Examination of Witnesses (Questions 100
- 109)
TUESDAY 12 JUNE 2007
DR NEIL
BENTLEY, MR
DAVE PRENTIS,
MR WILL
WERRY AND
MS RACHAEL
MASKELL
Q100 Paul Flynn: The crie
de coeur we have had from all voluntary bodies is that up
to 40 %, some say, of their time, energy, resources, attention
is given to winning contracts and looking to surviving next year
and the year after, and the other part of their work is being
machine monitored with people looking over them and making sure
that things are right, so they are only using half their time
delivering on the job they are doing. What do we do about that?
If we move into an area where there is more tendering, people
are going to be doing less of the jobs they should be doing and
more worrying about the future.
Ms Maskell: Certainly in some
areas it is even worse than that. If you look at Supporting People
funding 50p in every pound is spent on the administration of that
funding stream, and what we find within organisations is that
huge resources are being shifted into this whole contracting market,
with expertise being brought in just to deliver services, and
we know that 1 in 20 bids succeed across the sector. If you multiply
that up it is a lot of wasted resources, and if you are a small
organisation you are hardly going to put resource into something
where you may not succeed at the end of the day. So bearing that
in mind, it is a huge risk that organisations are taking. Why
should they take a risk in delivering services when they have
been delivering services in a concrete way for a long period of
time? The sums do not add up, and that is where we have been saying
"Give us the evidence."
Dr Bentley: It is a philosophical
question, because I have been on platforms with speakers where
some are very pro service delivery and contracting and some are
not. There is clearly a lively debate in the third sector about
its fundamental role and whether it is to deliver a public service
or whether it is to promote volunteering and continued to be funded
on a volunteering basis. Nobody is forcing any voluntary sector
organisation to do one thing or the other, and individual organisations
need to decide what their role is and how they are going to be
funded, be it through donations or not, and if they want to deliver
public services, I have seen some of the submissions to this inquiry
where some voluntary sector organisations are arguing that delivering
services and campaigning and doing all the other voluntary work
they do are not mutually exclusive, and it is up to those organisations
to decide what is in their best interests to do.
Q101 Paul Flynn: Finally,
is there a danger that if this goes ahead with the bureaucracy
and all the people monitoring the services and this great monster
sucking on the services it will not improve the services and we
will create unnecessary bureaucracy that is wasteful and does
not add to the value of the services in the end?
Ms Maskell: I think the NCVO[11]
put it neatly about transferring and transforming services, and
what they are saying is transform by all means but do not transfer,
and I think this whole bureaucracy which you describe is the reality
which is being created within organisations. One example that
we always look to is Northern Ireland where the whole issue of
marketisation and competition cannot take place because of the
sectarian issues. There if you pitch organisation against organisation
you create a whole plethora of political issues let alone the
delivery of services, so I think there are models out there which
say you do not have to go down this line of competition and you
can still deliver services, but unfortunately we are not seeing
that drive on these shores.
Chairman: I do not think we will adopt
the Northern Ireland model. It is quite an extreme argument!
Paul Flynn: I am grateful to you. Thank
you very much.
Q102 Mr Prentice: Just picking
up a couple of points, Amicus believes that the Government has
another agenda; it is not being straight with people; that a lot
of what is happening is a stepping stone to privatisation—you
used the words earlier "Trojan horse". In paragraph
16 of your memo you talk about housing associations possibly considering
flotation on the Stock Exchange, and then you go on to say that
they should be used as a stepping stone to full privatisation.
Is it the case that housing associations can just decide, and
legislation does not need to be amended or anything, to go public
and be listed on the Stock Exchange?
Ms Maskell: This is one of the
issues that came out within the Cave review, about whether housing
associations should be able to be floated on the Stock Exchange.[12]
What our members will say within those organisations is they will
automatically lose some of the ethos and the ability to deliver
to service users. The majority of our members work in housing
associations where they have an additionality of social care attached,
and as a result of that there is a great fear it will just go
down the route of other organisations and corporates, and will
not have the vested interest and raison d'e[circ]tre of being
about the services that are delivered.
