Memorandum from The Children's Trust
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?
Although it is hard to evidence whether third
sector organisations always deliver higher quality services, plurality
of choice has so far shown itself to be a good thing for the general
public/ service users.
Compared to the public sector the third sector
has experienced a greater degree of stability of purpose over
past years and has been subject to much less reorganisation. This
has meant that services have remained more stable for their client
groups.
(b) Is loss of accountability a threat of
commissioning services? If so, how can this best be managed?
2. Is the third sector more likely to provide
better public services than the state or the private sector?
The voluntary sector can play an important role
in cutting across the structures of public sector provision and
achieving an economy of scale. For example it would not be practical
for every local authority to provide special education for children
with profound and multiple difficulties within their area, because
the number of children who would use the service would be too
small. However a voluntary sector provider may well be in a better
position to provide such a service. At The Children's Trust we
work with over 80 local authorities to provide specialist services
that would be unrealistic (and costly) to replicate in their own
areas.
(a) Is there evidence that where services
are provided by the third sector, that they are popular with those
that use them?
Our own experience of providing services to
children with multiple disabilities and their families is that
the services themselves evaluate extremely well in that they meet
the needs of the client group. Our services are provided in very
few places in the UK, and the combination of services is unique.
We are therefore able to fill the gaps that exist in current public
sector provision, without inexperienced local authorities having
to attempt to do the same.
Third sector organisations often have their
roots in the local community and therefore may have more credibility
from this known association with users, as opposed to providers
within the state sector where the links may be more tenuous.
(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?
The third sector is more able to adapt and change
to meet the needs of its population. For example at The Children's
Trust we have been able to adapt our services to meet the ever-changing
complexity of the needs of children who use our services. An example
of this is the new service we have developed for children who
are technology dependent. Because we were able to use voluntary
income, we were able to set up a new service which helped to get
children home from hospital within the space of just 12 months.
As small or medium-sized service delivery organisations
charities such as ourselves are close to our service users and
their families and are therefore able to change and adapt services
to meet individual needs ensuring that we provide more of a personalised
service. This ability to respond quickly to changing needs is
something which is welcomed by our service users.
(d) Is there evidence that contracting to
the third sector leads to greater scope for innovation in public
service delivery?
We find that it is possible for us to use charitable
funds to "pump prime" new services that can then be
commissioned once they have proved that they work. The ability
for the voluntary sector to fundraise for such innovative projects
should not be underestimated.
The third sector, by providing such services,
is often able to take away the "headache" of providing
very specialist low incident high cost cases, which may be both
time consuming and costly for the public sector to provide, and
which usually result in poor satisfaction outcomes for service
users. As well as service users getting a better service which
accurately meets their needs, this also frees up time and expertise
within the public sector to concentrate on more general services
that they are well able to manage.
3. Does commissioning benefit the third sector?
(a) Will contractual relationships with the
state improve stability within the third sector?
A contractual relationship with the state can
help stability within the third sector, but only if the contracts
themselves are for longer than one year. If this is not the case
a service can find itself spending a great proportion of its time
pursuing future funding rather than being able to focus it efforts
on the needs of the service users. In addition a contractual relationship
will give third sector organisations confidence to plan for future
and free resource to focus on developing better services rather
than working hard simply to stay afloat.
(b) Will close involvement with service provision
prevent third sector organisations retaining the ability to be
critical of government?
No. At The Children's Trust we rely on the state
to fund the placements of children in our care. As the providers
often closest to service users it is vital that the third sector
remains able to advocate on behalf of these groups. There is no
reason for this to change unless the state sector chooses to put
punitive measures in contracts to prevent organisations from speaking
out.
(c) Is there a risk that the service providers
will become increasingly bureaucratic?
The systems for commissioning are already very
bureaucratic and there is clearly a risk that unless it is monitored
this situation may get worse. We have found that in order to meet
the increasing need for regulation and bureaucracy surrounding
contracts, our staffing has had to change accordingly—with
extra staff employed to help meet the need. However stronger contractual
relationships and more experience of commissioning by the public
sector would allow third sector organisations and the public sector
alike, to free up time which would help to redress this imbalance.
(d) Is there a risk that third sector organisations
will lose their independence, their identity or their distinctive
ethos?
We believe that one of the reasons many third
sector providers win state contracts is because of, not despite,
these very traits. As long as the third sector can demonstrate
its growing professionalism there should be no risk to its independence,
identity or distinctive ethos.
(e) Might the third sector become polarised
between large service providing organisations and more radical
groups? If so, would this matter?
Some might argue that there is already significant
polarisation within the third sector. For example in the children's
sector there are the "big boys" such as the NSPCC, NCH
and Barnardos versus the smaller, often more specialist providers.
The third sector itself needs to take responsibility, through
initiatives such as VCS engage to ensure that these bigger organisations
support a greater diversity of provision. The state sector in
turn needs to ensure that it considers both small and large organisations
when making commissioning decisions.
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?
Although handing over responsibility to the
third sector will naturally result in the loss of some degree
of control over the services themselves, the state plays a vital
role in the inspection and regulation regime and therefore should
not see itself as losing all control.
There is an argument that for some services,
such as health, a loss of control from the state side is not necessarily
a bad thing. Indeed it may allow clinicians and others to have
more of a say in service development, resulting in a service that
is both wanted and needed.
(b) What capacity will the state need to ensure
that it can be an intelligent customer of services?
Commissioners need to become familiar with the
services that they are commissioning and those that are available
to them. Without this expertise it will be impossible for them
to make informed purchasing and commissioning decisions.
The state should ensure that there are specialist
commissioners at a higher level, or covering wider geographical
areas to ensure that this expertise is used wisely and is affordable.
(c) How is duplication of effort in order
to monitor and manage contracts best avoided?
National contracts and quality standards would
help to reduce duplication of effort. These contracts may also
result in greater stability for third sector providers. Ensuring
that contracts are commissioned on a national or even regional
level would also mean that the commissioners themselves would
become more expert in the services they would be commissioning.
An example of this in practice is the current system of SEN Regional
Partnerships whereby local authorities work together to share
best practice.
(d) How good is the state at managing bidding
processes and defining contractual obligations when commissioning
services?
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?
No. In theory, with full cost recovery, services
should cost the state the same as from other providers.
One way costs could be brought down would be
through strategic alliances of charities, allowing them to pool
services such as HR. These consortium arrangements could be encouraged
by incentives such as such organisations not attracting VAT when
using such initiatives.
(b) Are there "hidden costs" such
as contract oversight?
For the third sector, inspection and regulation
are already huge burdens, both in terms of extra staff and the
employee time required to manage the contract arrangements. For
the state, the bureaucratic burdens will be there whether contracting
through outside providers in the third (or even private) sectors
or from within the state machine itself.
(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?
Competitive neutrality is an admirable goal
but for it to become a reality there would need to be an "amnesty"
whilst infrastructure is put into place to allow all organisations
to "compete" in the same way. The state would also have
to be careful to ensure that there is a level playing field and
not allow large, private organisations to enter the market by
offering special prices at entry level which then rise at a later
date. This would require a high degree of sophistication and expertise
on the part of commissioners.
6. Are the costs and benefits to the state
the same when commissioned from the third and private sectors?
The costs to the state should be the same whether
they use services commissioned from either third sector or private
sectors. The difference comes from the attitude and ethos of the
third sector which is much closer to its user group and does not
have to answer to shareholders. This can allow the third sector
to deliver many, perhaps less tangible, benefits to its service
users.
March 2007
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