House of Commons - Public Administration

Select Committee on Public Administration Eleventh Report

5 THIRD SECTOR DISTINCTIVENESS

"My view is that there is nothing that the voluntary sector can do that the public sector or private sector cannot do just as well."—Martin Narey, Barnardo's

52. Every Member of Parliament will have experience of excellent work delivered by third sector organisations working in their constituencies. During the course of this inquiry we have also heard a wide range of examples where third sector providers are delivering highly effective services to users including some of the most deprived and vulnerable people in society. However, it is equally apparent that excellence is found across different sectors. In our Skills for Government inquiry, for example, we noted that in the Civil Service "very many excellent things … are done by excellent people every day".[59] The challenge which the State has taken on is to try to identify the areas where involving the third sector in service delivery will improve outcomes for users—ideally, helping to "transform" the service.

53. The key concept in the Government's vision is distinctiveness. Services will not be transformed by a change of provider unless that provider offers something distinctive. This appears to be the primary rationale for looking to the third sector in particular (rather than simply allowing the third sector to participate as a means of widening competition). The Government, as we have seen, believes that there are a number of characteristics which might make third sector organisations particularly suited to public service provision:

A strong focus on the needs of service users;
Knowledge and expertise to meet complex personal needs and tackle difficult social issues;
An ability to be flexible and offer joined-up service delivery;
The capacity to build users' trust; and
The experience and independence to innovate.[60]

Seemingly supporting this, the Commission for Social Care Inspection (CSCI) found in 2005-06 that in all sectors of social care provision—including residential care, nursing care, older people's services, services for younger adults and children's services— voluntary sector providers were meeting a greater percentage of their published standards than either the private or public sectors.[61] The Government also sees "wider benefits" in involving the third sector more, including the generation of social capital and fostering a spirit of voluntarism.

54. Not everybody, though, is convinced that the third sector has something distinctive to offer. The Local Government Association told us that "there is nothing intrinsic in the organisational structure of TSOs which means that they automatically deliver better public services than any other sector".[62] The Audit Commission, who must have spent as much time as anyone considering the effectiveness of third sector service delivery, told us that they were "not aware of any evidence that services transferred to the third sector show distinct improvement in quality after that transfer".[63] Even if such evidence were to be found, its meaningfulness would be shrouded by the tendency of local authorities to outsource services that they saw as failing, where the initial transfer would be likely in any circumstances to produce some level of improvement from a poor baseline. Similarly, they were not aware of any evidence that services transferred to the third sector had improved any more significantly than services transferred to the private sector.[64]

55. The strongest denial of distinctiveness, however, came from within the sector itself, from Martin Narey, the Chief Executive of Barnardo's:

My view is that there is nothing that the voluntary sector can do that the public sector or private sector cannot do just as well. There is nothing special about us…

Mr Narey has a great deal of relevant experience, not just from Barnardo's but also from working for a long time in the public sector, buying services from both the private and the third sectors. Drawing on his experience as a commissioner in the Prisons Service, he reflected how he saw no conflict between profit—the treatment of which is central to the definition of the third sector—and commitment. He felt private providers of prison services were delivering 'decent, compassionate, value driven services'.[66] When he tells us that he has "tried to bury the word distinctive and remove it from the Barnardo's lexicon", we are compelled to listen.[67]

56. The parameters of the debate are clear. The remainder of this chapter is concerned with an attempt to assess—through examples, and through more systematic studies where possible—whether the Government and others are right to assert that the third sector can offer distinctiveness in the provision of public services.

The characteristics of the sector

User focus

57. Perhaps the most commonly cited strength of third sector organisations was a strong focus on the needs of service users. This claim was typified by the evidence we received from Swift Health Promotions that TSOs "tend to be client-focused" because there were "fewer operational and political limitations on the help and support they can provide". The user focus was also linked to the "passion, enthusiasm, generosity of spirit and entrepreneurialism of their workforce (paid or unpaid) in identifying and meeting changing needs."[68] The NCVO suggested three more reasons why third sector organisations might be able to demonstrate such a focus:

the way a particular organisation is set up—for example, many TSOs are founded by people with direct experience of the issue they are seeking to address;
the way they operate, such as having users on their board, or amongst their staff; or
because the organisation is based in the local community.[69]

58. FPA, an organisation funded by the Department of Health to provide information to the public and to professionals, described how daily contact with users through their Sexual Health Direct helpline provides them with an overview of concerns about sexual health issues which they are able to share with professionals and policy makers and which informs the content of the information resources they also produce.[70] Richard Gutch of Futurebuilders England told us that they had invested in Barnet Voice for Mental Health, a safe house for people with mental health problems, run entirely by people with personal experience of mental health problems themselves. Another organisation in which they had invested was Peacemaker, which was doing community cohesion work, and was run by a group of Asian people who were caught up in the Oldham disturbances in the North West.[71] These are undoubtedly organisations which would start from a different perspective to that of a public sector agency.

