Examination of Witnesses (Questions 180
- 193)
THURSDAY 5 JULY 2007
MR JOHN
STOKER, MR
CAMPBELL ROBB
AND MR
RICHARD GUTCH
Q180 David Heyes: It is the
level playing field argument, is it not? They want the establishment
of a level playing field between the public, private and voluntary
sectors. Given the worthy intentions of the Compact, given the
need to be sensitive in putting contractual arrangements in place,
how is that consistent with the competitive neutrality that the
CBI particularly are arguing for?
Mr Stoker: The level playing field,
when it comes down to the bottom line, which is the quality of
services delivered to users, is the same for everybody from every
sector. The way you can reconcile it with the third sector locally—say
you are a local authority, you are, for the first time, moving
to procure, on an authority-wide scale, a service or an activity
which has previously been financed perhaps by grants in smaller
local pockets: you can think about how you parcel up the work
because if you parcel it up in certain ways it is going to be
more accessible to small and voluntary sector bodies than if you
package it up in others. You can think about ways in which you
can actually enable some of the smaller organisations that are
present locally to get together in consortia to bid for that in
circumstances where they might not be able to do that on their
own. They can do all of that without actually moving away from
the level playing field.
Q181 David Heyes: Really?
Mr Stoker: Yes.
Mr Robb: I am not sure that the
level playing field— . There are a whole range of reasons
why the playing field is never necessarily level. There are many
voluntary organisations who would say—
Q182 David Heyes: A carefully
contoured playing field.
Mr Robb: A carefully contoured
playing field, indeed. Ultimately, it is about those who wish
to buy services, those who wish to commission services, really
understanding what it is that they wish to buy and being willing
to pay extra for something. We were talking earlier on about the
benefit volunteers bring to a particular service. If that is the
case, are they willing to pay more for that particular service?
The examples that are most difficult to commission for are people
with multiple needs, a small charity that is supporting drugs
users. If they are successful at what they are doing, there are
savings to a local authority across the board and through police
and all other things like that. It is very hard to measure what
that success is, but commissioners have to be really aware of
what they are doing. That is how you create a level playing field,
because the Commissioner, the buyer of the service, is exactly
clear about what it is they want to buy and they understand the
cost that they are willing to pay for that and sometimes they
may wish to pay a premium from the third sector or from the private
sector or from the public sector because they think they will
get something extra for doing that.
Mr Gutch: I think, in our experience
at Futurebuilders, we have got quite a long way to go before worrying
that the level playing field is becoming uneven in the wrong direction.
Our overwhelming experience is that commissioners still view the
third sector through grant spectacles—they do not treat
them in a business-like way—and the kind of contracts that
a commercial provider will expect to get—take refuse collection
or something, which will be long-term contracts, fully reflecting
the costs of the provider in providing the service—are miles
away from most of the funding relationships that third sector
organisations experience at the moment, so we have got a long
way to go to get this bit of the playing field up to the level.
Q183 David Heyes: One last
point, if I might. When we had the trade union people in a few
weeks ago with David Prentice from Unison, for instance, the top
man in Unison, and these were not his words, but the impression
he gave us was that what was really going on here was that the
third sector, the voluntary sector was just a Trojan horse for
a drive towards the complete marketisation of what we considered
as public services in the past, and that the continued problems
of tight public sector budgets, the drive to get costs down, and
so on, meant that inevitably the third sector were never going
to get any bigger than they are now and the consequence was that
they will be squeezed out completely because the market would
drive it. I give that as a report, that is what the trade unions
are saying, and I would be interested to hear your view on that.
You are a Trojan horse.
Mr Robb: As I have said on a number
of occasions, what the Office of the Third Sector and Public Services
Action Plan are here to deliver is better services for users by
using the third sector in appropriate places to do that, and that
is what we are trying to implement, and to give the third sector
the opportunity to work in partnership with the public sector
to benefit users, because we believe that in certain circumstances
the third sector can deliver services that are better for users,
sometimes in partnership and sometimes on their own, and, as I
said before, what we are interested in is good contracts that
ensure that all of the different things that the contractor wants
from that contract, including staff development or the full cost
of that, are met through that process. That is what we are interested
in.
