Social Justice Committee, 19 Sep 2001

Meeting date: Wednesday, September 19, 2001

Official Report 237KB pdf

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Voluntary Sector Inquiry

I welcome the officials from the Scottish Executive—Mark Batho, head of the social justice group, Sheenagh Adams, head of the voluntary issues unit, and Gavin Barrie, voluntary issues manager—who will give a short presentation before members ask questions.

It may be useful if I begin by describing where the voluntary issues unit sits in the overall scheme of things at the Scottish Executive. It is one of three divisions within the social justice group, which I head, the other two being the equality unit and the social inclusion division.

The role of the voluntary issues unit is to encourage, support and develop the relationship between the Executive and the voluntary sector. It is not the channel or gateway for all the Executive's dealings with the sector, because the Executive's policy is to encourage mainstreaming. For example, the education department will deal directly with the voluntary sector on education issues, the health department will deal directly with the sector on health issues, and so on. However, the voluntary issues unit sits at the centre to encourage and support those contacts.

In policy terms, the Executive regards the voluntary sector as an important player in all aspects of the business with which the Executive deals. It sees the sector as a key partner in policy development, service delivery and the development of community capacity—alternatively known as the accumulation of social capital. That is recognised in the terms of the Scottish compact, which is the agreement between the Executive and the voluntary sector—I think members have copies of it. The compact provides a framework for developing further the relationship between the sector and the Executive.

The Executive's commitment is also backed up with money. In 1998-99, the Executive directly provided the sector with £23 million; that has risen to £39 million in 2001-02. The Executive has made a number of commitments to the sector to modernise the legal and financial framework within which the sector operates. In particular, a funding review is under way—no doubt we will talk more about that. There is also a separate but connected review of the funding of the black and ethnic minority voluntary sector. A review of charity law was conducted by Jean McFadden, responsibility for which lies with the Deputy First Minister, Jim Wallace, and with the justice department. However, my group also takes a close interest in that, because half of Scotland's voluntary organisations are charities.

A review of the social economy began yesterday with the secondment to the social justice group of a member of staff from the Scottish Council for Voluntary Organisations, who will conduct that review over the next three months or so. Several new funding mechanisms have been developed and we are investigating new ways of funding the voluntary sector. In fact, even as I speak, social investment Scotland—a new loan fund for social economy organisations—is being launched.

We are also strengthening the sector's infrastructure support; for example, we have completed the national network of councils of voluntary service and local volunteer development agencies. The Executive has doubled its funding for both those networks.

We have good working relationships with the main sector umbrella bodies, the Scottish Council for Voluntary Organisations and Volunteer Development Scotland. We have two main formal forums in which we meet: the voluntary sector forum, which is chaired alternately by the Minister for Social Justice or her deputy and by the convener of the SCVO. The forum meets a couple of times a year to run through issues of concern to both sides.

The convener of the SCVO and the chair of Volunteer Development Scotland also participate in the voluntary issues management board. The board meets three times a year and involves senior officials from the Scottish Executive and the voluntary sector. At an official level, I chair the board. We have good, regular, informal contacts with the SCVO, Volunteer Development Scotland and other umbrella bodies across the sector.

Increasingly, we are developing international contacts. It is increasingly apparent that many countries across the world are working at different stages of very similar agendas. We have things to offer other countries and they undoubtedly have things to offer us. For example, Sheenagh Adams attended the main United Nations conference at the start of the international year of volunteering, in Amsterdam. A representative of the SCVO and I were invited to Canada at the beginning of this year to discuss our compact and a similar agreement on which the Government of Canada is working with its voluntary sector. That visit was followed up by a ministerial visit in July, when Margaret Curran, accompanied by SCVO representatives and me, went back to Ottawa and on to Quebec, which is at the forefront of interesting developments on the social economy. We hope to build on those contacts. I recommend to the committee the website of the voluntary sector initiative in Canada, which is highly accessible and very informative. I can provide the clerk with contacts if that would be helpful.

Your written submission states:

"The sector is also well placed to assist the Executive in developing policy given the wide variety of interests covered."

Can you expand on that? Can you provide any examples of where the voluntary sector has assisted in developing policy?

One of the features of working with the sector in the past has been the issuing of consultation papers by the Executive and previously by the Scottish Office. Officials' and ministers' ideas about what they wanted to pursue were firmed up at an earlier stage; we are now trying to get the sector involved much earlier.

An example of the sector assisting in the development of policy is the millennium volunteers scheme, which is a UK scheme to promote and support volunteering among young people. It is due to come to the end of its current format next March and we need to consider how to take it forward. Jackie Baillie has asked for a review group to be set up to consider the issues and assess how the millennium volunteer scheme fits into the broader picture of young people volunteering. There is no pre-set agenda for that and no draft consultation paper. We have brought the sector in at the level where we are starting our thinking on the scheme's future, instead of bringing it in later. The aim is to improve policy development and to make the policies that we adopt more responsive to the needs of the voluntary sector. There are similar examples elsewhere in the Executive, in health and education for example.

Do you agree that one of the strengths of the voluntary sector is that, through identifying need locally and developing practice—for example in child care or in the prevention of violence against women—the organisations provide the basis on which policy is now developed by the Executive? How do we maintain that strength? Child care is a classic example. At a local level, the need to have wrap-around care in nurseries was understood. We now see such care being rolled out at a Scottish level. How will you ensure the independence of the voluntary sector so that it can think innovatively rather than follow where the Executive leads?

We maintain the strength to which you refer mainly by working with the intermediary bodies in the sector. Those are bodies in which a range of voluntary national or local organisations with a common interest come together. One example is YouthLink Scotland, which is an umbrella body that represents the interests of something like 300 voluntary organisations that are involved in all aspects of working with young people. YouthLink has the time to get involved in policy development but also to engage with its members, which deliver services locally.

