The economic role of Scotland’s third sector in shaping health and social care

The third sector’s economic contribution and development seems to be too often overlooked.

You only need dip your toe into domestic politics to recognise that there are major financial dilemmas facing both the UK and Scottish Governments. And it’s not only in the here and now – we know there are further pressures in the pipeline. There will be changes in the demographic profile of Scotland over the next 50 years, with projected growth in public spending, and particularly on health and social care. Yet the money that is going to be needed is likely to far exceed the estimates of what will be available unless changes are made.   

The ALLIANCE’s campaigning and influencing work centres the voice of lived experience and advocates for third sector’s contribution to improving the population’s health and wellbeing.

When people think about health and care services and policymaking in Scotland, it’s often the role played by government, the NHS and integration authorities that comes to mind. However, this overlooks the vital function played on a daily basis by thousands of third sector organisations up and down the country. The range of work done by the third sector is enormous and the health and care system couldn’t run without us. Whether it’s direct support from the likes of Community Links Workers and social care professionals; running clubs and hubs that help keep people connected in their communities; or informing and influencing national and regional policy that will have a direct impact on people’s lives.

Despite the Scottish Government’s commitment to a Wellbeing Economy, and the UK Government’s pledge to grow the economy, the third sector’s economic contribution and development seems to be too often overlooked.  Worse, though, are the inefficiencies and systemic inequality which is built into the dominant funding models – grant funding and service contracts – which often undermine the sector’s sustainability and growth.  One way this is demonstrated is in the growing divide between the pay awards being offered to the public sector workforce in comparison to the third sectors.  It is also evident in the requirements on the third sector to meet ‘fair work first’ principles, without any equivalent funding adjustments taking into account the increased real living wage or cost of living increases.

A recent report by the RSE found that despite the inherent complexity of the third sector, its economic contribution – through employment, purchasing and commercial activities – remains substantial. Many analyses show it to be greater than other sectors, including health and life sciences and creative industries – all of which enjoy considerable Scottish Government support.

Yet there are still gaps in the evidence, and in Scotland there has so far been no attempt to estimate the overall economic contribution of the third sector.  Rather, there has been a growing expectation on individual organisations to find ways to demonstrate the contribution they make to national, system, service level or personal outcomes and prove their impact and performance.  

I am supportive of evidence-informed policy and investment decisions, and of robust scrutiny and review, upon which to learn lessons and identify improvements; yet I have real concern about the continued onus being placed on individual organisations (and sometimes even individual programmes) to effectively demonstrate their impact to secure funding and contracts.  This overlooks the way in which social change really happens in a complex world where actions are part of a web of relationships — most beyond our control and many of which are beyond our influence. We need a systemic means of measuring and evaluating social agendas such as improving health and wellbeing, enabling independent living and reducing homelessness.  

I share the concerns expressed by Toby Lowe from the Centre for Public Impact: “it is impossible for organisations to “demonstrate their impact” if they work in complex environments. Asking them to do so requires them to create a fantasy version of the story of their work. This corruption of data makes doing genuine change work harder because it is difficult to learn and adapt from corrupted data.”

The ALLIANCE enjoys good relationships with our funders and sponsors and is a valued and trusted bridge between the public sector, the third sector and people who access health and social care services.  We have recently undertaken work in an attempt to better describe the impact we contribute.  In 2022 alone, the ALLIANCE generated:

• health and wellbeing benefits of at least £26.6 million (£5.39 for every £1 received in core grant funding)
• cost savings of at least £0.8 million 
• £7.7 million gross value added (GVA) to the Scottish economy and supported 160 jobs
• tax contributions of £1.0 million from staff wages

This impact sits alongside a range of other benefits stemming from our work that could not be quantified. This includes directly contributing to eight of the 11 national outcomes for Scotland, helping to build and improve a person centred health and social care system, enhanced services for people who access health and social care, job satisfaction for professionals in the health and social care sector, and staff retention for service providers and increased wellbeing for the families of those supported.

At a time of competing demands for the public finances we have available, it is crucial that we don’t overlook the essential third sector which operates in our communities, often responding where public services don’t or can’t.  We cannot continue to take the sector for granted, or we risk losing much of this vital social fabric of our civil society.  Perhaps a key question we need to keep asking is: what would our economy look like without the third sector?

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