Memorandum from Futurebuilders England
Ltd
1. What are the benefits of contestability
to the users of public services?
(a) Have services which have been transferred
to third sector organisations shown improvements in quality?
In Futurebuilders England's experience it is
the complementary aspect of third sector organisations delivering
services that is transforming provision, rather than just transferring
it from one provider to another. Third sector organisations—in
partnership, not in competition with—the public sector,
can offer more to patients, residents and communities. It is not
about removing or transferring services from the public sector,
but adding distinctive value for better or more sustained provision.
Third sector organisations are often well placed
to deliver services because they focus on the needs of users;
have particular experience and expertise, flexibility, independence
and ability to build users' trust; and because they involve local
people, engaging volunteers and help build social capital.
Futurebuilders England is keen to help third
sector organisations deliver public services where they want to
and are best placed to do so.
In practice, we have seen how third sector organisations
identify need and fill gaps left when the public or private sector
cannot, or do not wish, to provide a particular service.
An excellent example of this is Futurebuilders investee
East Midlands Community Dental Association, which trades as Genesis
Dental Care.
Genesis opened three new not-for-profit dental
practices in Grantham, Derby and Lincoln late last year (2006)
after competing for contracts from Primary Care Trusts. After
the new DH dental contracts came into effect in April 2006 many
practices stopped providing NHS care and treatment. PCTs had to
tender new contracts based on local need and Genesis was able
to provide the same high-quality NHS care, but with additional
significant and distinctive advantages over traditional NHS dentists.
As a social enterprise, all profits are ploughed back into the
organisation, dentists are on a competitive fixed salary and patients
are invited to become members of the organisation to ensure it
responds to their needs and is patient-led.
Another example is Building Blocks Solutions
Ltd—a mental health social enterprise which offers advice
on benefits, housing and employment. They recently linked with
GPs in Nottingham to provide patients with non-medical support
and advice freeing up valuable GP appointment time and allowing
GPs to offer an extra dimension to their own services.
These are just two examples of many more Futurebuilders
could provide, where the third sector is proving how it can offer
improvements in quality in public service provision.
(b) Is loss of accountability a threat of
commissioning services? If so, how can this best be managed?
Like all contracted services, regardless of
who provides them, there should be a clear line of accountability
between the purchaser and provider through an agreed contract.
This is the same whoever delivers the public service. Good commissioners
ensure that the services they are planning and subsequently providing
(through the third, private or public sectors) respond to specific
user needs. The contract should include criteria which ensure
service users have the opportunity to feedback directly on the
quality, level and access to the services they are using.
Third sector providers are already geared up
to provide this level of accountability as they are often either
user-led or have a high involvement of volunteers from the sector
or area they are working in—who in turn have direct experience
of the needs that the organisation is attending to.
2. Is the third sector more likely to provide
better public services than the state or the private sector?
Futurebuilders England was set up in 2004 to
test whether the third sector could provide better public services
through longer-term investment in the form of loans and grant
investment packages.
Every investment offer we make to a third sector
organisation asks whether the investment will lead to a significant
improvement in public service delivery. So far we have made over
200 investment offers, all of which have to satisfy our assessment
criteria. This is set to analyse the public service they plan
to deliver or expand, and the likelihood of a public sector body
paying for their service.
Whether the third sector is more likely to provide
better public services than the state or private sectors depends
on what definition of "better" is being used and how
success is measured. For example if success is measured by engaging
users; using volunteers or creating sustainable communities, then
the third sector is more likely to be best placed to deliver this.
However, if the outcomes or measurables are not directly linked
to measures such as this then any sector could be successful at
delivering high-quality services.
(a) Is there evidence that where services
are provided by the third sector that they are popular with those
that use them?
Two of our health and social care investees
are providing services which meet an un-met need within the NHS.
Both are innovative and user-designed, but work in partnership
with their local health services to ensure they also meet the
needs of their purchasers.
Social enterprise Impact Integrated Medicine
Partnership provides complementary health services including acupuncture,
chiropractic and homeopathy to patients with long-term conditions
in Nottingham.