Specialist knowledge and expertise

59. A second government-cited strength of third sector organisations is the knowledge and expertise to meet complex personal needs and tackle difficult social issues. Again, there are numerous examples of such expertise to be found in the sector, such as the example below from the British Red Cross. We also heard from the medium sized national charity Fairbridge that their specialist expertise in tackling behaviour and different learning styles was how every year they win the trust and commitment of over 3,500 young people that most other organisations have found impossible to engage. These include "difficult to reach" 13-25 year olds with multiple needs who are outside education, training or employment.[72]

Flexibility and joined-up service delivery

60. A third facet of third sector distinctiveness is the sector's ability to offer, in the words of acevo's Peter Kyle, "much more holistic services across the board".[73] Lord Adebowale described how an organisation like Turning Point is able to 'bring together different funding streams to create sometimes bespoke services that meet the needs of individuals and their communities'. Turning Point's own Connected Care service was an example of that bespoke response.[74] Rainer also gave the example of their care leaving services in Surrey where they manage housing provision for care leavers but also bring in social work, personal care and specialist education provision. In addition to the £2.1 million contract for running the service, Rainer was able to access a further £1.2 million from sources such as European institutions which the local authority would have found difficult to access.[75]

The capacity to build users' trust

61. Another third sector selling point is a capacity to build users' trust. Joyce Moseley described how many of the young people Rainer deal with, "because of the difficulties they are getting into, see authority figures in whatever state as something they want to avoid".[76] Martin Narey told us that he was fairly consistently told by users that they like coming to Barnardo's because they are not social services. He cited a service in Middlesborough supporting young girls and young men, getting them off the streets where they are subject to abuse and prostitution. A number of the young people there apparently said consistently that they would not come to the service "if it was not the name of a voluntary sector provider above the door".[77]

62. Together (Working for Wellbeing) supports people with mental health needs and delivers specific services to offenders with mental health needs. They gave us a generic explanation of why trust levels might sometimes be higher for third sector organisations, especially in relation to the public sector:

Innovation

63. The final element of the claim of third sector distinctiveness is one which government has often been particularly keen to stress—that the sector offers the experience and independence to innovate. A cursory consideration of the past is enough to demonstrate that many ideas which are now central to statutory provision were incubated in the third sector. Rainer cited needle exchanges, piloted by third sector organisations in London, and family support centres, which were piloted by Shelter and NCH before being rolled out nationally.[79]

64. Help the Hospices gave us reasons why the hospice movement as a collection of voluntary sector organisations might be able to innovate with greater ease than the NHS:

The Hospital Management Trust, which owns three acute surgical hospitals in Sheffield, Grimsby and Swansea and runs four nursing care homes, supported this from their own experience in a hospital they once ran in Suffolk. They had been able to develop innovative rehabilitation delivery, day care services, home care services, night sitting and a range of practices "which would have been quite impossible to deliver through the bureaucratic systems within the public sector".[81]

Assessing the evidence on distinctiveness

65. It is clear, then, that many third sector organisations demonstrate the characteristics identified by government as exemplifying the sector's distinctiveness, and that these can lead to impressive outcomes. What is less clear is whether other sectors do not, or cannot, reach the same levels. In many cases, the empirical basis on which to judge is simply not there. For one thing, there is always a prospect that if commissioning practice were different, organisations might behave differently. Many of the mechanisms for involving users, for example, such as having users on boards, are easily replicated in the public or private sectors. Our recent report on User Involvement in Public Services showed that there are a range of ways in which the public sector is engaging with and involving its users, even if this involvement is inevitably imperfect.[82] The assumption that third sector organisations have a particular strength in their focus on users is not as clear-cut as many appear to believe.

66. The National Consumer Council (NCC) have recently attempted to address the evidence gap through examining the experience of service users in social housing, employment services and domiciliary care services to find out whether services provided by third sector organisations were indeed distinctive.[83] Alison Hopkins (who conducted the research for the NCC) told us that the research was prompted by a sense that the claims made about the distinctiveness and effectiveness of the third sector as a provider of public services were fundamentally anecdotal:

67. Although by no means giving a complete picture, the NCC's work is a hugely welcome attempt to give some rigour to a sphere where debate has so far, of necessity, too often consisted of assertion and counter-assertion. The NCC's findings were published in May 2007 and are summarised below:

Table 2: Findings of National Consumer Council research

Service Area	Findings
Social Housing	Little difference between performance of public sector and third sector: generally low levels of user satisfaction.
Employment Services	Third sector out-performed private sector in all core service factors; private sector in turn significantly out-performed public sector in all areas.
Domiciliary Care	Little difference in performance of public and third sectors. Private sector providers seen as most responsive, with staff who are most friendly and helpful, and most likely to treat people with dignity & respect.

