Examination of Witnesses (Questions 220
- 239)
TUESDAY 10 JULY 2007
MR MARTIN
NAREY, MR
PHILIP CULLUM
AND MS
ALISON HOPKINS
Q220 Jenny Willott: What about
small organisations who are more dependent on a sole source of
funding?
Ms Hopkins: Smaller organisations
who are in that sort of position who argue their case, have some
evidence and can have a reasoned argument about what it is that
they are trying to advocate or to be critical of are taken seriously
and will be taken seriously, because there is a recognition that
these are organisations that do have a dual role and indeed that
is one of the benefits of having them. A lot of public authorities
and public bodies can learn through that experience and actually
there is a bit of ears and eyes on the ground. A lot of third
sector organisations worry about the potential that there will
be some negative knock-on effects, but we do not have any evidence
that that is necessarily a problem.
Mr Narey: Although I do not think
there is any evidence to suggest that organisations that speak
out will not get contracts, there may be a worry for those charities
which take their core funding from the government, which we do
not. If you get core funding just to exist then there must be
a risk that if you are going to insist on speaking out against
the secretary of state on particular policies you might believe
that would come under threat. There has been some evidence that
in the dying days of the last Conservative government people who
worked for Nacro would say that they did suffer and did have core
funding removed, partly because they had spoken out against the
penal policies of the then government.
Q221 Chairman: Some 55% of
your funding comes from government.
Mr Narey: That is correct.
Q222 Chairman: Is that both
grant and contract?
Mr Narey: That is all for contracts;
we do not get grants from any agency at all, the only money we
take is in contractual exchange for providing services.
Q223 Chairman: Would it matter
if that figure was substantially different from 55%? If it was
85% would it make a difference?
Mr Narey: I would not like it
to grow very much because I would want us to be an organisation
that was both a doing organisation, providing services, and a
campaigning organisation because the link between the two is very
important. I want to have the money and the resources to be able
to do research and to speak out and try to influence government,
but actually I do not think there is a particular level at which
I would start to panic, there are other organisations which take
a much bigger proportion of their income from statutory funds
and I do not think that necessarily should impinge upon their
independence.
Q224 David Heyes: I want to
pick up with Martin Narey your earlier statement about a very
strong belief in competition driving improvements in services,
your personal philosophy that you brought from the Prison Service
and now into Barnardo's. You talked about having to look at lots
of tender documents from local authorities and you make decisions
about whether or not to put time and energy into bidding for them,
but even the ones that you do bid for you achieve one in three
of the contracts that you go for. This whole business of bidding
for sometimes sizeable contracts is inevitably costly, time-consuming
and some would say it is a wasteful use of your resources. How
do you achieve the cost recovery on what you spend on these speculative
and failed bids?
Mr Narey: Ultimately, for most
of our bids, the cost of tendering is something which we have
to factor into the price.
Q225 David Heyes: My monthly
donation pays for that, does it?
Mr Narey: In part, although we
are very proud of the very high proportion of our income which
goes directly on services because our central costs, for example,
despite the recent flurry of advertising, are very low. Yes, there
is a cost to the contracted process and the tendering process
but there are greater and more important consequences; there is
also something about instability. I felt very angry last December
when I counted up the number of my staff who did not know whether
they had a job on April 1. I was being asked by public sector
contractors to do things that they would never dream of doing
to their own employees. The short termism of contracts, the fact
that right now as the year comes to an end there will be a large
proportion of our work which we will not know whether or not will
be financed again from 1 April. That is very destructive and makes
it very hard to hang on to good staff.
Q226 David Heyes: You tempt
me to say that is competition for you, you espouse competition
and that is competition at work.
Mr Narey: I espouse competition
but I do not espouse contracts which can be terminated at very
short notice and I certainly do not espouse short term contracts.
I got better deals out of private sector prisons when I lengthened
the contracts from five to ten years and even better deals when
I lengthened them to 25 years. We are not suggesting 25 year contracts,
but contracts have to be for a significant period of time if you
are going to bed the work down, do it well and retain and attract
very good staff.
Q227 David Heyes: I would
like you to expand on this whole area with the failings, the difficulties,
the necessary hurdles that are there in the commissioning practice,
but before we do that I just want to try and understand what you
are saying. You said there were costs involved in abortive bids;
is there any way you can quantify that for us? What proportion
of Barnardo's income goes on competitive bidding that does not
produce a result, does not produce a contract or a service to
the public?
Mr Narey: It would be impossible
for me to do it in my head here, Mr Heyes, but I am very happy
to commission someone to try to work that out and I will let you
have a note.[4]
Q228 David Heyes: That is
fine; if you can let us know that would be good. Can you not give
us a kind of indicative figure?