Since 2004 Impact has treated over 300 people,
tackling health inequalities and reducing NHS costs of longer-term
care and treatment. After completing an Impact programme, 87%
of patients report reducing or stopping their prescribed medication;
76% visit their GP less frequently; and a number no longer require
hospital treatment such as physiotherapy or spinal injections.
After winning the 2006 NHS Alliance Acorn Award
for Integrated and Complementary Healthcare, Impact is now working
with local GPs, Nottingham City PCT, and Nottinghamshire Healthcare
NHS Trust to develop complementary services for more NHS patients.
This will primarily be through the new practice-based commissioning
initiative within the NHS.
One Impact patient said: "When I first
came to Impact I was on anti-depressants and knew nothing about
homeopathy. My doctor said I'd need to be on medication for at
least six months, but I was able to safely stop taking it three
months after starting at Impact. It's helped me get back to a
normal life. What we need now is for the NHS to provide these
services all over the country."
Barnet Voice for Mental Health, a user-led mental
health organisation, opened its crisis house in December 2006.
As the first crisis house in the country to be run by people who
have experienced mental health problems, it was developed in conjunction
with the Mental Health Partnership Board—the joint commissioning
body for mental health services for the London Borough of Barnet
and Barnet PCT—the house will provide people with mental
health problems with a place to go in times of crisis.
Based in North Finchley, the house will initially
offer a weekend service, providing a safe and supportive non-medial
environment for people experiencing a mental health crisis. A
support group will also be held at the house mid-week to provide
ongoing support for those who have used the crisis house.
One volunteer from Barnet Voice for Mental Health
said "My personal experience of mental health problems started
some 11 years ago as a complete breakdown with severe clinical
depression due to a medical negligence. At one stage in my illness
it was decided I needed hospital admission, but because my illness
was due to a medical procedure that went horribly wrong and left
me with post-traumatic stress disorder, it was decided that in-patient
care would not be the best option in a crisis. The site of
a hospital was more than I could cope with. There was no
available alternative than to be treated at home, and there, heavily
medicated, I became isolated and a recluse for some two years.
I feel that the less clinical environment of a friendly crisis
house with other users to talk to and pressures of everyday life
taken away for a time could have contributed to a quicker recovery
and prevented me becoming a recluse for those lost two years."
(b) Is there evidence of demand for more services
to be provided by the third sector? If so, who from?
This is a complex question. First of all, it
is important that service commissioners find out what service
users want and build this into their service specifications. Secondly,
commissioners should test the market to see who is best placed
to meet this specification. And finally, commissioners should
be willing to pay the right price for services that meet this
specification.
If all these conditions are met, we believe
there will be increased demand from both commissioners and service
users for more services to be provided by the third sector, because,
in our experience the third sector is well-placed to respond to
users' needs.
We have 200 investees who are working across
the public service areas of children and young people, health
and social care, education and learning, crime and community cohesion.
There are many more outside of the Futurebuilders current remit
working in the arts, sports and leisure, waste and recycling and
the environment. There are also examples of progressive local
authorities that want to diversify their provision through the
third sector and are using local strategic partnerships and forums
to better understand the sector and what it can provide.
Futurebuilders is also working with one local
authority whose plans, if realised, could herald a significant
step forward in the whole area of public sector commitment to
provision of services through the third sector. This authority
is in the early stages of scoping a plan to find a third sector
provider to run a proposed new Children's Centre, and is considering
offering a 15 year full cost recovery contract to a suitable third
sector provider prepared to include in its tendering the commitment
to take on a Futurebuilders capital loan. If the plan becomes
reality, it could become a blueprint for creative and enlightened
commissioning across the country and an example to other commissioners
of productive risk-sharing.
Wakefield Metropolitan District Council holds
regular meetings to make sure private and third sector providers
are well informed about Council plans and priorities, and Futurebuilders
is being asked to speak at an increasing number of commissioner-hosted
information events.
Some public sector organisations are also working
with Futurebuilders to help more third sector organisations get
ready for contestability and compete for contracts on a level
playing field. Portsmouth City Council is in discussion with a
local provider about submitting a Council-endorsed bid for capacity
building to Futurebuilders, while in Yorkshire & Humberside
the third sector support organisation Clinks is working with the
Regional Offender Management Service support to develop a Futurebuilders
bid for development grant funding. The scheme as a whole is designed
to give commissioners greater confidence in the abilities of third
sector providers to address offending in the region.
