Localism - Communities and Local Government Committee Contents

6  Who will deliver localism?

The Government's plans to diversify service provision

160. In October 2010 the Government published a strategy for voluntary and community groups, charities and social enterprises, which stated that:

    The Government is committed to ensuring that charities, social enterprises and co-operatives have a much greater role in the running of public services. By promoting contestability to open up more contracts to third sector providers and giving them more information about the costs of existing suppliers, our reforms are aimed at giving the sector a bigger role in delivering more innovative, diverse and responsive public services.[331]

Under this vision, NHS patients would be able to choose from "any willing provider", the voluntary and community sector would be given opportunities to bid for criminal justice contracts for offender and community services, mutuals, co-operatives and social enterprises would be encouraged to deliver social care, and "local partners" would be able to influence the support delivered by welfare to work programme providers.[332] Publication of a White Paper, Open Public Services, is expected in early summer 2011. The Prime Minister has said that it will set out a 'presumption' that private, voluntary and charity bodies can bid for health, education, justice and council services.[333]

161. DCLG's 'essential guide' to decentralisation states that "to improve the quality, responsiveness and efficiency of public services we […] need to break open the public sector's monopolies […] Our default position is that all public services should be open to diverse provision". The premise is that "local control over local spending requires a choice of public service providers".[334] These aims are embodied by two specific measures in the Localism Bill: the community 'right to challenge' and the designation of 'assets of community value'.

162. Under the community right to challenge, voluntary or community bodies, parish councils and local authority employees will have a right to make to a local authority an expression of interest in running a service that the authority currently provides.[335] The authority must then either accept or refuse the expression of interest, and, if it is accepted, must carry out a procurement exercise for the service, in accordance with normal procurement rules.[336] A DCLG press release on the publication of the Bill set out the Government's belief that this new mechanism would lead "to a transformation in the way that local public services are run", citing children's centres, social care services, and transport links as possible subjects of community challenges.[337]

163. The Localism Bill would require local authorities to maintain a list of community assets and 'land of community value' within their area.[338] The owner of an asset thus listed would not be able to dispose of the asset unless certain conditions had been met, including written notification to the local authority of their intention to dispose of the land, and completion of a moratorium period during which community groups will have an opportunity to raise capital in order to bid for the asset. The assets will ultimately, however, be sold on the open market at market value.[339]

164. Although some critiques of these measures in the Localism Bill have focused on the potential for private companies to get more involved in public service delivery, the Government's expressed intention is rather to encourage individuals, communities and interest groups to spontaneously extend their activities and to take over services which are at present largely delivered by the state. 'Liberating' such groups will, the Government believes, be sufficient to galvanise more widespread voluntary activity at a level below the geographical boundaries of existing councils. The Minister for Decentralisation, Greg Clark, explained the motivation for these plans:

    I believe very strongly that the best ideas are not the preserve of elites, whether they are in Whitehall, Westminster or, frankly, necessarily the people who occupy the upper echelons of the town hall from time to time. I think lots of people in communities and working with their communities have great ideas but often they do not have either the influence or access to the mechanisms available to those in power and authority in order to achieve what they want. Therefore, it seems to be incumbent upon us as a Government and also upon local government to make some of the resources and support that we have to make our ideas fly available to people in communities with good ideas. I am absolutely certain that if you do that over time and across the country people will, if they have their head, do things in ways that represent innovations and will be a motor for progress that can be tremendously exciting.[340]

165. We heard from witnesses some of the advantages that could be realised through greater involvement of the voluntary and community sector in service design and delivery: innovation, "imagination and initiative", better understanding of what is going on in the local area, expertise in delivering services, and the values of social entrepreneurship.[341] Voluntary sector organisations often enjoy high levels of trust in the community, and can engage with local networks largely inaccessible to the stautory sector.[342] Cllr Steve Reed described a community-led initative in Lambeth which aimed to reduce the exposure of young people to gang activity and violence, and the ways in which it had been more effective than council-led efforts in the same vein. One of the advantages was the potential for savings:

    that community group delivered, for a fraction of the sum of the council's own service, better outcomes. If we can place more of our resources at the disposal of communities in that way and appropriately support the communities to be able to analyse their needs and then procure for them, you will get value-for-money savings. It will differ from service area to service area, and place to place, because the level of capacity will differ, but you will see that happen.[343]

