Localism

Memorandum from the National Council for Voluntary Organisations (NCVO) (LOCO 091)

Executive Summary

1.1 NCVO is the largest general membership body for voluntary and

community organisations (VCOs) in England. Established in 1919, NCVO

represents over 8300 organisations, from large ‘household name’ charities to

small groups involved in all areas of voluntary and community action at a local

level. NCVO champions voluntary action. Our vision is of a society in which

people are inspired to make a positive difference within their communities. A

vibrant voluntary and community sector (VCS) deserves a strong voice and the best support. NCVO works to provide that voice and support.

1.2 NCVO supports efforts to devolve power to local people and communities as part of building a vibrant civil society. We have long argued that power and decision-making should be devolved to the local level where possible; and that public services should be commissioned and delivered in partnership with the people and communities they serve.

1.3 Localism is not solely about public service delivery, but about stimulating new forms of participatory democracy, allowing a full range of people and communities a voice to influence decision making and building the ability of communities to have a real influence over the policies that affect them. A vibrant civil society is central to the good society. The starting point for measuring the effectiveness of services should be the positive difference that these services add to the lives of individuals and communities.

1.4 Along with clarity of purpose in seeking to de-centralise decision making, there should also be an acknowledgement of the limits of this approach. Local diversity, with services tailored to meet local need, is positive but a role for central government should remain in:

· leading on good funding practice;

· setting standards and ensuring that they’re met;

· making and managing functioning markets in public services;

· tackling barriers to promoting new, innovative approaches

1.5 Decision making should be devolved to the right level, not necessarily the lowest level, in accordance with local need. This may vary, according to the nature of the particular service, community or issue. A uniform model will not be possible, and one community may need to be served by decision makers at various different levels depending on the issue.

1.6 There are also limits to de-centralisation as a mechanism for driving improvement. Positive change will not come simply through transferring services from one sector to another or a change in the level at which decisions are taken.

1.7 The Total Place initiative offered some positive early insights into the potential of place-based budgeting. This holistic, user-centred approach which focuses on need should be expanded to drive effective public services. The VCS has a unique and important role to play in the delivery of needs-focused services.

1.8 There should be an enhanced role for local government in a decentralised model of public service delivery. However, voluntary and community organisations have a vital role to play, working with their users and members to identify need and design, deliver and evaluate public services. Partnership working between local government and the VCS will therefore be essential in ensuring that de-centralised public services better meet the needs of local people and communities and maximising and recognising local resources. Whilst the ultimate aim may be to transfer power to communities and individuals, local authorities will retain an important role in funding, supporting civil society and in designing, delivering and monitoring the effectiveness of funding.

1.9 A strong Compact, at both local and national level, is important in managing an effective partnership relationship between the statutory sector and the VCS. The Compact is a vital tool in delivering better partnership working at the local level. The principles of localism are closely aligned with the principles of the Compact; to deliver local activities based on local need, identified through local engagement.

The extent to which decentralisation leads to more effective public service delivery; and what the limits are, or should be of localism.

2.1 More effective public service delivery can best be achieved by:

· plac ing the agenda of citizens and communities at the heart of the reform process ;

· e nsur ing public services are designed and delivered in a way that enables the voice of citizens and communities to be heard and acted upon, as well as providing them with a market choice .

· a holistic approach, which provides effective, joined up services to citizens.

· a pply ing a more sophisticated understanding of the efficiency agenda, which gives as much weight to effectiveness as it does to cost savings.

2.2 Enabling people to co-produce services, involving them in their design and delivery, is likely to lead to more efficient and effective public services. This will require more systematic engagement and involvement of communities, enabling them to identify their needs and design solutions to meet those needs. This is often best done at a local level. However, there are also examples where service users are not well-represented at this level (eg people with a rare medical condition) and therefore it is essential that decisions are taken at the most appropriate level: decentralisation alone will not bring about improvements in public services

2.3 VCOs have a vital contribution to make, bringing both an awareness of local needs and particular skills and experience of involving service users and communities, particularly those that are the ‘hardest to reach’, giving them a voice, as well as a choice. It is essential that local authorities understand and support these roles over and above any role they may play in service delivery.

2.4 Decision makers must take full account of the valuable role that the VCS plays in providing voice and advocating on behalf of a full range of people and communities, including the most vulnerable and marginalised. Identifying need, including unmet need, in communities is important and changes to public services, including decentralisation should take place through consultation and partnership with the VCS.

Recommendations:

· De-centralisation is an important element of making public services more effective, but should not be seen as the complete solutions.

· Local Government should work in partnership with the VCS, which has a unique reach into a wide range of communities.

