Outgoing charities chief Stephen Bubb warns of “toxic” relationship between government and third sector

Exclusive: Outgoing head of charity leaders’ network ACEVO criticises Cabinet Office over plans to support private business using civil society funds – but the department says it wants to "explore the potential of an untapped area of the economy"

Outgoing ACEVO chief Sir Stephen Bubb has hit out at the government's approach to charities. Image credit: ACEVO

By Suzannah Brecknell

16 Jun 2016

Sir Stephen Bubb, the outgoing chief executive of the charity leaders’ network ACEVO, has raised concerns that money designed to support charities could be “leached into the private sector”, as he warned of a "toxic relationship" between government and the voluntary sector.

Speaking in an interview with CSW, Bubb – who hands over the leadership of the organisation representing charity chief executives to Asheem Singh this month – said recent negative messages from ministers had contributed to a drop in contact between officials and civil society organisations.

He told CSW: “It is crucially important that the climate – which gets established by senior ministers, the prime minister – changes. At the moment the message around Whitehall is that the sector doesn’t matter, they're pesky people who are irritating and therefore can be ignored.”

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Bubb also criticised a review of "mission-led businesses" – companies with a social purpose but which are not formally structured as a charitable interest company (CIC) – launched by the Office for Civil Society earlier this year.

The review will, according to the Cabinet Office “examine how this emerging sector can be supported to double in size over the next decade, delivering greater economic and social benefits", and the department has told CSW that its work remains at an "early stage".​

But Bubb argued that while the business department could and should be supporting corporate social responsibility and mission-led businesses, it should not be doing so using resources intended to support civil society.

"To spend scarce resources on supporting the private sector in a department about civil society is extraordinary," Bubb said. 

“What worries me is that the resources for social finance, which are clearly earmarked for third sector organisations, will be leached away into the private sector" – Sir Stephen Bubb

There are currently protections around which organisations can be supported by Big Society Capital – the bank set up by government to support social investment.

“I am suspicious that this taskforce is about thinking of ways around those restrictions,” Bubb told CSW. "I'm all in favour of mission-led business, I'm all in favour of corporate social responsibility, but I don't believe that resources that are intended for civil society should be diverted into the private sector.”

Bubb argued that when a business is mission-led but is not a CIC, it offers no protection that funds will continue to be used for social purposes. 

When a CIC is sold or closed, their assets can only be passed to charities or other CICs. The same restrictions will not apply to a mission-led businesses.

“What worries me is that the resources for social finance, which are clearly earmarked for third sector organisations, will be leached away into the private sector. The problem is you have a mission-led business today, and tomorrow it’s gone," Bubb said.

And he said the example of welfare-to-work provider A4e "should be branded on anyone is involved in this taskforce".

The controversial firm was founded in 1991 to retrain former steelworkers in Sheffield. It described itself as a social purpose business until 2012, when the Advertising Standards Agency ruled that the term was misleading since it implied the company was a not-for-profit enterprise. In 2015 A4e was sold to private company Staffline for £34.5m.

Bubb was also strongly critical of government plans to insert a clause in all grants to charities preventing them from using public funds to lobby ministers. He described the clause as “totemic of a toxic relationship between government and charities”.

Responding to Bubb's criticism, a spokesperson for the Cabinet Office said: “This review does not commit any resources to the private sector. At this early stage it seeks only to explore the potential of an untapped area of the economy.

"Mission-led businesses have the potential to improve communities whilst also contributing to the wider success of the UK economy, which is why it is important that we run this review. We welcome evidence and views on this, via our Call for Evidence."

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