1% of public sector budgets should be top-sliced and devolved to neighbourhoods

[By Grant Aitken]

If the public sector is serious about reducing health inequalities, then it is time for some clarity.  The biggest barrier to progress is not structures, governance or legislation, rather it is about the way the statutory sector understands and sees voluntary, community and social enterprises (VCSEs) as equal partners.

I have been on both sides of the funding table.  Although the public sector talks endlessly about prevention, inequality and resilience, it too often treats communities as “should be” grateful recipients expected to beg politely for scraps, rather than equals capable of delivering better outcomes for less money. A deeply disempowering relationship

This mindset is not just patronising; it is actively harmful.  It is not that communities are failing public services; rather it is public services that are failing to recognise communities as part of the solution.  Instead of unlocking local energy, the system is ignoring and sidelining VCSE organisations and is surprised when outcomes do not improve.  In practice, too many systems have simply recreated old behaviours inside new structures with control held tightly at the centre.

Rearranging organisational charts will not reduce health inequalities.  Writing strategies does not build trust and another round of pilots will not compensate for a culture that still believes expertise mostly sits inside statutory commissioners and providers.

Let’s be honest about what is happening.  Faced with shrinking budgets and rising demand, the public sector is not transforming, it is retreating.  Services are being rationed, but we avoid saying that out loud.  Instead, need is redefined, eligibility thresholds are raised, and access to services is made more complex.  This is not prevention.  It is bureaucratic withdrawal dressed up as reform.

At the same time, the public sector is rationing services while claiming to focus on prevention.  There are numerous examples where public sector bodies are seeing significant proportions of their budgets supporting a small and narrowing number of people.  This is not the problem of the individual or the family, rather a siloed public sector approach that isn’t tackling the root cause of the problem.

The consequences are clear to see, pressures being displaced onto communities, carers and underfunded voluntary organisations, while the system congratulates itself on ‘managing demand’.  Yet, health inequalities continue to widen, trust erodes, and everyone pretends to be surprised.

I have seen this from both sides of the “revolving door of funding” and believe that many parts of the public sector simply do not understand how VCSE organisations work or choose not to.

Most of the public sector funding routinely covers delivery only, with little consideration to an organisation’s core costs, the costs that ensure we have a resilient and sustainable VCSE sector.  A VCSE leader once described this as the “donut effect”.  It is a perfect metaphor for how systems hollow out and undermine the very organisations they rely on to reach marginalised communities. To be serious about reducing inequalities the public sector doesn’t need to be continually restructured; rather there is a need for a behavioural reset.

That means:

  • Moving from paternalism to trust
  • Stopping short-termism in funding and relationships
  • Taking risk with shared responsibility and joining up services within the public sector
  • Seeing people and communities as assets that contribute to the solutions the public sector face.

We need a new compact that ensures at least 1% of public sector budgets should be top-sliced and devolved to neighbourhoods, not as competitive grants, not as pilots, and not with conditions that strangle local decision-making.  This must be long-term, flexible investment, stewarded locally and accountable to place.

This will be far harder than a structural reform, with all public sector bodies seeking increased “productivity” to manage shrinking budgets but rising demand.  But it is possible and there are examples of the VCSE organisations leading the thinking and advocating for change.