The newly elected Coalition government has announced an eye-watering austerity budget, with more detail of cuts to come. Similar moves are being made by governments across the developed world. Alongside this fiscal retrenchment the Coalition wants to initiate a debate about the role of the state. Are public sector activities better located in the private or third sectors? We will have to wait to see quite what this means in practice. Will the state disengage completely from whole areas of activity? Or is it a question of pushing provision out of the public sector, with government continuing to fund services and exert strong regulatory control?
Such a rethink could present opportunities for third sector organisations. But it can also present significant challenges. Ann Nevile’s forthcoming paper in Policy & Politics provides a timely reminder of the potential tensions between output legitimacy – value for money services – and normative legitimacy – values and community connectedness – that government seeks from third sector providers. Her research reaffirms that the most important strategy for maintaining normative legitimacy is retaining a mixed funding base, even though the transaction costs associated with doing so are considerable. This strategy also helps maintain organisational flexibility and innovation.
We are only just beginning what could turn out to be a significant transformation of the welfare mix. Recognising the complex competing pressures and accountabilities facing third sector organisations will be a vital part of the debate.
Nevile, A. (2010) Drifting or holding firm? Public funding and the values of third sector organisations, Policy & Politics, advanced access.
Alex Marsh, Management Board, Policy & Politics