(c) Do public services provided by the third
sector more accurately reflect the changing needs of those that
use them?
The third sector is incredibly diverse and it
is difficult to generalise whether all services provided by the
third sector reflect user needs. Our investees tend to be driven
by user need rather than financial return or centrally driven
targets. They also proactively engage their users to develop services
that meet their needs. It is therefore logical that they focus
on the (evolving) needs of users. We believe the evidence tends
to bear this out.
Futurebuilders investee, PeaceMaker is an excellent
example of this, as Director Siddika Ahmed explains:
"PeaceMaker was formed in 1997 by a group
of young British Asians who had witnessed the development of segregated
communities as a result of the misunderstanding, prejudice and
racism which were prevalent across Oldham at the time. With little
or no action being taken the ongoing tension and segregation between
communities finally culminated in the Oldham riots in May 2001.
"As new approaches and solutions to these
tensions were explored we become an established organisation recognised
for its work delivering a range of community cohesion activities.
Working with young people and supporting the wider community,
PeaceMaker developed a portfolio, which is now recognised at local
and Government level as being at the forefront of anti-racist
work across the country.
"By bringing different groups of people
together we have had a significant and sustainable impact on the
lives of the people who participate in our programmes. Many of
the young people we have worked with have become peer educators
or mentors at PeaceMaker, and have gone on to incorporate what
they have learnt into their professional lives".
PeaceMaker continually adapts to the needs of
the young people they work with and the communities in which their
varied programmes are aimed.
(d) Is there evidence that contracting to
the third sector leads to a greater scope for innovation in public
service delivery?
RNID, the charity for deaf and hard of hearing
people, is launching a national, innovative, specialist £5
million mental health service for deaf people with financial support
from Futurebuilders and the Royal Bank of Scotland. This major
new service development aims to tackle the crisis in mental health
provision for profoundly deaf people. RNID will develop four purpose-built,
residential mental health units, specifically designed for deaf
people.
The new eight bedded units, supporting people
with acute mental health needs, will offer services to promote
social inclusion and independent living. The community-based residential
units will be designed to enhance communication and aid longer-term
recovery. They will also offer an alternative to hospital for
many deaf people who are trapped in a cycle of readmission to
inappropriate mental health care settings.
Dr John Low, Chief Executive, RNID, says: "The
incidence of mental health problems amongst deaf people is much
higher than average, and individuals are often discharged from
acute care straight back to the community without intermediate
rehabilitative or community-based support. With the mental
health sector considerably under-funded, even more so for deaf
and hard of hearing people, this project will go a long way to
ensure that they are included and have access to appropriate and
high-quality care".
3. Does commissioning benefit the third sector?
(a) Will contractual relationships with the
state improve stability within the third sector?
The stability of the third sector is not just
dependent on a contractual relationship with the state. We know
that our model of loan finance is helping our investees to focus
on sustainability, sharpen their financial planning and increase
their ability to secure full cost contracts, as Liverpool Crossroads
Caring for Carers explains: "The Futurebuilders investment
has helped Crossroads to move to the next level in our development
as a social care provider. This will bring forward activities
that could not have been envisaged for at least a couple of years".
Third sector sustainability depends on a number
of variables: whether they are receiving full cost recovery contracts;
how much they rely on short-term grant funding; number and length
of contracts (ie one-year or three year) and their ability to
sell services and generate income.
We believe that an appropriate mix of grant,
loan, contractual income and voluntary income will help many more
organisations become sustainable. Moving from one-year to three-year
contracts as the norm will also help organisations to focus on
sustainability, rather than spending quality time on renewing
grant and contract funding every year. Joint commissioning of
services across boroughs boundaries and public sector departments
could also support the third sector stability.
(b) Will close involvement with service provision
prevent third sector organisations retaining the ability to be
critical of government?
