that money around.

I will bring in Ms Davis, and then I guess that that is my last opportunity.

We have until 10:50, but a lot of members still want to ask questions, so I ask for concise and succinct answers.

I have worked in the sector for over 30 years, and I know that many organisations need consistent funding—that is certainly the case for Saheliya. Even if it is at the same level as it is now, we need consistent funding for five or 10 years, as long as we are providing quality services and demonstrating that. In the past, we have said to statutory funders that, if they give us £100,000, we can bring in £3 or £5 from other sources for every £1 that they have given us, and that has worked. If statutory funders give us some stability, we can demonstrate business continuity and other funders will go along with that—they will match fund that. That is critical.

In budget discussions, there needs to be a lot more cost benefit analysis—even if it is on the back of an envelope—of what happens if you do not fund the route to the most marginalised.

Thank you.

The deputy convener has raised really interesting points, and I was interested in Paul Bradley’s response. I ask him to provide written examples of what he was talking about to the committee. Obviously, an organisation might not want to be named, but it would be helpful to have real-life cases that we can take up with the Scottish Government.

We are looking at this year’s budget, but we also need to look to future years. The Scottish Fiscal Commission has highlighted that there will be a fairly major gap of more than £1 billion in the budget over the next two to three years. Paul, I know that you said that you do not talk about taxation, but, using more general terminology, where do you think we should be going to bridge that gap? Do you or your members have any views on that?

As I said, the sector definitely has a view on revenue raising. I repeat the point about the report that I mentioned—I can share a copy of that after this meeting, if that would be useful for the committee to scrutinise.

We are fully aware of the tough financial challenges that the Scottish Government faces, particularly the looming deficit in 2027-28, which you mentioned. There is the revenue generation part, but it is also about how to get the most out of the money that is already in the system. We welcome the Scottish Government’s commitment to public service reform, which has come up again in the programme for government. However, we feel that the issue needs to be a big focus over the next few years.

I have just submitted the SCVO’s response to the procurement reform post-legislative scrutiny. It is quite eye-opening to see the glacial pace of the reform that is happening in procurement in Scotland. That process is absolutely critical, with £1.8 billion-worth of funding having gone to the voluntary sector through contracts in the past year. We agree that there need to be efficiencies and that the process needs to be effective, but those efficiencies cannot start with cost cutting; they have to focus on what services we need in order to deliver the best outcomes and impacts.

At the moment, organisations tell us that there is very little focus on impact and outcomes, despite the fact that the sustainable procurement duty has come in. One organisation that I spoke to said that it has to squeeze that information into bidding forms, because it is just not asked about outcomes—it is all about costs. Until we get past that and start to think about how we use our money most effectively to deliver outcomes and impact in communities—for example, so that we think about not just numbers of places in nurseries but what impact those will have on parental employment—we will be in the same situation. It does not matter how much funding you bring in; it will just add to a system that does not deliver for people and communities.

Alison Davis, I saw you nodding away. Is there anything that you would like to add to that?

The procurement system just does not work. In the past, we were funded solely by the City of Edinburgh Council, which used to provide 22 per cent of our funding through contracts. When those contracts went out to tender, a white male-led organisation won. Our footfall remains, but we cannot bid in the same way. We do not have a team of people to put the tenders in.

In addition, the measurements that are used do not include a full equality impact assessment. They say that they do, but they do not—for the reasons that I was talking about just now. It is about having knowledge of the most vulnerable.

What would be your preferred methodology for allocating money?

I would look at consistency and the delivery of quality services, and I would want a genuine equality impact assessment across the board. There is a lot of wastage. If there was consistent funding, even at a low level, that would enable voluntary sector organisations to plan and to secure other funding.

Thank you.

Do you have any comments about the progress that the Scottish Government is making towards implementing its commitment to fair funding principles and to investing in the voluntary sector or about its progress towards meeting its multiyear funding commitments? I put that question to Paul Bradley first.

That is a really important question. We have seen progress in terms of the Scottish Government talking to the SCVO and other organisations. That is welcome—it is something that we asked for last year. However, in terms of the funding situation for organisations, I do not think that we have seen any progress at all.