Sarah McAdam of the Commission for Rural Communities cited an example of a town council which had taken on responsibility for some highways maintenance work from the principal authority, with local people doing the work: "they are very responsive and have that local knowledge about where the issues are likely to arise."[344] The Community Development Foundation concluded that a more diverse group of service providers would make for "a more vibrant suite of public services", bringing greater capacity and energy.[345]

166. Ben Kernighan of the National Council for Voluntary Organisations sketched out how the mix of local service providers might change over the next five years:

    At its best I think we will see some exciting examples at neighbourhood level—so quite localised—of where services have been transformed and the voluntary and community sector has played a significant role in that. In particular, in terms of your question about the users of services, they are therefore engaged in shaping and designing those services [...] We will also see lots of examples at a neighbourhood level as well of different statutory services coming together and really exciting multi-purpose community solutions. We will also see other areas that have not got to grips with what is a complex agenda, where we will see a lot of fragmentation, disorganisation and big fears in relation to the period of change could be really tricky.[346]

Ralph Michell of the Association of Chief Executives of Voluntary Organisations added that in some areas the provider market might in fact shrink if the local authority, bruised by funding cuts, reacts by "in-sourcing and looking after their own".[347]

Who will deliver the Government's vision?

167. Many examples already exist of the type of organisation the Government hopes will expand into public service provision. This is a sub-local authority layer of institutions which could be described as embodying the 'Big Society'; indeed, there is some concern that in promoting such an idea, the Government is "seeking to reinvent the wheel".[348] Parish councils are one of the most traditional and widespread of such institutions (though largely absent from the most urban parts of the country). Local authorities have in many cases established ward or neighbourhood forums or committees at their own initiative; these may include local councillors in their membership and many are allocated a small budget. Schools are self-governing institutions and are moreover a natural focus of much activity that the Government might characterise as 'localist', such as parent-teacher associations, volunteering and fundraising drives. Tenants' co-operatives, residents' associations, Business Improvement Districts and voluntary forums for town-centre management, chambers of commerce, single-issue campaigning groups, amenity or user groups, community trusts that run buildings or other facilities, neighbourhood housing associations, councils for voluntary service, safer neighbourhood panels, local branches of national charities, youth clubs, faith groups and sports clubs are further examples of 'localist' bodies that already occur in some combination in most communities across the country.

168. Indeed it is questionable whether the Government's characterisation of public service delivery in England as a monopoly which needs to be broken open is accurate. On our visit to Croydon, it was put to us that it is in fact very difficult to draw a definite dividing line between the state and 'the community'; a Children's Centre leader, for example, might be employed by the local authority but be in many senses also a community figure—someone who might advocate for the community, or galvanise others to take part. Alison Seabrooke of the Community Development Foundation described a distinctive type of third-sector body which she called 'self-help organisations': primarily volunteer-led, they tend to be established "because people are angry [about] some service delivery shortfall." Ms Seabrooke cited an organisation working on domestic violence issues that was set up, on a shoestring, by a woman whose daughter had been a victim of domestic abuse; the organisation now receives a substantial volume of referrals from social services and is highly regarded for its work, although it receives no core funding.[349]

169. However, whether this array of different groups and institutions has the capacity or appetite to rapidly 'scale up' or to take on new responsibilities is an unexplored assumption. Such groups vary in the extent to which they are formalised, the extent to which they levy charges, extract fees from members or seek external funding, and the extent to which they interact with the state. Some, such as community trusts or neighbourhood housing associations, may already deliver services that at one time would have been a local authority responsibility. Others might have the potential to do so, but a great many will be engaged in areas of activity that, while enhancing their area or improving quality of life, could not be considered any kind of substitute for state activity. Many have some degree of reliance on the local authority for support or facilities. Still others may consider that the strengths of their organisation lie in their distinctiveness from statutory delivery agencies.

