Unite the Union — Written evidence (CHA0105)

Unite is the UK’s largest trade union with 1.4 million members across the private and public sectors. Unite represents over 250,000 workers in public services, including 60,000 in the Community, Youth and Not for Profit Sector.

Executive Summary

• There should be a comprehensive re-evaluation of the role of charity and not for profit organisations and their relationship with the State, with funding designed to support their independence, advocacy and additional role rather than being used to replace state provision of core public services
• There should be an urgent review of funding for the sector with a return to grant funding as the norm as the most appropriate funding system for the sector.
• Cuts are disproportionately impacting on charities, particularly small and medium sized charities dependent on Local Authority funding. This is leading to vulnerable people losing vital services.
• There is a need to improve the diversity of the charity workforce with an end to unpaid internships, forced volunteering and increased funding to support high quality paid apprenticeships, as well as entry level positions for young people from diverse backgrounds
• Unite supports improved standards and innovation through greater coordination and collaboration in the sector with minimum standards hardwired into all funding and the creation of sector wide national collective bargaining systems between employers and charity staff trade unions. Government has a vital role in promoting this.

1. Introduction

1.1     Unite the Union is the largest union in the not for profit sectors, representing over 60% of all union members, in over 6,000 organisations. These include members in social care, housing associations, the arts, trade unions and professional bodies, mental health, cancer, disability, poverty and children’s charities, education, youth and play organisations, legal, advice, guidance and community organisations, faith bodies, international aid organisations, environmental NGOs, campaign groups, animal welfare charities, as well as numerous non-governmental public bodies, funding agencies and umbrella bodies.

1.2     In the run up to the 2015 general election Unite carried out a major survey of a broad range of members across these subsectors which was the basis of Unite’s post-General election report presenting our vision of the sector[1]. Some of the comments and graphs from this survey are attached in the appendix at the end of this document [held by Committee staff and available on request]. While some of the policy may have moved on Unite firmly believes that this report remains relevant and salient around the issues facing the charity sector.

1.3     Unite welcomes this important investigation by the Lords Charity Commission[2]. There should be a comprehensive re-evaluation of the role of charity and not for profit organisations and their relationship with the State, with funding designed to support the independence, advocacy and additionality of not for profit organisations rather than use them to provide statutory public services on the cheap.

2. The purpose of charities

What is the role and purpose of charities in civic society in England and Wales?

- How has this changed?

- What makes them distinct from other organisations doing similar work?

- What role can charities play in community cohesion and civic action?

- What challenges do charities face in trying to fulfil their role in civic society?

- How can these challenges be overcome?

2.1     Unite members have been grappling with this crucial issue for some time. Over the last two decades government policy has fundamentally reshaped the role of voluntary and community sector organisations[3]. While experiences are diverse, many Unite members have reported that current policies have undermined their charities and other not for profit organisations, with attacks on their policy and advocacy role, as well as their ability to provide evidence of the impacts of government policies on service users and clients. Government has slashed funding and the remaining resources have been concentrated in ever larger organisations with less community control. This in turn has reduced the diversity and innovation within the sector and made many feel that their organisations have been co-opted and restricting from speaking out[4]. Some commentators have raised concerns about the impact of this on services and service users, while some organisations have become vehicles for outsourcing parts of the state, rather than effective independent partners[5].

2.2     Unite members have developed a different vision for the role of charities, advocating a return to the principles of “voluntary action” and strong independent voices that can hold governments and other power structures to account. In Unite’s view charities should not be used to replace state provision of core public services, but rather have a vital role in building innovative additional services and providing independent advocacy voices to drive improvement, accountability and reform. Such voices will be diverse, ranging from small informal community campaigns, groups and mutual organisations to large national charities and international NGOs, all contributing a positive role in our democracy.

2.3   At the core of Unite’s concern is the changing nature of government funding models with more and more organisations dependent on government contracts rather than grants. Grants from the public sector have declined from £6 billion to £2.2 billion in the last 10 years[6], and the latest huge cuts to local authority funding will only increase the scale of the problem, as communities lose both Council and voluntary sector services. This is particularly impacting on small and medium sized charities[7].

