Memorandum from Leonard Cheshire
In each instance below we are answering the
questions from our specific perspective as a provider of social
care services often contracted from local authorities.
1. What are the benefits of contestabilty
to the users of public services?
(a) Have services which have been transferred
to third sector organisations shown improvements in quality?
Leonard Cheshire provides a range of directly
contracted commissioned services from local authorities across
the UK. These services, statutory in nature (eg 1948 National
Assistance Act, 1990 Community Care Act etc), are based upon an
assessment of an individual disabled person's social care needs
and costed/funded accordingly. Leonard Cheshire uses its voluntary
income, judiciously, to supplement—not subsidise—these
services where appropriate thereby making them of greater value
to the individual beneficiary than if they had been provided directly
by the commissioning authority. An example of such a benefit is
the provision of advocacy services—vital in supporting disabled
people to attain independence. This provides a distinct "added
value" and a greater quality of service provision.
(b) Is loss of accountability a threat of
commissioning services? If so, how can this best be managed?
No. We remain fully accountable to the commissioning
local authority, and ultimately therefore to its elected members
for the effective and legal delivery of services they contract
from us. In addition we also are accountable to a range of external
regulatory bodies for the effective and safe delivery of these
services, notably the Health & Safety Executive, the Commission
for Social Care Inspection and the General Social Care Council.
Recent legal judgements regarding where responsibility lies for
legislation such as the Human Rights Act clearly indicate that
the commissioning authority retains responsibility to users of
services for their rights even though services are being provided
by third parties. Critically, we are accountable to the people
who use our services, formally though established complaints procedures
and informally through forums and user focussed initiatives which
are designed to ensure people who use our services are able to
shape and influence the style and nature of services commissioned
and received.
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?
Yes. In 2001 Stuart Etherington, chief executive
of NCVO, cited polling evidence which showed six out of 10 people
agreed that specialist not-for-profit organisations are better
placed to deliver many public services than profit-making businesses.[155]
A more specific indicator is the published view
of the Commission for Social Care Inspection (CSCI) that social
care services provided by the third sector are consistently of
greater quality (against the National Care Standards) than those
provided by the statutory and private sectors. In the "State
of Social Care in England 2005-06" report, published in December
2006, the CSCI found that in all sectors of social care provision—including
residential care, nursing care, older people's services, services
for younger adults and children's services—voluntary sector
providers were meeting a greater percentage of their published
standards than either the private or public sectors.
Leonard Cheshire can also pass on anecdotal
evidence from our direct experience when tendering for contracts.
We were, for example, recently informed by a shire authority that
where a service was previously provided by a third sector organisation
and then moves to the private sector, those services are less
popular with service users. Anecdotally, we are also aware that
there is sometimes resistance to moving some public services away
from the public sector—irrespective of the alternatives
on offer, based on an inherent resistance to a change in service
provider.
(b) Is there evidence of demand for more services
to be provided by the third sector? If so, who from?
There is already substantial contracting out
of services within the social care sector. Whist the public service
reform agenda suggests a growing need and demand for a greater
externalisation of public services, Leonard Cheshire has not detected
any particular current shift towards increasing the degree of
contracting out across the social care sector. This however may
be due to the new rules on TUPE which could negate the financial
incentive for local authorities to externalise more of their services,
rather than through any policy intention.
(c) Do public services provided by the third
sector more accurately reflect the changing needs of those that
use them?
Yes, very much so. Increasingly government policy
intentions in adult social care have focused on increasing the
involvement and choice of disabled people—for example through
the public service reform objectives and the outcome indicators
in both the Social Care Green Paper and the Health White Paper
concerning user choice and independence. This drive towards choice
and user-involvement provides a strong platform for the third
sector to deliver services which have great appeal to individual
disabled people.
Two factors distinct to the third sector underpin
this. Firstly, voluntary income can and is used to lever in essential
facilitating ancillary services, such as advocacy and personal
development which can help to realise these policy intentions.