2.5 Local diversity, and the design and delivery of services that reflect local needs are to be welcomed. However, it is important that minimum standards are protected to allow equality of access and provision. With the abolition of some accountability measures, including the Audit Commission, and statutory indicators, there will need to be adequate safeguards in place to ensure consistency. There must be a culture of accountability and evaluation to create ongoing and positive and evidenced change.

Recommendations:

· Government to consider which scrutiny and oversight measures will be necessary to maintain standards in a more de-centralised context.

· For the Government at all levels to ensure robust equality impact assessments are conducted before changes to service provision and budget allocations are made. Equality impact assessments should take place early in the service design process and be open and transparent

· Government and the VCS to draw up key tests to assess the effectiveness of locally delivered services. The level at which this work should take place will vary.

The lessons for decentralisation from Total Place, and the potential to build on the work done under that initiative, particularly through place-based budgeting.

3.1 There were positive early results from the Total Place initiative. An approach which is focused on need and led by the needs of users and communities will be an important part of improving public services, as people’s needs cut across public sector silos. The adoption of place based budgeting will require cultural as well as structural change in the public sector. Holistic approaches to meeting need are led by users and communities, and not determined by administrative boundaries. The Total Place pilots looked at spending and didn’t advance much into solutions.

3.2 Place based budgeting can promote better commissioning processes: assessment of need and capacity; designing solutions; delivering services; evaluating for change and should be an important part of the solution for the Government in seeking to protect frontline services in a period of fiscal retrenchment as resources can be allocated more effectively.

3.3 However, to realise the full potential of this approach, government will need to employ a degree of flexibility. For example, place based budgeting may highlight the need for increased investment in preventative services, where upfront investment will yield considerable savings in the medium to long term, as well as improved community well-being.

3.4 There is a particular role for the VCS in place based budgeting to maximise community resources and bring in significant needs/resources evidence and to employ innovation, as the VCS has unique strengths and abilities in identifying need, designing services with users at their heart and employs a range of innovative approaches to public service delivery.

3.5 There are a number of potential barriers to place based budgeting, including:

· The need to understand and commit to outcomes,

· Sharing the risk of outcomes not being met;

· Measuring and distributing shared savings and proportional rewards for all parties;

· Being able to staff and structure truly person-centred (and implicitly risk-taking) services;

· Barriers to financial transparency and co-operation between funding services;

· Upfront investment to cover both acute and preventative services;

· Cultural, workforce and administrative barriers to shared budget and service development;

· Learning how to share risk on investments into new services and new infrastructures.

3.6 The relationship between place based budgeting and the ‘right to bid’ proposals will require close examination. The potential for communities to own and run services is one way of engaging service users and local communities. However, service providers will also need to work in partnership with local communities, including through co-production. Local government must look closely at the commissioning process, to ensure that the process of identifying need and designing services is effective in a model where communities can bid to run services. Communities will need to be equipped with the skills and confidence to take on these responsibilities, to be able to compete fairly against more established players in the market.

Recommendations:

· A place based approach should extend beyond budgets. The whole approach to identifying need, commissioning and procurement and the design and delivery of services should enable individuals and communities to co-produce services. Savings may also be achieved, but this must not be the primary driver for a move toward a more place-based approach.

· For place based budgeting to be successful, agreed outcomes between the VCS and other partners are necessary. This will require good partnership working, with clear lines of accountability agreed in advance. Government at all levels should commit to partnership working with the VCS, and there should be joined up working across Whitehall to achieve this.

· For ‘right to bid’ proposals to be balanced with a holistic approach, ensuring that commissioning processes identify and meet local need. .

· A place based approach will require a degree of workforce change – central government should play a role in sharing development practice across agencies and Whitehall staff’s own skills through mentoring or other work.

The role of local government in a decentralised model of local public service delivery, and the extent to which localism can and should extend to other local agents.

4.1 Local government should have an enhanced role in public service commissioning under a decentralised model. Whilst the ultimate aim is to devolve power to communities, there is a valuable role for local government in providing support, resources and expertise to civil society. Local authorities are likely to remain a primary decision maker in commissioning and procuring public services.

4.2 Local government will play a leadership role in commissioning, co-ordinating with different sectors where necessary. The role of users, citizens and communities in commissioning is important to ensure that services meet the needs of local users.

4.3 It is important that local government is equipped with the right powers and resources to be able to take on an enhanced decision making role. The suggested end to a ring-fencing of local authority budgets would be a welcome development in giving them the freedom to make decisions flexibly, responding to local needs. All communities should be involved in the process of identifying need and this evidence needs to inform service design and delivery in a meaningful way. Local government should share best practice to drive greater effectiveness and higher standards and there may be a role for central government in co-ordinating this activity.

4.4 The majority of funding to the VCS is channelled through local government and the role and status of local government in a decentralised model is therefore of importance to civil society [1] . Local authorities should work with the local VCS to empower local communities to set the agenda and identify priorities for their area.