As I said, it is good to see the programme for government commitment to public service reform. We are starting to hear the phrase “fairer funding” used across the Scottish Government a lot more, but we do not truly understand what that means. There is no definition. I think that there has been mention of progress towards multiyear funding and something around processes, but the Government has not adopted the SCVO’s fair funding package.

We are hearing from organisations that the Scottish Government is using the term “fairer funding” in meetings and discussions with them, but the reality of the funding is nothing of the sort. As I mentioned, organisations are receiving vague intentions to fund them and are then waiting months to get written confirmation of that funding. They are being asked to develop elaborate business plans, which adds to the paperwork, but they are receiving no feedback from the Scottish Government on the funding. They are told that it will be another week, another month, and then there is silence. I have also mentioned the delays in getting the funding. Even if funding has been allocated, if it is not out there and being used, people are not being supported. All of that causes major delays in delivering services and staffing issues, including, potentially, the issuing of redundancy notices and so on. That is not good.

The programme for government contains a commitment to develop a plan, and we have called for the milestones to be transparent, because we need to hold the Scottish Government to account on that. I think that it was the convener of the Finance and Public Administration Committee who said that, back in 1999 to 2003, one of your predecessor committees published a report highlighting similar issues but we are still having these discussions. That progress should have happened six months ago, when the commitment was made in the prospectus. Given that organisations are telling the SCVO that this is their worst year in terms of their funding relationship with the Scottish Government, that is six months wasted.

Emma Congreve, who was in front of the committee last week, mentioned that there is a feeling that commitments and policies are announced with no thought as to how they will be implemented. The concern is that that will happen here as well. Some work is going on in terms of using things like the community capacity and resilience funds to test two-year funding and some changes to funding criteria, but that is scratching the surface.

We have welcomed the positive engagement with the cabinet secretary, though, in having frank and honest conversations about the challenges. Many of the issues that we have talked about are not necessarily political issues; they are operational issues. We have welcomed recent meetings about those issues with senior Government officials, and there is a commitment to work with us and to have dialogue about them, which is welcome.

10:30  

Those operational issues have an impact on policy delivery. If the money is not reaching organisations or if organisations are not certain about the funding that they will get for the year ahead, they will not be able to plan or deliver the services that they would want to deliver.

As you know, the SCVO has been calling for inflationary uplift, particularly in respect of support for the living wage. New conditionality has come in, and that conditionality is super-important to paying the real living wage. However, there is not the funding to resource that.

There are lots of issues that need to be looked at. On what we want to see this year, timely communication and payments would make a huge difference to the upcoming funding year, and that would not involve a huge cost to the Scottish Government. We would also like to see the Scottish Government doing more around testing the implementation of multiyear funding across major funds and using that to think about a model for 2026.

There is one thing that I encourage the committee to do. I have listened to evidence sessions this week, and all those fair funding issues have come up in the Constitution, Europe, External Affairs and Culture Committee, the Health, Social Care and Sport Committee and the Finance and Public Administration Committee. I do not know whether there is an opportunity for the conveners of the committees to come together to look at the SCVO’s fair funding framework and think about how those issues are reflected across parliamentary discussions. Seeing those issues being raised across the board has been quite eye-opening for me.

Thanks for that. Does Alison Davis have anything to add to that?

Multiyear funding is critical, and it needs to be linked to quality outcomes. That needs to happen now, because the situation is critical.

I am really sorry that you are experiencing those issues. The committee will certainly feed that back to the Scottish Government.

On funding and how it is allocated, reducing child poverty is, obviously, a Scottish Government priority. How does the funding of the voluntary sector support tackling child poverty? Does that have any implications at all for how funding is allocated within your own budgets?

It is massive. The cabinet secretary talked about the accessibility of processes, and it takes at least four hours to apply for universal credit with somebody. It takes a member of staff at least four hours to do that—any online form will take about four hours—and the resource implications of that are massive.

We have seen a massive increase in the risks to children because of domestic abuse and mental health issues following the Covid lockdown. It is massively resource intensive to put in place all the measures, so we are really struggling.

We have a parenting programme that is groundbreaking because it solves the problem of women not being able to deal with children with additional support needs and high levels of stigma in communities. Carers allowance is not being applied for, support services are not being accessed, diagnoses are not being made, and people are not being registered as disabled. That process takes a lot of time, explanations and support in first languages, but we have sporadic funding for it.