170. The Association of Chief Executives of Voluntary Organisations reported that its members are concerned by

    what appears to be the government's misunderstanding of what a voluntary organisation is, how it operates, and the extent to which an army of volunteers can be raised. The process of helping people engage with their communities is not going to happen overnight but is a long cultural change.[350]

Community Matters, which represents mainly small-scale and informal community groups, reported that such groups already deliver services, but that "our membership do not generally provide [statutory] services and are mostly not set up to provide them in future, although a very small number provide housing and health care."[351] London Civic Forum (LCF) explained that

    Many local community groups exist outside the formal voluntary sector who require little or no money but who want to make a difference to their area. These groups, such as amenity groups and after-school groups, emerge through local networking and are often fundamentally different from those groups who want to provide a funded services such as job-seeking advice. But that difference has often been unrecognised by capacity-building initiatives which focus on the more formal community sector groups and offer support in areas such as devising a constitution.[352]

LCF's interim Director, Lorraine Roberts, noted the emphasis the Government has put on relatively formal mechanisms such as mutuals, co-operatives and social enterprises, commenting that many people do not want to be involved to that level.[353] The success of this version of localism is also likely to vary a great deal according to the characteristics of different communities.[354]

171. The role that volunteers might play in a new landscape of public service delivery is contested. North Dorset District Council has implemented its own version of localism with "a huge army of volunteers without whom this journey would not have been possible".[355] Volunteering has helped the council deliver a range of services, including tourist information centres, open space maintenance, town markets and leisure centres at lower cost and, the council stated, with greater responsiveness to customers and the community.[356] Cllr Colin Barrow, Leader of Westminster City Council, argued that the full potential of volunteers had not yet been reached: "This has quite a long way to go before we run up against those buffers. I don't think we'll know until we try it. We must be allowed to move in that direction, as far as the capacity will allow, and then more capacity will arise".[357] NESTA recommended that local government "presume community capacity to innovate", and stated that "giving communities ownership of developing and delivering their own responses to the big social challenges they face is a self-fulfilling prophecy".[358]

172. Community Matters, however, warned that volunteers and voluntary services should not be considered "a free, limitless public good. In reality these groups operate in a low-consumption economy, often in practice a gift economy, but the resource requirements in terms of time, stress or the modest amounts of income required are very real constraints".[359] Cllr Richard Kemp suggested that "lots of people want to be involved" and it was up to local authorities to "bring together that coalition of the willing", but this must be tempered by pragmatism: "at the end of the day, libraries will not be run by volunteers; they'll be run by librarians. We've got to make sure that volunteering and support is complementary to, and not replacing, basic services".[360] Cllr Steve Reed, Leader of Lambeth Council talked about individuals' motivations to get involved:

    Participation is based on reciprocity, what you get out of it. It's not just altruism; it's because you perceive a need and, because that need directly affects you, your family or your household, you will get involved in finding the solution, because it matters to you that much. [Parents in Lambeth who set up the country's first 'parent-promoted' school] didn't become involved in a Parent Promoter Foundation because they fancied doing a bit of volunteering. They did it because they cared passionately about the education of their children, and they feared there wasn't a good enough place for their children to go and they wanted to be part of that solution.[361]

A retreating statutory sector?

173. There was some concern about the prospect of different layers of government withdrawing from service provision on the assumption that the vacuum would be rapidly filled by newly-empowered citizens.[362] Community and volunteer-led initiatives, said Age UK, should not be seen as a substitute for existing publicly-funded provision.[363] Sense pointed out that in the case of services for people with low incidence disabilities, it is not a given that there will be a local group to which services might be entrusted.[364] Age UK worried that there is "a risk that vital local services could be lost by assuming that because people don't want to run the service themselves, they don't want the service at all".[365]

174. North Dorset District Council told us that in 2006-09 it implemented changes which achieved a 25% reduction on its net revenue budget. Town and parish councils and community partnerships were consulted about which services "were important to their communities and, if important, would they be prepared to work with the district council to safeguard their future provision". The services under consideration included leisure centres, public conveniences, sports development, tourism promotion, open space maintenance, car parks and street cleansing.[366] Cllr David Milsted told us that it is up to communities what services they need and want:

