Communities and Local Government CommitteeWritten submission from A4e Ltd

1. Introduction

1.1 This response is submitted on behalf of A4e to the Communities and Local Government select committee inquiry into Community Budgets. A4e is happy to provide further clarification on any aspects of our response and we are keen to give oral evidence to the committee as part of the inquiry.

1.2 A4e is recognised as a market leader in the design, management and provision of front-line public services. Established over 20 years ago, A4e was set up with the aim of lifting people out of poverty in Sheffield; originally through helping ex-steel workers re-train and find jobs in other industries. We are now a global business, still motivated by a social purpose.

1.3 We partner with public, private and third sectors to develop innovative and efficient solutions to the most complex social problems; from entrenched, inter-generational worklessness to poor health in deprived communities. This work brings us into contact with people across the UK who we help to navigate public services, and ensure that they get the support and help they need to help themselves. We therefore have a unique perspective on the ways in which services are delivered. We also have a comprehensive view about the challenges and issues involved in integrated outcome-based commissioning and therefore for the success of the Community Budget approach.

1.4 We have long been committed to working in a way which reflects the problems of our customers rather than the silos of different Government agencies, and to use our scope as a third party to provide joined-up services. In our own service delivery we aim to build services that make sense for individuals. Our recent work in this area has included:

Conducting focus groups with our customers about their views on public services, the shift to open public services and the direction of service reform.

Working in collaboration with both local charities and ex-inmates in order to develop a more user-centred blueprint for offender rehabilitation.

Developing A4e’s “Total Person” methodology which has led the way in debating how services should cater to the customer.

2. Executive Summary

2.1 A4e welcomes the committee’s inquiry into the progress achieved so far under the roll out of Community Budgets, and as a longstanding exponent of integrated service provision, we strongly support the Community Budgets themselves.

2.2 In our view these pilots were initially hampered by a lack of direction from central government. Although many councils that adopted them are already saving money and improving services for the user, they need to be judged in the context of the current organisational and budget pressures on the public sector. The recent announcements regarding the Troubled Families Unit, together with central government’s funding commitment in support local initiatives, are a welcome indication that this issue is now achieving the momentum it needs.

2.3 We fully support the approach to tackling deprivation and joblessness in a family setting and believe that all parties should now be even more ambitious about Community Budgets.

2.4 This approach, coordinating resources and action, could be used to tackle a range of problems which run across the remit of different agencies. As with the current approach to troubled families, this wider remit will, above all, demand leadership at three levels: overall commitment of budgets across departments in both central and local government; the commissioning of integrated, user-driven services by local commissioning organisations; and, the implementation of the complex supply chain necessary to deliver services on the ground.

3. The administrative arrangements for operating a Community Budget and the support that has been provided by central government departments

3.1 The period from the launch of Community Budgets has been characterised by uncertainty over central government support. This absence of Whitehall leadership has been clearly exemplified by the lack of a single sponsoring department for the initiative during much of the recent period and the failure of departments to make any specific budget commitment.

3.2 As a result, although the ethos of Community Budgeting was – and is – widely supported by local authorities, there has been considerable uncertainty about the scope and priorities of the initiative. This has been one of the reasons for a lack of ambition by some Community Budget initiatives.

3.3 We therefore strongly support the establishment of the Troubled Families Unit, which should give Community Budgeting a clear direction. It is, however, important that the role of the Unit moves beyond mere sponsorship and establishes strong coordinated leadership to broker the support of Whitehall departments. We are encouraged by the recent announcement of a budget commitment of £450 million to the issue. With a real shift towards outcome commissioning, this could be an important step towards a necessary and broad-based redesign of local services.

3.4 The initial lack of funding commitment by departments other than DCLG for Community Budgets has hampered both the scale of the experiment and its ability to be a genuinely holistic response. Local authorities are understandably less willing to address problems that cut across central departmental remits if those departments do not bear an equitable share of the costs.

3.5 In some cases the issue has not been the lack of central government support per se, but a lack of consistency across departments. In one area in which we work, the local authority was allowed to draw down their education budget early in the form of exemplar funding, and so front-load investment in the first and second years. However because other agencies such as the Police and NHS did not have similar arrangements with the MoJ and DH, the local authority would have had to shoulder the entire risk of achieving their family intervention outcomes, and was hesitant to do so. This highlights the very problems that Community Budgets are designed to overcome – the administrative disjunction between different departmental silos. Money is parcelled up into different budgets in Whitehall and significant barriers remain that prevent it being recombined effectively at the local level.

3.6 The lack of progress in establishing new approaches in the delivery of community budgets can to some extent be explained by some exceptional circumstances. The CSR and local government settlement did not emerge until December 2010 and many government departments have spent much of this year managing significant budget reductions. It has therefore been very difficult for local authorities to devote scarce resource and organisational capacity to a model that requires upfront investment, even when it is designed to make savings in the long run.

3.7 Lastly, both the costs and the benefits of Community Budgets must be pooled amongst contributing agencies to generate a broad-base of inter-governmental support. Experience has shown that strong leadership at both the local and central level is vital if different parties are to be persuaded to contribute their funds especially at a time when budgets are tight.

4. What are the most significant barriers that have been overcome, and what barriers remain to put in place the desired services?

