Memorandum from Swift Health Promotions
Further to the Committee's deliberations on
the role of the third sector in providing directly commissioned
services, the following evidence is submitted in response to the
specific questions raised.
A. EXECUTIVE
SUMMARY
(i) The third sector continues to have a key role in
the development and delivery of public services.
(ii) The raison d'être of third sector
organisations should not be compromised by the commissioning process.
Contracted services are distinct and it behoves both parties to
protect brand integrity.
(iii) Larger, representative third sector
organisations could be commissioned to manage local service delivery,
with smaller organisations being sub-contracted accordingly.
B. BRIEF INTRODUCTION
TO SUBMITTER
(i) Julia Hobbs MSc, BA, FRSH is a Trustee of Denbighshire
Voluntary Services Council and owner of a third sector consultancy
business—Swift Health Promotions.
(ii) In a career spanning 20 years, she
worked in NHS strategic management, prior to taking up a charity
chief executive post. Through Swift Health Promotions, she is
working with the Director General of Help the Aged to promote
outcome-focused, integrated care commissioning for older people.
She is a past winner of an UnLtd award for social enterprise.
(iii) Her particular expertise is in health
service commissioning, public health issues, including Health
Impact Assessment and charity management. These perspectives inform
the submission of this evidence.
C. FACTUAL INFORMATION—RESPONSES
TO QUESTIONS
1. What are the benefits of contestability
to the users of public services?
Contestability should ensure the seamless delivery
of needs-matched public services to users. If the competitive
programme is well managed and focused on outcomes, numerous enhancements
to service delivery can be sought, thus:
— Choice, where choice is desirable
and an appropriate commodity.
— Range, where provider capacity is
the only restriction to meeting user needs.
— High quality standards, assessed
through the efficiency and effectiveness domains of evidence-based
best-practice, customer satisfaction, financial control and risk
management.
— Geographical convenience. Though
local provision is always desirable, good transport links or an
integrated travel service can lessen the burden of distance.
(a) Have services which have been transferred
to third sector organisations shown improvements in quality?
This entirely depends on the nature and scope
of quality measurement and the baseline from which quality is
assessed. For third sector organisations with specialist interests,
products and services are restricted to the focus of expertise.
In order to compete, standards are rigidly monitored to drive
the ongoing process of quality improvement. For third sector organisations
with generic interests, the range of products and services brought
to market can appear unstructured and haphazard. Nevertheless,
the quality drivers revolve around offering a user experience
of the services or products in a manner that surpasses expectations.
Both quality impacts have their place. The highest standards are
achievable when an organisation has a specialist interest in a
client group and is sensitive to the changing requirements of
this cohort, adapting products and services accordingly.
(b) Is loss of accountability a threat of
commissioning services? If so, how can this best be managed?
Responsibility can be delegated, but accountability
is retained. The commissioning process can establish this delineation
in consultation with its contractors. Please see question 4c for
an example of how responsibility and accountability can streamline
the contracting process.
2. Is the third sector more likely to provide
better public services than the state or the private sector?
Service provision should be seamless; that is
one of the goals of contestability.
(a) Is there evidence that where services
are provided by the third sector, that they are popular with those
that use them?
Not for profit organisations tend to be visionary
in outlook and values-driven in nature. While the vision supplies
the organisational destination, it is the values that inform their
brand. In many respects, values provide the "feel good factor"
and they can be as simple as reliability, trustworthiness and
politeness. In customer satisfaction terms, these add to a positive
experience. Anecdotal evidence almost always reflects the evidence
gathered in service evaluations—that the services are consistently
and persistently popular. The validity of the data is open to
interpretation, as some people make positive comments to express
gratitude for a service rendered even when the delivery was poor.
(b) Is there evidence of demand for more services
to be provided by the third sector? If so, who from?
The best evidence of demand for more services
to be provided by the third sector is the swamping of existing
services. Unfortunately, commissioners have been slow to recognise
that demand-management processes by service providers can be translated
as unmet needs. The data might be unrecorded, as there are no
financial incentives to collate information on unmet needs.
(c) Do public services provided by the third
sector more accurately reflect the changing needs of those that
use them?