2.4   The result is many have been pushed further and further away from their founding principles and lost the ability to deliver independent campaigns, undermining their ability to innovate and challenge government where necessary, a concern echoed by many sector leaders in private. It has also meant that the focus of their work and activity is increasingly driven by commissioners and funders, rather than growing out of the expressed needs of communities.  This can generate cynicism and lack of engagement, as charities are not always able to respond to local priorities, or to sustain relationships over a longer period than a project funding cycle. 

2.5   Unite members believe that this is a major loss as not for profit organisations often have a mass of evidence about social issues and possible solutions, but this is rarely used for anything other than monitoring. Unite believes that a return to a strong advocacy role can help improve public services by using the sector as a critical friend to statutory agencies to build greater understanding of where services can be improved and where they are having positive impacts.

3. Volunteering

- How does the sector benefit from volunteering?

- How has the status of volunteers changed?

3.1   Unite is a strong supporter of volunteering, with much of the union’s own work done by voluntary activists and representatives across the country. This sector is heavily reliant upon the goodwill and kind nature of volunteers but there is a fine line between engaging volunteers and using them to replace paid work.

3.2   Unite believes that volunteering is a huge benefit to our whole society and is the driving force behind the community and voluntary sector. Unite does however stress that there must be emphasis on genuine volunteering, rather than the use of volunteers when paid staff would be more appropriate. Unite members have raised concerns that as resources become tighter far too many employers are replacing formerly paid roles with volunteers. This has particularly fed the concerns about unpaid internships in the sector which have been replacing entry level jobs in many organisations.

3.3   The sector would benefit from far greater clarity and employment protections particularly around definitions of employment and volunteer status. Tackling this issue would get rid of the confusion surrounding what should be a paid job and what can be voluntary and could be part of wider reforms needed to tackle exploitative practices such as zero hours contracts.

3.4   Too many people are being coerced to work for free, either by employers evading national minimum wage legislation or by government schemes for those unable to find paid employment. Unite opposes forcing the unemployed to work for free for the voluntary sector on any kind of workfare/work experience programmes (recent FOI releases show that the practice was wide spread[8]). This is why we joined up with hundreds of not for profit employers to support the Keep Volunteering Voluntary campaign[9] opposing forced workfare volunteering and is also challenging the use of unpaid internships in the sector.

3.5   To support real volunteering and volunteers Unite has co-written a good practice guide for volunteers alongside the major volunteering agencies in each of the four UK countries[10]. A key element of this is to support a protocol agreed with the TUC about avoiding the use of volunteers to replaced formerly paid work. Unite would like to see governmental and legislative support to strengthening this protocol.

3.6   It also needs to be recognised that volunteering is not free. Agencies need funding to cover recruitment, support and supervision and volunteer’s expenses in many cases. This adds value to the role of a volunteer, while support and recognition goes some way to keeping them on board. Good volunteering often requires engagement at a very local level, and local authorities should be encouraged to have volunteering strategies, co-produced with the voluntary sector.

3.7   Another way to reduce burdens on volunteers, workers and employers in the sector would be to streamline the disclosure and barring process for example with a “driving licence” style card, which was portable to avoid repeating the same process. This would serve the double purpose of saving organisations money and time.

3.8   Lastly the cost of living crisis has meant that many people are in tough times working longer or multiple jobs to feed their families. Free time is therefore scarce. Promoting volunteering therefore needs to go hand in hand with tackling the UK’s low pay and long hours employment culture, and encourage employers to provide more flexibility and time off to volunteer.

4. Pressures and opportunities

What are the main pressures faced by charities currently, and what impact have these had?

- What opportunities do charities have in the current environment?

- Are there specific pressures affecting particular types of charity (for example, service delivery charities; charities reliant on fundraising income; charities with a rural focus; smaller or larger charities; or charities promoting a particular cause) that you can highlight?