We recognise the time constraints on organisations, particularly on small local projects that deliver a service. Such organisations do not necessarily have time to allow their project manager or a project worker to take time away from the project to work on policy development.

We also recognise the independence of the voluntary sector. The committee will meet people from voluntary sector organisations during its inquiry. Voluntary organisations are not entirely reliant on us for funding but have other sources of money. They are able to criticise the Executive and go against what it wants because we are not their sole funders and they have a broad base of funding. To an extent, that fact secures the independence of voluntary sector organisations.

We recognise that voluntary sector organisations have their own agenda, priorities and actions. We want to find out in what ways we can work in partnership. We want to identify the common threads on which we can work together, but we recognise that our priorities, objectives and approaches will not always match those of voluntary sector organisations 100 per cent.

Do you think that, even where a voluntary organisation relies largely on money from the Scottish Executive, the Executive would not be tempted to flex its muscles and affect the organisation's independence?

That has not been my experience and I am not aware of that being a criticism of the Executive.

You are right, convener, that there is a risk that the Executive will be perceived as saying to voluntary organisations, "We have decided to do something. Here is a consultation paper that in effect tells you what we are going to do. We want your comments on it, but we will do it anyway."

The general thrust of the discussion on consultation in the compact and the good practice guide, as well as what we encourage divisions throughout the Executive to do, is to break away from such practice. We encourage divisions to ensure that consultation papers are not statements of the Executive's intentions but an attempt to engage the best of practice throughout the voluntary sector at an early stage of policy formulation, before the policy is set in stone. The thrust is to engage the voluntary sector in making policy rather than once practically everything is done and dusted.

I will widen the context of the discussion. As I understand it, the compact is an agreement between the Executive and the voluntary sector, but most support for small or local voluntary sector projects comes from local authorities. To what extent are the principles of the compact mirrored by formal arrangements at the local authority level?

We know that some local authorities have developed their own local compacts. The Convention of Scottish Local Authorities has been involved in developing a volunteering policy for local authorities. We have regular meetings with COSLA. One of our officials attends the voluntary sector forum in COSLA at which local authority officials with responsibility for voluntary sector matters get together. COSLA is also represented on a range of working groups in which we are involved.

Do you have any perspective on the extent to which the principles that you are laying down at national level operate at local authority level throughout the country, bearing in mind, for example, the non-statutory functions of local authorities and pressures on funding? Are local authorities more focused on meeting their own objectives than on the voluntary sector's separate agendas?

Obviously, you would need to ask COSLA and the local authorities about that.

Do you have a perspective on that?

Our perspective on the approach that different local authorities take comes mainly through the national networks that we fund, especially the councils for voluntary service. For example, last week, I visited CVS Fife, which reported that it has an excellent relationship with the local authority. Indeed, the local authority is investing something like £120,000 of core funding. In Fife, there is a good relationship, whereas in other areas only small amounts of money are available and there is perhaps not the same level of engagement.

The community planning process will assist the sector to engage with local authorities. Our colleagues within the Executive who deal with local government have certainly encouraged people to take account of the voluntary sector in the development of that process. For example, the deputy director of the SCVO is a member of the community planning task force.

What sort of feedback have you had from the voluntary sector on how well the compact is working? How satisfied is the voluntary sector with the compact? Are pressure points and areas of difficulty emerging from the various forms of contact that you have had?

The voluntary issues unit and the voluntary sector have carried out a joint review on the workings of the compact. The first report on that has been submitted to the Minister for Social Justice. We expect that that report will be published shortly. The feedback is that although the relationship is generally fairly good, there are funding issues. The Executive has not always given three months' notice of funding intentions. There are also some examples of where we have not allowed three months for consultation, although that was a commitment in the good practice guide.

You have talked about a report on the working of the compact. Will a formal review of the compact take place so that additions can be made and weaknesses addressed? Should the committee be considering any particular issues in that general area?

There have been internal discussions on the possibility of reviewing the compact. At the end of October, there will be an away day for ministers, senior people in the Executive and people from the voluntary sector that will address whether a formal review rather than simply consideration of the implementation of the compact is needed.

Have any aspects been flagged up as causes for concern on which that process should focus?

We are aware of the issues. When the minister publishes the report, we will see the reactions to the issues that it identifies. Funding remains an issue. To address that, we are undertaking a separate funding review.

I would appreciate your view on the roll-out of the compact across other Executive departments. I am conscious that there can be a different approach to things within different departments of the same organisation. When I served as a councillor, the housing department was well geared up on this kind of thing, but the parks department was terrible. There were distinct differences of ethos and approach. Do Executive departments have that sort of problem?

The good practice guide has been circulated to all the Executive's departments, agencies and non-departmental public bodies, all of which are covered by the compact. A training programme on the compact is also being rolled out across the whole Executive. It takes the form of seminars that are presented jointly by the voluntary issues unit—Mark Batho presents some and I will present the next one, which will be to the health department—and senior officials from the SCVO. Seminars are introduced by the relevant minister and are available to all staff in the departments. Once the programme has been rolled out across the departments, we plan to roll it out to relevant staff within the agencies and NDPBs.

Money is allocated to local authorities to promote certain voluntary initiatives, such as on particular health issues. I have heard from local groups that, although Jim Wallace or Jackie Baillie may send them a letter to say that funding has been given to the local authority, they feel that the funding is not passed on and that they get no value from it. Does the Scottish Executive monitor to ensure that money that has not been ring-fenced but has been allocated for a particular purpose is used for the purpose that was intended?

When money is handed over to local government as part of a settlement, it is for local authorities to decide how the money is used. Obviously, there are different ways in which to encourage use of the money, short of ring fencing, such as discussing how matters are developing. I would be misleading the committee if I said that we had formal mechanisms for such action.

Are you saying that, if a local group complained that the local authority was not dispersing the money in the spirit in which it was granted, nothing can be done about it?