Source: adapted from NCC

68. Philip Cullum, the NCC's Deputy Chief Executive, told us that the NCC's research had not entirely supported the assumption that third sector organisations were particularly user-focused:

Part of the rhetoric around the third sector is an understanding of users and the ability to get close to them. One of the things that we found was that actually that rhetoric in some instances can be rather overblown, particularly when it is being provided to quite a general population like social housing …

69. One of the most commonly cited characteristics of third sector distinctiveness—almost its unique selling point—is the sector's focus on service users. Yet user focus is not unique to the third sector, and indeed what little research there is suggests that this user focus can be lost when organisations provide services to a large, general population. Equally, it is hard to measure whether the third sector has an inbuilt advantage in providing specialist knowledge and expertise. This is not something the National Consumer Council's research attempted to measure. Nobody, though, claims that the third sector has a monopoly on specialism. If the test of distinctiveness is that the third sector offers more specialist knowledge and expertise than other sectors, then we have not been provided with sufficient evidence to prove that claim.

70. The NCC's research does tentatively support the notion that the third sector might have an inbuilt advantage in providing a flexible, joined up service. Across employment services, domiciliary care and social housing, users consistently felt that third sector providers were better than other sectors at "providing a flexible service"—important because people's needs are not always treated holistically by government agencies. However, on other related measures such as "staff who care about you as a person", third sector organisations were not rated any higher than their competitors by service users. Indeed, in domiciliary care, both the third and public sectors were significantly outperformed by the private sector on this measure.[86] Fairbridge told us that when they were commissioned to provide services in Southwark, they "provided a missing 'joined up-ness' within the borough that wasn't there before"; but this was "partly due to Fairbridge's work, and partly due to the commissioning process".[87] In other words, the impetus for joined up service delivery can come from the State too. There is some evidence that third sector providers in certain fields provide more flexible, joined-up services. However, flexibility of services seems very dependent on good commissioning practice.

71. Even in the area of innovation—the very crux of third sector distinctiveness -there is debate as to whether there is an inherent strength within the sector, or whether in fact commissioning practice was more important than who provided the service. The Local Government Association told us about a study carried out by Stephen Osborne at Edinburgh University in 1994, and repeated in 2006, which suggested that 'innovation is not an inherent characteristic of voluntary organisations, but arises from the policy context created by central and local government'.[88] The 2006 study also showed that the number of TSOs who state they are involved in innovative activity has fallen considerably. This chimes with observations from Stuart Etherington that innovation comes from involving service users in service design.[89] The Audit Commission's work on innovation in local government also found that innovation "tends to come from those who are closest to the users of a service, and often emerges in partnerships. We found evidence of innovation among providers of all kinds, but no particular evidence of greater innovation in the voluntary sector compared with other service providers."[90] The many fine examples of innovative practice in the third sector do not add up to conclusive evidence that the sector is inherently more innovative. We discuss the question of whether innovation can be bought in chapter 7.

72. The one area where we did identify a potential distinctive strength in the third sector was in its capacity to generate user trust. However, while we can see that offenders and users of mental health services may often not trust the State, the same is not necessarily true of other types of service users. Indeed, given that equity is not intrinsic to the third sector, there are reasons why some people might have more trust in the State. This is backed up by the NCC research, which found that levels of trust in third sector providers were only higher in the field of employment services. In social housing provision, the public sector was just as trusted (or perhaps distrusted), while in domiciliary care the highest levels of trust were once again in private sector providers. There is clearly a need to be cautious with these figures, as the NCC's sample of service providers is not necessarily entirely representative. Nonetheless, the figures do suggest a pattern, which is that where service users are more likely to have had negative experiences of the State, they are more likely to trust non-public sector providers. In certain areas, it appears that third sector organisations may indeed be more likely to secure users' trust than public sector counterparts. It is equally apparent, though, that this is not universal across all forms of public service provision. Nor is it clear that it is a third sector-specific strength. It may be more accurate to suggest simply that certain types of service users, or would-be service users, may be apprehensive of dealing with the State.

DOES SIZE MATTER?