Q103 Mr Prentice: I was surprised
when I read that. I am not up to speed as much as I should be
but do you have a list that you can give us of those public services
that you think are on the hit list, secret or otherwise? We know
from the Freud report what is going to happen in Jobcentre Plus,
the work being floated off, people with disabilities, getting
them to work and so on, and we have heard about offender management
and we are told constantly by ministers of the Heineken effect,
that the third sector can reach parts and reach people that conventional
public services cannot reach, so can you give the Committee some
kind of idea of those services which could be floated over to
the third sector, if not now then maybe in a note subsequently?[13]
Ms Maskell: Just answering the
first part of your question, I do not think it is a covert agenda.
It is very clear. What we are seeing is an opening up of the market.
Reading the action plan on behalf of the third sector on public
service delivery, it talks about public, private and third sector
very clearly in parallel, not preferencing the third sector at
all. Therefore what we are saying is we are seeing, because of
best value principles or competitive tendering, call it what you
want, the fact that on cheaper options the private sector does
come in and with local authorities, PCTs, on strained budgets,
trying to get their costs down they are going with the cheaper
bids if the same services are being delivered. There are a few
exceptions to that, but the private sector is increasingly winning
the contracts.
Q104 Mr Prentice: What about
the other point, the Heineken effect, that good as public services
are and committed as the people working in them are, there are
certain client groups which are very difficult to reach—people
taking drugs or whatever—and the third sector is uniquely
positioned to reach those people? When we heard from the chief
executive of Turning Point last week he said people would be seeing
dead bodies on the streets of central London without his organisation,
and he clearly felt that Turning Point was filling a function
that conventional public services could not fill. Was it legitimate
to say that?
Ms Maskell: Often what we find
is that people working in the third sector have worked for local
authorities, PCTs, and are the same people with the same skills
base and the same training and the same ability to deliver, but
there is an issue about resourcing, and if we are talking about
additionality you get state funding plus that, additional eyes,
ears, hands, to deliver your service, and that is when you are
able to pick up more work, have a niche delivery and work closely
with service users in order to get results that you desire.
Mr Prentis: Both of our submissions
praise the community and voluntary sector and the work they are
doing. They do work alongside the public sector in many respects,
and they have ways of working which means that they can be very
close to very vulnerable people that they are working with. We
are not coming along and hopefully we have not given you the impression
that in some way we want to denigrate the third sector; that is
not the case. Our argument is that they provide a very valuable
role and we should be nurturing it, rather than changing it out
of all recognition.
Q105 Chairman: We are at the
end but could we have one more go at this? Gordon mentions Victor
Adebowale, the chief executive of Turning Point who came along
last week, and he said that he was making no claim for the intrinsic
superiority of the third sector over the State or indeed the private
sector, but that sometimes the State was better for doing certain
things, sometimes the third sector was better, and sometimes the
private sector was better at doing certain things. Is that not
just a sensible approach, not to have any ideological predisposition
in favour of one of these providers rather than another, and to
say: "Where they can be most useful we should use them",
and that the commissioning process, if it is done properly, bearing
in mind all that has been said about the need to get fixed on
costs and all the rest of it, is what intelligent commissioning
should produce? Now, if that is the case, are we not all gainers?
Dr Bentley: Yes. I could not agree
with you more.
Mr Prentis: How do you do the
assessment of which is better? Who provides the better service?
How is the assessment done? Our experience on the ground is the
assessments are not done because the push is always to privatise
them. The push is always that the work has to be transferred,
and when this has been raised we are told that we have to grow
the private sector, the voluntary sector. Now you are putting
forward an ideal which has not been limited in this country, and
I think there needs to be a real debate on the grounds that you
are saying now, which is not taking place. The push is always
in one direction. The push is not: "Well, let's find out
which is the high quality service, where it can best deliver from,
how it can improve things for the users of the service."
The push is always one way and that undermines a lot of what you
are attempting to say there. Nobody actually carries out fairly
the assessment to find out whether or not it is better that it
stays within the public sector, stays within the voluntary sector,
or is a private sector issue.
Q106 Chairman: Final word,
Will?
Mr Werry: Thank you, Chair. I
have long since lost any feeling that I have any influence on
anybody else's feelings about it at all—
Q107 Chairman: No, but you
have an aura of wisdom about you which I keep looking at you for!