We are struggling a little because such matters are outside the funding handled by the voluntary issues unit. If one is talking about a specific education initiative, for example, that is not something in which we would engage on a day-by-day basis. I am sorry, but I do not want to mislead the committee.

That is fine. Such matters have been bothering me lately, and I am happy to hear your views.

Such matters go right to the heart of the relationship between the Executive and local government—territory that I do not want to go into just now.

Nor do many people.

I have a specific interest in equal opportunities. I was a member of the Equal Opportunities Committee. Paragraph 9 of your submission states:

"We recognise the special needs of the black and minority ethnic voluntary sector".

That intention is great, but such a statement seems very bland. What are the needs of that sector and what will be done about them?

We commissioned a separate review of the funding needs of the black and minority ethnic voluntary sector. It was published in March and the consultation period ended at the end of July. We received about 70 responses and we are about to finish examining them. The review covered not only the Scottish Executive's funding of the sector, but the wider funding picture in Scotland. It has made a host of recommendations, not only to the Executive, and we shall be advising ministers on how to act on those recommendations.

Following the publication of the report, the Executive gave a grant to Black and Ethnic Minority Infrastructure in Scotland, which brings together various black and minority ethnic voluntary organisations. It will play a CVS role, support the growth and development of the black and minority ethnic voluntary sector and link in with the white-led sector. For example, the SCVO will provide the management services for BEMIS in the short term. The Executive has awarded it £300,000 over three years. That was the immediate response to what have been identified as the needs of the sector. As I said, the review is about to be completed and ministers will be making announcements on their policies in due course.

What about the other clearly disadvantaged sectors that are noted under the Scotland Act 1998? The Equal Opportunities Committee has taken those on board. Our first major study concentrated on the position of women. A decision has not been taken, for example, on lesbian, gay, bisexual and transgender issues. Are you looking at that sector with regard to voluntary sector funding?

As Mark Batho explained, the Executive's policy is to mainstream voluntary sector issues. Our colleagues in the equality unit are considering the issues affecting the voluntary sector within their policy areas.

We will have achieved mainstreaming only when there is no longer a need for an Equal Opportunities Committee, but that will be a long time in the future. How do you feel about mainstreaming equality in general? How does that tie into your work?

I will answer that question as I have responsibility for the equality unit. The equality strategy was published in November 2000. We are acting a little like swans in that there is a lot of paddling underneath at present to get matters in motion. Experience throughout the world tells us that mainstreaming is hard. It is about changing hearts and minds in the long term.

There have been developments in terms of encouraging those in the Executive to think about such matters. The Housing (Scotland) Act 2001 was a reasonable success in that it brought in voluntary sectors that represented different minorities and allowed them to have their say in the formulation of the policy that underpinned the act. A lot of effort was put into that by the equality unit to help people along.

You are right that over time, one would hope that that becomes part of the natural behaviour of the organisation as a whole. At the moment it has to be directed, and that is resource-intensive. There are two pilots in the areas of housing and education to develop those kinds of links. Technically, we are talking about the equalities agenda, but inevitably we are talking about the voluntary sector. Most women's groups and groups representing minorities are voluntary organisations, so there is a crossover.

A terrific amount of work is taking place. The preliminary report on the equalities strategy will come out in the next month or two, and will be presented to the Parliament. It was agreed that there will be a preliminary report, followed by the first of a series of annual reports from 2002 onwards. That will give an indication of activity throughout the Executive.

Mainstreaming is a two-way process. While we are mainstreaming voluntary issues throughout the Executive, the equality unit is mainstreaming equalities to us, so that we address the issues in our own policy work. We have taken that on board in a number of ways. For example, from this year we are funding an SCVO equality project to help the voluntary sector to take on board equalities issues and equality-proof their own work and policies. We are also funding VDS to address volunteering issues in black and ethnic minority communities. It is examining the promotion of volunteering in black and ethnic voluntary organisations, and addressing the issue of white-led volunteering organisations giving access and opportunities to people from black and minority ethnic communities.

I was interested to hear that what you are doing is difficult because you have to win over hearts and minds. My understanding was that one of the strengths of mainstreaming is that winning hearts and minds is a bonus, but in the meantime you take responsibility and expect organisations to drive the policy forward. Whether people think that it is a good idea or not, they have a responsibility to do it. I am interested in your comments on that. What is being done about gender issues? Specifically, what is being done to support women's organisations? What proportion of Scottish Executive voluntary sector funding goes to deprived areas, and how is it monitored?

On mainstreaming, I agree that there has to be a process as well as simply winning hearts and minds. To an extent, that is driving the agenda. As I said, the equality unit worked with officials who were working on the Housing (Scotland) Bill to ensure that they were following the processes.

The good practice guidance is intended to guide officials throughout the Executive on how they should act in terms of funding, consultation, partnerships and the like. Experience suggests that the process is helpful and necessary, but ownership of concepts such as taking full account of the needs of women in formulating policy throughout the Executive is important as well. If people do not believe that better policy will result by engaging with women's organisations to ensure that the new policies take full account of women's concerns, they will produce a less good product than if they do believe it. That is why I talked about hearts and minds. There must be processes, but there must be ownership as well.

On women's issues generally, work has been going on in the equality unit to develop contacts with women's organisations and on means of reaching out to consult those organisations and individuals whom consultation normally never reaches. It is all too easy to chuck out a consultation paper and say, "We have consulted", but a host of people whom we are not reaching will have things to say.

In the summer of 2000 the equality unit made a significant push to reach out to different women's organisations to set up channels for the Executive's consultation processes to get to those people. We cannot engage with everybody directly, so it is important to have channels of communication through, for example, umbrella organisations. A lot of effort is currently going into developing those different channels of communication.

What was the third point?

It was on deprived areas. Most of the funding that goes out from the voluntary issues unit goes to national organisations or national networks. Funding at a local level is done through the millennium volunteers programme and the Unemployed Voluntary Action Fund, which also administers money for the ethnic minority grant scheme. This year there is also funding for a small grants fund for the international year of volunteers.