4.1   By far the largest pressure on charities is the need for sufficient and stable sources of funding. While it was ever thus, the Government policy of public sector cuts, especially to local authority budgets, has had a major impact on many charities[11] leading to redundancies, restructurings and in some cases complete closure[12]. Cuts have had a disproportionate impact on not for profit organisations as local authorities and other funding bodies have passed on the cuts.  At the same time, more members of the public are turning to agencies in the sector, as they lose support from statutory provision, so demand is rising and in many cases charities are having to turn people away[13].  This is particularly true for agencies offering services focussed on those in poverty.

4.2   Trusts and foundations are reporting huge pressure on their grant programmes, with high levels of competition meaning that many excellent projects and organisations close simply because the overall funding is not sufficient to fund all good quality applications. 

4.3   There needs to be an urgent halt to the huge cuts to funding with proper analysis done on the impact of those cuts to communities and the false economies that they produce e.g. it is estimated that the national annual investment of £1.6 billion in housing-related support generated net savings of £3.4 billion by avoiding costly acute services (Capgemini 2009).  Similar figures can be produced for cuts to legal aid funding and the knock on effect of service users relying on more costly acute services due to lack of support early on.

4.4   There needs to be a comprehensive review of the sector and the services that have been lost as part of the Government’s ideological austerity agenda. In particular this should look at youth and play work, legal and advice services, arts, disability support and mental health services. Local Councils need to be able to use their reserves now to protect vital services for their local communities and government redistribute funding to councils based on demographic needs.

4.5   Unite has long been campaigning for fair and sustainable funding for the not for profit sector. Many organisations in this sector (especially those working with vulnerable service users) will always be dependent on state funding, but the short term and volatile nature of funding decisions is affecting organisations’ ability to plan and develop.

4.6   Funding grants and contracts should cover the full costs of delivering the services and be guaranteed for a minimum of 3-5 years if not longer. Similarly the renewal or removal of funding should give organisations ample notice (6 months – 1 year).

4.7   Unite members report that the deepening use of competitive commissioning to fund many charities is driving a race to the bottom. Employers increasingly undercut each other to win bids to run services at a cost that results in them having to cut both staffing levels, and their pay and terms and conditions. This is unsustainable and is leading to severe damage to the services affected – e.g. in social care. Unite therefore believes that there should be an urgent review of funding for the sector with a return to grant funding as the norm as the most appropriate funding system for the sector.

5. Innovation

How do charities seek to innovate, particularly in the digital arena?

- What more could be done to promote innovation, and by whom?

- What barriers are there to being innovative?

5.1   A well paid workforce with excellent conditions is key to innovation and success in the voluntary sector. More government funding at local and national level and more stable long-lasting funding is essential for this. Competitive tendering of services, with poorly designed targets and a downwards pressure on wages, terms and conditions are a major cause of insecurity and stress, all of which impacts on morale, staff retention and the capacity to innovate.

5.2   Investing in training and skills are a core part of supporting staff to innovate in the sector. Unite members would support more regional opportunities for people to develop their skills and expertise and to promote innovation and excellence as well as developing understanding of digital skills. This would require investment and funding to be a meaningful success. High quality training would also help to deal with some of the regularly occurring issues affecting the sector such as poor management cultures, bullying and stress.

5.3   The sector is increasingly limited in the backgrounds of its staff and more should be done to ensure that young people from a diverse range of backgrounds can get work experience in the sector by making sure they are paid at least the real Living Wage for internships. Unite has joined up with InternAware to campaign against the use of unpaid internships in the not for profit sector as they are elitist, excluding people who cannot afford to work for free and are being used to replace previously paid jobs in the sector[14]. The practice is uneven but Unite’s research has previously shown that around 40% of the largest charity employers engage unpaid interns[15], while Unite members report that these roles are often criteria for accessing certain funding streams.

5.4   Providing opportunities for young people is vital to a thriving sector, and talented young people currently face huge barriers to joining the sector.  There is a need for creative funding support for community organisations in order to offer high quality paid apprenticeships, internships and entry level positions for young people in the voluntary sector. These should be for sufficient time for the young person to gain real experience and agencies would need to show that the young person would be able to develop real skills as well as meeting a social need.  Young people could approach agencies that they had a particular interest in working for and be able to access funding for those roles. The new apprenticeship levy could be an opportunity to develop these practices in the sector.

