Memorandum from Barnardo's
INTRODUCTION
1. Barnardo's works directly with more than
110,000 children, young people and their families in over 350
services across the UK that provide a range of services to the
most vulnerable. We receive 55% of our funding from the state
and this goes directly to providing the public services that we
are contracted to provide (not 78% as recently incorrectly stated
in the Civitas report Who Cares? How state funding and political
activism change charity). We work with local authorities and
public bodies across the UK and this response draws on that experience.
2. We welcome the Public Administration
Select Committee's inquiry, as these questions are vital in light
of the Government's policy to commission more services from non-Government
bodies. Barnardo's welcomes the opportunity to bid to deliver
public sector services as this is an opportunity for us to be
directly involved in improving outcomes for children, young people
and their families.
EXECUTIVE SUMMARY
3. Barnardo's would like to see:
— Minimum three-year contracts, with
five and ten year contracts becoming the norm, for improved stability.
— Implementation of the Cabinet Office's
Action Plan for Third Sector Public Service Delivery in
particular training of commissioners.
— Two-stage tendering processes—a
pre-tender questionnaire that, if approved, would result in invitations
to tender and full tenders being submitted from a select few bidders
who have a real possibility of winning the contract.
— The introduction of standard contract
terms and removal of unnecessary burdens from contracts.
— Measures to allow direct cost comparisons
between the statutory and third sectors on a level playing field
and a focus on measuring outcomes.
Question 1(b)—Is loss of accountability
a threat of commissioning services? If so how can this best be
managed?
4. Contracts provide the mechanism to manage
accountability, but only (as outlined below in response to question
four) if they include clear and measurable outcomes, effective
reporting and monitoring processes, and clear complaints procedures.
Question 2—Is the third sector more likely
to provide better public services than the state or the private
sector?
(a) Is there evidence that where services
are provided by the third sector, that they are popular with those
that use them?
(b) Is there evidence of demand for more services
to be provided by the third sector? If so, who from?
(c) Do public services provided by the third
sector more accurately reflect the changing needs of those that
use them?
5. Evidence from Barnardo's work shows that
services provided by the third sector are popular with both service
users and with commissioners.
6. In the North East, three local authorities
have recently stated to us that their preference would be to commission
parenting services from us, but that in some cases commissioning
and procurement rules inhibit them in doing so. The Senior Parenting
Practitioner posts ("Super Nannies") announced by the
Government as part of the Respect programme were established with
the intention that they would be based in the statutory sector.
In at least one instance, "because of Barnardo's exceptional
work in this area" the post has been based with us in the
third sector.
7. Gateshead Youth Offending Team (YOT)
work with the Barnardo's to deliver parenting interventions to
parents of young people in the criminal justice system. Our SunGate
service offers a variety of interventions to support parents from
1:1 support through to an eight week course offering advice on
parenting. They report that "whatever the intervention, the
satisfaction with the SunGate service reported by parents who
use it is high. Close collaboration between the YOT and Barnardo's
staff means the service is constantly reviewed and hopefully improved
in light of this feedback".
8. Each of our services evaluates its work
in a number of ways including through direct client questionnaires
and feedback. The Hive, a project based on a housing estate to
encourage community development found that the majority of residents
accessing our services would not approach social services. The
following is a typical response from a service user at The Hive.
We can provide the Committee with further examples if that would
be useful.
"Before coming to Barnardos I found it difficult
to get any sort of help and guidance, I felt as though I was in
a shell and I had no where to turn to. Since moving to Fence Houses
I found out about Barnardos and I feel like a different person,
the help and support I have received has been fantastic.
I have come out of my shell and have a lot more
self-confidence. When I first found out about Barnardos I didn't
think I would get anything out of it but I have been proved wrong.
They have helped me sort out my home and finances and have introduced
me to courses such as peer mentoring and youth work, the confidence
I have from attending these courses is fantastic I feel so much
better and happier in myself.
I know that when I have completed my courses
I will be able to go out back into the community the help and
guidance I have been given. Barnardos has saved me in a way whether
I need help and support or just a chat and a coffee they have
been there for me, for the first time ever I feel like a person
that is valued and not just a statistic I can never repay the
life line they have given me.
Thank you Barnardos xxxx"
Question 2(d)—Is there evidence that contracting
to the third sector leads to greater scope for innovation in public
service delivery?
9. One example is Barnardo's Mosaic service
that works with young people who have been abused. These young
people have not engaged with the local authority and have often
had poor experiences of child abuse investigations. As a result
some of these young people have been involved in training social
workers to improve the process that young people experience and
the service given to them by the statutory sector.