We do not have figures for specific postcode areas, but we have figures at local authority level. The £39 million that goes out from the Scottish Executive is broken down into policy area figures only. We are in the process of trying to create a database that would allow more sophisticated interrogation of what the money is being spent on. That would not be able to be interrogated at a local level in terms of, for example, social inclusion partnership areas.

How would you encourage national organisations to which you have given money to prioritise the needs of deprived areas?

It would depend on what they were being funded to do. National organisations are often being funded to provide a national service—perhaps to its member organisations. We give core funding to the SCVO to help it to provide support for its members. Some of that might be in deprived areas. We are looking for locally based funders—whether it be health boards, local enterprise companies or local authorities—to identify local needs in deprived areas and put money in.

How do you ensure that the bodies that you fund, which are often umbrella organisations, are in touch with grass-roots and community groups and represent the views of smaller organisations?

The umbrella organisations that we fund are primarily organisations such as the councils for voluntary service, which are membership organisations at the local level. We are examining who their members are and are encouraging them to broaden their membership base. That was one of the things that we asked them to do with the increased funding that they received as of this year.

We also encouraged them to bring in wider elements of the voluntary sector such as small locally based housing associations, which have not necessarily been engaged with local councils for voluntary service in the past. Similarly, we want to know who a national organisation's members are and how the organisation communicates with them. That is true on the voluntary sector side and on the volunteering side.

I was interested in Mr Batho's introduction, when he talked about foreign trips and all the rest of it. I waited with bated breath when he said that he was going to make a recommendation—I had hoped that it was going to be a trip to a country but, unfortunately, we will only look at your website. I have recovered from that disappointment. Why do you see information technology connectivity in the voluntary sector as important? Could you not have done more using IT rather than by travelling?

I should point out that we travelled economy class. The contact with Canada came through them talking to us. They came into our website and looked at what we were doing on the compact. We had a significant exchange of correspondence by e-mail and continue to do so.

The specific reason why we were invited over to Canada is that they have developed a complex process to build the relationship between the voluntary sector and the Government through a series of joint tables. One of them is a joint accord table. It is building up the accord, which is their equivalent of the compact. That brings together, under joint chairs, a range of senior Government and voluntary sector people from across Canada. They all wanted to hear what Stephen Maxwell from the SCVO and I had to say about our compact. That was the focus of the visit.

We held 12 meetings in three days with voluntary sector representatives from different kinds of organisations and with Government officials representing departments such as the finance and central services department. Electronics take us a long way, but they do not take us the whole way. My group operates within limited budgets and we are conscious of the need for economy and value for money in relation to such occasions. The alternative—simply relying on electronics—misses tricks, as it does not allow people to get a feel for what is going on or to engage with people and to hear what their concerns really are. We will be careful of repeating those circumstances, but they provided great value. The contacts that were built up are still being pursued and we e-mail one another regularly.

I do not wish to seem to be the committee's IT technophile, but could you tell us a bit more about the £1.1 million that has gone into IT initiatives over this year and the past year?

I will hand over to Sheenagh Adams for that question.

You are not the technophile in your group, are you?

No.

I do not claim to be either, although I can tell you about our budget.

We recognised the voluntary sector's need to get connected and to make full use of IT. Like other businesses, the voluntary sector must work in the way in which the modern world operates. We have worked closely with the SCVO on that matter. Indeed, the SCVO is probably a world leader as a result of the portal that it is developing for the voluntary sector, which is going to be called workwithus.org and which will be the access point for electronic communication for the entire voluntary sector in Scotland. The portal will enable the public to do all sorts of things, such as donating online, telling organisations that they are going to leave them money in their will and so on. It will also enable the voluntary sector to lobby online—members can expect to receive lobbying e-mails on a number of issues through the portal.

Our funding approach has been twofold. We invested in the portal, giving the SCVO £400,000 over two years to assist the development of the portal. The portal is innovative—it is not something that can be bought off the shelf from PC World. Scottish Enterprise has taken an interest in the portal, in which it invested £200,000 last year. We have given the SCVO some help towards the staff costs of managing the development of the portal.

For the portal to work, not only does the SCVO need support at that level, but the broad spectrum of voluntary organisations must be able to engage with it. We have been trying to help with the promotion of connectivity at the local level. For example, we have put money into the IT networks of the CVSs and the local volunteer development agencies.

We also have a grant scheme, providing £500,000 each year for three years—this year was the first year. We invited organisations to apply for a grant and told them what the priority areas were. We were not keen to fund the purchase of personal computers alone—they have come down in price and the SCVO runs a PC leasing scheme with BT, so machines have become more accessible. We tried to help organisations with the cost of setting up intranets or websites that would enable them to give advice and support to the public. There was strong interest in those grants—for the £500,000 that was available, we received applications for about £7 million or £8 million-worth of work.

I take it that IT is one way of overcoming the problem of not reaching out to enough organisations or people, to which Linda Fabiani referred. Are you hopeful that IT will help you get your message across and gather more opinions?

The portal will contain all sorts of funding information that small local voluntary organisations will be able to access more easily than in the past.

I will ask about funding the voluntary sector, as that issue is often top of the agendas of the voluntary organisations that I meet. It is clearly of concern to the Executive, as you are conducting a review of it. I understand from your written submission that you have received approximately 240 responses. In those responses, have there been any key themes about what the sector wants the Executive to do to improve its funding?

The sector has pointed out for a long time that organisations have to piece together and maintain a package of funding from a variety of sources. Even within the Executive, across the 20 or so schemes for the voluntary sector, we did not have a one-stop shop for grants. Ministers have made it clear that, in their view, the benefits of having each department working on funding together with the relevant part of the voluntary sector far outweigh any benefits of having a one-stop shop for funding.