5.5   There is also a real need for funding for innovation and experimentation in relation to social need rather than just technological innovation. Funders must recognise that innovation includes the possibility of failure. For this to happen government funding bodies must be allowed to use procurement to drive standards up, allowing procurement to be based on more than just lowest cost. This should include social and environmental clauses such as the promotion of collective bargaining that would raise standards creating a level playing field for organisations seeking funding which would lead to greater innovation rather than a race to the bottom.

5.6   Unite believes that there should be a radical re-thinking of the ways in which services are designed, which fosters and rewards collaboration, and which includes service users and front line workers in the design of services and of indicators of success from the outset, and which allows for creativity and flexibility to ensure that provision genuinely meets the needs of the community.

5.7   Unite would support an approach which required Local Authorities to have a real strategy for the sector, which had involved the sector from the outset, and for which some funding could be available to deliver local partnership work – especially in relation to the need to tackle emerging issues such as food poverty.

5.8   Lastly some local authorities have developed areas of good practice in relation to the sector, and government should do more to share this information and create opportunities to learn from each other.

6. Governance, leadership and management

What skills are required to lead and manage a charity?

- How can these skills be gained?

- What support exists to develop these skills within the charitable sector?

What role should trustees play in the performance and effectiveness of a charity?

- How can trustees be best equipped, enabled and supported to fulfil their responsibilities?

- What, if any, changes might this mean for current arrangements?

6.1   Management is a crucial issue in the charity sector. Short term funding and austerity cuts mean that many organisations are regularly managing crises, sadly those organisations often do not have management with the skills or training to deal with the crisis effectively. Of all the sectors Unite organises in it is the not for profit sector where issues of poor management, stress and bullying rank the highest concerns. As described above tackling these issues require stability and investment.

6.2   Unite is calling for far greater coordination and leadership in the charity sector to build and alternative agenda to that of cuts and competition. Government should work with infrastructure bodies and unions to develop a new framework for the not for profit sector that promotes its independent voice as a key cornerstone of our democracy while putting its funding on a sustainable footing. 

6.3   Poor management is also driving several serious issues relating to employment rights in the sector. Zero hour contracts are a growing problem driven by funding arrangements like payment by results, personalisation and contracts based on services delivered. Unite is calling on government to ban these contracts that cause such insecure employment with no guaranteed hours or income[16].

6.4   The Government has cut back on employment rights for people working in micro-businesses and on fixed term contracts e.g. health and safety. These changes have disproportionately impacted on the not for profit sector workforce due to the number of people working under these conditions.

6.5   Similarly, TUPE legislation has never been fit for purpose in the not for profit sector and was undermined further during the Coalition Government and now potentially by the outcomes of BREXIT. Many employers are avoiding any obligations to workers that are transferred into their employment either through contracts transferring or mergers. This has led to a race to the bottom that can only be halted through clear obligations from funders and legislation to strengthen TUPE protections.

6.6   It must be recognised that problems such as low pay, exploitative employment contracts and the race to the bottom are intrinsically linked to poor management and the decline in collective bargaining coverage and union membership density across the UK[17].

6.7   Pay and collective bargaining coverage in the diverse sub-sectors that exist in the sector is far too low. While the sector is diverse, Unite believes that there is significant scope to extend collective bargaining and workforce planning to break the constant trend to cut pay and terms. This would help harmonise up pay and terms as well as bringing other benefits such as proper pension provision and joined up training in the sector.

6.8   Government funding should support collective bargaining arrangements by hard-wiring pay and conditions into all funding streams. Those organisations in receipt of work from the public sector where collective bargaining exists, e.g. health, local government, should be included as part of those agreements e.g. the JNC Pink book for youth workers in Local Government.

