Memorandum from Tom Levitt MP
The third sector has a long history of providing
public services. Ever since charities began, the voluntary collection
of funds to spend on services which make life better for those
in a state of suffering has been regarded as a "good thing"
and something to be encouraged. Even hundreds of years ago hospices
and hospitals were provided in this way, a hundred years ago it
was social housing and today it could be almost anything.
In that sense it is the public sector which
has arrived late at the feast. As it grew in power, reach and
wealth throughout the 20th century it became the dominant force;
taxation rather than charity became the embodiment of "from
each according to his means to each according to his needs".
We have passed through an era in which the swing
of the pendulum dictated that we could provide public services
without relying too heavily on the voluntary sector, though it
has never gone away.
Today there is a strong political belief both
within government and outside that what we can achieve when the
public and voluntary sectors work together is more than the sum
of its parts; that the third sector can bring mission qualities
to an enterprise that the monolithic state cannot nuance alone;
and that communities which at least influence, at best deliver
local services themselves are sustainable, cohesive and happier
than those that merely receive.
A marriage is therefore assumed: but the nature
of the dowry is proving a challenge. There are several bones of
contention:
Who decides what services are needed?
The public sector traditionally makes this decision,
with the occasional nod in the form of grant aid to local good
causes. Notable exceptions include, of course, guide dogs for
the blind and lifeboats, services in which there is no formal
public sector involvement.
Ultimately, no plan can be sufficiently comprehensive
to provide services to respond to each and every identifiable
need. The beauty of the third sector is that it can create and
evolve services organically in direct response to local need,
when necessary on a timescale the public services might regard
as unreasonably rapid.
Over the years various third sector organisations
have developed areas of expertise in service delivery. They have
grown in size and reputation as cost effective service providers
to meet various readily defined needs. The public sector has recognised
this and bought into it, literally. Health and social care, for
example, now account for a third of all the services provided
by the third sector.
A partnership of equals?
Despite heroic attempts through service level
agreements, compacts and even seats for volunteers on Local Strategic
Partnerships, we do not have anything like a partnership of equals
between public and voluntary sectors. The Local Government and
Public Involvement in Health Bill, currently before Parliament,
has the potential to address this.
The public sector has the last word on deciding
on the cost of a service. Of course it will often be possible
for a voluntary organisation to provide a service on a more cost-effective
basis (for the commissioner) than the comparable service could
be obtained from a private source, even if it were available.
But the commissioner is not looking for a service identical to
that on offer from `traditional' sources; whilst from the provider's
point of view the service should both reflect the organisation's
mission and have the flexibility to bring new benefits to each
individual service user. With increasing professionalism in the
sector and the rise of social enterprises, greater competition
amongst providers is inevitable.
Commissioners of services do not, on the whole,
compete with each other for the favours of the providers.
Competition is a double-edged sword. Many voluntary
sector organisations would be more than happy to deliver, on their
own terms, a service compatible with their mission in partnership
with the public sector. But to do so in a competitive environment,
where the wrong outcome to a daunting funding process can destroy
an organisation, causes many to hesitate before either holding
their nose or stepping back.
If providing a service is part of a third sector
organisation's mission then maybe there is an argument that the
organisation could be providing this service on a charitable basis,
without the need for a public sector partner. Whilst this is often
not financially viable, the argument could be used to justify
the commissioner meeting less than 100% of the provider's costs,
but should it? Surely nothing can justify the fact that fewer
than one voluntary sector service provider in eight provides services
commissioned by the public sector on the basis of full cost recovery.[181]
This has to be addressed.
The length of service contracts or grant aid
is also problematic. Local authorities themselves have until recently
only ever been able to plan according to annual budgets, rendering
them unable to guarantee funding to a third party for more than
12 months at a time. This argument, often employed disingenuously,
makes it impossible for voluntary organisations to plan and invest
for the longer term the more they become dependent on public sector
funding streams.
What happens when needs change?
Picture the scene: a volunteer gets out of a
van and takes a piping hot meal to a waiting elderly housebound
person. They chat for a few moments and the volunteer, who is
perhaps the old person's only visitor of the day, moves on.