    If they tell us they do not want it and they can prove that they really know what they are talking about, it is not for us to say, 'I'm sorry but you're wrong; you have to have it'. […] if genuinely the community does not want to take something on because it feels it does not want it badly enough, fair enough.[367]

If supported by research and robust consultation, such a conclusion may well be valid. However, if a service or facility is used primarily by the less vocal in the community, or people who would not be in a position to take on responsibility for running it, it is possible to see how a local authority in the hunt for cuts might mistake lack of volunteers for indifference.

175. Community enterprises and voluntary sector groups—particularly small ones—will require time, support and resources from the statutory sector to take on new responsibilities.[368] This was emphasised by NESTA, who reported findings from a survey in which eight out of ten respondents agreed that the Government should allow communities to come up with their own solutions to difficult social challenges such as youth crime, obesity and climate change. Most did not know, however, where to get the right support, with 80% of those who already had ideas saying they would progress them if they had such support.[369] This support could include advice, start-up grants, training, or fulfilling basic practical needs such as access to photocopying facilities or web hosting.[370] Cllr Steve Reed argued that "it doesn't work if the community is simply left to do it on its own. It's too exhausting". He returned to the example of a community-inspired youth project in Lambeth that aimed to prevent young people getting involved in gangs:

    When they were left to their own devices to do it the impact was not as big as it became when the council partnered them and put more resources at their disposal, so they had more things to call on. If you went to visit them and speak to them, they would say, 'Why do you have all of these detached youth workers over there, doing those things, when we know that this kind of activity works?' We're trying to find ways to give them more control over those detached youth workers, so that what they're doing lines up with the community's own understanding of its own needs. You could leave the community to do it itself, and just take the council's youth services away, but that's like pulling the rug from underneath them, because there aren't always going to be enough people with the appropriate skills to do all the things that need doing, but they will profoundly understand what needs to happen in the place where they live, because they live there and they see their children getting involved in these kind of gangs. What we're talking about here is a partnership, not de-professionalising.[371]

176. The Community Development Foundation cautioned that "complex issues in delivering services and managing community assets and land can go beyond the average citizen's skill set"; support from professionals, including council officers, would therefore be crucial.[372] Project management, business planning and governance skills would all be needed by new or developing organisations.[373] On our visit to Devon, we heard about initiatives including a community-led planning project, a community-run shop and post office, and a trust which had assumed countryside management responsibilities. While the inspiration and much of the hard work came from members of the community, all the projects had depended on local authority assistance at some point—for help in accessing funding, for planning advice, or for underwriting the new management model.

Barriers to greater diversity of provision

177. Voice4Change England and Urban Forum warned that

    whilst localism and devolution of power to communities can support public service reform, it is not a given that public service reform supports localism. If proposals on opening up public services are not managed properly then it is not local business or charities that will take over services, but large corporations.[374]

During our visit to Devon we heard from the Chief Executive of Exeter Council for Voluntary Service, who used the analogy of 'clonetowns'—local high streets dominated by branches of national chain stores—to describe the impact that attempts to encourage a wider range of providers to deliver public services might have. Small local organisations, often with a very specialised expertise that does not lend itself to winning large contracts, could be squeezed out by large-scale, national charities. The effect, he said, could be contrary to localism. Other witnesses, however, argued that the better national organisations fully recognise the need to work with local partners or through local structures, and to tailor their service to the needs of each community.[375]

178. Many small-scale voluntary sector organisations feel that they are put at a disadvantage compared to established players in the market by current commissioning practices. They might therefore suspect that they have little to gain from increased opportunities to tender for contracts such as might be unlocked by the community right to challenge.[376] The Association of Chief Executives of Voluntary Organisations (ACEVO) noted that bidding organisations will have to to have large amounts of time and other resources at their disposal.[377] Regulations about payment in arrears or annualised spend, or procurement rules, can pose significant barriers to community organisations seeking to compete for services on an equal footing with large-scale providers.[378] This includes, for example, St Petrock's, a small charity providing 'first contact' services for homeless people, which we visited in Exeter. The trustees told us that the lack of a full-time bid writer, the difficulty of providing some of the outcome evidence asked for in tenders because of the very early interventions they provide, and unhelpful feedback from unsuccessful applications all jeopardise their chances of taking on new services. St Petrock's also reported that some commissioning processes are founded on an assumption that a regional-scale provider would be the most appropriate delivery agency.