4.1 Barriers overcome

4.1.1 Community Budgets are not an end in themselves, but the basis for a new way of working that revolves around outcome commissioning, user-led services and locally driven solutions. A significant achievement of these pilots is to have helped to shift the parameters of policy thinking in this direction.

4.1.2 The pilots have successfully drawn together different parties who would not normally collaborate closely. We have seen a stronger understanding of the complexity of the issues involved – and the degree of cooperation required to overcome them. Despite an uncertain start, it is now more widely accepted that Community Budgets are an important way to improve service outcomes for the users than the traditional silo-based approach.

4.2 Barriers that remain

On the other hand, there remain a number of barriers in widening the impact and effectiveness of community budgeting.

4.2.1 Invest to save

In some areas there is still a reluctance to implement the invest-to-save budgeting approach that a fully-fledged move to early intervention implies. Early intervention to prevent downstream problems requires investment, and this remains a very significant problem for local authorities—especially against the backdrop of budget reductions.

Although there are ways of transferring investment and risk to the private or third sectors, such models are in their infancy. A strong evidence base is needed before all parties can be convinced of the merits of Community Budgeting – a fact which highlights the importance of these pilots, and of the evidence which they will produce.

4.2.2 Objectives

The second barrier is the sheer complexity of the objectives of community budgeting. Even if all parties cooperating on an issue support a particular goal, it can be much harder to find a “theory of service” that all can agree on. Parties might have different ideas of the outputs that are needed, even where there is complete agreement about the desired outcome. Having both shared objectives and a shared methodology is key to running a successful Community Budget.

4.2.3 Incentives

There are different incentives for cooperation from different agencies. Some have more readily cashable savings (for instance a reduced requirement for police overtime) than others where savings depend on shutting capital facilities. This disparity hampers cooperation across departments, even when all can make resource savings.

4.2.4 Data

There are also considerable problems in terms of both data availability and its form. For example there are widely different metrics that mean data is not comparable or is too sensitive to be shared. More broadly, there is sometimes a bureaucratic reluctance to share data between departments at local and central levels. Yet community budgets depend for their success on overcoming these data related obstacles.

4.2.5 Local Government

Some local authorities have been reluctant to look at outcome-based commissioning models at all. They remain wedded to a revenue model rather than an investment model, and have seen Community Budgets merely as an opportunity to channel funding to their existing delivery models. It is critically important that community budgets involve a radical change in objectives and approaches to service delivery.

4.2.6 Family Intervention Pilots

Given that the Community Budget pilots revolve around troubled families, it is important to learn from the experience of Family Intervention Pilots. Resources have been concentrated on level 4 families – families in crisis. However it is important to point out that, particularly in a difficult economic climate, there will be movement into as well as out of difficult circumstances. We need therefore to tackle the “flow” of lower risk families into the “stock” of high need families. Otherwise any success in supporting high need families will be quickly undermined by a flow of families into the high risk category. We suggest that the FIP approach needs to be developed to encompass smaller and earlier interventions which would mitigate this problem and use scarce resources more effectively.

5. What are the emerging implications for local governance of services and who is accountable for the money spent though Community Budgets?

5.1 If Community Budgets are to achieve their potential in improving public service delivery, it is crucial to develop a consensus between the different participants at a local level around the outcomes expected and the interventions needed.

5.2 Local authorities are particularly well placed to broker these negotiations since they have a democratic mandate, expert local knowledge and provide many of the services involved. Such strong local accountability needs mechanisms through which to bring partners together. However local and national agencies are currently going through a period of upheaval, which means that some of the structures (and individuals) that normally drive reform are being reorganised or dissolved.

5.3 Budget cuts can accelerate rather than impede reform, yet they also make it difficult to create a forward investment model, even where this might save money in the long run. This highlights the needs for strong and continuing central government support. The announcement regarding funding support for the Troubled Families initiative is therefore a very welcome first step.

5.1 What lessons have been identified for operating more comprehensive community budgets and what lessons the troubled families pilots will have for Community Budgets in other policy areas, and the “Whole Place” Community Budget pilots?

5.2 In an austere climate, local authorities can find it difficult to pool their resources—even though it is widely acknowledged the efficiencies of coordinated early intervention are all the more necessary. Community Budgets cannot therefore rely wholly on locally driven approaches, and will need continuing central government support.

5.3 Community Budgets need to have clear mechanisms to pool savings as well as spending; otherwise they will not create the necessary incentive for the national and local organisations to work together and build an early intervention approach as standard. Metrics also need to be agreed so that each partner paying towards an outcome can be sure that their outcomes are reflected. This is particularly important where a critical objective is cashable savings. It is important to note that cashable savings will accrue to other parts of both local and central government, in addition to those which have invested in the model and this needs to be recognised in the decision making process.

5.4 Our overall conclusion is that a crucial component of successful community budgeting is strong leadership at every level to ensure cooperative relationships are to be established, both between local authorities and across the local/central divide.

This leadership is particularly important at three levels: overall commitment of budgets across departments in both central and local government; the commissioning of integrated, user-driven services by local commissioning organisations and in the implementation of the complex supply chain necessary to deliver the services on the ground.

December 2011