Memorandum from Accenture
INTRODUCTION
1. Accenture welcomes the opportunity provided
by the Public Administration Select Committee to comment on "Commissioning
Public Services from the Third Sector".
2. The UK Government's recent creation of
an Office of the Third Sector demonstrates its determination to
use the sector as a key means of effecting public service reform.
By positioning the sector as a key delivery partner of public
services, the Government hopes to maximise the range and depth
of services available, in order to deliver the choice and devolution
agendas that it is enacting across the country.
3. Accenture is a global consulting organisation
dedicated to helping government and third sector organisations
achieve high performance results that meet the challenges of a
rapidly changing environment.
4. Accenture's Atlantic and Europe group
has more than 1,400 employees dedicated to government and third
sector organisations. Our people come from a wide range of cultural,
academic and geographic backgrounds. We bring together people
with different skills and experiences to deliver great things
for our clients, to shape the future of our own business and to
make a real difference to the communities in which we live.
5. This response considers the following
areas:
— growing emphasis on the third sector;
— benefits of greater involvement of
the third sector;
— success factors for partnership working.
GROWING EMPHASIS
ON THE
THIRD SECTOR
6. Opening up markets for public services
to new suppliers should allow a greater choice for users. The
devolution agenda centres on the efforts to provide personalised
services across all public services, to empower citizens to influence
the services they are entitled to and increase the choice for
users. The nature of the third sector means it has the capacity
to tailor services at the point of need and reach those on the
"fringes" of society, increasing the range and depth
of services for users. Such personalisation, range and depth is
likely to increase competition between providers, which is assumed
would lead to a better quality of services overall.
7. Significant affinity exists between the
Government and the third sector, as both are driven by a public
service ethos and share the aim of improving the lives of the
people they serve. This makes a partnership between the Government
and the third sector appealing: the third sector can help meet
government outcomes, while the Government can provide sustainable
funding opportunities to the third sector through contracts, further
enabling an improvement in outcomes.
8. Over the last few years, the third sector
has shown its ability to make a positive difference to the country's
economy. Made up of charities, social enterprises, voluntary and
community groups, the third sector possesses flexibility and adaptability
as they manage and work towards multiple bottom lines—financial,
social and environmental. What's more, both government and the
third sector face challenges in achieving their goals, which the
other can help overcome through effective joint working. The question
is how to make such a partnership work? Clearly setting out the
benefits to both government and the third sector of working together
will help both parties to understand not only why they should
work together, but how to position themselves effectively in the
market using the solutions they offer. It will also help the Government
plan how it can best enable the third sector to achieve these
benefits.
BENEFITS OF
GREATER INVOLVEMENT
OF THE
THIRD SECTOR
9. As independent organisations, based in
the heart of local communities, the third sector offers accessibility
in terms of where services are delivered and importantly, in the
relationships they build with users. This enables the third sector
to support people on the "fringes" of society, who would
otherwise never access mainstream services. Insights from our
work to date show that the capacity to build strong relationships
with users based on a high level of trust means that users are
often more affiliated to such third sector organisations, beyond
the name and reputation of a private body. This ability of the
sector to reach both individuals and communities is core to its
appeal. It offers much more than additionality, it offers a way
of reaching its audience which the statutory sector often finds
difficult to replicate.
10. Furthermore, by being based in neighbourhoods
and communities, third sector organisations understand both what
services need to be delivered and how. The third sector selects
appropriate services through a combination of service development
against local statutory sector priorities and user consultation.
As the third sector can be flexible and has the capacity to tailor
services at the point of need, it can offer choices to users that
best meet their requirements and therefore have a higher likelihood
of success.
11. That the third sector has the ability
to adapt its methods of service delivery is vital. By making initiatives
both appealing and bringing them closer to home, the third sector
maximizes uptake and impact on users. For example, Healthy Living
Centres understand that health services must be delivered in culturally
sensitive formats if they are to access certain users. By combining
religion-based activities with physical activities such as chair
exercise or health MOTs within a mosque, some Healthy Living Centres
have been able to help men and women that are marginalised by
mainstreamed forms of service delivery. This ability to bring
their services to market in highly targeted and creative ways
is a key part of the innovation of the third sector—finding
new and better solutions to existing problems.
12. Social outcomes are key to what a commissioned
third sector—in particular social enterprises—offers
over and above the private sector. An organisation within the
third sector works towards multiple bottom-lines in a way that
makes this sector unique in its capacity and commitment to delivering
multiple types of benefits. For example, a social enterprise might
be set up to address health inequalities but because of its approach
will also impact social capital aspects such as community cohesion.
Crucially, social enterprises reinvest their profits back into
the community. This reinforces and builds on the initial social
impact, enabling the community to see the results of its involvement,
creating a positive driver for improvement and change.
SUCCESS FACTORS
FOR PARTNERSHIP
WORKING
13. For the third sector to help the Government
achieve its aims, the latter needs to put in place a range of
mechanisms to enable the third sector to be effective in public
service provision. These should be developed to allow the third
sector to respond successfully to the new open market without
curtailing competition or giving the third sector unfair advantage
over other potential providers. At the heart of any strategy the
Government adopts must be the implementation of an effective commissioning
process that incentivises and enables the third sector to compete
effectively using the skills and unique value they bring to public
service delivery.
