Communities and Local Government CommitteeWritten submission from the Department for Communities and Local Government

Introduction

The Prime Minister’s commitment to troubled families and establishment of new delivery arrangements

Community Budgets were developed in 2010 as a way of helping local agencies agree outcomes and resources across organisational boundaries. They are an enabling mechanism, designed to be flexible to local requirements. As such they are an approach—not a Whitehall programme and are already being tailored and developed by local places. Building on this work, on 15 December the Prime Minister announced further resources to improve outcomes for troubled families. These are families who place huge social costs on communities – where lack of aspiration and isolation from the rest of society can start to pull at our social fabric.

New research shows that these families cost government £9 billion per year in England alone. This equates to an average cost of £75,000 per troubled family, per year. It is not unusual to have up to 20 different professionals engaged and costing up to £250-£350,000 per family.

The Secretary of State for Communities and Local Government1 will lead work designed to achieve the Prime Minister’s ambition to turn around the lives of 120,000 of the most troubled families by the end of the Parliament. A new Troubled Families Team was established on 1 November in the Department for Communities and Local Government to drive this work forward.

This programme will involve:2

Resources to lever in local investment and incentivise the reprioritisation of funds to boost pace and urgency. An overall budget of £420 million over four years will support this work.

Co-ordination across central government, local government and other local agencies to line up relevant programmes behind this ambition and remove structural obstacles that block progress.

Practical support and encouragement to ensure all the right families are being identified and that all agencies are prioritising the activities and interventions which evidence shows can help turn the lives of families around.

The application of Community Budget principles if areas choose to use them.

Governance with the Secretary of State and Louise Casey reporting to the Prime Minister and an Inter Ministerial Group chaired by the Secretary of State.

We will track success against clear, easy to measure criteria and implement a strategy to stop the flow of new families replacing those who leave this group and challenge areas not showing the required leadership and necessary progress.

Questions

1. Community Budgets are a mechanism to enable local areas to agree outcomes and align budgets across different agencies. Many of the agencies are sponsored by Government Departments, so central Government support was offered from the outset. The first 16 Community Budget areas to tackle families with multiple problems (CB-FMP) had a lead contact in Whitehall and the Local Government Association (LGA) to discuss initial proposals for governance arrangements; how Whitehall and LGA colleagues could help; and to agree the work programme needed to implement the community budgets.

This initial phase was lead by a Community Budgets Group, chaired by Lord Bichard with Whitehall Directors General, Chief Executives from the first 16 areas and representatives from police and health, Barnardos, and Development Trusts Association from the third sector. Its focus was the delivery of community budgets among the first 16 areas by April 2011.Their role was to enable and support them by:

facilitating collaborative working between areas, LGA and central government;

driving forward local flexibility in pooling and aligning funding and encouraging places to take control and transform services;

assisting the dismantling of, and preventing new, centrally-created barriers to local innovation.

Individual Whitehall Champions were appointed to support each of the first 16 areas. They acted as Whitehall representatives for the area: escalating issues, brokering agreements, and identifying the “win-win” for areas and Whitehall. They also helped areas on a range of issues from channelling enquiries to policy experts, to developing approaches to local governance and accountability.

Ministerial meetings with Leaders from the first 16 areas took place in early 2011, addressing outstanding barriers to implementation. Issues addressed included arrangements with the Work Programme and the European Social Fund (with DWP) and NHS clusters (with DH). Ministers and Leaders agreed to establish a Community Budgets Political Leadership Group (PLG). Chaired by Baroness Hanham and bringing together Leaders and Chief Executives from the first 16 areas, it focussed on identifying, co-designing and delivering products to assist in community budget set-up. It met four times between April and the publication of initial products in October 2011.

A range of support events for the areas were arranged from November 2010 by the sector through the LGA working closely with Government, led by DCLG and DfE.

In addition, support on evaluation was offered from DCLG and DfE analysts to assist the 16 areas to establish their own evaluation processes; this has been taken up by some areas.

2. Barriers have been identified by the areas involved via two key routes: the PLG, chaired by Baroness Hanham, and the Exemplar bids which DfE ran for the first 16 areas. Four particular areas were identified: data sharing, innovative finance, leadership and simplifying assessments. Leaders volunteered to lead work to tackle these obstacles, with support from DCLG as well as other departments and the LGA. This work is still ongoing, with the outputs to date available for all on the LGA’s website: http://www.local.gov.uk/604.

The first 16 community budget areas were invited to bid for “exemplar funding” from DfE3 – they applied singly or in groups for funds for the areas they were having particular difficulty with, for example understanding and using an evidence base for benefits realisation, data sharing and innovative finance. These latter two have merged their work with that of the PLG volunteers, to remove unnecessary duplication.