73. A further strand to the debate on the distinctiveness of the third sector was the issue of whether some third sector organisations are in fact more distinctive than others. In particular, within the voluntary and community sector there was a debate around whether the characteristics of third sector distinctiveness identified by the Government were more likely to be found in small, local organisations than in large national ones. This was certainly the belief of Alex Whinnom of Greater Manchester Centre for Voluntary Organisations, who works on behalf of many such small local organisations. He told us that it was a mistake to conflate the two different types of organisation:

I think the mistake, again, is to think that the big national charities with million pound, multi-million pound turnovers are the same thing in any way as the small local charities … The philosophy around commissioning public services from the third sector, all the rhetoric, is all about the added value you get from what seems to me to be a description of the small, local charities.[

74. Mr Whinnom's belief was echoed by one of the Manchester-based local charities he worked with, the Wai Yin Chinese Women's Society. The Wai Yin Chief Executive Sylvia Sham argued that local roots brought distinctive benefits:

75. The danger that our witnesses identified was that in pursuing a policy agenda designed to obtain something distinctive, the Government might actually unwittingly damage the existing distinctiveness of the sector by incentivising third sector organisations to grow and become more businesslike in order to win large contracts—thus losing what made them distinctive in the first place. This is not just a hypothetical concern; our visit to New York and Boston showed us that this is a real issue in areas where the third sector becomes a major player in service delivery. We heard complaints from many people in the United States that the sector had been changed by service delivery, becoming too bureaucratic and losing much of what had been special about it. We also heard a similar experience of the United States from Richard Gutch, who had written a report based on the experiences of the United States as long ago as 1990 signalling this experience. He told us that this same thing was happening in certain areas in the UK:

76. Other witnesses, however, cautioned against the view that distinctiveness was in some way a factor of size. Lord Adebowale, who heads one of the largest national third sector organisations, disputed the view that big is necessarily bad:

Acevo's Peter Kyle warned us that it was "very easy to stereotype and to pigeonhole different charities based on size or ethos or background", but that it was not necessarily helpful to service users to do so.[95]

77. Perhaps the most helpful overview we heard came from Stuart Etherington, who told us that while there might be a tendency for different characteristics to be present in organisations of different sizes, this did not equate simply to "small good/large bad":

I think it is easy to oversimplify the argument, in a sense, between large and small. I view this as, sort of, 'horses for courses'. The purpose of public services is to provide good services for citizens in a way that is responsive to their needs … some organisations are better at providing different sorts of services.

Let me give you an example: if you want local tailored solutions to particular complex problems, then the probability is that you are going to try to work with smaller, locally based organisations which reflect the needs of local citizens. If you are trying to provide a similar type of service from one place or another, then you may go for a large organisation which has the capability of delivering that type of service.

The recurring theme was the cry for a more sophisticated evidence base.

"Added value"

78. Aside from the five elements of distinctive service delivery, the Government also believes that involving the third sector in public services has "wider benefits" beyond quality of service provision—a concept which is often described as "added value" or sometimes as "collateral value". Memorably, the 2004 Review of the Voluntary and Community Sector cited an observation from Einstein that "everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted".[97] More prosaically, the Government went on to explain what it considered to be the wider benefits of employing the third sector to deliver services:

involving local people to build community ownership;
building the skills and experience of volunteers;
increasing trust within and across communities, thereby building social capital.[98]

79. The British Red Cross gave us an example of collateral value in action:

Research has found that VCS care in the home services, including those provided by the British Red Cross, are effective in reducing the sense of social isolation, which was repeatedly raised by service users as their prime concern on leaving hospital. The quality of attention and time given by volunteers was found to be crucial to this.

Leonard Cheshire described to us how they use their voluntary income to supplement directly contracted services and lever in ancillary services, 'making them of greater value to the individual beneficiary than if they had been provided directly by the commissioning authority'.[100] This is a form of added value different from those listed by the Government. We also heard at our seminar about Bulky Bob's, based in Liverpool, who deliver recycling services to the public but also deliver the collateral value of employing ex-offenders.

80. The question which we need to answer is whether delivery through the third sector really does deliver added value, and whether delivery through other sectors does not. Here, it is difficult to be definite. Not all service provision by third sector organisations does provide these wider benefits. Many of the larger service delivery contracts won by the third sector are won by large organisations, not necessarily employing volunteers or building social capital. Martin Narey (again) told us that he was "cautious about joining this chorus which says that we have some sort of added value".[101] The Charity Commission were also concerned that there were some misconceptions around the concept:

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81. Conversely, the type of added value provided by Bulky Bob's could theoretically at least be provided by other types of provider. There is no reason why, if it was in the contract specification, private sector organisations could not do as Bulky Bob's do and employ a certain proportion of ex-offenders. Nor do we know a reason why the public sector could not deliver some services on this basis itself.