179. The challenges are illustrated by the explanation of the Work Programme given to us by Employment Minister Chris Grayling, who explained that the 'payment by results' basis of Work Programme contracts means that bidding organisations need to be able to "bankroll" their tenders.[379] Wider application of the payment by results model for service delivery contracts might, therefore, restrict the organisations that are able to get involved. In its strategy for the voluntary and community sector and social enterprises, Building a stronger civil society, the Government has committed to producing proposals to "modernise" commissioning practice to ensure that more opportunities are open to civil society organisations.[380]

180. Several organisations argued that a culture change will be needed to ensure that commissioning decisions assess benefits other than cost savings, specifically "social value", the sort of criteria on which local community organisations might be better able to compete.[381] The Government has said that it will look at "how to enable commissioners to use assessments taking full account of the social, environmental and economic value in their commissioning decisions".[382] A Private Member's Bill introduced by Chris White MP, the Public Services (social enterprise and social value) Bill, would require public bodies to introduce social clauses into their procurement and tendering processes, thus requiring all businesses that bid to declare the social value their tender would produce. The Bill was given its second reading on 19 November 2010. Greg Clark has said that it is the Government's intention that "social value in the local area" can be taken into account during procurement exercises triggered by the right to challenge in the Localism Bill.[383]

181. A further concern is the prospect of grant funding, as opposed to contract funding, being cut or disappearing.[384] One North West argued that grants promote innovation and quick responses to need, and enable new groups to get off the ground and develop capacity. It pointed out that many organisations "are best when they remain small", and it is these sort of groups that are better served by grants than having to negotiate commissioning and contracting processes.[385]

182. The capacity of voluntary sector organisations to respond to the localism agenda may also be undermined if they find their funding substantially reduced. Figures compiled by NCVO show that in 2007/08, 52% of statutory funding to the voluntary and community sector came from local government, so the risk of cuts as councils adapt to straitened circumstances is significant.[386] Ralph Michell of ACEVO told us:

    the key concern is cuts. Our estimate is that if local government passed on the cuts it is facing proportionately to the third sector, it would mean a loss of income to the third sector of £1.8 billion a year by the end of the Parliament. We are already starting to see cuts being passed on disproportionately. [...] There is the danger that Whitehall has a particular view of the third sector and clearly values its role, but in some areas local government will not share that view and will see the third sector simply as an easy option to cut. It is a soft target and nice to have in good times but not necessarily in bad times. That is our main fear.[387]

Community Matters, a national federation of community organisations, reported a local government officer saying that "It feels as if there are two conversations being had; the one about cutting costs, and the Big Society one about building community. We haven't got the resources to do both in the time that's been given to us and in the end, the savings will have to come first".[388]

183. Ministers, including the Prime Minister, have been vocal in urging local authorities not to pass on cuts in their own budgets "disproportionately" to the voluntary sector organisations they fund. Greg Clark said it "would not just be the wrong thing to do but would be a bizarre and counter-intuitive thing to do".[389] Compact Voice, however, reported that "despite these reminders, local decision-making has only followed the spirit described by national policy in some instances."[390]

184. A 'transition fund' set up by the Government to support organisations through this potentially tricky time amounts only to £100 million.[391] The transition fund is part of a larger package of £470 million over four years which is intended to help community groups realise the 'Big Society'; this includes funding for 5000 new community organisers, recruited and trained centrally. The Government plans to establish a 'Big Society Bank' using funds from dormant bank accounts to provide new finance for social enterprises, charities and neighbourhood groups. The bank will be a wholesale organisation, investing in financial intermediaries which will in turn increase access to finance for social action groups.[392]

