Cuts: charities take a hit from the public sector bad guys

Yesterday I described the rather agressive approach to dealing with government demands for cuts adopted by Serco, a big private outsourcing company. It's only fair to point out that the public sector too can be far from saintly when it comes to the way its treats its own suppliers. Take North Yorkshire and York primary care NHS trust, which having earlier this year awarded 18 local charities £150,000 in grants to provide a range of health promotion and patient support services has now changed its mind , on the basis that it has discovered it faces "financial pressures." The charities have been told not to expect the final part of this year's grant, or if they have already received money for the last quarter of the year, to pay it back. The handling of the case, at least according to this report by Third Sector, appears to have been extraordinary. The PCT did not consult with the charities before it issued its demand (on October 19, the day before the comprehensive spending review), and it seems to be justifying its decision to rip up the grant agreement on the basis that it was not legally binding. This is in blatant contravention of nationally agreed NHS guidelines designed specifically to cement "understanding and trust" between the NHS and the voluntary sector. The local voluntary sector is considering legal action. Some local charity employees will lose their jobs. The suspicion remains however, that the PCT - faced with a £17.5m overspend - is not really too bothered about destroying "trust and understanding" with its small local voluntary suppliers. The voluntary sector is easily bullied, its commitment to its beneficiaries easily exploited. The PCT would not be quite so cavalier with the likes of Serco, not least because a big private provider would have ensured the contract was legally binding in the first place, rather than relying on good faith. This story, I suspect strongly, is being repeated up and down the UK as NHS trusts and local authorities search for rapid, unstrategic short term cuts. One charity director told me recently her organisation had been approached by a public services commissioning body to renegotiate a contract mid-year. Would the charity be able to "fundraise" from its donors 15% of the value of the new contract, wondered the commissioner? Clearly, some powerful public spending authorities are thrashing around in a clumsy panic, cutting what is easy to cut, with regard only for meeting this year's cuts target. Smaller, local charities (and the "nice-to-have" services they provide) are directly in the firing line. Ministers are deeply anxious about this, not least because a key part of their "big society" infrastructure is disintegrating before their eyes. But it's not immediately clear what they can do about it. • Do you know about similar stories involving charities and local NHS and council authorities, or big private sector conttractors? Post a comment below, or tell us about it in confidence on our online Cutswatch form .