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2 December 2002updated 24 Sep 2015 12:16pm

They talk of charity, but business is their best friend

By Gideon Burrows

Perhaps more than any other industry, the “third sector” – charities, not-for-profit organisations, community groups and social businesses that now boast an annual income of nearly £16bn and well over 500,000 employees – should be the natural soulmate of a Labour government. Ministers say they want more charities and social organisations to deliver public services – from home help and housing to refuse collection and residential care. And the Treasury is offering millions of pounds to encourage them. Call it Tony Blair’s fourth way.

It is likely to be more popular than the private finance initiative, not least because the third sector helps the socially excluded. For example, Supercare, based in west London, employs disabled people to do cleaning and gardening for Ealing Borough Council, providing paying jobs that such people might not otherwise have.

The General Agreement on Trade in Services (Gats) however threatens this revival for the voluntary sector. Huge foreign companies want to bid for local authority contracts, and special treatment for social organisations such as Supercare is unfair competition.

As with all WTO texts, arguments rage as to the interpretation of what must be liberalised. In the worst case, anything involving some form of competition – refuse collection, building, childcare, home help, meals on wheels – would be thrown open to foreign firms. Government leg-ups for voluntary groups face a challenge because super-rich multinationals don’t get the same treatment.

There are strong arguments for a level playing field in industries serving the public interest: the debate in the New Statesman over the BBC licence fee is testimony to that. But it is only over the past year or two that the voluntary sector has been invited to the game. Now the pro-third-sector policies of an elected government and elected local councillors could be overruled by an agreement drawn up by companies hungry for new markets.

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The government’s whole “best value” regime, which rules over how local authorities purchase and provide public services, allows considerations of community involvement to go into the assessment alongside the simple cost in cash. Many elected local councillors ask their officers to consider factors such as the environment and job creation when making purchasing decisions. All this could be ruled illegal if ministers allow Gats to creep further into public services. “Gats is being pushed through with the momentum of big business, but the problems it throws up are not being addressed,” said John Hilary, a trade policy adviser at Save the Children.

Thus, while the government welcomes the third sector with one hand, it uses the other to undo the good work done to support it. Ministers have privately admitted to charities that business will always come first. If the UK doesn’t open up its public services to foreign competition, then UK companies will find markets closed to them abroad. Step aside, social businesses, voluntary and community groups; business always was this government’s best friend.