Asset transfer

185. Transfer of assets to community groups and social enterprises, as envisaged by the 'assets of community value' provisions of the Localism Bill, is not a new idea. A review of community asset ownership and management was conducted for DCLG in 2007, following which an Asset Transfer Unit was funded to provide technical advice to community groups, local authorities and others. During our visit to Devon, we heard about ongoing asset transfer projects in the county, each initiated by the community. Devon County Council emphasised that such projects could be very difficult to bring to a conclusion, that they could be easily de-railed by unforeseen circumstances, and that committing a building to one community group could in certain circumstances have the effect of excluding another. The assets to be transferred were sometimes in poor condition, and so a great deal of investment was needed before they could be handed over. Groups needed to have a very robust business plan, and some of the possible avenues for income generation—such as car parking fees—might bring other problems. Finally, changes in the membership of a community group's committee could seriously affect the viability of a project, especially if committees did not retain the high-level skills required to manage it successfully.

186. The Audit Commission commented that, while community asset transfer is manageable, "there are real risks in putting valuable assets in the hands of groups that may not be able to own or manage them."[393] Alison Seabrooke of the Community Development Foundation drew on her personal experience to highlight the possible pitfalls:

    I've raised money for, developed and built a large community building, and I know how damn difficult it is to run it and to keep it going. Particularly if you are looking at generating your own earned income, that becomes harder if you're in a community that doesn't have much money to spend, or with local public bodies that do not have much money to distribute to support it. So I think in terms of the principle, actually owning, developing and managing a building for the community is a real privilege, and you run it in a way that is effective because you know when people want to come and use it. [...] But in terms of getting them off the ground, and ones that are perhaps up and running at the moment and what their futures are going to be like, it's going to be very tough.[394]

London Civic Forum, while enthusiastic about the contribution that asset transfer could make to the growth of the social enterprise sector, noted that councils would have to ensure that there is a large enough revenue stream to enable social enterprises that take over assets to manage them effectively.[395] Action for Market Towns described the mix of capital grants, loan finance and revenue that was typically necessary for successful asset transfer, and the possibility of promoting community share and bond issues to support this.[396] There is some concern that disposal of assets will be undertaken by local authorities primarily as a means of making savings, rather than seeking to support local groups to take them on.[397]

187. To roll back the state on an assumption that civic activism will fill the vacuum would be a leap of considerable optimism. We do not wish to imply that there is no scope for the community to get more involved in directing and running services—the potential gains in terms of innovation and responsiveness are huge, and we have seen examples of what can be achieved by motivated and dedicated people. But there are limits to the responsibilities that communities can be expected to take on in a localist system; private individuals and community groups do not have infinite capacity to expand their activities, nor do many wish to. The Government must acknowledge that the 'Big Society' already exists to some extent, and therefore must be realistic about how much further it can grow. It has not explained how it expects to achieve a substantial increase in the number of volunteers and community bodies willing to take on the provision of services.

188. The voluntary and community sector will require practical help to scale up its activities. We welcome the Government's commitment to reviewing commissioning processes to ensure that small-scale groups are not habitually at a disadvantage. Funding cuts, and a potential reduction in grant funding as opposed to contracts, will inevitably undermine the potential of some groups to participate. We note the Government's intention to publish statutory guidance to local authorities not to pass on 'disproportionate' funding reductions to the third sector. However, this is another instance of two types of localism coming into conflict: local government must be given the flexibility to manage its resources according to local decisions, even in instances where those decisions might threaten the development of a 'Big Society' along the lines envisaged by the Government.

