Memorandum from ACEVO
INTRODUCTION
1. acevo is the professional body for the
third sector's chief executives, with 2,000 members. Our mission
is to connect, develop and represent the sector's leaders.
(a) The majority of our members are registered
charities, and over 50% are engaged in some form of public service
delivery.
(b) We promote a modern, enterprising third
sector, and call on third sector organisations to be:
— Professional and passionate in achieving
change and delivering results.
— Well-led with a commitment to professional
development, training and diversity.
— Well-governed and accountable, with
robust and fit-for purpose systems to protect independence and
enable effective decision-making.
— Enterprising and innovative, taking
a businesslike approach to funding issues and striving for continuous
improvement and sustainable development.
2. acevo has undertaken extensive research,
consultation and advocacy in recent years to help third sector
leaders in fulfilling the sector's potential as a provider of
public services. We have consistently argued that third sector
organisations should be encouraged and supported in developing
this role.
3. We have also drawn attention to the shortcomings
in commissioning and funding arrangements, which are restricting
the sector's ability to realize its potential. We have worked
to ensure that public authorities conform to the principles of
good practice in commissioning services from the sector, and that
third sector leaders have the knowledge, skills, and confidence
to negotiate effectively for such arrangements. This submission
will explore these shortcomings in more detail.
4. Our key publications on the subject of
charities and public service delivery include:
— Choice and Voice: the unique role
of the third sector (2006).
— Mind the gap: a funder's guide to
full cost recovery (2006).
— Communities in Control: the new third
sector agenda for public service reform (2005).
— Speaking Truth to Power (2004).
— Full Cost Recovery (2004).
— Surer Funding: improving third sector
public service delivery (2004).
5. We also worked closely with the Cabinet
Office to assist in preparing Partnership in Public Services:
an action plan for third sector involvement.
SUMMARY
Third sector organisations can and should play
a major role in transforming public services. They are currently
held back by a framework that promotes inefficiency, restricts
capacity, and stifles innovation. Radical reforms to the way in
which services are commissioned would allow third sector organisations
to develop and disseminate a new breed of coherent, citizen-focused
services, tailored to local situations and individual circumstances.
This response:
— Outlines the benefits of commissioning
services from the Third Sector, pointing to specific examples
where service transfer to the third sector has led to improvements
for users.
— Identifies remaining challenges and
difficulties for commissioners.
— Provides proposals for improving
commissioning practice and signposts further sources of help and
advice.
SPECIFIC
Benefits of contestabilty to users of public services
— By opening public service markets
to increased competition, contestability should drive up quality,
efficiency and innovation. Where services have been struggling,
new providers and new forms of delivery can impart a greater end
benefit to the user.
— There is strong independent evidence
that leading third sector organisations provide high-quality,
customer focused services, closely tailored to help hard to reach
clients.
— One reason for this may lie in their
ability to provide joined-up services, working across boundaries
between central and local government, and between those distinct
local governmental agencies.
Our 2005 publication, Communities in Control,
identified the following areas where the third sector is well
placed to make an immediate impact in improving services:
— Health and Social Care.
There are examples of improvements in service
quality following transfer, as the following two case studies
demonstrate:
CASE STUDY
(1) TOMORROW'S
PEOPLE
Tomorrow's People: is a specialist charitable
trust, helping people out of long-term unemployment, welfare dependence
or homelessness into jobs and self-sufficiency. It acts as an
expert intermediary between government, business and individuals,
using professional, dedicated staff to help the hardest to reach
groups in their own communities. During the last 20 years, Tomorrow's
People has helped 382,000 people in their quest to move out of
long-term unemployment.
An independent study by Oxford Economic Forecasting
identified the following hallmarks of their work:
— One-on-one contact with clients—A
Tomorrow's People adviser will spend 45-60 minutes with a client
per meeting, compared to the 14 minutes they would receive at
Jobcentre Plus.
— An environment of trust—many
clients come forward by word of mouth, recommended by friends
and relatives who have already been helped and trust the organisation
to deliver.
— Good links with employers—understanding
their requirements and building trust that applicants forwarded
will be appropriate for their organisations.
— Focus on after-care—so that
both the employer and employee know that if any problems arise
in the early stages of their relationship they can call on Tomorrow's
People for support.
— Independence from government—making
it easier to win the trust of clients who may be wary of speaking
to "authority-figures".
On average 76% of those helped by Tomorrow's
People are in work 12 months later and the gross cost per job
created by Tomorrow's People is around £2,050. This compares
to £3,500 for the New Deal and £3,700 for Employment
Zones.
— There are also wider benefits which
accrue to society as a result of improvements in the health of
those who find jobs through Tomorrow's People: a reduction in
child poverty and social exclusion, and lower levels of crime.
— In addition, economic benefits arise
from the training assistance which Tomorrow's People has provided.