Please refer to the notes for 1(a). Not for
profit organisations are committed to changing needs and in many
cases are able to respond swiftly. Clearly, rescue organisations
thrive in emergencies, but they are not unique in their dynamism.
They tend to be client-focused and there are fewer operational
and political limitations on the help and support they can provide.
Decision-making is rapid, especially during crises. Furthermore,
not for profit organisations can rely on the passion, enthusiasm,
generosity of spirit and entrepreneurialism of their workforce
(paid or unpaid) in identifying and meeting changing needs.
(d) Is there evidence that contracting to
the third sector leads to greater scope for innovation in public
service delivery?
(i) The public service dilemma in contracting
with the third sector arises from their relative strategic status.
Public sector strategy is unyielding, in that its budgets, plans
and commitments are entirely fixed. Whatever "innovation"
demands are placed on the sector, there is no escaping the financial,
structural and operational rigidity through which services can
be contracted or delivered. Despite the near permanence of political
restructuring and direction, public sector organisations are rooted
in their welfare state history and the expectation that what was
done then can and will be done today. For all its ambitions, the
public sector is largely driven by endless operational objectives.
Targets-based performance monitoring and management are recognisable
manifestations of this culture.
(ii) Third sector strategy, in contrast,
is mutable. Though historically they emerged in response to the
cause or symptoms of crisis most voluntary organisations, charities
and social enterprises are experimental in nature and future-focused
in direction. As the environment changes, the successful organisations
adapt. In the process, many have made the painful decisions required
to meet current and future needs. The key difference is that they
have acted upon the decisions by making the changes.
(iii) Regrettably, few commissioning organisations
have managed to build a flexibility clause into their contracts,
so not-for-profit organisations have been unable to meet changing
needs within budget. Some organisations are able to meet these
needs through their own fundraising efforts, if allowed. It is
more likely that they will be penalised for extending beyond their
contractual obligations, than rewarded for their creativity, adaptability
and needs-sensitivity.
(iv) Until this aspect of the commissioning
process can be reconciled, the scope for innovation is small and
voluntary and charitable organisations will continue to push boundaries
without public sector backing.
3. Does commissioning benefit the third sector?
A well-managed, consultative commissioning process
can bring enormous benefits to the customer or recipients of third
sector services. Even with full cost recovery contracts, compensation
for the provision of public services is partial. This is not unreasonable,
as it allows third sector organisations to continue their extraneous
activities without conflicts of interest.
(a) Will contractual relationships with the
state improve stability within the third sector?
(i) The provision of public services should
fall outside of, though aligned to, the day-to-day functioning
of the third sector. Dependence on the public sector for overall
stability should be a cause for concern by both parties, as independence
is the key to ensuring diversity in service provision.
(ii) The destabilising effects of contractual
relationships are linked to commissioner short-termism and delayed
decision-making and to the failure to ensure full cost recovery
by either or both parties.
(b) Will close involvement with service provision
prevent third sector organisations retaining the ability to be
critical of government?
(i) The raison d'être of third sector
organisations cannot be compromised by a contractual arrangement
to deliver public services. Drawing attention to failures in government
policy and campaigning for improvements are essential facets of
representative and research-based organisations.
(ii) Not all third sector organisations
will seek to provide public sector services. Those that do will
be subject to rigorous monitoring to ensure they deliver the required
outcomes. Even the most radical and critical third sector campaign
groups, if they so choose, can bid to provide services. Their
ability to generate desirable results could provide the impetus
for major change in government policy.
(c) Is there a risk that the service providers
will become increasingly bureaucratic?
(i) Please see question 4(c)(i). Increasing
bureaucracy is a feature of modern life and it is right that all
organisations that provide a welfare service should adhere to
like employment, financial, technical/clinical, risk management
and governance standards.
(ii) It is within the gift of commissioners
to minimise the extent of unnecessary or wasteful bureaucracy
on third sector organisations. Likewise, it behoves third sector
organisations to manage their internal processes to provide resource-efficient
services. Overall, it is more efficient to contract with large
representative organisations who can then subcontract with smaller
and local providers.