A lot of our service users think that health visitors are linked to the Home Office and that, if they do not do the right thing, they will be deported. It is about how intensive that work is, which has increased massively since Covid and with the move to online applications and remote working, which makes things very difficult. People who are working remotely will often ask our case workers whether the service user is in the same room as they are in. If we say no, she cannot give consent, so she cannot get a service—and that can be an emergency maternity service.

I hear you. Thanks, Alison. Does Paul want to come in on that question?

Yes, although I know that we are short of time.

Many of you will be familiar with the Poverty Alliance—the challenge poverty week is coming up—which is a case in point, as it demonstrates the importance of funding organisations in this space, of bringing lived experience into policy development, of collaborating and of campaigning for improvements to, for example, the Scottish child payment. We saw that campaigning last year, and we will see it again this year.

For challenge poverty week, the Poverty Alliance has come up with five key asks, one of which is backing for the SCVO’s call for fair funding. Ahead of the anti-poverty summit that the First Minister held, the Poverty Alliance recognised that its members wanted fair funding to be a key item on the agenda. That reflected what the Poverty Alliance heard from its members about the dire need for longer-term funding and more support for grass-roots organisations, which play a crucial role. Alison Davis spoke about the specialist skills that such organisations have and their ability to bridge the trust gap between communities, marginalised groups and public authorities.

The Poverty Alliance could present to the Scottish Government or the Scottish Parliament a number of innovative ideas and solutions for tackling poverty. The fact that it has picked fair funding for voluntary organisations speaks to the importance of the issue across the sector.

At a previous meeting, the committee heard that, in addition to children, other groups of people are suffering from poverty, including young single people and older people, and that they need further support, too. First, do you agree? That will probably be a fairly straightforward answer. Secondly, how can the Scottish Government take that into account in its budget decisions?

It is very difficult. I go back to the point about consistent funding. More funding does not necessarily have to be provided—although more funding would be good—but there should be consistent funding, with a framework of statutory funding around which other funding and income can be built.

We should focus on the under-fives. From our experience, that is where the risk is and where change can be made. There should also be well-informed equalities impact assessments for everything. That means stepping back and not, for example, spending money on huge interpreting contracts for the police and the national health service, because the police and the NHS say that they do not really work for the most vulnerable people. If the Saheliya model was used, Saheliya would not need to exist. We should also think about bus travel. Our funding from the Poverty Alliance enabled women to access health services, learn English and do all sorts of things that they could not have done otherwise.

The SCVO agrees that tackling child poverty should be a priority, but minimum basic needs must be met regardless of the circumstances in which someone finds themselves, the community that they are from or who they are. As a country, we should focus on that, and voluntary organisations have a huge role to play in that regard.

Addressing poverty is about putting more money into people’s pockets—we heard about a good example of that in the previous session—but there is also the exclusion aspect. The voluntary sector plays a vital role in ensuring that people feel connected in their communities, whether that is through village halls, museums or groups. At the Constitution, Europe, External Affairs and Culture Committee’s meeting the other day, I heard voluntary organisations in the culture sector speak about the really bleak challenges that are ahead of them. One example that they used was charging for entry to various venues. If funding is taken away and certain parts of society are not supported, that will have an impact on people living in poverty and those who are on lower wages, so we need to look at the whole system.

I agree that the situation is difficult. It is very easy for me to sit here and say what we need to do; it is a lot harder for Governments to do it. Impact assessments are really important for understanding how decisions that are taken in one area will affect other areas. That links to the point about transparency. No one is denying that the Government has some really difficult decisions to make, but, if there is more transparency around how the decisions are made, that will make things easier. We might not like the decisions, but we would be able to better understand how they were made and why they were taken at a certain point in time.

Thank you.

The Verity house agreement, which was signed by COSLA and the Scottish Government, includes a commitment to agree a new fiscal framework governing how local authority funding is allocated. What implications will that have for voluntary organisations working with local authorities?

It is important, but again—I sound like a stuck record—unless decisions on the allocation of funding are informed by a full understanding of equalities and needs in local communities, it will not be effective. It is laudable, but we must have that baseline of knowledge.

Is that your concern?

Yes. That is my concern.

Paul, do you have any thoughts on that?