Oxford Economic Forecasting has calculated that these economic
benefits are worth around £450 million. For every £100
invested by Tomorrow's People, the whole of society is £160
better off in the long term through lower expenditure, additional
taxation receipts and wider economic and social benefits.
CASE STUDY
(2) MENTORING PRISONERS—THE
TRAILBLAZERS PROGRAMME
"Trailblazers" is a mentoring programme
based inside HMYOI Feltham, providing Mentors to young male offenders
in custody. Mentees are linked to a Volunteer Mentor from the
community for approximately one year. Visits take place inside
the prison every two weeks during the last six months of his sentence
then continue for a further six months post-release to help ease
the transition back into society.
The selection process for mentees is minimal:
any prisoner who wishes to join the programme can do so.
In addition Trailblazers also offers a life
skills programme for prisoners, topics include careers advice,
job search skills, interview techniques, drug and alcohol awareness
and making choices, which all help prepare for their release.
210 young offenders have benefited from mentoring
via Trailblazers. Of those, only 17% have reoffended so far. Home
Office statistics show that 76% of Young Offenders reoffend within
two years of leaving custody. In comparison with Trailblazers
mentees shows that of the 210, 55 mentees have been released for
over two years and only 31% have reoffended.
Accountability
— Commissioners can retain accountability
through robust, improved commissioning. Greater clarity on the
split between purchasing and providing services is needed. Where
services are being commissioned from state providers, commissioners
need to be clear and transparent about this.
— Our publication Surer Funding (2004),
established 4 key princples for public service contracts:
1. risk should be shared equally between
partners, and not fall solely on the provider;
2. contracts should be of a sensible timescale,
with three years as a minimum;
3. bureaucracy should be minimized; and that
4. pricing should be fair, and related to
performance.
— Commissioners should involve third
sector organisations more in the design as well as the delivery
of contracts. More dialogue will help deliver clearer and improved
outcomes, and an understanding of the added value that the third
sector can bring.
Demand for third sector services
There is no cast iron guarantee that the third
sector will provide a better service than the state or the private
sector. However, there is evidence that services provided by the
third sector are poplar with users:
CASE STUDY
(3) THE BRITISH
RED CROSS
The British Red Cross is the largest third sector
provider of community equipment in the UK, helping tens of thousands
of people in need each year.
For the past nine years the British Red Cross
Community Equipment Services (CES) in Leicester has held the contract
with the local council and health services to manage all community
equipment services for Leicestershire and Rutland, helping over
20,000 people per year. More recently the Red Cross has won similar
contracts to manage CES support for Barnet and Doncaster.
Run from a small call centre and a warehouse
in the centre of Leicester, the Red Cross staff in the Leicester
service handles 7,500 calls per month and delivers almost all
equipment within seven working days.
The Audit Commission has officially cited Leicester
as an example of good practice. Other statutory authorities seeking
advice on how best to operate such a service regularly visit the
Leicester BRC CES site, which continues to expand its service
year on year. In 2004, the Leicester service won a national Dept
of Health award for innovative use of IT.
CASE STUDY
(4) SURE START
NUNEATON: A CHILDREN'S
CENTRE DEVELOPMENT
LED BY
NCH
Sure Start Nuneaton was approved in July 2000,
and covers a culturally diverse urban area within Warwickshire.
NCH are the Lead Agency and the Accountable Body is North Warwickshire
PCT.
Services operate from the Main building (Riversley
Park Centre, owned by PCT), an outreach venue (a refurbished shop),
a local school, and a church building.
The Centre provides:
— Early Education and Day Care.
— Family Support and outreach to parents.
— Child and Family Health Services.
It also links with Job Centre Plus, through
a service level agreement. Job Centre Plus sessions are held at
Riversley Park every month, and CV Writing courses are delivered
as part of an Adult Learning Programme.
The Programme Director cites the following factors
as key to its success:
1. a common understanding and commitment
to integrated working and inclusive services through a child and
family centred approach;
2. developing and sustaining effective partnerships
between agencies;
3. having a system in place for listening
to children and families and responding where possible;
4. challenging inequity and poor quality
provision; and
5. not compromising on quality.
Popularity of third sector services
— Third sector services are popular
with users for several reasons, many of which are outlined earlier
in this response: they are joined-up, provide flexible, tailored
services; and for isolated, hard to reach groups are seen as genuinely
independent and less threatening than some state providers.
— Third sector services have often
been set up to meet a need that has not been addressed by statutory
services. Success in one geographical area can lead to an increase
in demand, and expansion regionally or nationally.
CASE STUDY
(5) MOTABILITY
Motability is a national charity, set up to
assist disabled people with their mobility needs. The organisation
directs and oversees the Motability Scheme which enables disabled
people to obtain a car, powered wheelchair or scooter simply by
using their government-funded allowances.
Motability grew up in response to an area of
identified need where statutory services were unable to provide
a sufficiently user-focused solution.
