The Big Society - Public Administration Committee Contents

Conclusions and recommendations

The roots of the Big Society

1.  The Big Society is not a new concept. It builds on a wealth of traditions and ideas about strengthening communities, civic action and co-ownership of public services. (Paragraph 12)

A coherent policy agenda across Government?

2.  The redistribution of power from Whitehall to communities, central to the Big Society project, will by its very nature necessitate a substantial change to Whitehall itself, and to the nature of government. Our evidence prior to the publication of the Open Public Services White Paper suggested that some witnesses remain concerned that there is not sufficient coherence in the Government's plans to achieve the objectives of the Big Society project. We await the publication of the results of the consultation following the Open Public Services White Paper and hope to see detailed implementation plans and coherent proposals in place before April 2012. As we recommended in 'Change in Government: the agenda for leadership' the Government must produce a comprehensive and coherent change programme. Without this, attempts to bring about change will be defeated by inertia. (Paragraph 24)

Communicating the Big Society

3.  Without a coherent plan, the Government has so far been unable to communicate effectively to the public what the Big Society project means in terms of practical policies—however, we await their Departmental plans to be published in advance of April 2012. If they fail to do so, they will not secure sufficient public understanding support for the commitment to open public services. For the Big Society project to be successful, Ministers must increase public understanding of the nature and purpose of their public sector reform agenda by setting out what it means in practical terms. (Paragraph 31)

Opening public services to alternative providers

4.  We welcome the Government's commitment to encourage the participation of the charitable sector in the provision of public services. We recognise that not all public services are suitable to be delivered by charities and that not all charities are willing or capable to deliver services. Charities and community groups have shown that they can provide some public services at better value for money than those delivered by the state and that some wish to do so. We have yet to see how the Government will encourage this since contracting out continues to favour the larger, more commercial providers. In essence, this is the challenge: to build the 'little society', rather than the 'Tesco' charities that are skilled at tendering. (Paragraph 38)

A cheaper provider?

5.  We would be concerned if commissioners were faced with a choice between the either simply choosing the cheapest option or commissioning a more expensive service from a small local charity which might be able to provide a better service, but would be unable to compete with larger charities or the private sector on cost grounds. (Paragraph 42)

Effect on the voluntary sector

6.  Increasing the number of charities and community groups that deliver public services will change how the charity sector operates as a whole. There is a danger that charities may become agents of public policy, subject to targets and incentives and thereby becoming an extension of the state. We expect to consider the state of the charity sector in a later inquiry. (Paragraph 48)

The role of the private sector

7.  Opening up public services to new providers raises the prospect of much greater private sector involvement, as many of our witnesses have indicated. Private sector large contractors may provide the cheapest option in the first round, which may drive out smaller, more innovative, more local and more accountable providers. We recommend that Government regularly review the level of large private sector involvement in public services to ensure that the objective of the Big Society project of empowering communities over local services is being achieved. (Paragraph 53)

A voluntary sector bias?

8.  Ministers have spoken both of promoting charities as the favoured provider for public services and in favour of a more mixed economy with private sector providers also involved. The officials responsible for commissioning and managing contracts for public services need to know whether Ministers wish them to prefer the voluntary sector over offers of potentially better value. Clear Ministerial guidance to the civil servants and local authority officials responsible for the commissioning and tendering of public services is therefore imperative. (Paragraph 58)

The current funding situation: 'the funding gap'

9.  We are concerned that many charitable and voluntary organisations are suffering the immediate effects of reductions in public spending. In some cases their existence is at risk, yet they are the very organisations which may wish to participate in the Government's Big Society policies. (Paragraph 71)

The Transition Fund

10.  We welcome the Transition Fund and the intention to sustain the voluntary sector which underlies it. The fund itself can clearly not provide assistance to every charity and voluntary group struggling to bridge the gap between public spending reductions and new sources of social finance income. This funding gap may effectively inhibit some charities from tendering for public service delivery, and thus undermine the Government's efforts to procure from charities and social enterprises, as they may lack the available funds to enter into contracting arrangements. There is also a question about democratic accountability for the allocation of such funds. We urge the Government to bring forward proposals to address this, such as a form of voting system, in order to reflect the aspiration to involve people and communities. (Paragraph 75)