14. The diagram below summarises key elements
of what the Government and third sector can do to partner effectively,
and what this will achieve:
15. The Government needs to ensure that
local government and statutory bodies have a clear commissioning
process and criteria which providers need to meet. This requires
an end-to-end commissioning process to be put in place which encourages
an open market for applicants, which effectively evaluates the
suitability of each candidate across a broad set of criteria,
and which provides a structured way of monitoring and evaluating
the success post contract award.
16. While the commissioning process is an
important one, it will not work alone in bringing about successful
partnership working. This submission highlights four key factors
that should be considered alongside a clear commissioning process
to ensure that the right environment exists to successfully harness
third sector organisations in delivering public services—the
four factors are ensuring the third sector is fit for purpose,
performance management, incentivising the third sector, and scale
and capacity.
Enabling the third sector to become fit for purpose
17. To be a viable choice for citizens in
an increasingly contestable public service marketplace, third
sector organisations must undertake both an organisational and
cultural shift. They will be expected to become more professional
and to implement relevant business practices to ensure value for
money for the tax payer. To support this, government must make
professionalisation a key component of its third sector agenda,
setting out clear requirements around business management. At
the same time, the sector must adopt and embody a culture of professionalism,
accountability and transparency. It is only when government enables,
and third sector corresponds, that the third sector will be able
to:
— plan and manage its operations more
effectively;
— grow, building capacity and expanding
its service delivery to reach more people and meet government
demand;
— innovate, better meeting user needs
and further improving outcomes.
Performance management
18. Performance management is a key aspect
of the professionalisation required of the third sector. The third
sector has been subjected to different performance requirements
from a range of different funders, which are often more about
the funders' monitoring needs than the outcomes of an organisation's
work. Both the number and disparate nature of these monitoring
requirements also mean that it is difficult for the third sector
to take a focused approach to performance monitoring and improvement,
which in turn represents a challenge to the local government and
statutory bodies in commissioning services.
19. In order for commissioning to be effective,
the Government should establish a standardised but sector appropriate
set of indicators that enable the third sector to monitor their
own performance in terms of outcomes achieved, and how well they
are running internally. In this way, the third sector would be
able to implement a reliable, recognised performance management
framework that will help the drive to greater professionalisation.
20. Getting the full value from the third
sector means that a balanced set of performance criteria must
be used to both select and monitor the right partner for service
provision. This is essential if the "triple bottom line"
is to be accurately reflected in the commissioning process. To
get a true picture of performance, the Government needs to define
appropriate indicators to assess its providers across two core
criteria: outcomes achieved and cost of service delivery.
21. In terms of outcomes, indicators are
required which focus on social capital improvements (such as increased
wellbeing of users and attitudes towards the safety of a community)
and short term self-reported outcomes from users (eg numbers back
in work or numbers who exercise three times a week), rather than
the long term indicators of improvements currently measured and
tracked, but which are difficult to link directly to the work
of an individual organisation.
22. In terms of costs, the selected indicator
needs to reflect the total cost of delivery for the third sector,
that is, reflecting full cost recovery across service delivery,
overheads, management, training and research, and development
costs. Bringing these elements together to measure cost effectiveness
is particularly challenging in the third sector. For example,
government must recognise both the challenges and benefits of
working with volunteers, which might actually increase the cost
base of a third sector organisation, rather than decrease it.
Indeed, it is important that the third sector is not seen as the
"cheaper" option, but instead value for money is recognised
through the wider social and environmental impact it achieves.
Therefore, using an accurate cost per user as a performance measure
is essential to both reflecting the true work involved in delivering
third sector outcomes, while also giving an indication of the
reach of the service provided.
23. It is also important that whatever model
or structure the Government selects for regional and local levels,
it does not result in over-regulation of the third sector. This
is why we have suggested "outcomes achieved" and "cost
of service delivery" as the two core indicators which local
government and statutory bodies should use to assess its providers,
which would form part of the performance management framework.
Commissioning bodies cannot expect to have sight of the full performance
management framework of the third sector as it would a mainstreamed
organisation—third sector organisations need to retain management
independence, as occurs in existing private sector contracting
relationships. This is why it is important for government to provide
the framework for performance management to the third sector,
as a guarantee of good practice in performance management, rather
than seeking to monitor across the whole of the sector's performance.
Placing an emphasis on good performance management encourages
transparency and accountability in both government and the third
sector, while at the same time, helping to build open relationships
and driving efficiencies through the streamlining of evaluation
and monitoring, all ultimately leading to better achievement of
outcomes.
Incentivising the third sector
24. While the links between the Government's
drive to provide more cost effective and accessible services and
the increased focus on involvement of the third sector are evident,
there is nevertheless a need for central government to ensure
that local statutory bodies play an active role in creating the
right environment for the sector to truly flourish. The third
sector is prime for a move beyond mere additionality into playing
a vital developmental role for public service provision. For example,
entrepreneurship is an essential part of the third sector, driving
innovation which will lead, in the mid and long term, to continuous
improvement in social outcomes. The work of ECT group embodies
this.