Q184 Chairman: As a matter
of fact, is it possible for a commissioner to say, "We are
only interested in taking contracts from third sector providers"?
Mr Gutch: I do not think it is,
but what I think it is possible for the commissioner to do is
to specify the service in such a way that it is highly likely
that only a third sector organisation would be able to deliver
that, and that is about perhaps placing particular emphasis on
the involvement in the local community, working with local people
in particular ways that you would not expect a commercial provider
to be able to do. I think it would be contrary to EEC procurement
rules to state that you only want to procure from a third sector
organisation, but you can specify in a way that makes it much
more likely.
Q185 Chairman: This is odd,
because if even part of the rhetoric is true, which is third sector
brings distinct qualities to the provision, the user focus and
everything else, it seems absurd that you cannot say, therefore,
we want these services to be provided by third sector organisations.
You can then do your competition amongst third sector organisations
to see who can best provide it, but you would have said that you
think this is the sector that you think should provide the service.
Is it really the case we cannot do this?
Mr Robb: I think it is back to
the carefully contoured playing field analogy, in that what we
are interested in is not specifically the provider of the service.
There are benefits that we think third sector organisations bring
in terms of flexibility, innovation, closer to users, long-term
commitment, servicing multiple needs, and that a commissioner
should, if they perceive that is the problem, having gone through
a process for really understanding the needs of the users, commission
a service that requires those things to be taken into account
and may even pay a premium for that to be the case because they
believe that provides a real benefit, and then there is an open
competition for that; but the public sector, the private sector
and the third sector can compete on that and they have to have
the evidence, there needs to be the evidence that that provider
can provide the evidence that they can do that and that they are
the best provider that is in place to do that.
Q186 Chairman: Is it the case
that under EU procurement rules you cannot say, "We only
want third sector providers?"
Mr Robb: Can I honestly say? I
am not an expert on EU procurement rules. I am happy to get back
to you on doing that, but my understanding would be (and Richard
would know this better) it is the case that for contracts of this
nature you have to have an open tendering process.
Mr Gutch: I think it is the essential
difference between a grant and a contract. A local authority can
provide a grant to any voluntary organisation it wishes, but if
it is contracting for a service, then, under EU procurement rules,
it has got to be open. As we say, there are ways of specifying
it, and also the size of it and all kinds of things, so that you
can make it more likely that it is going to be appropriate for
that service to be delivered.
Q187 David Heyes: Equally,
under the rules, you cannot disqualify a tender that you know
to be a loss leader from a private sector organisation that is
trying to grab the market.
Mr Gutch: No. If I can make one
last point, in a way I think it would be odd if you could say
this is only for third sector providers because, as we have been
saying throughout, it is not an absolute certainty that the third
sector provider is going to be able to provide the service that
is needed. We are talking about having the potential to do it,
but that has surely got to be put to the test.
Q188 Chairman: I am sorry
to worry about this, but if something is not put out to tender,
you can simply commission directly, can you not, which does not
involve going through a competitive process?
Mr Gutch: This is getting into
the complex territory none of us feel fully qualified to answer.
Q189 Chairman: It is pretty
essential to know whether this is an area you want to develop
or not?
Mr Gutch: You can have negotiated
agreements with a provider. Where there is a provider in a very
much niche area of provision and it simply would not make sense
to open it up, then you can have a negotiated agreement in those
kinds of circumstances. You would have to marshal all your reasons
for doing that in case there was a challenge, but that is one
of the grounds, I think, on which you can have a negotiated arrangement.
Q190 Mr Prentice: I want to
ask you about faith, because before Blair politics and religion
did not really mix and public money did not go to religions, but
now public money goes to promote interfaith dialogue, and so on
and so forth, and we are getting used to that. I asked Mr Stoker
earlier about the Codes of Practice, and I see in the Compact
that there was a Code of Practice promised in 1998 (I am sure
it has been published) on community groups, including those which
are faith based. Are there particular difficulties about contracting
with faith organisations? Just as I have been sitting here I have
thought of lots of examples where faith based organisations may
want to get involved—the Salvation Army doing meals on wheels,
a local Muslim organisation doing Halal, and so on and so forth.