Mr Narey: In truth it is probably
quite small in terms of additional costs because most of our bidding
is done at a local level and our service managers do it in the
margins of their other job. We do not employ legions of contract
negotiators to fill in tenders, we try to share good practice,
but most of it is absorbed within somebody's day to day job.
Q229 David Heyes: I guess
two of your typical competitors in this bidding process would
be, for example, NCH[5]
and the Children's Society, they are in the same field as you.
Mr Narey: That is correct.
Q230 David Heyes: They are
also incurring all these abortive costs as part of their running
costs. In the private sector that is the sort of situation when
you might see a cartel emerge and it possibly might even be easier
to do that in the voluntary sector where I know there is a friendly
rivalry between yourself and the other two major players in this
game. Does that happen, do you have discussions with your senior
colleagues in the two organisations about which contracts it would
be sensible for Barnardo's to bid for because it is more related
to your experience and your priorities than it would be, say,
for NCH, but you know that you have all got to bid because that
is the game. Does this happen?
Mr Narey: Absolutely not.
Q231 David Heyes: Not even
informal chats in work?
Mr Narey: Seriously, we have a
very close working relationship. Claire Tickell of NCH, Bob Reitemeier
of the Children's Society and myself get on very well and do a
lot of work on joint policy things, but we have never had a conversation—and
I have been at Barnardo's for two years—about whether a
particular contract should be bid for. One of the reasons for
that is I do not make that decision, I do not have any role in
dictating what my staff who are working in the North West of England
will decide to bid for. We leave those decisions very much to
our six English regional directors and our three directors of
the non-English regions, but there is no evidence of a cartel
whatsoever.
Q232 David Heyes: You could
save a lot of money if there was, you know.
Mr Narey: We could. Public services
would not do as well because the competition is sometimes inconvenient
for us, particularly when there are multiple funders, and that
makes it much worse. I was at a splendid project called Health
in Action in Manchester recently which supports families affected
by HIV; the last time I looked they had 12 different funders and
there is an awful lot of time spent there chasing that money,
but overall, however inconvenient it is to us, the outcome of
that competition is that the public get very good value for money
because we have to price very competitively to win the work.
Q233 David Heyes: Can we go
back then to this issue of the problems with core commissioning
practice. You have highlighted the obvious example of short termism
and uncertainty for the future of employees, but there are other
factors. Let us try and get some of those out.
Mr Narey: Rigidity of contractual
and legal terms. Some of my staff have shown me pages and pages
of annexes to tender documents with, literally, sometimes 70 or
80 different pages of contractual terms which are imposed at the
tender stage so there is no opportunity to discuss the contractual
terms: very short periods to terminate the contract, sometimes
clauses in contracts which say that any part of the contract can
be varied at any time by the local authority, things which in
a normal contractual relationship you would never tolerate—not
always, but sometimes those sorts of things cause problems.
Q234 David Heyes: Do NCC have
a view on the shortcomings of current commissioning?
Mr Cullum: Our main one is that
consumers are not sufficiently involved in the process of deciding
what services are commissioned for. We would agree with the idea
of a mixed economy of provision to try and meet the various needs
of consumers, but part of the benefit of that diversity is about
innovation, so if you are asked to bid for things which are so
carefully defined that all it becomes is a debate about who can
offer it for the cheapest price, then you are missing a trick
in terms of the innovation that can come from diversity and, as
I say, the spark between the provider and the user.
Ms Hopkins: One of the other things
that came through in talking to commissioners in the research
was the lack of strategic thinking and planning within local authorities
and health authorities. Commissioners often felt slightly isolated
and were not sure themselves that they were necessarily using
all the current best practice and real cutting edge sort of skills
because they are often left to work away in a very technical,
dry atmosphere on their own. Hopefully through the provisions
of the Local Government Bill in terms of driving best practice
and improving commissioning, and through the training programme
with the third sector and IDeA[6],
rolling out the training commissioners, there could be some improvements,
but it is how to be more strategic and how to get the strategic
plans down to ground level whereas, as Mr Narey said, most commissioning
is done at a local level and the strategic discussions are too
far away.
Q235 David Heyes: It is quite
surprising that this continues because the real landmark was about
10 years ago when the Compact idea emerged and there was the national
Compact between government and the third sector, and that was
mirrored in many areas—I think every area has got a local
Compact and it is full of rhetoric and worthy statements about
partnership and working to understand each other better and addressing
areas exactly like the ones that Mr Narey and yourselves are talking
about. It seems to be a minefield for the third sector organisations
who are bidding and we do not seem to have seen any positive moves
on the part of the public sector on this. All the problems are
there that were there 10 years ago and in some ways they seem
greater, they seem magnified. Why is that?
Ms Hopkins: I am not sure who
knows the answer.