Question 3—Does commissioning benefit the
third sector?
(a) Will contractual relationships with the
state improve stability within the third sector?
10. Contractual relationships with the state
offer the opportunity for improved stability within the third
sector, but only if contracts are issued for longer periods of
time. A three-year contract would be the minimum needed for increased
stability, but five or ten year contracts would provide greater
stability. Barnardo's believes there needs to be a shared commitment
to make this work and for contract terms to be fair; for example
for the contract only to be broken through breach, and not operating
under essentially a six-month rolling contract (see below in response
to question 4(d)).
Question 3(b)—Will close involvement with
service provision prevent third sector organisations retaining
the ability to be critical of Government?
Question 3(d)—Is there a risk that third
sector organisations will lose their independence, their identity
or their distinctive ethos?
11. Barnardo's receives 55% of our income
from the state[55],
and this goes directly to fund service provision as contracted.
We use voluntary funds to complement this statutory work and for
our campaigning and influencing work. Barnardo's services, which
work with 110,000 children each year, provide an authoritative
base for our influencing work. The issues we have raised recently
clearly show that we retain our ability to be critical of government—
— Criticising Anti-Social Behaviour
Orders.
— Highlighting the poor educational
outcomes for children in care and calling for change.
— Highlighting our support for young
carers.
— Criticising the inhumane treatment
of asylum-seeking children.
— Convincing the Government to introduce
polygraph tests to help monitor adult sex offenders released on
licence.
— Reinvigorating the End Child Poverty
Campaign.
Question 4(b)—What capacity will the state
need to ensure that it can be an intelligent consumer of services?
12. Barnardo's supports the practical suggestion
in the Office of the Third Sector's Partnership in Public Services:
Action Plan for Third Sector Public Service Delivery (December
2006) for training for key commissioners on working with the third
sector. The Government will establish a two-year National Programme
for Third Sector Commissioning that will invest in the skills
of 2,000 commissioners from across the public sector—including
staff in Jobcentre Plus, Primary Care Trusts, National Offender
Management Service and local councils—who they consider
have the biggest impact on the third sector.
13. We also support the Action Plan's eight
principles that commissioners of services should do:
— develop an understanding of the needs
of users and communities by ensuring that, alongside other consultees,
they engage with third sector organisations as advocates to access
their specialist knowledge;
— consult potential provider organisations,
including those from the third sector and local experts, well
in advance of commissioning new services, working with them to
set priority outcomes for that service;
— put outcomes for users at the heart
of the strategic planning process;
— map the fullest practicable range
of providers with a view to understanding the contribution they
could make to delivering those outcomes;
— consider investing in the capacity
of the provider base, particularly those working with hard-to
reach groups;
— ensure contracting processes are
transparent and fair, facilitating the involvement of the broadest
range of suppliers, including considering subcontracting and consortia-building
where appropriate;
— seek to ensure long-term contracts
and risk sharing wherever appropriate as ways of achieving efficiency
and effectiveness; and
— seek feedback from service users,
communities and providers in order to review the effectiveness
of the commissioning process in meeting local needs.
14. The outcomes that the Government expects
children to achieve have been set out in the Every Child Matters
Outcomes Framework. Barnardo's advocates the following methodologies
and believes that if introduced across all local authorities it
could promote better commissioning of children's services, and
better outcomes for children and young people:
— The Centre for Child and Family Research
at Loughborough University has developed a "Cost Calculator
for Children's Services"[56]
which assists local authorities in monitoring the true costs of
services to children and improve strategic planning and commissioning.
The value of this type of tool is that it allows comparisons to
be made between the different types of care placement across groups
of children or for individual children. The tool was based on
research to assess how far variations in the cost of different
types of provision are reflected in the quality of care experienced
by children with different needs. The tool is specific to children's
social services and calculates costs from the bottom up based
on the actual case history of the child, and each individual child's
placements and needs. It also analyses costs by outcomes, which
links to the Every Child Matters agenda.
— The measurement of Every Child
Matters outcomes achieved for children and young people through
providers is vital. Barnardo's is currently working with services
in the North East to modify the questionnaires that young people
fill in before their looked after review to include some questions
on outcomes. The software used is called Viewpoint, and in addition
to being used by some local authorities as a tool for the looked
after reviews, it is also used more widely, for example to undertake
questionnaires in schools.
Question 4(d)—How good is the state at managing
bidding processes and defining contractual obligations when commissioning
services?
15. In our experience local authorities
are very poor in both managing the bidding process and defining
contractual obligations.