A good example of this is the Government's stated policy aim of
drastically increasing the level of take-up of Direct Payments
by disabled people. It is widely accepted that one of the reasons
for the current low level of take-up is the paucity of advocacy
and brokerage services—which the third sector is well placed
to deliver. Secondly, the third sector's values and culture resonate
strongly with service users—a blend of mutual trust and
a good practice base underpins a true partnership approach to
service planning and delivery. In addition this relationship is
also used to influence commissioners—either on an individual
basis or in terms of overall commissioning plans/priorities/methodologies.
(d) Is there evidence that contracting to
the third sector leads to greater scope for innovation in public
service delivery?
The third sector has always been known and valued
for innovation; to some extent this is constrained in public service
contracting by the rigid approach of commissioners, including
a predominance of input rather than outcome measurement in contract
performance assessment, a more flexible and open approach by commissioners
would therefore be needed to take advantage of the real scope
for innovation that the third sector can clearly bring. To achieve
such results third sector providers need to be highly adept contract
negotiators—and such skills are not always available throughout
the sector. Ensuring that the sector can achieve fair and equitable
contracting results that afford the flexibility to innovate is
a key factor in ensuring that third sector delivery of public
services will be effective.
3. Does commissioning benefit the third sector?
(a) Will contractual relationships with the
state improve stability within the third sector?
It can do. Full cost contracts for reasonable
time periods can give the sector the security it needs so that
it can take risks and innovate. The income stream can help the
sector to meet some overhead costs and employ experienced and
knowledgeable staff to bring capacity and contribute over and
above the actual delivery of the contract. A key issue here is
what is meant by "contractual relationships". A key
opportunity afforded by working with the third sector is in the
sharing of a distinct set of values, unencumbered by a separate
duty to shareholders. This enables a different form of contractual
relationship to operate—this has been called "relational
contracting" to distinguish it from the very formal arms-length
contracting which is commonly used. There is a particular logic
in using this sort of approach for services which are relational
by nature, ie involve the direct delivery of care and support.
(b) Will close involvement with service provision
prevent third sector organisations retaining the ability to be
critical of government?
It is important to understand the nature of
different types of funding from the state, and from different
parts of the state. Social care provision is, in essence, based
on the assessed needs of individuals—providing this kind
of service does not in any way preclude a charity from challenging
or criticising government policies. If, however, funding is received
directly from central government, and is ring-fenced or tagged
to a particular policy initiative then challenging that policy
may become difficult for a charity. It is important to remember,
however, that charities should be governed by their charitable
purpose—and they should not, through their services, support
a policy that runs counter to this purpose. The broad issues about
charities' ability to both work with and be critical of government
was well and starkly articulated in the Charity Commission's recent
report "Stand and Deliver".
Leonard Cheshire's funding and contracting relationships
are predominantly with local authorities. In the main, any criticism
we might make about local government would be to central government
about their levels of funding for social care services. This has
the effect of us aligning ourselves with a case that local government
itself often makes to central government. Recent exchanges between
the Local Government Association and central government illustrate
this. In 2006, the Local Government Association warned that, without
extra central government funding, by 2009 councils will only be
able to support those individuals with "substantial"
or "critical" needs, leaving 370,000 individuals without
support.[156]
It is also important to remember that the purpose
of criticising government or another public body would be to change
the policies of that body. Leonard Cheshire would not commit to
running a service that we did not think fell within our charitable
purpose. We would also always retain the right to challenge commissioners
on the application of policies—we have in the past, and
will continue, to intercede in support of service users, where
we are concerned about a commissioner's application of policies.
In this case our ability to challenge and change practice can
actually be enhanced by working directly with commissioners.
The ability to continue to challenge government
could potentially be reduced if a charity's ability to survive
was dependant on income from a single or narrow range of source(s).
In Leonard Cheshire's case, no one authority (central or local)
accounts for more than 8% of our income. Thus we can "afford"
to continue to challenge any public sector body with whom we contract,
without jeopardising our future or compromising our commitment
to the people who use our services.
A major advantage of being a service provider
at a local level is the knowledge and feedback we get from working
directly with disabled people. This makes our responses, and where
necessary our challenges, to government (central and local) informed
and evidence based. This is an added value as it positions the
organisation as a conduit of end service user's views—a
key desired outcome of government public service policy.
