There is a kind of state capacity that never appears in a spending review or an organogram, and Britain has spent the last decade quietly running it down. The voluntary sector has been undermined by two trends pulling in the same direction. The first, and the most visible, is money. Core budgets have been cut and contracts squeezed in the name of efficiency, with commissioning increasingly designed to drive cost out of the system. The second is harder to see and, over time, more corrosive. Government after government has simply stopped paying the sector serious attention, allowing a national asset to wither through neglect rather than any deliberate decision to do without it.
The sector’s voice in policy and political debate has thinned accordingly. There are exceptions: the government’s new Office for the Impact Economy, established in the Cabinet Office late last year, is a genuine attempt to draw impact investors, philanthropists and purpose-driven business into closer partnership with the state. But it is telling that the front door ministers have chosen to build is for capital rather than for the voluntary sector as a whole. They rarely talk about what charities and community organisations actually do for public services, or about their part in a more inclusive economy. There is a particular irony here for the current government, given how much the Labour party owes its own origins to the voluntary and mutual movements of the early twentieth century. Today it appears largely indifferent to the sector’s fate.
Some of this is inheritance. The Big Society project of the early 2010s was widely read as a cover for austerity, a way of dressing cuts as empowerment, and it has cast a long shadow. The Conservatives grew wary of the whole civil society agenda because of how that project ended, while Labour has tended to retreat to firmer ground, defending the central role of the statutory public sector rather than asking what should sit alongside it. The effect has been a cross-party silence on a question neither side wants to own.
“The voluntary sector” is a loose label for an enormous range of organisations, held together less by form than by purpose: they exist to create social value rather than profit, sitting outside the state while remaining woven into how the country looks after its people. There are over 160,000 registered charities in Britain, and the wider universe of voluntary bodies is usually put at around 400,000. Together they account for income of more than £69bn and contribute more than £17bn in gross value added to the economy each year. They are a source of social and economic wealth at the same time.
The argument we have been making across this series is that many of Britain’s policy failures trace back to the same root: the absence of a settled view of what the state must own, what it must enable, and what it must be capable of. The voluntary sector belongs squarely inside that unsettled question. No country can meet its citizens’ needs through the market and the state alone. Voluntary and community organisations do something neither can manage: they give people a measure of control over their own lives, and they reach into places that public provision, however well run, cannot. Treating them as an afterthought misunderstands what a modern state needs around it in order to function at all.
Consider what the sector actually does. It reaches the people the state tends to miss, the young person classed as NEET who would otherwise slip through the gaps, the isolated older person an ageing society will produce in ever greater numbers. Our own work on provision for young people in the West Midlands has shown how often it is a voluntary body, not a statutory one, that reaches them early enough to change the course of a life. It innovates under constraint, finding ways to support people with complex needs that larger and better-resourced systems cannot, cutting through what the social innovator Hilary Cottam has called the “labyrinthine processes and irksome rules” that stand between people and the support they need. It speaks for those with little voice in Whitehall or Westminster, able to challenge government and market alike precisely because it answers to neither.
And it does something that matters more as other institutions weaken. As the churches, trade unions, workplaces and extended families that once held communities together have declined, grassroots organisations have become some of the few remaining builders of social capital and local resilience. They connect people back to democracy and to public institutions, which is why the case for devolving power should not stop at councils and combined authorities, but reach the community bodies that are rooted in particular places and understand their priorities.
None of this is new. What is new is the pressure on it. An ageing population, fraying communities and the disruption already arriving with the Fifth Industrial Revolution are raising the demands on the state at precisely the moment its reach is narrowing. A centre that cannot deliver everything itself, and never could, needs a strong civil society around it more than ever. To run that capacity down now, as fiscal constraint hardens and the calls on the state multiply, is the opposite of strategic.
For too long the sector has been caught in a cycle of short-term funding bids and heavy procurement, with contracting goalposts moved at the last minute and little room to plan or build for the future. Changing that means treating the sector’s capacity as something worth investing in, and bringing it back from the margins of political debate towards the centre. Most of all it means moving from transactional contracting to a genuine, long-term partnership between government and the organisations that work alongside it. In a country where inequality has widened and social divisions have deepened, the work of building a strategic state cannot be done by government alone. It depends on the organisations that reach where the state cannot, and on a politics finally willing to treat them as part of the country’s capacity rather than a residual category to be managed down.
Patrick Diamond is professor of public policy at Queen Mary University of London and a former head of policy planning in No.10. Vijay K. Luthra is a public service transformation specialist and former civil servant, local government councillor, school governor and NHS NED