Big Society Capital

11.  Delays in setting up Big Society Capital are contributing to the 'funding gap'. In our report 'Change in Government: the agenda for leadership' we reported on the frustration in Government about the "deadweight of inherited policy, not least by the overbearing constraints imposed by the vast body of EU law and regulation". The delay in the operation of Big Society Capital by the need to seek EU state aid approval is a case in point. (Paragraph 80)

12.  Big Society Capital is a genuinely imaginative social innovation, which has enormous potential in the long term. The concept is as yet unproven, and large scale effects will take a decade or more to bear fruit. Furthermore, Big Society Capital will not provide the solution to the 'funding gap' for many small, local charities who do not wish to take out loans. The Government must acknowledge that in the short term Big Society Capital is unlikely to resolve the current 'funding gap'. (Paragraph 88)

Social impact bonds

13.  Social impact bonds have the potential to transform the way public services are delivered and financed. Until further evidence of their success, both in achieving social aims and attracting capital, is available, we urge caution in reliance on their growth. We welcome the reviews taking place of the pilot project at HMP Peterborough, and look forward to receiving information on the project's progress. (Paragraph 92)

Commissioning public services and the Big Society

14.  We welcome the Minister for the Cabinet Office's recent announcement on re-negotiation of EU procurement regulations. We look forward to the Government setting out what changes they are seeking, why they are sought and the timescale for implementation of the changes. We also recommend that the Government set out detailed plans to revise procurement guidance under the existing regulations. We intend to conduct an inquiry into the Government's public procurement policies in the light of the Minister for the Cabinet Office's recent announcement of a package of measures that are intended to reform how the Government buys from the private sector. (Paragraph 98)

15.  We recommend that the Office for Government Commerce revise guidance on the EU Public Contracts Regulations 2006 to promote appropriate interpretation of the regulations by local authorities in commissioning. (Paragraph 99)

16.  We recommend that the Cabinet Office consult the voluntary sector on the legislative and bureaucratic barriers which inhibit voluntary groups from delivering public services. We note the commitment of the Chancellor of the Exchequer, in his 2011 Autumn Statement, to a review of TUPE regulations, and we urge the Government to give special consideration to smaller charities in this review. (Paragraph 101)

17.  For rapid and successful commissioning, there must be a cultural shift in departments. Ministers must set out what practical steps are required to change the commissioning culture in Whitehall and how success will be measured. In particular, the objectives, roles and tasks of commissioners must be identified and skills shortfalls must be addressed both through training and through the recruitment of suitable staff. (Paragraph 106)

18.  Attempts to open up public services to charities and voluntary groups may encounter the difficulty that services provided by such organisations do not fit easily into the siloed mentality of Whitehall departments, who are unable to address the multiple needs of the service user - even where this approach is the very key to the success of voluntary organisations. We regard the challenge to government presented by charities such as Emmaus as a litmus test of the Government's Big Society project. We believe that joint funds, managed by local authorities and financed by separate departments, may be the answer. We expect the Cabinet Office to lead decisively on this matter. (Paragraph 112)

19.   On the evidence before us we find little reason to have faith that large contractors will subcontract to smaller, charitable or voluntary providers. We recommend that departments should keep public sector contracts as small as possible to ensure contracting with as wide range of providers as possible. Ministers should regularly review and publish the scale of public sector contracts and the size of organisations they procure from. The objective of the Big Society project of empowering communities will not be achieved by simply contracting with private companies and large national charities. (Paragraph 114)

20.  Furthermore it must be recognised that commissioning is but the first stage of the delivery process. Consideration must be given to by whom, and by what means, contracts are to be policed for quality of delivery, and complaints and problems dealt with. (Paragraph 115)

