Red tape is demoralising charities and preventing them from playing the key role expected of them in delivering public services, according to former overseas development minister Clare Short.

Speaking at a regional meeting of Acevo (the Association of Chief Executives of Voluntary Organisations) members in the West Midlands, Short said she did not think charities should go “back to the days when the voluntary sector was very rebellious and challenging but also somewhat scruffy” but it should use its collective power to challenge the status quo.

“We do not want bureaucracy and regulation that imposes domination not inspiration,” she said. “The voluntary sector had wonderful creativity but perhaps it has been lost. Having been suckered in to be a provider, the sector has become squeezed by bureaucracy.”

Deputy chief executive of Acevo Gail Scott Spicer said the Labour MP’s comments rang true for the group’s members. “Too many exciting third sector projects are being stifled or obstructed by unmanageable levels of monitoring and red tape.”

The comments follow a recent NCVO survey that showed many charities delivering public services believe regulation can be good but is often flawed in practice.