I agree that the agreement is welcome. We want local authorities and the Scottish Government to talk. That is what has got us to this agreement, which is positive. However, the voluntary sector is not party to it, and anyone who is not party to it is probably unclear on the detail and what it will mean in practice. Correct me if I am wrong, but my understanding is that there is not a focus on more funding coming from the Scottish Government, and if local authorities face a funding shortfall, that will have a knock-on effect for voluntary organisations.

The Accounts Commission for Scotland said that local authorities and communities face a stark future, and if it is going to be grim for local authorities, it will probably be grimmer for voluntary organisations, particularly those that work on preventative services. Non-statutory services are usually the first to go, but making cuts to those services has a knock-on effect on statutory services, and more people need to access emergency support.

This has come up several times, but we know it at SCVO: all the invisible cuts have been made. Further cuts will have an impact on services and will impact on people, whether those who access the services or those who work in the voluntary sector. The agreement is a positive step in that we need positive relations between local and national Government, but we are looking from the sidelines and thinking, “What’s going to happen here and what does this mean for us?” For example, does reducing ring fencing impact the voluntary sector? We are looking at that kind of thing to see if it impacts us. We do not want to make assumptions about the situation, but we are watching that space.

Do you envisage any benefits from the agreement, Paul Bradley?

We really do not know. From speaking to organisations in the voluntary sector that work in local areas and communities, we hear that there is a lack of optimism about the possibility of improved funding, better funding arrangements and better relationships with contracting authorities.

The challenge is that we are not party to the agreement. There was an accord between the voluntary sector, COSLA, the Scottish Government and the Society of Local Authority Chief Executives and Senior Managers way back in 2010, or around that time. An agreement on paper does not mean much to us at the moment; it is about the reality of what happens over the next couple of years.

You have made that point clear.

It is also about the mechanism for allocating that funding. If it has to be done through tenders that are cumbersome to complete and so forth, that will exclude the organisations that reach the most vulnerable.

That is helpful. Paul, in your submission you state that the voluntary sector’s contribution to the vision for a wellbeing economy remains “largely unacknowledged”. Will you explain that in more detail?

Yes. When we talk about that vision and its role in the economy, we talk about the Scottish Government and others, but it goes beyond that—and it goes beyond SCVO saying that. The former chief economist at the Bank of England said that the estimated value benefit of the voluntary sector in the UK is around £200 billion, but in national accounts it is around £20 billion, which is a huge difference.

It is a challenge to look at the value of the sector and monetise things such as volunteering. However, Volunteer Scotland has done that and has said that formal volunteering, by 1.2 million volunteers, equates to around £2.8 billion to the economy, and then there is all the informal volunteering, too. There is a perception that we give money to the voluntary sector to do good things, but it is not an investment. It is not healthy to monetise everything.

I think that it might have been you who made the point at last week’s meeting that there might be a risk that we focus only on things that we can measure. Andy Haldane, the former chief economist at the Bank of England, has said that that is exactly the problem, which is why we are forgetting about the voluntary sector across the UK.

10:45  

Because that is the nature of where we are, work is under way to look at that. The Department for Culture, Media and Sport has funded a project to do a feasibility study to look at aggregating Office for National Statistics data. I think that the Fraser of Allander Institute is working with that team in an effort to have Scottish data included. Thinking about Scotland specifically, our ask is that, as part of the review of the national performance framework in 2028—it will not be possible for this to be included in the current review round—an indicator should be included that quantifies the sector’s economic contribution to Scotland, so that we can track and measure it.

With regard to the lack of recognition, the NPF makes no mention of the voluntary sector, the third sector or charities. Mention is made of volunteering, but the last time I checked, which was a couple of weeks ago, I discovered that the Scottish Government had taken the decision to remove volunteering questions from the Scottish household survey every other year, which means that those questions will be asked only every two years. I have just mentioned the economic contribution that volunteering makes; we should be monitoring that on a yearly basis. That position might have changed in the past two weeks, but it is an important issue.

The fair work and business outcome makes no mention of the voluntary sector in any way, shape or form, despite the fact that the data and indicators that are used there include voluntary sector employers. If we are not focusing on and not recognising those, where is the attention to our contribution on fair work, a living wage and the gender pay gap? We want our sector’s work to be recognised in the fair work and business outcome, as well as in the NPF overall.