The accountability of delivery bodies

189. Bristol City Council stated that:

    If public services are going to move towards delivery by citizens, communities and voluntary groups a system for holding them to account needs to be outlined. It needs to be clear how citizens, communities and voluntary groups will be accountable for services they deliver, who will hold them to account, and what the role of the 'Big Society' will be in holding itself to account. What will be the role of elected members if responsibility and accountability for services may be moved away from the local authority? Will councillors become the scrutinisers for an increasingly more devolved decision making system? There remains a need to think through how Big Society initiatives interact with the formal governance and service delivery functions of local government, especially as these become more autonomous themselves.[398]

Other organisations raised similar questions.[399] The Runnymede Trust argued that "democratic accountability is not a key strength of voluntarist approaches", and that the role of local government in providing transparency and legitimacy to devolved arrangements had not been properly clarified.[400]

190. Eugene Sullivan of the Audit Commission agreed that commissioning relationships between purchaser and delivery body clarified accountability and made it easier for other parties to monitor the relationship.[401] The Minister for Decentralisation confirmed that new arrangements for voluntary and community groups to deliver services would be arrived at through contracts with local authorities. Bids to run services under the community right to challenge, for example, would if accepted be "subject to the contractual regime of the council".[402]

191. However, Mencap argued that contracts with delivery bodies are in practice often "inadequate" tools for councils or individuals to use in holding them to account, and in addition:

    there is a tension between the patterns of larger contracting arrangements versus real choice of services for people, which again makes it difficult for individuals receiving services to exercise 'accountability', albeit via the market route. In times of financial constraints, smaller specialist providers of services are likely to be undercut by larger, national or even multinational organisations. Again this [...] has implications for accountability, as local individuals will find it difficult to hold national providers to account.[403]

Jessica Crowe of the Centre for Public Scrutiny described how contractual arrangements can be of varying utility in ensuring accountability and transparency:

    We did some research a couple of years ago, looking at different forms of commissioning and contractual relationships, and how councillors could hold those contractors to account. It was very clear that, unless it was built into the contract right at the start that the contractor was expected to come and supply information to scrutiny from the start, it tended to be quite easy for the client-contractor relationship to be quite cosy. The contractor could just say, 'Well, we're accountable to our client', and the client would say, 'Well, we're making decisions and we're holding the contractor to account', but that is not very transparent to everybody else. So it has to be built in right from the start. Where that does happen, however, you can develop quite a constructive relationship, particularly if it's a long-term partnership, which you can see. You then get a good understanding from the contractor and the supplier of what the council as a body wants to see, and you get a process of dialogue. I think that that's much more healthy.[404]

192. The question was also raised of how the public sector equality duty introduced by the Equality Act 2010 will transfer to community and voluntary groups that take over the running of services.[405] Age UK expressed concerns about the risks of financial and managerial sustainability of local services that become community-owned.[406] Cllr Steve Reed considered that "there will need to be covenants around some of the contracting that enables communities to take control of assets or run services so that, if things go wrong, if groups are excluded, if services are failing, we can still intervene."[407]

193. It will largely fall to local authorities, whether through contract management or other oversight arrangements, to determine whether the services provided by community organisations are of adquate and consistent quality. Local decisions will need to be made about the level of risk councils are prepared to take on, both in terms of financial underwriting and in performance management. Ways of transferring services to different providers may be needed in the event of ineffective service delivery.

194. Accountability for services delivered by non-statutory bodies is also causing some pause for thought at the national level. The Public Accounts Committee took evidence on the subject of accountability on 19 January 2011 from Sir Gus O'Donnell, Sir Nicholas Macpherson, Rt Hon Francis Maude MP and Lorde Browne of Madingley. When asked about accountability and value for money in bodies such as foundation trusts and free schools, Sir Gus O'Donnell responded that he had asked Sir Bob Kerslake, Permanent Secretary of DCLG, and a group a colleagues to investigate the issue of localism and accountability and report back to him: "We are doing some very new things here; payment by results for a lot of contracts will create some issues about precisely where the accountabilities lie. I think that is something we need to sort out."[408]

195. Even if the capacity of communities to take over services was infinite, we consider that there would still be vital roles for democratically-elected local authorities to play. Prime among these is holding service deliverers to account. Local authorities are also needed as enablers, market-shapers and failsafes, evening out inconsistencies or gaps in service provision, and helping community groups and the voluntary sector to grow their own capacity. We urge the Government not to assume that a diversification of provision can occur spontaneously, nor can it occur without a coherent strategy to manage the risk of failure in service delivery.