(c) Is there a risk that the service providers
will become increasingly bureaucratic?
It is important for third sector providers to
keep the right balance between their effort to secure and deliver
public service contracts and their wider charitable activities.
Yes, the processes and demands of providing publicly funded services
can lead to a more bureaucratic approach and the development of
an internal infrastructure which shifts the balance within an
individual organisation. However the bureaucracy stems principally
from the overly prescriptive requirements of the commissioner
and the myriad of associated regulation, some of which can be
clear duplication, rather than the act of providing the services
per se.
A key issue here is the attitude to risk. Particularly
in the field of providing care to adult services users, there
can be a presumption that people do not have the ability to determine
choices for themselves. This combines with a dominant pressure
in most formal contracting being the reduction (even elimination)
of risk. Ensuring that such contractual obligations, and the bureaucracy
that often accompanies them, do not interfere with policies that
promote independence and choice can be difficult. The adoption
of the relational approach referred to above allows discussion
and sharing of risk in a different way hopefully more responsive
to the needs of individual people.
(d) Is there a risk that third sector organisations
will lose their independence, their identity or their distinctive
ethos?
Potentially, yes. The critical issue here is
identity. As we explained above, Leonard Cheshire's ability to
continue criticising central and local government is largely based
on the circumstances of its funding relationships but we accept
that these are not universally shared across the wider sector
(although they largely are in the provision of contracted social
care services by the sector). What we have little control over
is the public's perceptions of our funding relationships with
central and local government—and independence from them.
As illustrated above, the contracted services we provide are based
on individual need and can be substantially enhanced by the deployment
of voluntary income—in addition to providing beneficiaries
with a range of wholly voluntary funded services. There is a responsibility
on the sector to articulate these issues.
Regarding ethos, the issue of mission drift
has been cited as a possible outcome of the sector delivering
public services. Third sector organisations need to be constantly
vigilant that whatever services they agree to provide are of benefit
to their beneficiaries and can be readily identified with their
charitable objectives. There is clearly a role here for regulators
such as the Charity Commission to hold third sector organisations
to account where appropriate.
(e) Might the third sector become polarised
between large service providing organisations and more radical
groups? If so, would this matter?
Yes some polarisation could occur—but
no, it doesn't matter as long as each third sector organisation
is clear for itself (and accountable through the Charity Commission)
about how it is delivering its charitable objectives. Some may
do that, at least in part, through service provision, some may
not. Traditionally if there is a need for people to campaign,
influence, innovate or provide services, the third sector has
evolved to meet this need through existing or new organisations.
There is no reason to believe that public sector contracting will
inhibit these well-established and natural processes. One concern
sometimes aired is that that the sector may become differentiated
into a predominantly service providing sector and one that focussed
more on issues such as advocacy and campaigning. There is however
good evidence that charities can do both—Leonard Cheshire
and Scope are good examples of this and the dual benefits of both
these approaches in a single organisation are recognised and enjoyed
by their beneficiaries.
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?
The state will ultimately retain control through
contractual arrangements—as it does, and has done for some
time, for a substantial part of what it does on behalf of its
citizens. The Government is currently encouraging public service
providers to give greater control to service users themselves
through encouraging a plurality of providers, including the third
sector, which will increase choice for service users.
(b) What capacity will the state need to ensure
that it can be an intelligent customer of services?
The state needs to learn how to work with partner
providers to be clear about outcome delivery and reasonable measures
to monitor this. It also needs to recognise that, despite its
experience and power, it doesn't always know best and needs to
listen principally to service users, but also to its agents who
are working directly with service users to meet their needs. A
principle capacity that the state needs to create is the capacity
to involve the third sector at the "service design/specification"
stage thus ensuring that good practice and knowledge/expertise
from one geographical area can be learnt and practised elsewhere—in
essence this boils down to the effective cross fertilisation of
quality practices and ideas. The state also needs to satisfy itself,
possibly through the appropriate regulatory authorities, that
whoever is commissioning services is doing so reasonably—putting
enough resources into contracts in order to get a quality result
in terms of outcomes for service users.
(c) How is duplication of effort in order
to monitor and manage contracts best avoided?