However, in the context of the funding review, we are suggesting having a common application form, which would bring some of the advantages of a one-stop shop. It would no longer be the case that somebody might apply for one scheme, which may not quite be the right scheme for them, and then find that they have to fill out a completely different application form if they go on to apply for a different scheme. From the current perspective of the voluntary organisations, it is a matter of identifying, applying to and maintaining what seems to be a patchwork of funding, from a variety of sources. That is a main cause for complaint.

The other issue that arises is the stability of funding. People want three-year funding and they want ease of application. They also want standardisation in the conditions and reporting requirements that attach to the offer of grant, so that they can produce just one report to meet the needs of their own management committees, the Scottish Executive funders and other funders from whom they might also be getting money.

Another important desire on the part of voluntary organisations is to move away from the whole thrust of recent grant making, where it is all about innovation, and according to which they have to think up new ideas—to reinvent the wheel, to make their work sexier and jazzier so that it appeals to funders and they can tie in with the latest fad for funding—before they get money. We have to recognise that that approach has to change, and that there is a lot of good-quality work going on. We have to look for ways to find sustainable funding for projects that are delivering on the ground and producing the outputs that funders are looking for from the money that they are investing.

Someone working in the voluntary sector said to me the other day that when a business in the private sector is seeking to fund projects, it seeks a track record, and it is difficult to get money until a suitable track record has been found. Their view was that, in the public sector, a track record is the last thing that is needed; what is needed is a nice, new pilot. Then money pours in but, as soon as the pilot starts working, the money is withdrawn. That may be something of a caricature, but it is a trend that is emerging from the consultation and, in a wider sense, throughout the sector. That will need to be addressed.

That is true. Representatives of the voluntary organisations with which I am familiar and whom I contact constantly raise their concerns about sustainability with me. They are providing services in response to local need. If those services were to be taken away, the communities that they serve would be deprived of much-needed services. That also results in organisations having repeatedly to make funding applications to protect their services, but in such a way that almost suggests that they are doing something different and innovative. It is not good enough for the Executive just to recognise that as a problem. We need to know how you will respond to it. Apart from appreciating that the problem exists, what are you considering doing to address it?

This is not just an Executive problem. One concern about the resources that the voluntary sector—particularly the bigger organisations—receives relates to European money, for which the application process is horrendous. That is not something that we in the voluntary issues unit can directly address, although we can make our views known.

Sustainable funding is the objective in the longer term. By their nature, grants are not necessarily sustainable funding—there are problems in that taps can be turned off and on. The economic situation and many other factors can cause lack of sustainability. That is one reason why efforts are beginning to consider other ways of providing funding on a longer-term basis. I mentioned the social investment Scotland loan fund, which is being launched today. It will be supported by the four banks in Scotland and the Executive. The fund has £5 million to begin with—which is not huge—but we hope that it is at least an acorn to grow things.

I have participated in a group that originated in Community Enterprise in Strathclyde. It is considering an equity type of funding and has come up with some surprising findings about the likely demand and the opportunities for such funding. One of the points to emerge is that voluntary organisations can be disadvantaged in trying to access longer-term, more sustainable funding by being unable to build up a track record or a sound balance sheet with which they can go to a funder—perhaps a commercial bank or an intermediate fund—and say that they are, within certain terms, commercially sustainable and would like to borrow some money. Their grant streams are so short. Much work must be done.

The committee will appreciate that I cannot anticipate the final outcome of the funding review, but work will be done on how voluntary organisations can get more of a track record and more sustainability and be allowed to maintain some reserves—some cash balances—without the money always being snatched away. Work will be done on allowing the development of more imaginative ways of funding.

Funding should not always be through grants, although they will always have a place. There is a growing recognition that the voluntary sector is a commercial sector in many ways and ought to be capable of finding solutions that are more commercial for some of its funding problems. The United States is carrying out a lot of work in that area too. I am not saying that the Government is shedding its responsibility for giving grants, but it is trying to widen the cocktail of, and opportunities for, funding for the longer term.

I agree. The sector has no objections to the finding of different sources of money, but managing that cocktail and finding leadership can be difficult. Gavin Barrie outlined the difficulties with a one-stop shop and I appreciate those, but if there is not a one-stop shop, what alternatives exist to give the voluntary sector some support and leadership in putting together funding cocktails?

The £2 million that the Executive put into the social investment Scotland fund, for example, is specifically aimed at developing capacity so that organisations are not told, "Here is a pot of money" and left incapable, with no expertise in working out how they might best benefit from that money. The money is intended to grow the capacity—to grow the market.

There is a recognition that that process must be in place, as it is in the private sector. Business advisers flood over small businesses all the time and lessons must be learned from that. New ways of considering funding must be developed and the customer, as it were, must understand what is going on, otherwise we are wasting our time.

In England and Wales, the Government is taking a different approach to funding and is often in favour of direct funding. In Scotland, that does not seem to be the case. What is your view on that?

The sector in Scotland is different from the sector in England; it is much more formal and much better organised. There are organisations through which things can be channelled and I think that ministers feel that local funders are better placed to identify local needs. When we fund at local level, we try to do so at arm's length. As I said, the unemployed voluntary action fund runs three grant schemes for the Scottish Executive. We no longer fund the councils for voluntary service and the local volunteer development agencies directly. We manage that funding through their parent bodies—through CVS Scotland for the councils for voluntary service and through Volunteer Development Scotland, which has a unit specifically for the volunteer bureaux. We feel that that approach offers a better outcome for the bodies that receive funding rather than would be the case if they had to come to central Government.

You may be right, but how do you ensure that local groups can compete on an equal footing with, and be given as much recognition as, larger organisations and umbrella bodies?

That depends on how the schemes are set up. If the aim is to get money to small local groups, one would set up a funding scheme that was different from the one for national bodies.

We gave money to the Scottish committee that was set up to celebrate the international year of volunteers. That committee is chaired by Liz Burns, who is the director of Volunteer Development Scotland. Some of that money was used to set up a small-grant scheme. The UVAF has run that scheme very successfully, offering small grants of up to £500 to local groups. The Minister for Social Justice visited some of those groups this summer.