The Government, with the LGA, has continued to make an open offer to any places developing their own community budget approaches to tell us where they hit difficulties in their progress which Government could help to unblock. The LGA has not so far passed on any specific issues from those areas developing community budgets for new themes – but Government remains open to any approaches.

3. Financial accountability: Where a local area has chosen to align funds around a shared objective, financial accountability is unchanged. Some areas may choose to pool funds using the existing legislative framework of a Section 75 agreement (NHS Act 2006, replacing the Health Act 1999 Section 31 arrangements), the accountability arrangements for which are set out in that Act. Other areas could choose to pool using their own organisational powers, and using the well-known and tested systems of Local Government finance to provide assurances of the regularity and propriety of funds pooled via an LA. This has not so far been used to any great extent. In support of this approach, however:

Birmingham and Greater Manchester are developing “Investment Agreements” between local partners choosing to make a collective investment (see http://www.local.gov.uk/innovative-finance) This will set out all partners’ inputs alongside an agreed division of return on savings made by investing in effective early interventions;

A Memorandum of Understanding is being developed between Government departments to signal the support of Accounting Officers for Community Budget pooling, within the legal abilities of each organisation, across a partnership. HM Treasury and the NAO have been closely involved, alongside Departments. The Whole-Place pilots will look further at financial accountability issues arising from wider local pooling;

DCLG led work, commissioned by Sir Gus O’Donnell, on financial accountability in decentralised public services. This recommends that departments publish an accountability System Statement setting out the framework of local accountability measures that the Accounting Officer relies on to ensure the proper uses of public money and value for money: these systems should be flexible enough to allow for the local pooling of budgets. The report4 contains an example Statement for local government. The key elements of this system are clear roles for councillors and for officers (particularly the chief finance officer, known as the section 151 officer), and framework of financial rules, for requiring authorities to balance their budget. This work is subject to an ongoing conversation with the Public Accounts Committee.

Local Governance: The community budget approach is that local partners come together and agree how services can be better delivered, how they will organise themselves, performance manage and agree how funding should be managed in order to ensure the approach works to transform services. Local partners seek to use collaborative arrangements such as pooled and aligned funding and other financial mechanisms to support their redesign of services.

Bringing partners together: DfE’s Exemplars encouraged areas to:

Explore the need for a consistent implementation model.

Examine structural reforms to enable integrated working and funding towards the delivery of public services such as by joint commissioning and innovative investment models such as payment by results, investment agreements/systematic benefits realisation.

Develop robust evidence on effectiveness with clear cost/benefit analysis and effective evaluation.

Utilise pooled budgets and aligned resources aims for traditional barriers to partnership working to be overcome allowing more efficient, economic and effective use of resources.

The barriers identified by Ministers and Leaders included:

Governance—looking at what is critical by way of clear lines of accountability, planning and finance. Some areas have built on previous partnerships, such as Local Strategic Partnerships whereas others have developed Joint Investment Boards. Examined by Greater Manchester, Swindon and Salford.

Leadership—crucial for managing a successful community budget with strong political leadership across the area and a clear vision for reform supported by senior champions and partner organisation sponsors.

Clear Aims & Objectives—clarity and associated milestones have been examined by Hull with ownership, peer support and challenge being considered as key aspects for success.

4. It is too early for robust evidence of the effectiveness of community budgets to be absolute, but a picture is emerging about what is needed to develop an ambitious approach:

A tailored approach—there is no one single method that will work for all areas. Each area needs to understand current best practice and interventions that are effective and apply them to their own circumstances and partnership dynamics;

Early agreement amongst partners about the problem, its causes and the objectives and outcomes that they want to achieve – this provides a clear focus;

Strong local leadership – areas where there is input from senior leaders in local organisations from the outset tend to be able to develop a community budget more quickly and strongly;

Dedicated capacity to develop options for service redesign and the vehicles for funding them, as well spending time with partners to secure agreement;

Strong and effective partnership working where partners are able to take difficult decisions, pool resources and overcome sovereignty concerns to tackle the problem rather than defend individual organisational interests;

A new mindset focused on finding solutions to barriers that prevent better service delivery rather than using barriers to maintain the status quo; and,

A new relationship between national and local partners to tackle service delivery barriers together and co-design solutions.

NB: we can provide info on the names of the first 16 community budget places; representatives on the oversight Group; attendees of the Political Leadership Group; examples of lessons learned – and any other background the Committee would find helpful.

December 2011