4.5 To achieve genuine de-centralisation, and to build communities with the capacity and confidence to play a full role in policy making, will require genuine partnership between all statutory and non statutory sectors, including community representatives, government, the VCS and the private sector. Relationships will need to be based on trust and accountability. There is a need for both formal structures, to bring together partners from different sectors and for local Compacts to be used in managing relationships.

4.6 A strong, well understood Compact is important in managing the relationship between the Government and the VCS. In the context of de-centralisation, it is important that local Compacts are drawn up between local government and the VCS and that both sectors are committed to it.

4.7 The VCS is grounded in local communities and localism is central to the ethos of the sector.

Recommendations:

· Central government should equip local government with the powers and resources it needs to play an enhanced role in decision making.

· There must be a full role for the VCS in identifying need and designing and delivering services, including through partnerships with local government, with the private sector and with Local Enterprise Partnerships.

· Early adoption of a robust, well understood and well publicised set of Compact commitments.

· For local authorities to have to adopt meaningful Compacts.

· A Compact ombudsman, responsible to Parliament, would be an important step to managing the relationship between civil society and the state.

4.8 NCVO members report wide variation in the ways in which local authorities are dealing with current financial and economic challenges. Local government should aim to make long term decisions based on evidence, in the context of reduced funding. De-centralisation and an enhanced role for local government increases the urgency of this.

4.9 Some local authorities are dealing effectively with reduced funding whilst fostering good relationships with the VCS and therefore protecting service delivery. For example, lessons learned from the London Borough of Merton are:

· Early, open discussion based on mutual trust is vital to underpin the relationship

· Putting the needs of communities rather than organisations first allows a shared starting point and common objectives

· Separating out grant and contract funding allows clearer thinking about each

· The VCS has to be ready to adapt to tighter circumstances

· Local public bodies need to recognise and value the sector’s expertise [2]

Recommendations:

· For central government to provide guidance on how local authorities should be managing the need to reduce spending and for best practice examples to be disseminated to promote good funding practice. This could be done in partnership between the Government, NCVO and representatives of local government including the LGA.

· For the Spending Review settlements to oblige all departments to take the impact of their decisions on the VCS into account. For DCLG, this obligation should feed down to local government.

The action which will be necessary on the part of Whitehall departments to achieve effective decentralised public service delivery.

5.1 Action from Whitehall will be necessary in driving effective decentralised public service delivery. There will still be an important role for central government in setting and maintaining standards, providing clear frameworks for service delivery and sending a signal to local authorities about the way in which the relationship between all levels of government and the VCS should work (for example in ensuring that an end to ring fencing does not precipitate a sharp drop in funds to VCS projects – particularly those that serve marginalised, vulnerable and excluded members of the community). Central government must work to ensure a level playing field in public services, without which there cannot be a fully functioning, plural, competitive market. The role of Whitehall is not, therefore, simply to devolve power and reduce its role in public services.

5.2 The need to reduce spending must not result in sharp, quick cuts to budgets in the VCS. Whilst the majority of funding to the VCS comes from local authorities, central government has an essential role in setting overall spending and in providing frameworks within which local authorities operate.

5.3 Effective public service delivery requires effective funding, with decisions made on a long term, strategic basis. Good funding practice driven from the centre will help to mitigate the impact of reduced overall funding and help to build much needed resilience in the VCS. Central government should set out clear guidelines on improved funding mechanisms, including:

· Longer term funding (set for the period of the forthcoming Spending Review where possible)

· Proportionate requirements attached to funding

· A comprehensive understanding of the full range of types of funding available, and when these are appropriate

· Accessible funding for a full range of VCOs with the application process to be less complex

· Adoption of the intelligent funding model

· An approach to funding which takes full account of the social value added by the VCS in identifying need, designing and delivering services.

5.4 Effective delivery of decentralised public services will also require a fully functioning market and there is a clear role for central government in making changes to create a level playing field. NCVO has called on government to examine in detail the required changes in market making and management, including changes to:

· Tax and fiscal policy, including Gift Aid and VAT (particularly shared services VAT)

· Commissioning

· Allow local public sector organisations to pool budgets

· Procurement [3]

Recommendations:

· Whitehall should retain an important role in setting standards and the frameworks for public services and provide useful and meaningful guidance to local authorities and local decision makers.

· For good funding practice to be put at the heart of government decision making and to mitigate against the worst potential impacts of reduced spending.

· For Central Government to work with the VCS to develop detailed recommendations to create a level playing field, which will be a pre-requisite for genuinely localised, plural models of service delivery.

· For Central Government to examine commissioning processes in the light of ‘right to bid’ proposals, to take a lead in ensuring that local authorities have the ability to build skills and confidence for communities to derive maximum benefit from these proposals.

October 2010