6.9   For those organisations where there is no obvious existing collective agreement the Government should facilitate their creation. There are many employer bodies within the sector but these do not currently take any responsibility for creating a better structure of industrial relations and workforce planning. The one exception to this is in the housing sector in Scotland where a national collective agreement exists between Unite and the Employers in Voluntary Housing (EVH)[18] covering around 300 employers. Government should work with unions and employer organisations to build a fair system of industrial relations in the sector that protects service users and workers from market excesses.

6.10          Lastly there are wide variations across sector in relation to access to pensions. Statistics are not available for the numbers of sector staff covered by a workplace pension, however due to the large proportion of organisations not previously providing any pension provision, auto-enrolment is a significant issue for Unite members in the sector. This is affecting both small organisations that will have to provide a pension for the first time and large organisations that may find it difficult to fund their scheme due to increased take up. Collective bargaining and sector-wide coordination would help deal with this problem.

7. Accountability

How can charities ensure that they are properly accountable to their beneficiaries, their donors, and the general public?

- What, if any, changes might this mean for current arrangements?

- How should charities assess their long term viability and/or sustainability?

7.1   The Charity Commission is a crucial vehicle for providing meaningful transparency, and proportionate regulation. Government should provide the Charity Commission with sufficient funding to carry out its job of regulating the sector and providing advice and support for charities.

7.2   Unite is concerned however that the role of the Charity Commission is being politicised. There is a growing perception that the Charity Commission is disproportionately targeting Muslim charities. Similarly, there are growing concerns about its role as a tool of government attacks on campaigning charities, e.g. through a Charity Annual returns consultation that focus attention on charities campaigning activities, or enforcement activities against Oxfam before the last election.

7.3   The Charity Commission should not be used as a political instrument but instead should focus on providing the regulatory framework that allows charities to flourish while reinforcing public trusts, transparency and good governance. Revelations about the Big Society Network for example underline the need for this to be robustly enforced.

7.4   It is crucial that the sector commands public support. Unite is strongly in favour of charities being able to speak out about issues that they are coming into contact with (e.g. UK poverty, the use of food banks or suffering of disabled people) which the current government has criticised. This is a crucial part of charity and their vital advocacy role. 

7.5   Unite is however extremely concerned by serious issues such as tax avoidance and the granting of charitable status to what amount to private companies providing private services such as private schools, or health care.

7.6   The Charity Commission should be proportionate with its enforcement role, distinguishing between genuine errors of judgement or expertise and deliberate attempts to defraud. The former of these should lead to enabling support and remedies as part of any enforcement. This needs to be based on realistic targets and plans that are proportionate and focussed on prevention and improvement.

8. Resource management

What are the current challenges to financial sustainability, as well as efficient resource and risk management for the sector?

- How can these challenges be overcome?

- How can best practice and information be shared across the sector?

- What lessons can be learnt from past mergers or dissolutions of charities?

- How can charities effectively deliver services and be assured that their work achieves successful outcomes?

- What are the benefits and challenges of funding for charities being derived from commercial contracts?

8.1   Unite believes that the not for profit sector must not be used as a cheap replacement for public services, nor as a stalking horse for the private sector in public sector outsourcing – e.g. through pressure to create social enterprises in the health sector and encouraging them to bid for contracts.

8.2   Unite is strongly concerned about the procurement agenda and policies that are driving it. Public service reform, competitive tendering and privatisation, particularly where not for profit organisations are being used to deliver formerly statutory services, often on reduced terms and conditions and budgets. Unite believes that core public services are best delivered by the public sector, with the not for profit sector having a distinct complimentary role offering specialist services and independent advocacy and campaigning work.

8.3   Where services are delivered by the not for profit sector Unite is not convinced that tendering is the best way to commission services, especially where it opens those services up to private providers and a race to the bottom. Unite believes any government funding should have terms and conditions of employment clearly specified and protected in the agreements so that where competition is taking place it is solely on the basis of quality rather than cost.