In the UK, over 1.7 million disabled people
qualify for the Higher Rate Mobility Component of Disability Living
Allowance and over 16,000 qualify for the War Pensioners' Mobility
Supplement. Currently, some 430,000 disabled people have chosen
to have their allowances paid to the Scheme to meet the cost of
having a car, powered wheelchair or scooter through contract hire
or hire purchase schemes.
Since 1978, some 2 million cars, powered wheelchairs
and scooters have been provided through the Motability Scheme.
Today the Scheme purchases over 5% of all new cars, powered wheelchairs
and scooters sold in the UK, via a national network of over 3,800
Motability dealers.
The following factors have contributed to the
success of the organisation:
— a highly developed and specialised
offering which provides a sound basis for commercial competition;
— a strong conviction that the services
they provide are, or should be, mainstream services financed by
the state;
— the expertise in commercial negotiations
to win business on viable terms from statutory commissioners;
and
— the ability to join up a diverse
range of funding sources and providers (or types of service) to
create a single, coordinated, user-focused service.
Benefits of commissioning to the third sector
— Government bodies sometimes achieve
poor value for taxpayers' money in commissioning services. At
present, both government and the third sector expend a huge amount
of time and resource in managing short-term renegotiations of
relatively small quantities of money, so the commissioning process
is not currently geared towards increased efficiency.
— By placing funding on a more stable,
performance-related footing, government would free resources for
greater investment in the frontline, producing better services
for users and better value for taxpayers.
— Implementing the principle of full
cost recovery and a contracting in-line with the Surer Funding
Framework would have benefits for both sides.
FULL COST
RECOVERY
acevo has led research into the issue of cost
recovery over the last 10 years. It is now accepted at central
government level, that commissioners should recognise overhead
costs—the principle of full cost recovery—in contract
discussions. Key drivers behind the rationale are that:
— The distinction between overhead
costs and direct costs is artificial, and damaging.
— Overheads are essential to all projects.
— Each project should include a share.
— This is Standard commercial practice.
In contract discussions and negotiations, the
third sector should be subject to the same degree of scrutiny
as the private sector.
— The Government has recognised that
commissioning needs to improve: Partnership in Public Services:
An action plan for third sector involvement outlines four
sets of proposals, to:
1. invest in the skills of the 2,000 most
significant commissioners for the third sector, under the National
Programme for Third Sector Commissioning, providing targeted
support across commissioning agencies to build the skills and
knowledge necessary to involve the third sector;
2. improve commissioning from the third sector
by committing itself to the eight commissioning principles
set out in the action plan;
3. create a cross-government forum to align
the development of departmental commissioning frameworks that
reflect these principles; and
4. drive continuous improvement under Compact
principles.
These proposals need to be delivered for the
sector to deliver higher quality state commissioned services at
better value for money.
Independence
— The relationship between government
and the sector is both more subtle and more complex than many
of the arguments around independence give credit for.
— If more service delivery provides
greater influence and power for third sector organisations and
for their beneficiaries, then this is both central to the third
sector task and essential to the growth of civil society. As organisations
develop and increase service delivery, their evidence-base for
influencing and campaigning can be enhanced and their voice increased.
— The assumption that government corrupts
those with whom they treat does not accord with the reality of
mature partnerships. Government knows that when it buys into sector
delivery, part of the value of the deal lies in our very independence.
— Some commentators have raised concerns
that the charitable purpose of organisations might be diluted
or distorted by a greater focus on public service delivery. In
many ways, the distinction is artificial: many long-established
charities have delivered public services for centuries. For example,
the first "children's centre" was established in 1739
by the Coram Family.
— Although many third sector organisations
have a flexible and enterprising approach to service development,
they are also strongly focused on their missions. There is no
suggestion that those organisations should deliver services that
run counter to those missions, or that campaigning or capacity
building organisations should be encouraged by government to engage
more directly in service delivery.
— Fears over losing independence can
hinder an organisation's impact on its users and beneficiaries.
As Victor Adebowale, CEO of Turning Point has said:
"The idea that we should turn our backs
on those who need a service in order to maintain an ideology of
independence is not only misguided but unpalatable".
— There is strong evidence that charities
receiving statutory funding are able to campaign effectively.
— In recent years RNID ran a vigorous
campaign to improve the quality of hearing aids, while taking
on an active role in improving the procurement of audiology within
the NHS.
— Barnardo's continues to campaign
against the introduction of any sort of "Sarah's law".
Meanwhile, with other children's charities, it has helped to reinvigorate
the End Child Poverty campaign.
— NACRO, the crime reduction charity,
campaigns to shape policies on crime while working directly with
60,000 ex-offenders every year.
— Even at local level, many organisations
successfully combine service delivery with campaigning, using
knowledge gained from work with service users to inform their
advocacy. The Surrey Alcohol and Drug Advisory Service, which
runs services for 1500 people each year, now also hosts the Surrey
User Group, which aims to represent the drug and alcohol user's
voice at a policy and service level.
March 2007
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