Small charities are not ready enough to walk away from “wrong contracts”, the minister for civil society, Rob Wilson, told a Lords committee yesterday.

Wilson was giving evidence to the House of Lords Select Committee on Charities, which is taking evidence on the state of the sector.

He said that in his view, small charities were too ready to take on “wrong contracts”.

“What I would say to smaller charities is if you don’t like the look of the contract and it isn’t going to suit you, then walk away from it,” he told the committee. “There are a number of charities who take on contracts because they have to and I would strongly advise them not to do that."

Another member of the committee, Lord Bishart, said that for many charities, a contract was the only source of funding and it was not possible for them to walk away.

“It’s quite difficult for charities for them to walk away if it’s the only way for them to continue in existence,” he said. “We need fewer wrong contracts, don’t we?”

Wilson promised new measures in the next couple of weeks to help charities compete for contracts.

“We as a government really want small and medium-sized civil society organisations to access public service contracts,” he said. “They can really improve the outcomes for their service users. They have talent, ability and expertise that we really can’t find anywhere else and we want to use it.

“We have over the last six months been having an open policy discussion with charities including 80 of the smaller charities to explore the scope for government and the voluntary sector to find ways around the barriers that currently exist.

“We’re trying to make it a level playing field. We’re trying to champion the small and medium-sized charities. They can’t contribute in the way we want to at the moment.”

He said that he expected to announce new policies on that front in the “next couple of weeks”.