8.4   Certain procurement policies such as payment by results and personalised budgets have been disastrous to many organisations and their staff. Such funding arrangements have been instrumental to the increase of zero hours contracts in sectors such as social care while payments by results make it impossible for small and medium sized organisations to engage with contracts. These large contracts with payment in arrears will not deliver the quality work that is needed to support communities effectively and in some cases have led to private companies acting as an intermediary sub-contracting work to the local not for profit organisation that actually understands local user needs.

8.5   Unite would favour an approach which prioritised collaboration between government and consortia of smaller, locally based organisations with much more openness about what success would look like. Local authorities should be instrumental in working with such consortia to plan services, both statutory and additional, and ensure that there are locally responsive services, which can work flexibly enough to respond to changes in the local economy and which work from the basis that service users should be able to set some of the goals. 

9. Social investment

What is the potential of social investment and social impact bonds?

- What are barriers to fulfilling their potential?

9.1   Unite members share concerns about the introduction of social investment models of funding such as ‘Social Impact Bonds’ and ‘Pay by Results’ systems of funding. Their proponents claim this makes services more efficient and fills a gap in funding for preventative services that the public sector is often unable to fund.

9.2   Unite members are concerned that these systems are in practice being pushed as a market replacement to traditional mechanisms of funding such as grants and donations, displacing donor funding leading to donors to now “invest” in funding social programmes for a return rather than benevolent giving. This drives a focus around narrow measurable performance outcomes and market culture change that gives donors much greater say in how funding is spent.

9.3   Members are also concerned that they are likely to skew money towards larger more business like organisations rather than the traditionally more affective smaller community organisations and those that look at creative or holistic service design that many organisations would prefer to run.  That is most likely to penalise advocacy, arts and alternative community organisations. Coalitions of organisations also find it hard to access these funds as their contributions and outcomes are dispersed through member organisations.

9.4   It is also a major concern that social impact bonds are being used as a way to fund services that were previously run by the public and or voluntary sectors and reflect a broad based creep of neo-liberal financialised culture in to the not for profit sector.

10. The role of the Government

What should the role of Government be with the sector?

- What should be the role of local Government?

- What should be the role of the Charity Commission?

- Have these relationships changed? If so, how?

- How should Government (national or local) focus its resource to deliver its civil society agenda?

- What is the likely impact of greater local devolution on the charitable sector, or particular types of charity?

- What are the opportunities and challenges associated with local devolution?

10.1          The sectors relationship with government needs to be reshaped with the Government taking a hands off approach to the sector’s activities and instead concentrating on building coherent support, regulation and infrastructure that enables the sector to develop and excel, building infrastructure skills and funding that strengthens autonomy and advocacy. Key to this will be the repealing of the Lobbying Act and repeal changes to reduce the ability to use Judicial Review to hold Government to account.

10.2          Not only did the Lobbying Act reduce opportunities for charities to campaign on behalf of their members/service users but the government is now attempting to stop organisations from using public funds to campaign on behalf of positive change. Charities cannot be party political, which is right and proper, but they must be able to shine a light on what is going on amongst low income households and the catastrophic impact of government policies and cuts (of whatever party) and provide evidence to call for improvements.

10.3          Unite is concerned that systems of accountability in the sector such as the Compact are not fit for purpose, being largely ignored when politically expedient. This must be revisited to build a framework which is both better understood and recognised across the sector and given the necessary teeth to prevent government from simply ignoring it when expedient. Government should consider emulating the powerful “Declaration of interdependence in children’s services” produced by children’s charities in England and the TUC[19].

10.4          Unite believes that accountability needs to be radically strengthened and extended with policies designed around better supporting all types of organisation in the sector from micro and small, to large and international and real systems of redress from arbitrary decisions from funders. This would mean an approach focused on relationships and community engagement and representation, rather than simply viewing the sector as a provider of tendered services. 

10.5          The sector’s major value is through advocacy, independence and additionality. Local and national voluntary sector organisations often have an ability to engage with communities who do not engage so easily with statutory agencies, and thus complement other provision.  Market forces have failed whole sections of the community and it is therefore important that an approach should be taken which looks at how the sector can assist in narrowing the gap in opportunities between people of different backgrounds.

5 September 2016

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