Bidding process
16. It is not untypical to have less than
two weeks to submit a substantial tender, and then wait months
whilst the commissioner makes a decision. The bidding process
can often involve hugely detailed questions to all bidders as
a one stage process. This is very time consuming for organisations,
particularly for those who may have very little chance of success.
Each public body also requires different amounts and types of
information and supporting documentation.
17. Barnardo's recommends as an alternative
a much shorter pre-tender questionnaire that, if approved, would
result in invitations to tender and full tenders being submitted
from a select few bidders who have a real possibility of winning
the contract. We believe that this would be cost effective for
both parties, reducing administration and bureaucracy.
18. We believe that further thought should
also be given to address what documents may validly be requested
during the tendering process, and whether a public authority having
once received certain documents is deemed to have notice of them
(rather than tenderers submitting fresh documents on each submission).
Contractual obligations
19. Our experience of contract terms is
that they are increasingly contained within documentation issued
at the tender stage. This often stipulates that by submitting
a tender, the organisation is deemed to accept the contract terms.
Tenders will also not be considered if submitted on a conditional
basis, for example stated to be subject to agreement on contract
terms.
20. We understand the rationale for the
commissioner to set out very clearly what is required for provision
of the service; however it puts third sector organisations in
a difficult and unequal position. In these circumstances the options
available are to:
— Risk not being considered for the
tender by asking to discuss specific contract terms.
— Agree the contract terms even though
they may not be able to be complied with in practice (eg because
of unworkable monitoring arrangements) or because the contract
poses a theoretical or real risk to the organisation (eg unlimited
indemnities which may far exceed insurance cover).
21. Contract terms are almost always those
of the public body, and third sector organisations very rarely
have the opportunity to present their own terms, or negotiate
terms.
22. There are no standard contract terms
across the public sector, so each of the local authorities that
we deal with produce their own contract terms, which may vary
widely from area to area. For third sector organisations this
raises a number of concerns:
— Repetitive review and negotiation
of contract terms.
— Drain on management time and diversion
from core activity of providing services.
— Deciding whether a full legal review
of each contract is required, possible within the time constraints
or affordable. Many of the staff who have the direct service expertise
necessary to respond to tenders do not have legal training to
deal with complex issues.
— Negotiation is often not an option
because the public body personnel are not authorised to agree
changes, or do not have the expertise to do so.
23. In our experience the contract terms
we have seen are frequently drawn up by external law firms which:
— Contain a lot of legalese with hidden
requirements or draconian terms—these need to be interpreted
by a lawyer.
— Follow a "one size fits all"
approach—for example having a 100 page contract for any
scale of proposed service with a total lack of proportionality.
— Are unreasonably one-sided in favour
of the public body.
— Are understood fully by neither party
to the contract.
24. Below are some examples of the types
of unreasonable or poor contract terms that we have experienced:
(a) Aspirational and sometimes ambiguous
provisions which create potential for risk of breach—for
example a requirement to improve the lives of 200 children in
an area with no clear criteria of how this is assessed.
(b) Unreasonable and unworkable reporting
and monitoring requirements.
(c) Transfer of all legal liability of the
public body to the third sector provider for statutory responsibilities
such as human rights and freedom of information. This transfer
is questionable given only public bodies are legally bound by
these obligations. The costs associated with transferring this
responsibility and attendant risk is also not factored in.
(d) Provisions to claw back unspent money.
We believe this should only be used in relation to grants, as
a contract is an agreement to provide services in exchange for
a price.
(e) Unilateral right for the public body
to alter terms.
(f) Indemnities are usually unlimited, unrelated
to risk, and local authorities are unprepared to restrict to the
third sector organisation's level of insurance.
(g) Employment and pension provisions—imposing
conditions on staff conduct which can confuse/undermine the employment
relationship potentially leading to employment claims or unbudgeted
redundancy costs; and requiring third sector organisations to
be liable for pre-existing service for pensions.
(h) Short-term funding—inability to
plan, uncertainty for staff and service users and overhead costs
associated with short-termism.
(i) Provisions for the public body (or both
parties) to terminate with six months notice, effectively creating
a six-month rolling contract even though the contract is for three
years.
(j) Failure to match the term of funding
to other issues—for example three year funding but a five
year lease break clause.
(k) Failure to provide for costs on termination.
25. Barnardo's supports the recommendations
made in the Government's Action Plan for Public Sector Delivery
to remove unnecessary burdens from contracts, and that standard
contracts are developed in some key service areas.[57]
We suggest that the following areas offer scope for standardisation
and being made mandatory:
— Reporting and monitoring.
— Freedom of Information.
— Boilerplate—force majeure,
severability, notices.
