This paper evaluates the current attempt to develop local ‘compacts’ between local government and the voluntary and community sector, as an example of a relational contracting approach to structuring the evolving relationships between these sectors. It is structured in four parts. The first part charts briefly local government – voluntary sector (LG – VS) relationships in England over the period 1979-2000. It draws examples in particular from experience in the field of area regeneration. The second part introduces the concept of the Voluntary Sector Compact (VSC), and argues that it is central to the approach of the current Labour government to these relationships. It differentiates this approach from that of the previous government, denoted here as the service agency model, and situates it within the meta-paradigm of community governance. The third part explores the implementation of the Compact in England at both the national and local level. The final part draws out key lessons from this for the future of LG – VS relationships in England, situating these within an emerging model of LG – VS relationships.