(d) Is there a risk that third sector organisations
will lose their independence, their identity or their distinctive
ethos?
(i) Third sector organisations need to have
a strong identity and brand awareness in order to survive. This
is not the same as recognition-awareness. Brand awareness means
an internal understanding of the organisation's vision, mission,
goals and ethos. It also reflects operational standards, campaign
priorities and even a way of life for stakeholders. There is no
reason why these should be sacrificed by public sector commissioning.
(ii) There is one exception; third sector
organisations that exist exclusively to deliver publicly-funded
programmes. Despite appearances, they are already dependent but
they have much to lose as the public sector itself changes.
(e) Might the third sector become polarised
between large service providing organisations and more radical
groups? If so, would this matter?
Please see 3(b)(ii). In many respects, this
polarisation already exists and it is entirely appropriate that
it should do so. Yesterday's radicals are today's philanthropists;
today's radicals could well be tomorrow's saviours. Radical groups
remind us of ever-present concerns; they bring discomfort in their
critiques of service providers and they force a level of introspection
that slowly delivers change. There is no reason why large, service
providing organisations should not retain their own radical edge.
Public sector contracts are not a substitute for organisational
purpose.
4. Does commissioning services from the third
sector have any benefits for the state?
Many public sector leaders have introduced the
concepts of vision and values into their organisations, with a
near-universal lack of success. They might motivate staff and
help board members feel connected, but ultimately the public sector
is at the mercy of politics and therefore lacks the self-determination
inherent in the third sector. However, the public sector can benefit
from third sector philosophy.
(a) Does the state risk losing control of
service delivery in a way which might be damaging?
(i) Damaging to whom or what? The client?
The third sector? The public sector? Government? The population?
The state has long since relinquished control of many services;
it is part of the natural evolution of change.
(ii) Risk is manageable; containing risk
is not. The public sector has a duty to meet the needs of the
population in ways that are fair, equitable, cost-effective and
fit for purpose. It is only through these means that risk can
be minimised.
(iii) Third sector organisations are similarly
motivated, with the added dimension that they must attract public
donations. It is not in their interests to damage brand status
through the provision of poor services.
(b) What capacity will the state need to ensure
that it can be an intelligent customer of services?
(i) It is imperative that the state can
agree clear, strategic performance indicators with third sector
organisations. It has the capacity—and indeed, the necessary
culture—to achieve this goal. The state can and should determine
benchmarks for assessing trends, successes and shortfalls in meeting
objectives and these must be practical, reliable, repeatable and
replicable. Performance indicators have to be valid, measuring
only the outcomes and impacts they are intended to measure. Above
all, they should be sensitive to change.
(ii) In order to be an intelligent customer
of services, the romance with targets has to end. Target-setting
is rarely appropriate, other than for simple, mechanical processes.
In public service, a multitude of human variables can confound
the targets issue and for the health and care sectors in particular,
placing target achievement ahead of all other factors is ethically
burdensome.
(c) How is duplication of effort in order
to monitor and manage contracts best avoided?
(i) There is considerable merit in letting
contracts to third sector organisations that offer economies of
scale. In the voluntary and charity sectors, the enormous diversity
of organisations can be overwhelming and the competition for scarce
resources is wasteful to all parties. The commissioning cycle
can be a bureaucratic nightmare for smaller organisations as they
pitch against their natural allies and expend time, energy and
money they can ill afford, in the hope of gaining a modest return.
Having set clear performance indicators, the state should invite
national voluntary and charity sector organisations to submit
their proposals to deliver outcomes in partnership with stakeholders.
Small or locally-based organisations are not excluded from this
process, as the onus is on the national organisations to sub-contract
aspects of product or service delivery to ensure full coverage.
(ii) For example, Help the Aged could be
commissioned to provide all products and services that enable
older people to live independently in their own home within one
or more regions. The range of products might include assistive
technology and home aids, while the range of services might include
home and garden maintenance, falls prevention advice, visiting
and befriending schemes, hospital at home and end of life care
at home. In accepting responsibility for monitoring and managing
this contract, Help the Aged would also be accountable for its
effective delivery by sub-contractors. In the first instance,
paperwork would inevitably increase, though in the longer term
duplication of effort would be minimised if not eradicated.