The social services department then decrees
"We want you to spend less time delivering meals and more
time chatting, helping identify the needs of the most needy clients
and identifying what more we can do for them." If they can
cope, the clients are to be given a stack of meals at the start
of the week, a freezer to keep them in and a microwave to heat
them up, plus training on how to use it.
"No", say the volunteers, "We
volunteered to deliver meals, not chat, we're not social workers!"
and off they walk. This is exactly what happened in my county
a few years ago. In different circumstances a "yes"
might have brought about a fundamental change in the objects of
the charity, mission creep, caused by the influence of the outside
body. Neither response is intrinsically right or wrong, but this
sort of choice has to be made by voluntary organisation service
providers every day.
He who pays the piper...
There is a fear in the third sector that too
close a relationship with the commissioner of services, not least
because that body is ultimately subject to political swings, can
be poisonous. The wrong word spoken could compromise the organisation's
mission even when part of that mission is to campaign for a common
and worthy cause. The commissioner, deliberately or otherwise,
forces them to grow larger to pursue their part of the common
goal, when their infrastructure cannot support this. They may
be obliged to take on `non-core' activities in order to subsidise
their core mission values and the "non-core" activities
may grow like Topsy and compromise the mission.
As stated earlier, bidding for a contract against
a private sector provider or (heaven forbid) a social enterprise
or a fellow voluntary organisation is anathema to many voluntary
sector organisations. Not only does tendering require skills which
may be alien to them but the concept of losers is not part of
the sector's value structure.
There is a perceived lack of local funding for
internal infrastructure and capacity building, with Capacitybuilders
only seen as relevant to the sector's pinnacles and the Lottery's
Reaching Communities fund being 10 times over-subscribed. Add
this together and you have a sector which is becoming genuinely
worried about the idea of "the bigger they come, the harder
they fall".
CONCLUSION
Some magnificent things have been achieved by
public and voluntary sector partners working together on service
delivery. The roll-out of digital hearing aids, worth over £100
million, by the Department of Health in partnership with the Royal
National Institute for Deaf People (RNID) is one of the most spectacular
so far, yet most such achievements are local and small fry by
comparison.
The relationship between the sectors has changed
and will always be changing. Change is always more difficult to
manage than stasis.
At a macro level, amongst what needs to be done
is:
— for commissioners of services to
commit themselves to full cost recovery in a meaningful and demonstrable
way and for providers to have the capacity to calculate full cost
recovery accurately and negotiate on that basis;
— for the third sector to be more involved
in the strategic planning of services, identifying needs and prioritising
spending and action, at government level down to Local Strategic
Partnerships and Local Area Agreements, whether or not they are
providing services locally. Good practice in partnership working
exists and should be better disseminated, whilst commissioners
should learn not to regard the voluntary sector as cheap or amateur;
— for funding to move as rapidly as
possible to three-year minimum contracts for commissioned services
(only less with good reason and by agreement), especially at local
authority level;
— for greater levels of targeted funding
to enable grass roots third sector organisations to develop the
capacity to better negotiate and tender, together with developing
the confidence to say `no' when the need arises;
— for recognition by commissioners
that whilst dealing with a larger number of smaller providers
across a city or a county may be less efficient on paper than
having a single larger partner, it could be the best way of guaranteeing
the flexibility and diversity of provision that may be needed;
and
— for third sector providers to accept
that growing bigger does not always mean getting better.
All large voluntary sector providers started
off small. As some grow larger, as they inevitably will, new and
smaller ones will emerge in their wake, not carbon copies but
groups with different missions in different landscapes. At a micro
level these groups are seed corn and need to be nurtured. At the
same time, the community sector—distinguished by its horizontal
or geographical base rather than the classic vertical mission-based
silos of the conventional voluntary sector—is emerging as
a legitimate influence on localised service delivery within neighbourhoods.
Its place in promoting cohesion, social inclusion and the development
of social capital also requires nurture and support.
Ultimately, this partnership in service delivery
does not relieve politicians and others of responsibility. It
may dissipate the chain of responsibility but voters—which
includes service users and providers alike—will judge their
servants on the quality and appropriateness of the services that
their decisions have created and their funding has sustained,
as much in the future as they have in the past.
March 2007
181 Stand and deliver: the future for charities
delivering public services, Charity Commission, February 2007. Back
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