Futurebuilders has funded two Citizen's Advice
Bureaux (CAB)—North Liverpool CAB and Cambridge CAB. Both
are registered charities and delivering public services for their
local population. They provide free, independent and confidential
advice, but also collect evidence on behalf of clients to campaign
for change in local and national government policy. They are able
to be critical of government yet at the same time retain a close
involvement with service provision and met the needs of their
clients.
(c) Is there a risk that the service providers
will become increasingly bureaucratic?
Yes. Monitoring and evaluation must be proportionate
and fair. The burden of bureaucracy must not be unnecessary and
this will depend on the quality of the commissioning. We would
like to see commissioning focus on outcomes, rather than inputs
and outputs. With outcomes that have a real impact on the people
using the service. With good commissioning it should be possible
to avoid bureaucracy.
Our investees have experiences of commissioning
that at a basic level are not consistent or comparable. We have
evidence of investees receiving short documents to 300-page tomes
when competing for similar contracts across the public sector.
For Genesis Dental Care (as mentioned in 1. a) while a Lincolnshire
PCT was happy to award two contracts to the order of £350,000
pa, others have been reluctant to offer more than unworkable six
month initial commitments, claiming to be unable to make long-term
contracts with a new organisation.
The impact of uncertainty and budget constraints
across all commissioners is well illustrated by Age Concern Suffolk
(ACS), which has a £204,000 Futurebuilders investment to
deliver Day Care and Active Ageing services in and around Bury
St Edmunds. The ACS model combining day care and Active Ageing
services represents an extremely cost-effective approach to quality
services for older people, encouraging well being and independence.
At the time of applying for an investment, ACS had secured agreement
with Suffolk County Council's Adult Care & Community Services
to provide a specified number of daycare places (under block contracts),
and additional "spot" purchases, at a price that reflected
the high standard of the facilities to be provided. Suffolk Council
agreed to a three-year contract (a significant commitment, and
a real advance on previous short term, or ad hoc arrangements)
which was agreed by all the relevant parties. However, two months
before the centre was due to open (January 2006), the Council
insisted that a six month break clause be inserted and the "spot"
purchases were effectively withdrawn.
It made these changes in response to a requirement
to save over £14m from its care services budget. The lack
of long term commitment and a reduction of up to £46,000
pa in day care income will have a drastic effect on older people,
as well as the income and sustainability prospects of this project.
Furthermore, other ACS day care centres and services are having
referrals reduced and/or funding cut.
Paul Baker, ACS Deputy Chief Executive, said,
"The Government is looking to the voluntary sector to extend
its service delivery programmes. For the first time it looked
as if we had a degree of security in the form of a three year
contract, only for that security to be severely reduced and the
income heavily cut".
Futurebuilders investees, and other third sector
organisations, have expressed frustration at the lack of proportionality
between the size of contracts on offer and the amount of documentation
sometimes required in order to tender. We welcome the moves, by
the Department of Health and other commissioners, to introduce
the concept of proportionality into their emerging commissioning
frameworks.
(d) Is there a risk that third sector organisations
will lose their independence, their identity or their distinctive
ethos?
N/A.
(e) Might the third sector become polarised
between large service providing organisations and more radical
groups? If so, would this matter?
Futurebuilders England has made over 200 investments
offers since 2004. The majority of these (80%) are to third sector
organisations delivering services locally or regionally. 25% of
our investees are organisations with a turnover of £100,000
or less and 18% are black and minority ethnic-led organisations.
In our experience, it is precisely the small,
user-led nature of some third sector providers that makes them
invaluable to commissioning bodies. First Step Opportunity Group,
for example, is a small to medium-sized (SME) organisation, founded
and led by the parents of children with disabilities, that works
to support other families in similar circumstances. It has developed
a strong relationship with local commissioners who value its ability
to relate individual families, understand their difficulties and
design solutions that larger, more bureaucratic organisations
cannot develop or deliver.
18% of our investees work in rural areas where
access to traditional services is limited and the public sector
find it hard to provide services that meet the needs of those
living outside of town and village centres. Two of our investees—Esk
Moors Caring and Harrogate Community Transport Association—have
helped many more people to stay in contact with public services
without taking away the benefits of rural living.