(iii) A key advantage of this approach is
that the brand integrity of the individual sub-contractors would
be protected and maintained, though clearly poor performance or
low quality might put the sub-contractor at risk.
(d) How good is the state at managing bidding
processes and defining contractual obligations when commissioning
services?
(i) Bidding is onerous and contractual obligations
are defined too early within the commissioning process. Commissioners
have much to learn from the voluntary and charitable organisations
that seek to provide state-funded services. They have considerable
experience in filling gaps left by inadequate public sector provision.
They consult widely with their stakeholders and they understand
the priorities, needs and expectations of their consumers.
(ii) Commissioners have geographical and
philosophical priorities that aren't necessarily at odds with
other sectors. Unfortunately, third sector organisations often
find themselves competing for an identified budget allocation
for the sector, ring-fenced or otherwise. This sector-oriented
budget allocation is contrary to needs-led purchasing, yet it
is often the norm. This increases competition within defined sectors,
so for example, several dissimilar charities will vie for a share
of the pot. There will be winners and losers in that process.
However, the state should be commissioning on behalf of its population.
It is the needs of the people that should dictate commissioning,
not the business nous of available organisations.
5. What are the financial implications of
providing services through the third sector compared with directly
provided state services?
State service disinvestment is as immensely
unpopular as public sector wastefulness. The present pattern of
public sector provision is unsustainable, however, so something
has to change.
(a) Are services cheaper to provide?
It is not appropriate that third sector services
should be cheaper to provide; it is the cost-benefits that make
the difference, as briefly described in question 6.
(b) Are there "hidden costs" such
as contract oversight?
All contractual arrangements should be scrutinised
at the outset, to prevent or negate the effects of oversight.
Cost control is key and this should form part of a two-way process.
(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 a worthy goal but
is only achievable when access to public sector provision is unrestricted.
In the meantime, commissioners need to develop their capacity
to work flexibly with third sector partners in the pursuit of
service delivery excellence.
6. Are the costs and benefits to the state
the same when commissioned from the third and private sectors?
(i) The costs and benefits are different.
Third sector organisations are not motivated by profit, while
clearly the private sector has to make sizeable profits in order
to compete. Third sector providers are more likely to be trusted
by the general public—who, after all, pay for the services
they receive. Private organisations are less trusted, particularly
as there is a perception that they are a part of a drive to dismantle
the welfare state.
(ii) The private sector is capable of producing
high quality services, attaining excellent standards. These successes
are far less likely to receive the publicity afforded poor service
delivery, especially when that poor delivery is linked to individual
harm or suffering. Efficiency savings and service cuts in the
private sector tend to result in a downturn in quality and the
immediate withdrawal of provision to clients, while financial
rewards for shareholders and directors remain buoyant. Efficiency
savings and service cuts in the third sector tend to result in
the maintenance of quality for as long as possible, but with concomitant
cuts in working hours, salary or both. Volunteers are likely to
fill the shortfall, while donors are encouraged to dig deep. This
is wholly unfair, but reflects the sad reality.
(iii) As for benefits, third sector organisations
usually draw on an army of volunteers—an unpaid, skilled
workforce that at minimum wage levels would dramatically increase
the cost of public services. The third sector provides added value
in the form of specialist products, information, research data,
educational resources and training materials. It adds considerably
to the knowledge-base of society, including sponsoring academic
posts and drawing public and political attention to hidden issues
though lobbying and high-profile media and cause-marketing campaigns.
D. RECOMMENDATIONS
FOR ACTION
(i) That commissioning of integrated third sector services
becomes the responsibility of larger, representative third sector
organisations, in partnership with the public sector, where the
capacity and interest exists.
(ii) That commissioning of third sector
services is outcome-focused.
(iii) That commissioning of third sector
services is discrete from the usual strategic and operational
outputs of the organisation.
(iv) That commissioning of third sector
services rewards innovation, flexibility and exceptionally strong
performance in meeting needs.
February 2007
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