Grumbles about funding from the voluntary sector are nothing new. After all, it would be a strange charity that said: "Everything with our income is just fine, thanks." However there's a different tone to the concerns being voiced in the aftermath of a series of council budget-setting meetings last week.

Some of those grumbles became howls of anguish as it became apparent that a number of major charities are likely to face substantial cuts.

Representatives of the voluntary sector say some of their worst fears are being realised about the Scottish Government's strategy of giving local authorities more freedom to commission services within their own area.

Charities such as the Prince's Trust, Cyrenians and Youthlink are among those who say that - while supportive of the principle - they are alarmed at the potential short-term consequences of the ending of "ring-fencing" of funds.

Previously, under headings such as Supporting People, Changing Children's Services and the Youth Crime Fund, the old Scottish Executive allocated money according to restrictive policy goals. Some of this was distributed by local authorities but with very limited room for manoeuvre.

Removing those restrictions while preserving the level of funding was supposed to give councils greater ability to respond to local need.

However the worry from the voluntary sector was two-fold. Firstly that funds would be diverted to other priorities, especially with councils under pressure to freeze council tax. Secondly with some previously national funding packages being handed to local authorities, big charities such as the Prince's Trust were facing applying piecemeal to 32 separate councils rather than one central fund.

There are already some big-name losers emerging. The chief executive of the homeless charity Aberdeen Cyrenians has warned that it will have to close vital projects after Aberdeen City Council planned to cut £900,000 - a third of its funding - as part of budget cuts.

Edinburgh is known to be considering cuts to a range of voluntary organisations funded by the city, and Highland council may withdraw £150,000 of funding from the leading charity for carers and users of community care services in the region, the Highland Community Care Forum - although it deferred a final decision at its budget meeting last week.

Privately, voluntary organisations are fuming. An insider at the Scottish Council for Voluntary Organisations (SCVO) said: "Last year when this plan emerged we went to Cosla Convention of Local Authorities and the Scottish Government and said, we support what you are proposing, but are concerned that councils will use this as an excuse to cut.

"Cosla and the Government said it won't be like that'. Now, in Edinburgh, Aberdeen, Dundee, Inverclyde and Highland, we are finding it is like that. So it's a case of we warned you this would happen and you said it wouldn't happen'."

Officially, SCVO says it is in discussions with both local and central government to improve the transition to the new system while protecting charities.

Deputy Chief Executive Lucy McTernan said: "The Scottish Council for Voluntary Organisations is convinced that the end of ring-fenced funds for local authorities is broadly a good move. This will allow greater flexibility for voluntary organisations to demonstrate how they can meet the needs of individuals, families and communities. However, the time of transition is worrying for many organisations, especially against the backdrop of funding cuts by local authorities to voluntary organisations where relationships already exist.

"We must ensure that the end of ring-fencing does not undermine the good work voluntary organisations do in the community, and in this light, it's very important that local authorities, the Scottish Government and the voluntary sector work together to see a period of stability in funding relationships."

It is certainly the case that many voluntary organisations are not at all unhappy to see the back of ring-fenced funding. Martin Crewe, director of Barnardo's in Scotland explains: "The old system was not sensible. There was a lot of reporting back about relatively small sums of money. We welcome the fact that local authorities are going to be able to commission much more what they need."

Barnardo's - which did have projects funded through ring-fenced schemes such as Supporting People and the Youth Crime fund - welcomes the direction of government policy, even if it means reshaping such services. However the change has come very fast. "There is a leap of faith involved for the voluntary sector that some short term pain will lead to long-term gain," says Crewe.

Craig Winter, business development manager for leading social care organisation Turning Point adds: "People are having to make quick decisions. Some kind of transitional phase might have been positive but it isn't there."

Winter points out that the people most unsettled by uncertainty over funding are often service users, and by definition these are often some of Scotland's most vulnerable people.

The Prince's Trust has been one of the most outspoken charities in voicing its concerns and continues to plead for government to make some transitional funding available as it attempts to replace some £2m of funding for projects such as Xlerate With XL, the scheme it runs for school underachievers and potential drop-outs. Figures published by the charity last week show that 91% of those participating have stayed on at school or gone into further or higher education, voluntary work, employment and training.

It was financed by the Determined to Succeed fund, but the Prince's Trust now has just a few months to replace the funding by applying to the 31 different local authorities in which it operates.

"We have to establish a relationship with local authorities who have seen our work but may never have bought' from us," explains Geraldine Gammell, Director of the Prince's Trust in Scotland. "The timescale is too tight to deliver the level of work we've been delivering. By summer time we will have to see what funding applications have been successful and it is likely there will be some loss of activity. The point comes where you have to draw a line in the sand and we're getting close to that."

Transitional funding would ensure stability, she said. The Prince's Trust is also looking to explore the possibilities for joint commissioning with some councils. Gammell says she too supports the government's localisation agenda in principle but she still believes there is a need for some kind of national focus on delivering in key policy areas like those young people who are termed "NEET" - not in education, employment or training. "I don't think they want uniformity, but young people being excluded from school is a national issue and we've had national successes."

Aberlour Childcare Trust is another charity which may lose out under the new arrangements, which in turn means that young runaways lose out. Its award-winning Running Other Choices (ROC) refuge project is Glasgow-based but provides crucial short-term help for runaways from around the country. Such projects could struggle to convince other local councils to help sustain such services. It was previously backed by the central Youth Crime Prevention Fund.

Aberlour spokeswoman Kelly Bayes said: "We probably needed a transitional year. The question is how you get funding for a project which offers consultancy in one place, training in another and a direct service somewhere else. Some councils are saying yes, we'll do everything we can to help you, others say we'll try but it is going to be difficult and others simply say no, we can't help."

Sometimes central government funding is needed to put an issue on the agenda, she added. "Our young runaways work could face a major shortfall. That might only affect one or two posts, but sometimes if you lose one or two posts it means the rest of the service is not as viable as it was."

The tension over the revised funding arrangements looks set to continue as more councils are expected to announce tight budgets and council tax freezes. But there's another date to watch - March 4, when SCVO holds its Local Government conference.

The conference is billed as an opportunity for councils and charities to discuss how they work together in the context of the new concordat between central and local government.

But in the current mood there is every possibility of a rough ride for keynote speakers, cabinet secretary for finance John Swinney and Cosla's community outreach spokesman, Harry McGuigan.

Cosla President Pat Watters said: "Cosla campaigned for the removal of ring-fencing simply because it was a grossly inefficient system. The bureaucracy was staggering. As regards vulnerable groups, it is inconceivable that their needs, their aspirations and their required services will not impinge on the decision-making of local councils as they make their local budget decisions."

A Scottish Government spokesman added: "The Scottish Government recognises the crucial contribution the third sector can make. We have decided to invest significantly in the third sector by substantially increasing funding over the next three years by 37%.

"The new Scottish Government has also developed a new, more productive relationship with local government and are giving councils greater freedom than ever before to allocate resources to reflect local demand and deliver our national priorities. The Government's new relationship with local authorities presents an opportunity to enhance, not diminish, the delivery of local initiatives."



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