The process for those local groups has been simple. To apply requires only one page of A4. Similarly, to report requires only one page of A4, on which people say what they used the money for and what the outcomes were. Every group was given disposable cameras so that they could send in photographs of the work that they did to support volunteering. A scheme for small groups would be tailored and set up on a different basis from a scheme that was giving hundreds of thousands of pounds to national organisations.

In the past 20 years, there has been a great deal of professionalisation in the voluntary sector. To what extent has the need for people to have career prospects, pensions and pay that are compatible with what happens in local government been taken into account in both national and local authority funding?

I am not aware that the Scottish Executive has specifically taken that into account. Obviously, however, we support the SCVO, which provides advice and information to the people in the sector on their role as employers. When I worked in the voluntary sector, a lot of voluntary organisations used local authority pay scales and terms and conditions. However, as for any other employer, it is for those organisations to decide on the systems that they want.

A lot of progress has been made on training. Many voluntary organisations have got Investors in People status. The enterprise network has helped the sector with that.

Yes, but my point was really about resources and the standards that are laid down when funding is given. That funding should include an element that allows the payment of pensions, for example. That is important. You cannot expect people to give a lifetime of service in the voluntary sector without there being long-term provision for them. Resource funding often leads to problems with such aspirations. Does the Executive have a commitment, in so far as it has influence, to ensure that such conditions exist?

Our funding would certainly meet the full range of staff costs for organisations that employ staff. Several of our staff are on secondment from the voluntary sector. A fourth member will be joining the voluntary issues unit soon, and we will meet those kinds of costs. I am not aware of the Executive having given guidance to the sector on terms and conditions of employment. We see that as being for the sector itself to decide, through its parent bodies such as the SCVO—if I keep looking behind me, it is because one of the SCVO's deputy directors is in the audience.

With respect, I cannot help feeling that you are missing my point. The money comes in grant form from the Scottish Executive, councils or other such bodies. If that funding does not provide for pensions, pay scales and such matters, the appropriate levels may not be met. Does the funding structure take account of those matters when the sums are being worked out on core funding support for this or that organisation?

Our sums take account of the full cost of employing staff. I cannot speak for other funders, but I have no reason to suppose that they do otherwise.

I am also interested in new ways of providing funding. Citizens Advice Scotland has used Department of Trade and Industry funding over the years for assistance in development and to encourage partnership funding with local authorities. The organisation has made good use of that money for those objectives, and that is not an unhelpful model.

Core funding is the key issue. Is any consideration being given to a voluntary sector fund to provide matching funding to local authorities or a similar boost towards partnership funding? That would ensure that the organisations on the ground—this applies less to the federal organisations—can sustain core funding as opposed to additional project funding for particular initiatives.

Different departments will adopt different approaches to the funding review, depending on their policy objectives. The Executive has quite a good record on core funding of voluntary organisations. Most of our traditional voluntary sector schemes, which each department runs, consist of recurrent core funding. That is usually for national organisations, because the Executive takes a strategic approach, which means funding national rather than local organisations. A fair bit of core funding is going into the sector. Thereafter, each department decides on the right way of delivering funding, whether as a service or through contracts.

I make a distinction between federal, national organisations, which are broadly funded by the Executive—you are right that such funding is in place—and more local organisations, which might be called the member set-up, for which funding comes mainly from local authorities, with the problem of limited-time funding. As a policy matter, is the Executive considering ways of buttressing authorities' ability to provide core funding to suitable local organisations?

Ministers will want to consider that. When Jackie Baillie announced the review of the Scottish Executive's direct funding, she said that that was just a start and that she wanted to consider the wider funding situation for the voluntary sector, in terms of indirect funding and other funders. We may consider that, but not at the moment.

Robert Brown mentioned the professionalisation of the voluntary sector, which relates to what Karen Whitefield said. I am aware that many task forces and working groups have been established and I have no problem with that—that can be great. I am also aware of secondments from the voluntary sector to the Scottish Executive and vice versa. However, I am a bit worried that we will end up with a relatively small band of professional people, because the same people are on the task forces and working groups over and again. Generally, they are officers of voluntary organisations. Do you feel that the membership of the task forces and working groups is representative of the volunteer? How many of those bodies have members who are volunteers, rather than paid professionals of umbrella organisations?

That is an interesting point. A difficulty for those who run consultations—not only the Scottish Executive, but others—is that people who volunteer tend to want to do something practical or to provide care or support, for example. Not many people volunteer for such engagement with central or local government.

Perhaps they have never been asked.

That may be true. However, we now have the millennium volunteers review group, which met for the first time last week. Two of its members are young people who are volunteers. You have raised an important issue. Initiatives of the sort that I have been describing take up people's time. Large organisations with paid staff tend to have the time to participate in them and we have to hope that they will feed back to their membership. Volunteering is an important issue, as about 27 per cent of Scots—roughly 700,000 people—volunteer on a regular basis. That is a big number. Volunteering is an important part of the lives of people in Scotland.

I want to return to the issue of funding. In its first two years, the Scottish Parliament has enacted more than 20 bills. Much of that legislation impacts on the services that the voluntary sector provides. I have in mind the Regulation of Care (Scotland) Act 2001, the Housing (Scotland) Act 2001 and the Mortgage Rights (Scotland) Act 2001, to name but a few. Such legislation has resource implications for the voluntary sector. Some of the publications that the Scottish Executive will issue will direct people to seek advice and help from citizens advice bureaux, debt agencies and organisations such as Crossroads (Scotland) and the Alpha project, which operates in my constituency of Cumbernauld and Kilsyth and provides care services to people in the community. Those organisations will have to train their volunteers in order to comply with Scottish Parliament legislation, which they welcome. How does the Executive intend to resource the delivery by the voluntary sector of the changes that are required under new legislation?