Mr Werry: Basically you have to
be right, I think, let's find out who is best, nobody could really
resist that argument, but there are lots of practical ifs and
buts about that making all propositions so difficult, and so many
arguments, some of them being put forward today, to the effect
that the wrong person wins anyway, and also that the mere act
of having competition gets people's thoughts in the wrong sort
of channels. I will not say whether that is a complete answer,
either of those points disposes of the proposition that in competition
the best man wins, but I do say that they are serious propositions
and that they have to be addressed. I do my utmost myself to address
them. Not only do they have to be addressed but you have to keep
an eye on them, because they change. One of the things that has
slightly bothered me recently is that you get a lot of difficulties
with long-term contracts because they have to be re-negotiated,
and everybody says how good they are at re-negotiating contracts,
never do they say they made a mess of it, but it is very hard
to see how well the parties do; it is a very hazardous business.
But the longer the contracts that people want, and they want longer
contracts all the time, the third sector wants them, the worse
this practical problem becomes and the faster the rate of change
in the world in pretty well everything, the more intense it is.
So it is a real question, a real serious problem that we all have
to address. It is far beyond our scope today but I only mention
it to justify my own non intervention!
Mr Prentis: Just on this point,
one of the big issues is about contracts being flexible, and the
flexibility you need to develop public services goes out of the
window because of inflexible contracts 25/30 years long, and it
is a major effect. When it comes to government departments, say
the Department of Health, wanting to cut back on its expenditure,
it cannot where there are contracts in some areas of the Health
Service—40-50 % of the expenditure—but only in those
areas which are still within the public sector, so it is skewed.
And what you are finding now is that a school has been built under
PFI and is no longer required, you are going to have to pay for
the cleaning and servicing of that building for 25 years. We have
built PFI hospitals which are now community hospitals, and some
of those big PFI hospitals may not be needed. Independent treatment
centres are put in places where they are not required, and the
question I want to put to you is why is it the competitive approach
which is the one that drives change and not the collaborative
approach?
Dr Bentley: I do feel I have to
reply. One of the issues around where, for example, PFI contracts
are let and where hospitals are built and schools are built is
around needs analysis, and it is difficult to predict future needs
analysis as demography changes. Contracts do need to be flexible
and there has to be re-negotiation and flexibility built into
those, but if you want the private sector to take on the risk
of funding these projects long-term there need to be long-term
contracts to spread the cost of that risk, and that is what we
are seeing now. But improving service design and construction
design has to be taken into account upfront now so that, if hospitals
are no longer in the right place or school rolls fall, those buildings
can be used for another purpose.
Q108 Mr Prentice: The Government
wants to force-feed or grow the private sector in health so that
independent sector treatment centres got an 11.2 % uplift in carrying
out exactly the same operations as the NHS. Just for the CBI,
do you think the Government should, when it is negotiating contracts
with the third sector, offer a premium in order to grow the third
sector, because there cannot be a proper market if there are not
enough players?
Dr Bentley: There was a pump-priming
of the ISTC[14]
market in order to encourage providers into that market because-
Mr Prentice: That is taken as a given.
I am talking about whether the principle should apply to the third
sector as well, a premium.
Dr Bentley: If the Government
takes the view that the voluntary sector can help with a policy
objective and needs to encourage them by pump-priming the market
then yes, they should.
Q109 Chairman: That raises
questions about competitive neutrality though, does it not?
Dr Bentley: Yes.
Mr Werry: And the law, Chairman.
There are limits.
Chairman: I am grateful to you all. We
have had an interesting session and the fact that we did not have
a unanimous view amongst the people here was a great advantage
and enabled us to get under the skin of some of the arguments.
We hope at some point to make sense of some of those and we are
grateful to you for helping us along the way. Thank you for your
time.
11 National Council of Voluntary Organisations Back
12
Department for Communities and Local Government, Every Tenant
Matters: A review of social housing regulation, June 2007 Back
13
Department for Work and Pensions, Reducing dependency, increasing
opportunity: options for the future of welfare to work, March
2007 Back
14
Independent sector treatment centres. Back
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