Although the innovation strategy makes a few mentions of the third sector, it does not capture its unique contributions in areas such as medical research, regional economic partnerships and health. Last year, a piece of research was done by the British Heart Foundation and the Fraser of Allander Institute that showed that, in 2018, charities contributed £122 million to medical research in Scotland and created 7,300 jobs. There needs to be more focus on that.

One positive is that, over the past few years, we have managed to secure space for the sector on the national strategy for economic transformation board. We have one sector representative on that board, but that points to the challenge that exists, whereby people see the sector as one that can be represented by one person. We have been unable to get organisations involved in the many different strands of that, so we have set up a smaller group to support the person concerned and take some of the load off them. We need broader involvement. I will stop there.

Alison Davis might want to come in, although I know that we are short of time.

No—it is fine. Carry on.

I think that people frequently have a false perception of the voluntary sector. I have nothing against people in church halls doing flower arranging, but I think that that is the kind of picture that comes to mind when people discuss the voluntary sector. It is not acknowledged that we have a massive impact on employment and that we frequently have highly professional staff in highly professional organisations who deliver critical services for very vulnerable people. I think that that gets lost.

The final questions come from Roz McCall.

I have loads of notes and you have given us a lot of information. Thank you very much indeed. You have said so much about the need for consistent funding and performance outcomes, but I would like to focus on transparency and participation.

The evidence that the committee has received has highlighted on-going concerns about the transparency of budgets. Have there been any improvements in the transparency of the budget? Based on what you have said, I am not 100 per cent sure that that is the case, but I would be intrigued to find out about that. What needs to be improved? I will start there, although I might have a few more questions that spring off that.

Let us begin with Paul Bradley. If you could keep your answer short, that would be good, as I would like to hear what both of you have to say.

I will keep it very short. Every year, it is a challenge for us to understand the Scottish budget, the flows and changes in budget lines and the explanations around them. If we see an increase in the third sector support budget line, we do not know where that money is going or where it has come from. That is a big issue, which makes it hard for us to comment, either positively or negatively. Even if the change in a line is a positive move, it is very hard for us to say that. That is really important.

There is an issue to do with a lack of transparency around funding for the sector. The SCVO has an online system on Power BI that shows the kind of level of funding to the sector—we go through charities’ accounts and publish all of that information—but the Scottish Government does not have that kind of central resource, so it cannot say, for example, that a certain number of organisations are funded by the Scottish Government and what the funds are. Therefore, it often relies on our data—which is estimated—to do that. That is a challenge.

There are also issues around decision making. For example, the SCVO called for the consequentials from the UK spring statement to be passed on to charities. That has not happened, and, therefore, charities in Scotland have no support over the winter while charities in England do. That is a concern. We understand that the competence is devolved, so the Scottish Government has the right to choose, but transparency around how consequentials are spent would help us to understand why that has not been prioritised and would also help with the relationship between the sector and Government, because, if we can better understand the Government’s thinking, we can communicate that to the sector and other organisations can come to their own conclusions about what that means. Without such transparency, organisations are left looking at the Government and wondering where the support is.

I agree with everything that Paul Bradley just said. We are sort of removed from all those processes, and if, as he is saying, the SCVO does not know, Saheliya certainly cannot know. As you can imagine, with increasing demand and fewer resources, masses of our time is spent on fundraising. We have 29 different funders who must all be reported to, and I have to make sure that they are replaced when they need to be. That becomes a self-fulfilling prophecy, because, if you are not sitting at the table, you do not know what is going on, so you cannot apply to the right things at the right time.

There are financial and time pressures in preparing the budget. What would be a realistic scope for further transparency in that process? I know that that is a bit of a strange question, based on your answers, but do you have any insights, based on what you know from what people have said to you, that we could take on board in that regard? That is primarily a question for Paul Bradley.

There is an issue around comparing budget lines with the previous year’s lines to better explain what has contributed to a decrease or increase. For example, I think that the area of social enterprise is moving to a different part of Government—it will come under an economy or business directorate—so there is going to be a huge difference in the third sector support budget line, but we will not necessarily know how much that is. Certain other cuts or increases could be included and we would not know. That makes it hard for us to say whether a budget announcement is a good one. Organisations across the board, whether they are a mental health organisation or some other organisation, do not know from the budget whether it will be positive for them, particularly because, as I said, they do not hear anything until March.