The good practice guides that accompany the compact address that issue. They say that, in making policy, the Executive must be aware of the impact that that policy will have on the voluntary sector. I recognise that often the big impact is financial.

As someone who works in the voluntary issues unit, I cannot guarantee that, if a policy requires a voluntary organisation to spend a large amount of money, the additional resources required will be made available. However, I hope that the policy-making process would recognise any new burdens on an organisation. The same applies to burdens on local government. In other words, I am hedging my bets and not giving a direct commitment to make extra funding available. However, there must be recognition of new burdens. The good practice guides encourage that.

Has the voluntary sector raised the issue as part of the review of finance and funding? Some national and local organisations have indicated to me that it gives them cause for concern.

We are always wary of developing policies that would impose new burdens on the voluntary sector. Such burdens might be administrative as well as financial. Organisations often tell us that they need to be able to cope with the demand that might be generated by publicity campaigns that we are considering. Scottish Criminal Record Office checks on volunteers are one example of a new financial requirement that has been imposed on organisations. If there is to be a registered body to cope with that, the Executive will fund it.

I return to the point that was made about the general costs of running a voluntary organisation. Many different costs are involved. They include the costs of information technology and of training for professional staff. We hope that, when taking their funding decisions and considering the funding needs of the organisations that operate in their area, policy divisions will take those factors into account.

For example, we wondered whether we should make new, ring-fenced funding available for IT in the voluntary sector or whether we should simply ask the departments to help, given that IT is a new and developing area and that the voluntary sector does not have the IT support that big private or public sector organisations have. We decided that we would make a specific amount of identified money available to deal with the new need.

Policy and practice will vary, but all policy advice to ministers must take account of the impact on the voluntary sector.

Perhaps you could submit something in writing to the committee on that subject.

Obviously, legislation impacts on resources, but some of the campaigns that the Scottish Executive runs also have an impact. When the Zero Tolerance Trust's adverts are run at Christmas, women's aid groups that I talk to find that they are kept very busy. Millions of pounds are put into such advertising campaigns, but I would like you to write to the committee detailing how the Executive resources the organisations that have to deliver services as a result of the successful campaigns.

The review of the social economy has been touched on. Lyndsay McIntosh mentioned your trip to Canada and said that you were gaining knowledge about how people operate in other parts of the world. Jackie Baillie mentions the issue in the submission that was prepared for the committee, but I would like you to give us more details. When is the review expected to take place? Who will be involved in it? What do you expect to get out of it?

Yesterday, Stephen Maxwell of the SCVO was seconded into the Executive specifically to conduct the review. It is expected that the review will be completed by the end of the year. He will be examining ways in which the development of the social economy can help the Scottish Executive's social justice objectives. He will examine obstacles to that growth and ways in which the Executive can overcome those obstacles. The report will not be massive, but it will indicate areas in which further work is required. It will examine the role of various organisations in encouraging the social economy, such as the Scottish Executive, Scottish Enterprise and the new executive agencies in Scotland. He will also talk to local government and social economy organisations. What the social economy is is an interesting question.

It was going to be my next question.

Whenever people are asked to define the social economy, they quite reasonably skirt away from doing so, as they feel that, as soon as a definition is given, things move on. It is a bit like trying to define the private sector. Different groupings of organisations are coming together all the time and one would not want to restrict the definition too much. In the most basic terms, we are looking at the economic activity of the voluntary sector. At one end are organisations that look a lot like private sector businesses, but which operate on a not-for-profit basis, have community-based ends and employ volunteers. At the other end are much smaller organisations that engage in some economic activity, but which we would never describe as companies or as particularly entrepreneurial. The intention of the review is to examine the full spectrum and to determine various sorts of interventions.

I was talking earlier about loan and equity finance, but I was not saying that every small organisation will have to start looking at such methods of finance if they want to plug into external sources of funding. It will be horses for courses.

From this fairly tight review, we are looking for action points that we can progress. We need to know where the obstacles to development are. Funding will be one of those obstacles. We need to consider whether there are legal obstacles to developing social economy activity across the sector or other obstacles that the Executive can do something about. What does the scene look like? The chancellor's community tax credit proposals are out for consultation at the moment. Are there implications for Scotland that we ought to be taking into account? We hope that the end product will not be 500 closely written pages, but some action points that we can do something about.

Is work being done on the relationship between the voluntary sector and the co-operative sector in relation to the social economy? In some ways those sectors are quite distinct.

They are distinct. A few months ago, I went to a social economy conference in London, which was mostly about the co-operative sector. That took me by surprise. There is a strong emphasis on the co-operative sector within the Department of Trade and Industry. The social economy review ought to take account of the fairly fuzzy boundary between social economy organisations and co-operatives. That boundary might be drawn at the point of profit. If we move too far across that spectrum, we will lose the focus of the social economy review. The main emphasis of the review is unlikely to be co-operatives. If, during his studies, Stephen Maxwell finds that he has to pull in the co-operative sector and examine that relationship, we will not prevent him from doing so. That is a long way of saying that I have not really thought about it.

There is an argument that the co-operative sector plays an essential role in the social economy at a local level. If that sector is not taken into consideration, we will be looking at only part of the picture.

I am pleased that the Executive and the voluntary sector are exchanging ideas and knowledge with other societies, such as Canada. However, what steps are being taken to ensure that best practice in Scotland is shared? One hears many stories of wonderful projects that exist in one part of Scotland but are not translated to other parts of the country.

The portal that the SCVO is developing will help us to share information. That is a problem not just for the Executive and the voluntary sector; it is experienced by most organisations. That was my experience in local government: we would discover a really good idea and then realise that the local authority down the road had been doing it for 10 years. That is a common problem. It is important to make information available and to publicise what is going on.

The active communities initiative is our big policy thrust in relation to promoting volunteering and community involvement. The minister has set up an active communities forum, which brings together people from across the different sectors. As well as considering the implementation of the initiative, we will be examining all the things that are being funded and done under the active communities banner as a way of sharing information.