There are a number of things that can be done
to avoid such duplication:
— Standardised specifications and forms
of contract.
— Shared commissioning (local authorities
on regional basis/with PCTs/GP Practices/central government etc).
— The development of trust and confidence
leading to true partnership rather than "contract compliance".
— A stronger focus on outcomes—driven
by service users—rather than inputs.
— The creation of a strategic partnership
commissioner to ensure that any commitment to potential new services
continues should the current commissioner role change for some
reason.
— The creation of a three year purchasing
requirement within any given locality.
(d) How good is the state at managing bidding
processes and defining contractual obligations when commissioning
services?
It is getting better—but there is still
a long way to go. For example, there needs to be better planning
for and engagement with potential providers prior to the procurement
process starting together with more realistic timescales for the
returns of bids. There needs to be a greater willingness to contract
in response to provider proposals, providing this clearly meets
identified needs and service user's wishes without going through
a formal tendering process. Over-formal tendering processes and
an over-sensitivity to inputs rather than outcomes can inhibit
innovation.
5. What are the financial implications of
providing services through the third sector compared with directly
provided state services?
— Cross boundary developments.
— Repatriation of individuals (out
of county placements).
— Speed of delivery service solutions
can be created far more speedily within the third sector as the
sector is able to draw on additional sources of funding quickly
to create solutions.
(a) Are services cheaper to provide?
There is evidence to show that the contracting
out of services can lead to cost reductions through increased
competition. Such reductions must not come, however, through denying
providers with "full cost recovery" for their services,
and through an expectation of voluntary sector providers subsidising
statutory services with voluntary income. It is also vitally important
that commissioners retain a clear focus on outcomes not just cost—this
is hugely important in ensuring that quality of provision and
added value is given sufficient weight in tendering decisions.
(b) Are there "hidden costs" such
as contract oversight?
There are inevitably some costs to public authorities
of contracting out services but a more mature approach to contract
management and less "bean counting" would make these
manageable—and more than offset by lower overheads together
with the added value and flexible/innovative approach third sector
brings to such contracts.
(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?
It would be inappropriate to have an in-built
"weighting" factor to favour any particular sector—"competitive
neutrality" should be the fundamental approach. However,
contract decisions should not be solely price determined—and,
despite protestations to the contrary, in many cases they clearly
are. Commissioners should determine a "cost envelope"
within which they will award a contract and then make a balanced
decision taking account of quality of service offered, outcomes
for service users and any added value offered. A key issue for
the third sector however is the absence of a "level playing"
field when tendering for services. There are distinct differentials
between say the third sector and public service providers over
VAT liabilities and employment benefits such as key worker status.
These differentials disadvantage the third sector in its ability
to compete equally both on price and ability to recruit staff.
6. Are the costs and benefits to the state
the same when commissioned from the third and private sectors?
No. We believe that there are aspects to services
provided by the third sector which provide benefits that are not
evident in those provided by the private sector. The private sector
is driven primarily by growth, economies of scale and a need to
provide a return to shareholders. If the public sector is moving
towards greater contracting with the private sector, we believe
that this will generate amorphous, generic contracts which give
scale that the sector requires. This could lead to less tailored,
person centred services.
The third sector provides a range of unique
benefits:
— A strong empathy with beneficiaries
in terms of shared value base.
— Demonstrable degrees of engagement
with beneficiaries in terms of strategic planning and governance
arrangements.
— Beneficiaries have a strong level
of trust in third sector organisations they are involved with—seeing
them as both independent of the state or commercial interests.
— The value of the input volunteers
provide to third sector organisations is substantial, providing
extra capacity and value to beneficiaries at no extra cost.
— The "whole price" of fees
are translated into benefit with no responsibilities to shareholders.
— The use of voluntary income enables
the delivery of innovative related services in support of the
organisations charitable objectives.
— The third sector has strong traditions
of developing and providing services in response to localised
and individual needs.
March 2007
155 "Charities warn Blair about cheap service",
The Guardian, 22/10/2001. Back
156
"Meeting the Challenges Ahead", Local Government Association,
Autumn 2006. Back
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