26. We also suggest the following as types
of contract terms where there could be mandatory outline terms—a
requirement that they be included and parameters for what is acceptable:
— Service provision/specification.
— Duration and termination.
Question 5—What are the financial implications
of providing services through the third sector compared with directly
provided state services?
(a) Are services cheaper to provide?
(b) Are there "hidden costs" such
as contract oversight?
27. Comparing the cost of services provided
by the third sector and those provided by the state directly is
difficult for a number of reasons.
28. Many government departments and local
authorities are not able to cost their services on a "full
cost" basis as they do not know, or are not able, to attribute
all their support costs to services. For example finance or HR
is a cost already incurred rather than support to service delivery.
Therefore a proportion of these costs is not included in the cost
of delivering public services; however third sector organisations
are expected to include these, but not be more expensive. It would
be fair to say that third sector organisations could be smarter
at reducing these costs and attributing them better to service
delivery, but at the moment we are not starting from the same
baseline.
29. There is not a level playing field in
regard to VAT. Local authorities are often able to recover VAT
on their costs, but voluntary organisations are not. Charities
are therefore more expensive, particularly where there are a lot
of non-staff costs in the delivery of the service. There needs
to be an equitable application of VAT rules across providers.
30. An example of the difficulties of cost
comparison has arisen recently in relation to the sustainability
of the voluntary adoption sector as there have been reductions
in placements from local authorities to voluntary adoption agencies
of up to 33%.[58]
Barnardo's has placed 50 children for adoption in the last year,
compared to 70 children in each of the previous two years—a
29% drop in placements.
31. Local authorities are under pressure
to reduce costs, and we are concerned that because of this, using
voluntary adoption agencies has become a last resort. The average
cost of a placement through Barnardo's is £19,000 compared
with approximately £12,000 through another local authority.
On the face of it this seems like a cost saving for local authorities,
but there are three issues to consider:
— The basis of the cost calculations
for each type of placement—as above.
— The additional costs whilst waiting
to place a child—An unpublished Deloitte report (commissioned
by the Department for Education and Skills) found that 40% of
children and young people identified for adoption are still waiting
for a placement. For these children an appropriate adoptive placement
is likely to best meet their needs, and this should happen as
soon as possible, to ensure that children achieve the best possible
outcomes. The high ongoing cost of keeping a child in a residential
home or foster placement while waiting for a suitable adoptive
placement should be taken into account in local authority costings.
A fairly straightforward fostering placement could easily cost
£12,000 per annum in placement costs alone, more specialist
foster carers could cost in excess of £25,000 per annum and
there will be additional costs in social work time supporting
these placements. The biggest cost is to the child who is deprived
of an adoptive placement and for whom the clock is ticking; every
year spent in care (looked after) makes the probability of a breakdown
in the subsequent adoption home more likely. For children placed
after the age of 7 there is a 50% chance of breakdown.
— The best interests of the child.
Question 5(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?
32. At the moment there is not a level playing
field—the example above in relation to VAT being a case
in point. It may therefore be appropriate to have financial rules
or incentives to counter the current imbalances and get to a "competitively
neutral" position. Barnardo's would like to see a level playing
field, a transparent tendering process and for the third sector
to be given work where it demonstrates that it deserves it.[59]
Competition provides an opportunity to demonstrate value for money
and effectiveness and can lead to improvements in services.
Question 6—Are the costs and benefits to
the state the same when commissioned from the third and private
sectors?
33. As outlined in the response to question
five above, at the moment it is very difficult to compare the
costs of the services provided by the state and by the third and
private sectors. There are, however, benefits in delivery of public
services by the third sector which the Government recognise:
— Ability to reach the disadvantaged
groups who lack trust in statutory sector services.
— Innovative service provision.
— Expertise in working with the client
groups in specialist areas.
March 2007
55 Not 78% as incorrectly cited in the report Seddon,
N (2007) Who Cares? How state funding and political activism
change charity, Civitas. Back
56
www.ccfcs.org.uk Back
57
This commitment was reiterated in: HM Treasury, Cabinet Office
(2006) The future role of the third sector in social and economic
regeneration: interim report, para 6.16. Back
58
Harrison, D (2007) "Voluntary adoption agencies face closure",
Sunday Telegraph, 4 February 2007. Back
59
Further arguments are presented in an article written by Barnardo's
Chief Executive, Martin Narey in an article for the Guardian
newspaper: Narey, M (2007) Preferential Treatment, Wednesday
10 January 2007, The Guardian
http://society.guardian.co.uk/futureforpublicservices/story/0,,1986329,00.html Back
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