You have answered my question before I asked it.

Social investment Scotland will be launched today. What resources are behind that and what is your estimate of demand from social enterprises and community organisations?

It is a £5 million fund, £3 million of which comes from the four banks—with an initial guarantee from Scottish Enterprise—and £2 million from the Executive. One member of the team that operates the fund is seconded from a bank and two are from Scottish Enterprise. At the moment, they are trying to set up deal streams—to use a technical term. My understanding is that they have a number of irons in the fire. They are responsible for the fund, which will be mentioned in today's announcement.

As I hinted, we are talking about an acorn rather than an oak tree. This is new territory. The £2 million of Executive funding is to help to build capacity and recognition of the concept. The good practice that you referred to can then spread if it is beneficial to organisations. The benefits of loan finance are that it is longer term—organisations know where they are and that the tap is not going to be turned off. It also brings an element of commercial discipline, which is useful.

The anticipation is that we are not going to be fighting people off at the barricades in the early stages. However, there is definite interest in the sector about the concept and that interest can be grown over the coming years.

You do not therefore have a precise measurement of the parameters of demand. Do you believe that demand will grow over time?

That is the assessment of the people who are running social investment Scotland. Those people are businessmen and bankers. They also have the remit to grow the market. In effect, this is a commercial enterprise.

Given that, is growth in funding likely to be commensurate with growth in demand?

Initially, the commitment is for £5 million over, I think, three years. That will be monitored and, if the scheme works, it will certainly not be allowed to wither on the vine. It would be interesting to get the right mix of commercial engagement and public sector support to reflect the kind of market demand that there is.

In what ways are you reviewing how best to support and promote volunteering among young people?

Our main policy initiative is the millennium volunteers project, which is a UK initiative. That supports volunteering among 16 to 24-year-olds. The aim is for young people to commit to 200 hours of volunteering over a year. The young people draw up a personal volunteering plan, which aims to promote their personal development while contributing to the good of their communities. We are funding 1,600 to 1,700 places in the millennium volunteers scheme throughout Scotland. The funding is going to a variety of schemes. The schemes could be led by young people, where those young people have set up a project of their own. They could also be matchmaker projects that match young people with existing volunteering opportunities. As I said, the project is being reviewed.

More generally, we support the national network of local volunteer development agencies, which support volunteering generally. There is at least one agency in each local authority area. We are funding a Community Service Volunteers Scotland pilot project to examine volunteering opportunities for young people in rural areas, where young people might have less access to volunteering and may face transport difficulties. That is just getting off the ground and we will be able to report on it in due course.

Have you any evidence that the proportion of young people active in volunteering has increased over recent years?

It is hard to say at the moment. This is the first year that we have had a comprehensive set of questions about volunteering in the Scottish household survey, so we will be able to judge trends over time. However, at the moment we cannot say how the trend is going.

Do you have any feedback on the consultation on the Scottish Charity Law Review Commission report?

As I said, that is a matter for the justice department and the Deputy First Minister. I have not seen any consultation responses.

We have not seen that yet.

Do you have any broad ideas of the views that are being received?

No.

I am conscious of the time. However, I propose to allow the discussion to run for a further five minutes if members feel that they have pressing questions to ask.

Linda Fabiani raised the concern that the money that the Executive gives to local authorities sometimes may not filter through to voluntary organisations. Although I have heard of such instances, my experience in North Lanarkshire has been that many of the voluntary groups have seen a sea change since the creation of the Parliament. They feel far more included and they experience the effects of the additional money that is being given to local authorities and passed on. Local authorities also give a considerable amount of funding to the voluntary sector unprompted by the Executive. Have you had discussions with COSLA about the way in which we could effectively track how much money is going into the voluntary sector?

We have regular contact with COSLA, but we have not specifically discussed that issue with it. The minister has invited COSLA's voluntary sector spokesman to meet her; she is awaiting a response from him. I imagine that the issue of funding would be touched on when they met.

My question follows on from Kenneth Gibson's question about young people getting involved in the millennium volunteers project. Do you have an idea of which sectors of society those young people are coming from? I would like to find out whether they come from groups that already have an interest in volunteering, such as the Guide Association or the Scout Association—although I know that older people volunteer, too—or whether they are all new volunteers from areas where there have not been such initiatives before.

The millennium volunteers project is a UK initiative, but in Scotland it was designed specifically to include young people who previously would not have volunteered. It is not a case of just badging up the work that people already do for the guides, the Red Cross or any of the other uniformed organisations. There has been an attempt to include socially excluded young people. One of the projects that is represented on the review group is the Mastrick young people's project in Aberdeen. The lady there said that people had come forward who had never volunteered before and who might not have had the confidence even to go into a community centre. That project has worked well.

The statistics that the consortium that manages the millennium volunteers project gives us show that the project involves a mixture of people who are unemployed, people who are in further education and people who are at school. We are concerned about the age range for the millennium volunteers, which is 16 to 24. It is felt that too many young people are being excluded because the starting age is too old. We should be trying to catch volunteers when they are younger.

Paragraph 12 of the memorandum states that the Executive

"shall be looking at the funding that goes to the voluntary sector indirectly through NDPBs etc."

How do you intend to do that?

In her announcement, Jackie Baillie said that she wants to look at that funding. We want to know where the money is going—the schemes that people are using to get that money out. The issues that Gavin Barrie was talking about include whether the funding meets the needs of the sector, whether it is simple to apply for, whether the process of getting it is bureaucratic, what requirements and conditions are attached to the grant and whether things would have to be done for a NDPB that would not have to be done for the Executive. We want to make the system more streamlined, as Scottish ministers have to answer for that money.

I thank our witnesses very much for attending today and answering our questions. If you want to expand on any points that have arisen, we would be happy to receive that information from you in writing.

I adjourn the meeting for 10 minutes.

Meeting adjourned.

On resuming—