Thanks. I have one last question, on participation, because the public should obviously have an input. Should the Scottish Government involve the public in setting the overall priorities for spending, and what is a realistic scope for meaningful public participation in more detailed consideration of budget decisions?

Everything that you have said feeds into that, but let us flip the issue on its head and consider some detail about how we can deliver proper participation. Paul, given where you are coming from, perhaps you can give me a direct answer on that.

The SCVO does not work directly with people and communities; our focus is on organisations, so you would probably expect me to say that those organisations are working closely with people and communities, as Alison Davis’s organisation is doing. If you do not have that infrastructure in place, and, therefore, do not have trusted networks that enable you to understand the challenges, there will not be a sufficient number of voluntary organisations in the sector with the expertise to either provide opportunities for individuals to influence decisions or, through the engagement work and research that front-line workers do, feed into committees such as this one on what is needed.

Alison, could you also give me an answer? It sounds like that participation is not happening at the moment and is really difficult to bring in. Am I right in thinking that?

We get consulted a lot and, where possible, we provide responses to consultations. However, we do not get much feedback from those processes, whether they concern the public sector equality duty or the funding of activities to tackle violence against women.

The Cabinet Secretary for Social Justice carried out a lot of consultation with us through the Poverty Alliance, with which we work closely.

Before we finish, Bob Doris has a question. Could you make it a quick one, Mr Doris?

I will ask the shorter question that I have, rather than the longer one.

Mr Bradley, in relation to the Verity house agreement, you said that you thought that, in 2010, there was a fund that the third sector was involved in. My memory of that is that it was the change fund for older people, which ran for four years and was worth £300 million. The key aspect of that was that decisions around directing that cash had to be signed off by the NHS, local authorities and the third sector.

In the light of the Verity house agreement’s implications in terms of the reduction in ring fencing, do you have any comments about what the role of the third sector should be as a consequence of that, given that, for four years from 2010, there was a funding relationship that involved a sign-off by the third sector?

I was not aware of that fund. The specific thing that I was talking about was an agreement between COSLA, SOLACE, the voluntary sector and the Scottish Government.

On the issue of ring fencing, the changes could be a problem for the sector. Whether they are depends on the development of public service reform. If we carry on developing services as we currently do, that is an issue. However, if we focus on outcomes, impacts and the services that are going to deliver the most benefit, there is a lot of opportunity for the voluntary sector, because those services have a significant impact on outcomes.

That is all I have to say about that at the moment, but I am happy to follow up if you have further questions.

We could be talking about different funds. I thought that that might be the one you were referring to.

Do I have time for another supplementary question, convener?

If it is very quick.

The Scottish child payment was mentioned, along with the idea of direct payments. This year, that will cost £405 million. If that were to increase to £40 from £25, which is what some campaigners are asking for—I have sympathy with that call, but it has to be paid for—that would represent an additional £250 million, which would mean that there would be less money to spend on organisations such as Saheliya that are at the coalface, dealing directly with the most excluded and marginalised. Is there a balance to be struck between putting direct payments into the pockets of families that are very much in need and providing funding for those small organisations that provide support at the coalface? We cannot spend the same pound twice. Alison, do you want to respond first?

I can see that a balancing act is involved in that. If mainstream services were fully informed through equality impact assessments in a way that resulted in more adequate mainstream service delivery, there could be more direct payments going to our service users and Saheliya would not need to exist. However, that is not the situation that we are in, so there must be a balancing act, and I do not envy the people who are having to do it.

I agree that there is a difficult balancing act. Reducing poverty is about getting money into people’s pockets, but, as I mentioned before, if you are reducing cultural opportunities in a way that means that people cannot visit places free of charge, people will be excluded from those opportunities, too. It does not matter that they have more money; they will not be able to afford those activities.

There must be a focus on that balance between prevention and direct support for people. I am not saying that it is easy, but people who have spoken to me as part of our procurement investigation have said to me that no one is really looking at the whole system. I understand that that is a huge task, but they do not feel that change can happen without it.

Thank you.

Thanks, Paul and Alison, for your contributions today. We very much appreciate them. Next week, we will hear from another panel of witnesses on the budget.

That concludes our public business for today, and we will now move into private session to consider the other items on our agenda.

10:59 Meeting continued in private until 11:35.