Mr Narey: One of the reasons is
the commissioning talent pool is spread very thinly. Commissioning
has taken off so much in health service and local authorities,
and indeed where I was, and my regional and national managers
would say that they sometimes meet commissioners who are not terribly
good customers, they are not very expert in what they are buying.
They are very good about the contractual terms of a contract but
they may not know very much about what quality outcomes for children
are and they do very cautious things like prescribe the inputs,
prescribe how many staff will be on duty rather than prescribing
the outcomes for children. If I was giving advice to any public
body on improving public services I would say put your most talented
people into commissioning because if they are good commissioners
who will talk to potential providers and know the good in creative
contracts you could really improve public services. That would
really help us.
Q236 Chairman: That does raise
the question of why we do not have them because you have the Government
saying "We want good commissioning; it is terribly important
and we are going to put stuff in to promote better commissioning";
every third sector voice that comes in front of us says the real
issue is to get good commissioning, so the question is why do
we not get good commissioning?
Mr Narey: I know that when I was
recruiting commissioners it was very hard to get very good people
to move from the delivery side of an operation to wanting to commission
work; I find that difficult to explain. Eventually, in running
private prisons, I did manage to persuade arguably one of the
single most talented people working in prisons to come and do
that job and he had a transformational impact in a few years on
remoulding private sector contracts and improving private sector
prisons without putting an additional penny into the contracts.
Q237 David Heyes: It is finding
the right people.
Mr Narey: Absolutely.
Mr Cullum: There is something
about the culture. In my personal capacity I am also a member
of the Better Regulation Commission and thinking of some of the
lessons from regulation, which is often about public servants
being very risk averse and organisations in general, including
in the private sector, are using contracts in a very defensive
way. We are doing some work at NCC with the Better Regulation
Executive at the moment about regulatory requirements around information
and we have looked at consumer credit contracts and extended warranties
and lots of the terms are really there to protect the provider
rather than to help the consumer understand what it is that they
are buying, which is allegedly the purpose of some of it. There
is therefore some sort of culture of protection, and if I think
back to a previous job that I had when I had to write tender documents
for a research company for bids, some of the things we were asked
to provide in terms of information were complete nonsense and
I had to try and explain to a really big regulator once—they
were looking for about five or six focus groups—how our
values were aligned with their values. The tender document was
probably longer than the bit of work that was produced at the
end, so it just feels like there is an endemic problem which may
be partly about the contracting culture and how organisations
use their contracts.
Mr Narey: It is now routine for
us to be asked whether we have an environmental policy as part
of a bid for running a children's nursery.
Chairman: We may come back to this. Paul.
Q238 Paul Flynn: About 12
years ago in this Parliament there was a backbench debate about
the plight of young people leaving care. There was not a ripple
of interest from outside, from the press, until about five weeks
later when the principal speakers in that debate received letters
of congratulation from Princess Diana and from wards of court,
and then the issue had a greater potential including organisations
like Barnardo's and there was a great push to improve the lot
of young people leaving care. Why has it gone wrong; is it the
fault of the charities or the Government that it is still, as
you said earlier on, a major problem?
Mr Narey: It is very difficult
to explain, Mr Flynn. There have been some improvements but the
current outcomes for children in care are not good. I had huge
admiration for Alan Johnson in saying so obviously how bad things
were; I thought the Green Paper he wrote last spring was an extraordinary
Green Paper for a Government which had been in power for so many
years. Educational outcomes and a number of other outcomes—a
number of children in care end up in prison—are dire. The
reasons for that are first of all that they sometimes are a very
difficult group, sometimes we have almost fostered instability.
Sometimes we become rather obsessed with fostering and there is
lots of evidence of some children we work with who have been in
failed foster placements one after the other, where perhaps the
decision should have been made at an earlier stage to give them
the stability they need and keep them in a children's home but
make sure that residential care is exceptional. We do things like
move them to schools far too frequently; children in care have
lost out in the education market: while parents like me get our
kids into the best state schools, children in care almost inevitably
go to the worst state schools in terms of value added. There is
a whole host of areas where we have failed them but there is a
whole host of areas where pragmatically I believe we could make
significant progress over the next few years. If we get children
in care to the best schools and if we stop moving them in year
11, those two things alone will have a very significant effect
upon their educational outcomes.
Q239 Paul Flynn: Do you think
there is a memory of what happened then? It was not that long
ago when the whole attention of the nation was on this problem.
It had the patronage of Princess Diana and there were meetings
in this House, led by your organisation; has nothing improved?
Is there a memory of a failure of that period? I know you are
new in service at Barnardo's but there seems to be very little
improvement if you regard this as a major problem.
Mr Narey: There have been improvements.
4 Ev 148 Back
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The National Children's Home Back
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The Improvement and Development Agency Back
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