CFDG calls for the end of current Fair Deal policy in consultation response
15th June 2011
The Charity Finance Directors’ Group has responded to HM Treasury’s consultation on the Fair Deal policy, stating that the current arrangements cannot continue if more charities are to be involved in public service provision. Many charities delivering public services have inherited unmanageable pension liabilities as a result of Fair Deal, and others have simply refrained from bidding for contracts to avoid these risks.
Caron Bradshaw, CFDG’s CEO, commented: ‘Aside from the practical problems with Fair Deal, which our response outlines, the policy serves to deter many would-be providers capable of providing specialist, value for money services. In a recent survey of our members involved in public service delivery, 48% said that they had been put off from bidding for contracts because of the risk of liabilities – almost all said that the biggest of these risks was pension liabilities’.
CFDG’s response, formulated with input from members, highlights a number of problems charities experience with the way the Fair Deal operates in practice. These include that it can create a two- or multi-tier workforce, where employees within organisations have varying standards of pension provision and that many local authorities fail to provide full disclosure of pension liabilities, or do so too late. In addition the complexity is a problem – many charities do not have specialist pensions knowledge and are ill-equipped to assess their options fully.
Bradshaw continued: ‘Most charities are not pensions experts. Instead their expertise lies in delivering innovative, high quality services for beneficiaries – this is why Government are encouraging more charities to take on the delivery of services as part of their Big Society agenda. It is right that transferred public sector employees should have access to a good standard of pension provision. However the current arrangements are simply not working - It is essential that Government listen to the calls of the sector and change the Fair Deal. Without doing so, their vision of increased plurality of public service provision will not come to fruition’.
In their response, CFDG suggest that allowing charities to gain Admitted Body Status with a ‘pass through’ arrangement would be the best way of protecting employees pensions whilst distributing cost and risk more fairly. They also put forward an alternative of allowing employers to provide TUPE’d employees with a defined contribution scheme with a fixed generous contribution rate.
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Notes to Editors:
CFDG is the charity that champions best practice in finance management in the voluntary sector. Our training and development programmes enable finance managers to give the essential leadership on finance strategy and management that their charities need. With more than 1,700 members, managing over £21bn, we are uniquely placed to challenge regulation which threatens the effective use of charity funds. For more information, please see www.cfdg.org.uk
The full consultation response can be found on the CFDG website here. For further information, please contact Melora Jezierska, CFDG Policy Officer, at Melora.email@example.com or on 020 7250 8348.