What are the opportunities for faith based organisations to get
involved, and are there particular dangers that we should be alerted
to? Is it a good thing that faith based organisations get involved?
Does it matter?
Mr Gutch: I think if you look
at the history of charities, obviously lots of them have been
motivated by a particular faith, and that is often what has brought
people together to do whatever they are doing. The distinction
we make is that there is a difference between what is the original
motivation for the organisation, the value base of it, and who
they are providing their services to. In most cases we would expect
the service to be open to people of all faiths. Unless there is
some particular, say certain types of education, sometimes there
may be a case for that not being appropriate, but in most social
services one of the things we would look at very carefully in
assessing the application is: is this going to be open to all
those who could potentially benefit from it in the particular
locality?
Q191 Chairman: Forgive my
ignorance, but is it happening in a big way as I speak, that faith
organisations are delivering lots of services for local authorities
and maybe even central government, I honestly do not know.
Mr Robb: In the context of how
much the services are delivered by voluntary or third sector organisations,
it is not my understanding a high percentage of those are particularly
faith organisations. However, it is worth noting that there are
a growing number. The Charity Commission is registering a greater
number of faith based organisations and others and, as part of
the consultation exercise that the Office of the Third Sector
is running with the Treasury over the last year, our trade organisations
have increasingly come up and said they were interested in discussing
exactly those types of problems.
Q192 Chairman: Is this a good
thing or are you neutral on this?
Mr Robb: We want to find out what
that is and have a discussion with them. We would not be against
or for. We just want to find out what those issues are and have
a discussion with them, but, particularly if there is a growth
in faith based organisations, we would need to ensure we had the
right policies and ways of interacting with that and that people
were involved in that process.
Q193 Chairman: As we end,
can I ask one final question. We have had a lot of questioning
about whether the state has an agenda to push third sector provision
further and faster. What about the other side? Is the third sector
queuing up, knocking on the door saying, "We want to do more
of this? On the Futurebuilders side, we have not asked you about
the level of demand there is for your services. Is there vastly
more demand than you can meet or are you in the business of trying
to stimulate the market? What about third sector organisations
who want to do partnerships with the private sector? Are you interested
in getting involved there? What happens when people default on
your loans from the third sector? What do you do to them then?
Quickly, just a sense from the supply side what it feels like
at the moment.
Mr Gutch: I think you have to
remember with our investment approach, as I said in my introduction,
we are primarily lending money; so I think we are pleasantly surprised
with the level of demand. We have had 1,300 applications, totalling
over a billion pounds, and in a recent survey it was established
that 25% of voluntary community organisations are willing to consider
taking out a loan. Part of your question is about the appetite
for loan finance, because that is what we are offering, but the
other side of it is the public service delivery. I always go out
of my way to say this is not for all parts of the sector. There
is lots of incredibly important work the sector does which is
not about the agenda we have been discussing today. There are
people who want to do things through voluntary income, local community
action campaigning work, etcetera, etcetera, and I am very pleased
that the Office of the Third Sector have introduced a new grant
programme to support that kind of work. That is very important.
So, I would say there is a growing interest. We have not had more
demand than we can cope with, but I expect demand to expand, and
it crucially depends on the commissioning environment: because
if you are taking out a loan, in the end, you are expecting to
repay it because of getting a contract and fees, and the more
well developed that market becomes, the more likely you are to
be willing to take out a loan.
Mr Robb: Can I just reiterate,
we are absolutely not in the business of forcing organisations
to deliver public services when they do not want to do that. In
fact we have got a whole range of other policies which are about
supporting organisations. We have got nothing to do with public
services, but what we want to do is to ensure that for organisations,
when they do want to deliver public services, there is a good
partnership, that they have got the capacity to do it, that they
are held accountable for that in an appropriate way and that we
facilitate that innovation and change for users, and that is what
we are interested in.
Chairman: Okay. We have had some very
rich evidence, which we shall digest and use as best we can. Thank
you very much indeed for your time this morning.
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