25. ECT is one of the largest not-for-profit
waste organisations in the UK and is committed to the triple bottom
line, incorporating social responsibility, environmental sustainability
and economic viability into all that it does. However, ECT Group's
experience of bidding for government contracts has been a difficult
one, with local authorities seemingly favouring private sector
firms that have more negotiating clout and financial flexibility
to accommodate their terms and conditions. What the ECT Group's
experience demonstrates is that the Government must not only create
a clear and robust commissioning framework that is equitable to
all potential providers, it must create a landscape in which third
sector organisations can take risks in the way they meet user's
needs, without compromising their chances of gaining contracts.
Through the ECT Group securing the contract for integrated waste
disposal in the London Borough of Ealing, it was helping to create
social and economic value for numerous constituencies. By combining
creative thinking and innovative business practices, local communities
are experiencing an increased sense of well-being from the environmental
benefits of recycling and effective waste disposal; the Borough
of Ealing, on the other hand, meets its waste disposal targets
and gain political capital through the provision of cost-effective
services to satisfied residents.
Scale and capacity
26. While the sector has grown significantly,
the recent rise in the number of charities, community organisations
and social enterprises has not always led to an appropriate increase
in scale and capacity. As such, both of these now represent clear
priorities for the sector if it is to become a key delivery partner
of the Government. There are multiple ways in which the Government
can help the third sector augment both scale and capacity. First
of all, government can extend initiatives such as "Together
We Can", by further involving the local community in the
development and delivery of services. This brings multiple advantages
to both the Government and the sector. By being steeped in their
local communities, third sector organisations can provide a bridge
between the Government and the citizen in the processes of double
devolution from central government, through to regional/local
government and finally to the citizens themselves. Involving the
local community plays to the strengths of third sector organisations,
helping to build social capital. Involving the local community
also means the third sector has a large potential workforce at
its disposal that is brimming with local knowledge, but which
also allows them to strike the optimum workforce mix for meeting
government standards and delivering the services that are needed
to the places and people who need them in the most cost-effective
way.
27. Collaborating with others, be they private
sector organisations or statutory bodies, is crucial to building
scale. Joined up working in local government through, for instance,
joint commissioning between health and social services, is a good
means by which to encourage collaboration and partnership in providers.
For example, the Healthy 4 Life Healthy Living Centre works in
close and formalised partnerships with three other organisations
so that they can meet the demands of joint commissioning and deliver
more and better public health services to a larger constituency
in Leeds.
28. Another instance of policy encouraging
partnership working is evident in Hackney, East London. Primary
care in the borough of Hackney went through a shake-up when approximately
50 GPs came together to form a social enterprise called East London
Integrate Care (Elic). Elic was formed to harness the collective
will of GPs to engage in Practiced Based Commissioning of health
services, and was intended to streamline the process by which
such commissioning take place. In practice, what Elic will achieve
is the enactment of government policy in an efficient manner,
the devolving of service procurement decisions from centralised
bodies such as Primary Care Trusts to front-line workers like
GPs and nurses, and the involvement of the citizen/patient in
his or her own care through the practice of choice.
29. Finally, government and statutory bodies
must be open to the unique ways of working, sharing and learning
that take place in the third sector when commissioning services.
It is often the case that the ways of working within the sector
are intimately bound up with the creation of social and economic
value. For instance, the third sector is overwhelmingly defined
by the tenet of non-profit, where profits, monetary or otherwise
are reinvested back into individual organisations, the sector
and communities themselves. One way in which this reinvestment
occurs is through stewardship—where organisations mentor
each other and actively share resources. Cuckoo Lane is a social
enterprise that provides GP services in West London that is being
helped by the more experienced ECT Group. Because ECT focuses
on the business side of the practice—such as accountancy
and HR—it has freed up frontline workers such as nurses
to deal with over 70% of the complaints that come through the
door, demonstrating that there are clear benefits to be derived
from managed stewardship.
CONCLUSION
30. For the Government to fully harness
the potential of the third sector to help achieve positive outcomes
and to make the choice and devolution agendas tangible requires
that it recognises and plays its vital role as enabler. In practice
this means a willingness to change how it operates on a day to
day basis—to effect organisational change where necessary,
engage in knowledge sharing and create a robust and fair commissioning
process. As for the third sector, it must mobilise itself in order
to drive increased professionalisation and attain higher standards
so that it can compete in a world of contestability with vigour
and a commitment to excellence.
31. It is only when the appropriate balance
is struck between what the Government must do and how the sector
must respond that both—and by extension citizens—will
profit from the benefits that joint working between the Government
and the third sector promises. There are significant synergies
to be gained from the interaction of the third sector, the private
sector and the statutory sector. The Government can set the structure
and environment into which the third sector brings its values
and user-focused approach, while the private sector can be accessed
for its proven business practices. All parties have a vital role
to play in helping to ensure the third sector can play its full
part in the delivery of quality public services.
April 2007
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