Charities and value added tax

21.  We recommend the Government extend eligibility for the VAT refund scheme which currently applies for public sector bodies, to charities who deliver public services under a contract with a public sector organisation. This recommendation should be considered as a pre-budget representation addressed to the Chancellor of the Exchequer for implementation in the 2012 Budget. (Paragraph 120)

Public sector mutuals and the commissioning system

22.  It is not clear to us that the Mutuals Taskforce is equipped to overcome the resistance to public sector mutuals. This resistance goes beyond bureaucratic inertia in Whitehall. The lack of understanding in Whitehall and local government about mutuals and cooperatives must be addressed by indentifying and training the key personnel who make the decisions. If the Government had a coherent implementation plan, this matter should already have been addressed. (Paragraph 130)

23.  Public sector workers will weigh up the choice between the advantages of mutualisation against the risk of losing their public sector pension provision and may decide against spinning off into a mutual. It needs to be recognised that the support for mutuals has so far been dependent on exceptional circumstances. We recommend that the Government take a fresh look at this issue and develop innovative approaches to encouraging and incentivising participation in mutuals. (Paragraph 131)

Choice, contestability and equality of service provision

24.  We welcome the Government's commitment to ensuring common minimum standards of service provision. If this can be achieved, then local variation, which is inevitable in localism, can be welcomed if it will encourage innovation and improvement in public service provision. (Paragraph 136)

The role of faith groups

25.  We recognise the benefits to society of faith groups taking part in the provision of public services. While such provision could be encouraged by the Government, this should not be to the exclusion of groups who deliver services across multi-faith and non-religious communities. (Paragraph 143)

Accountability, equity, representation and management

26.  The Minister must set out clear lines of accountability for the provision of public services under its new arrangements together with a clear mechanism for members of the public to raise concerns about services. To fail to do so could be fatal to the chances of success for the Big Society project. (Paragraph 151)

27.  The principle of accountability to Parliament for the expenditure of public money by a department's accounting officer is key to the arrangements for fiscal control exercised by Parliament. The accounting structure for devolved public services will be necessarily complex. We ask the Government in its response to outline how this will work in practice. (Paragraph 152)

28.  The role of Parliament's Ombudsman is primarily a matter for Parliament, and is not an instrument for particular government policies. We share the Ombudsman's concern that it is not the role of her office to be an advocate for the Government's choice agenda. (Paragraph 153)

29.  Ministers have not set out clearly what success means for the Big Society project, nor produced metrics for success. In the absence of such statements an impression of policies made solely on the basis of anecdotes or single examples has developed. However, the Government has committed to regular Departmental reporting on progress towards the aims of the White Paper on Open Public Services, starting in April 2012. We recommend that the Government publish a clear statement, with practical examples, of what the Big Society project is intended to achieve and then develop the capacity to collect standard data on public service provision through the Big Society project, with a view to releasing it in open, accessible and meaningful formats, to allow the public to assess and judge success. (Paragraph 159)


30.  The substantial change expected to result from the Big Society project, namely the devolution of power to communities and citizens will not occur overnight: if successful, as witnesses suggested, it will take a generation. The Government's Big Society statements have, so far, failed to communicate this point effectively. There is public confusion with the policy agenda, eighteen months into this administration. Confusion also still exists among many service providers. Early examples, such as the Work Programme, have caused the charitable sector to express serious reservations about the implementation of the Government's ambitions in practice. (Paragraph 160)

31.  To bring in charities and voluntary groups to deliver public services, the government must take steps to address the barriers they experience in the contracting and commissioning system, which means developing a plan to address roles, tasks, responsibilities and skills in Whitehall departments. We recommend:

a)  A single Big Society Minister, who has a cross-cutting brief, to help other Ministers to drive through this agenda once they begin reporting progress against the aims of the Open Public Services White Paper from April 2012.

b)  An impact assessment, applied to every Government policy, statutory instrument, and new Bill, which asks the simple question: "what substantively will this do to build social capital, people power, and social entrepreneurs?"

Unless this is done, the Big Society project will not succeed. (Paragraph 161)

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Prepared 14 December 2011