196. Councils might have roles in ensuring community service providers are transparent and also to step in where there is failure. But there must be limits to this—there can be no serious localism if councils are expected both to transfer powers to localist institutions but still take the blame for failures in services thus provided. In some cases services will simply fail and the Government must accept this.

197. We recommend that the forthcoming White Paper on public service reform address the issues of the role of local government, the practical help that can be given to community groups to expand their activities, reform of commissioning processes, accountability arrangements for delivery bodies and those that take on the management of assets of community value, and how the risk of failure will be handled. It should include an assessment of how current models of contracting can be made more effective as tools of accountability, not just for the spending of public money but for the quality of service users' experience.

198. In the spirit of localism, we would not expect the White Paper to dictate detailed solutions to these challenges at national government level, but to set out the principles on which solutions can be developed locally. Nonetheless, the Government must acknowledge that some of those potential solutions will be difficult to implement without sufficient funding to support them.

331   HM Government, Building a stronger civil society: a strategy for voluntary and community groups, charities and social enterprises, October 2010 Back

332   Ibid., p.7 Back

333   "Open for business", Municipal Journal, 17 March 2011 Back

334   HM Government, Decentralisation: an essential guide, p.9 Back

335   Localism Bill, clauses 66-69 [Bill 126 (2010-12)] Back

336   Localism Bill: local government and community empowerment, Research Paper 11/02, House of Commons Library, January 2011, pp.46-7 Back

337   "Eric Pickles: revolutionary new rights for communities will protect and transform local services", Department of Communities and Local Government press notice, 11 December 2010 Back

338   Localism Bill, clauses 71-88 Back

339   Localism Bill: local government and community empowerment, Research Paper 11/02, House of Commons Library, January 2011, pp.48-50 Back

340   Q 495 Back

341   Qq 150-3 Back

342   Ev 248 Back

343   Q 9 Back

344   Q 184 Back

345   Ev 192 Back

346   Q 146 Back

347   Q 145 Back

348   Ev 166 Back

349   Q 185 Back

350   Ev 166 Back

351   Ev w177 Back

352   Ev 179 Back

353   Q 190 Back

354   Ev 190 Back

355   Ev 245 Back

356   Ev 245 Back

357   Q 39 Back

358   Ev 183 Back

359   Ev w179 Back

360   Q 39; see also Q 299. Back

361   Q 17 Back

362   Ev w136 Back

363   Ev 202 Back

364   Ev w1 Back

365   Ev 201 Back

366   Ev 244 Back

367   Qq 293-4 Back

368   For example, Ev 179, w75. Back

369   Ev 182 Back

370   Ev 179, w222 Back

371   Q 14 Back

372   Ev 194 Back

373   Ev 242 Back

374   Ev w221 Back

375   Q 196 Back

376   Ev w222 Back

377   Ev 165 Back

378   Q 28, Ev 193 Back

379   Q 396 Back

380   HM Government, Building a stronger civil society, p.8 Back

381   Ev 191, w171, w222 Back

382   HM Government, Building a stronger civil society, p.11 Back

383   Public Bill Co Deb, Localism Bill, 10 February 2011, col 469 Back

384   Q 137, Ev w199 Back

385   Ev w171 Back

386   National Council for Voluntary Organisations, The UK Civil Society Almanac 2010 Back

387   Q 134 Back

388   Ev w178 Back

389   Q 545 Back

390   Ev w137 Back

391   Q 141 Back

392   "Prime Minister launches the Big Society Bank", Cabinet Office press notice, 19 July 2010 Back

393   Ev 219 Back

394   Q 205 Back

395   Ev 179; see also Q 300. Back

396   Ev w51 Back

397   Ev w178 Back

398   Ev w167 Back

399   For example, Ev w223. Back

400   Ev 196 Back

401   Q 252 Back

402   Q 553 Back

403   Ev 204 Back

404   Q 254 Back

405   Q 218 Back

406   Ev 200 Back

407   Q 12 Back

408   Oral evidence taken before the Public Accounts Committee on 19 January 2011, HC 740-i, Q 72 Back

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Prepared 9 June 2011