We also have a number of large national organisations
that work within a specific service delivery area that is best
placed to be delivered at a national level—for example RNID
and their new mental health centres for deaf people.
Due to Local Area Agreements for example, we
also feel that developing consortia is an important—and
alternative—aspect for third sector organisations to consider.
We are currently working with the Learning and Skills Council
to help local third sector organisations contract and deliver
larger accredited learning contracts; and the Crossroads Association
to help member networks work closer together in social care and
health services. We also encourage larger networks to work in
partnership with small local organisations.
Commissioners will need to make an effort to
understand what smaller, more local groups can deliver and the
distinctive added value they bring, such as being closer to the
user and their needs, having unparalleled access to hard-to-reach
groups; and focused on the outcomes and impact on peoples' lives.
To help deter polarisation commissioners could include these values
in their tenders and base criteria on achieving outcomes.
4. Does commissioning services from the third
sector have any benefits for the state?
(a) Does the state risk losing control of
service delivery in a way which might be damaging?
N/A.
(b) What capacity will the state need to ensure
that it can be an intelligent customer of services?
N/A.
(c) How is duplication of effort in order
to monitor and manage contracts best avoided?
The Public Accounts Committee's 2006 report
into Working with the voluntary sector stated that application
and monitoring procedures can be unnecessarily burdensome for
voluntary sector organisations. Futurebuilders England supports
their recommendation to ensure that the Government works with
departments to promote the concept of a lead funder in contract
negotiations.
As part of an organisation's terms and conditions
with Futurebuilders we also ask for specific monitoring information,
but we are clear to include this as part of their regular monitoring
to their board/management committee so it is not bureaucratic
and in line with what they already have in place.
Good commissioning would ensure that clear frameworks
would be discussed in advance of a contract being signed so quality
time was spent on the delivery of the service rather on the administration
of the contract.
(d) How good is the state at managing bidding
processes and defining contractual obligations when commissioning
services?
N/A.
5. What are the financial implications of
providing services through the third sector compared with directly
provided state services?
N/A.
(a) Are services cheaper to provide?
Public services should be provided by whoever
delivers the best value for money.
As already outlined, there are a number of additional
benefits that the third sector brings to public sector provision.
All services regardless of who provides them should be costed
appropriately and a commissioner should make a decision on who
provides those services based on quality and cost-effectiveness
rather than what is the cheapest option. One sector is not always
cheaper or more expensive than another—it will depend on
what service is being offered, what needs the commissioner wants
to meet and what competitors are working in the market.
By using a third sector provider, the state
may see additional benefits to users through the form of volunteers—but
it is important to note that volunteers should never be a substitute
for paid staff.
One of our investees, John Grooms, has made
it clear that it will provide a service above and beyond the contract
specification it has with purchasers and to provide this it will
use voluntary income. This is not a case of the purchaser not
adhering to full cost recovery as it is paying the charity for
the work it is delivering as per the contract. However, John Grooms
knows that the service they provide will be of a higher quality
by using its voluntary income, but also knows the purchaser can't
afford it. They feel they have a duty to deliver the best service
they can and this way the users and the purchaser get a much better
service than one from the public or private sector.
As all third sector organisations are not-for-profit
organisations all money that is invested, through grant or contract
income, is invested and recycled within the organisation. By paying
a third sector organisation to deliver services commissioners
will not be paying over and above the costs of delivery to pay
shareholders.
(b) Are there "hidden costs" such
as contract oversight?
N/A.
(c) Are the benefits of the third sector participation
in public service provision so great that it is appropriate to
have financial rules which encourage this, or should the aim be
to have "competitive neutrality" between public, private
and voluntary sectors?
Futurebuilders England would like to see further
capacity building support for third sector organisations as appropriate,
so they can compete equally alongside other sectors. It would
not be fair or appropriate to introduce criteria or rules that
subsidised any sector. A level playing field and good commissioning
would be far more beneficial.
Ultimately this would be a political call. And
European rules would make this difficult to enforce, even if the
political will was there.
6. Are the costs and benefits to the state
the same when commissioned from the third and private sectors?
N/A.
February 2007
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