82. Added value has many facets, from generating social capital and voluntarism to levering in additional income or providing other unexpected but tangible benefits. Third sector organisations are often likely to be best placed to provide some of these benefits; but this may say less about the capability of other sectors than it does about the weakness of commissioning processes. Unless commissioners ask for added value, we cannot really know if it is a distinctive third sector strength. We will look at this in more detail in chapter 7.

Conclusions

83. We started this chapter with Martin Narey's provocative statement that he did not believe there was anything the voluntary sector could do that the public and private sector could not do, and that he had therefore tried to remove the word "distinctiveness" from the Barnardo's lexicon. For him, it was competition that drove improvement in services. Joyce Moseley from Rainer, also with experience of commissioning services from the third sector as a Director of Social Services, cast further doubt that any strong results demonstrated by third sector organisations were solely due to intrinsic qualities or distinctiveness. For her, the contracting out of a service, rather than the distinctiveness of who it was contracted to, made a difference compared to in house delivery:

There is something about the fact that you are running a specific service on a contract that gives you a real focus and that focus can dissipate a bit when it is taken back into the more general youth offending team.[

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84. Perhaps the most emphatic response to that we heard came from the NCVO Chief Executive Stuart Etherington:

The idea that there is broadly no difference at all between these various groups or organisations that are competing to provide public services is stuff and nonsense actually…

Historically, the voluntary sector has done things in a different way. It tends to involve users more in describing and developing the type of service that it runs. It tends to be slightly more risk-taking in terms of the sorts of services that it provides. It is often more trusted in terms of provision by excluded groups than the state or, indeed, the market.

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85. On close examination, though, it is not clear that these two positions are entirely incompatible. The evidence is clear, at least, that third sector organisations are not intrinsically more capable in any way than other organisations—which is Martin Narey's point—and yet (as Stuart Etherington says) there may well be a tendency for things to be done differently in different sectors. The challenge for the State is to work out what characteristics it wants in the delivery of particular services, and then try to inculcate those characteristics wherever it can.

86. Our attempt to test the Government's proposition that the third sector offers distinctive characteristics is no more than a first step. We can offer only tentative conclusions warning against hyperbole. The evidence is simply not there to judge conclusively whether there are shared characteristics across all third sector organisations, arising from their commonality of origins or ethos, which might make them particularly suited to the provision of public services. Indeed, there is widespread consensus that this evidence base does not yet exist. Will Werry of the Commissioning Joint Committee put it most succinctly when he told us that "it is surprising that a major national exercise is based on … supposition".[105]

87. We have already noted that the Government is not looking to transfer any set proportion of services to the third sector. At most, it has identified certain services which it believes third sector organisations may be particularly well placed to provide. This is a more nuanced approach and more sensible than attempting to claim general merits across the whole third sector. Given the absence of useful evidence, too, it is entirely sensible that the Government should no longer set numerical targets for the sector's contribution to public service delivery.

88. The work of the National Consumer Council in assessing user preferences is a helpful step in the direction of an evidence base. There is another important dimension, however, which is overlooked in the work of the NCC. While they tested for the same characteristics across domiciliary care, social housing and employment services, the gap may be a failure to identify which of these characteristics were particularly important to the users of each of these services. The Government identified the need for different characteristics in different services in its cross-cutting review of the sector in 2004. We have reproduced its findings as an appendix to this report. There, the Government tried to communicate the complexity of these questions by setting out what relevant "distinctive" characteristics third sector organisations might bring to the table in different service areas. This is the right idea, but approached from the wrong perspective. The real question in each service should be what characteristics are needed to get the best outcomes for users and for citizens. This might give commissioners an evidence base when they consider what characteristics they might look for when deciding how to commission a service. It is in this direction that research should focus if the policy of encouraging third sector provision is to be pursued.

59 Ninth Report of Session 2006-07, Skills for Government, HC 93, August 2007, para 11 Back

60 Cabinet Office and HM Treasury, The future role of the third sector in social and economic regeneration: final report, Cm 7189, July 2007, para 4.6 Back

61 Commission for Social Care Inspection, State of Social Care in England 2005-06, January 2007 Back

62 Ev 250 Back

63 Ev 168 Back

64 As above Back

65 Q 204 Back

66 Q 259 Back

67 Q 261 Back

68 Ev 276 Back

69 Ev 157 Back

70 Ev 227 Back