Communities and Local Government Committee - Mutual and cooperative approaches to delivering local servicesWritten evidence from the Local Government Association

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1. Summary

Councils are democratically accountable bodies, uniquely placed to understand the needs of their communities, take a joined up approach to meeting those needs and ensure that services are accountable no matter which organisation delivers them.

Councils are leading the way in reforming the way services are delivered, opening up markets, supporting enterprise and supporting communities to play a bigger role in the running of services.

Delivery models and ways of engaging will be different in different areas and councils have a long history of engaging their communities in services. Not-for-profit providers clearly have an important role to play but the goal in reforming services must be to improve services for the citizen and make services more efficient, not to support a particular model or provider.

2. Not-for-Profit Businesses and Local Authorities

Support for the principles of co-operative working in local authorities can be found across the political spectrum. Seventeen Labour councils and Labour Groups within councils are signed up to the Co-operative Councils Network (see Appendix A) run by the Co-Operative Party. Many Conservative, Liberal Democrat and Labour run authorities are also encouraging and facilitating communities, civil society organisations and council employees in the design and delivery of local public services. Independent and smaller political parties are also exploring ways of utilising the principles of co-operative working.

Councils’ experience of reforming services through community budgets, commissioning services, supporting competition, sharing services and providing people with personalised budgets all demonstrate how joining up services at local level can make them more responsive, efficient and accountable.

Local democratic accountability is the most effective and efficient way of giving people more control of the services they use whilst delivering value for money to the tax-payer. Councillors have the democratic legitimacy to champion the rights of service users and tax payers and hold services to account no matter which organisation provides them.

Real choice and real prioritisation will require a more radical decentralisation of decision making and funding. Government must accept that responsibility lies locally and there will be local variation. Councils must show leadership and take responsibility even when things go wrong.

The recent Public Services (Social Value) Act placed requirements on government commissioners to consider social and economic value when commissioning public services. Councils have a long record of working with their communities and the voluntary and community sector (VCS) in delivering services. Councils are already working to encourage small organisations and social enterprises to compete for contracts, by, for instance, making funding available to build local capacity and a more sustainable VCS sector. For example, Bristol City Council are supporting local VCS organisations to work together to deliver a major new contract with Job Centre Plus and Gateshead Council has established a £1 million fund to help VCS organisations become more competitive.

Councils are also working with VCS partners to develop more mature relationships around commissioning and procurement. For example, Suffolk County Council has worked with national VCS partners to design a programme to develop a sustainable market of public service providers; Sheffield City Council is working with Voluntary Action Sheffield to review and reshape their commissioning and procurement processes; and the London Borough of Camden is investing in co-production with local VCS organisations through its equality and cohesion fund.

Local authorities are already using social enterprises as part of their overall strategy to delivering improved, customer focused services at a lower cost. For example, Kirklees Council is developing a social enterprise hub that will aim to increase the range of service provision for adult social care; Hartlepool Borough Council worked with Hartlepool PCT and Turning Point to develop and run their “Connected Care” social enterprise; and Sheffield City Council has contracted a local social enterprise to manage the city’s green spaces.

In many cases the organisations best placed to help councils to deliver economic, social and environmental benefits in a local area, both directly and indirectly, are those organisations strongly rooted within local communities. This includes social enterprises but also the wider voluntary and community sector and local businesses.

The LGA is already supporting councils and councillors with effective engagement and commissioning to help them to develop “bottom up” services through a confident and in-depth knowledge of local community priorities and potential local providers. Our “Keep it REAL: Councils at the heart of their communities” programme is supporting a range of councils across the country to work with their communities and VCS organisations on local priorities ranging from drug and alcohol misuse, to a community-led approach to spending the Community Infrstructure Levy, to revitalising area forums.

Case studies from across the country, included in Appendix B, demonstrate how councils have worked closely with their voluntary and community sector and local partners, to develop new ways of working and more effective and efficient services through, for example, revised procurement practices; funding and staff support and advice for community organisations; and new commissioning frameworks. Many councils are taking radical steps to improve their commissioning with a focus on the local voluntary and community sector. For example, Brighton and Hove has developed an “intelligent commissioning” model that radically reshape their organisational structure and Worcestershire County Council has developed a new framework for financial arrangements with the VCS that is more transparent, fair, and strategic.

3. Local Government and Partnerships with other Organisations

Local government has a long track record of setting up and sustaining effective partnerships with other organisations, both within and outside the local government sector. New ways of delivering services put partnership working—across the public sector and with private and voluntary sectors—ever more at the front line.

One example of this new era of joint working are Health and Wellbeing Boards which will bring together local councils, clinical commissioning groups and other local government and health professionals and local organisations representing the views of patients, communities and people who use services. They will be the driving force for system reform, by identifying the health and wellbeing needs of the local community and agreeing key local health priorities on which to base commissioning plans.

Councils across the country have been working together to deliver efficiencies and provide better services by sharing services and combining commissioning contracts. For example, 219 councils are now involved in shared service arrangements that have resulted in £156.5 million in savings and local government has already shed 145,000 jobs in the past year. Shared services can refer to a range of things. Whilst traditionally thought of as back office arrangements (transactional, operational or professional) councils and other public services are increasingly looking to share senior management arrangements and consider joint-venture relationships with other public sector bodies and the private sector.

For example, the Anglia Revenues Partnership (ARP) is a group of three local authorities working together to manage delivery of revenue services for Breckland Council, East Cambridgeshire District Council & Forest Heath District Council. The partnership has provided both significant improvements in service delivery and annual financial savings in excess of £1 million per annum; there has been a recognised 15% increase in caseload management; and staff productivity has increased by 50% with the introduction of home working.

In Herefordshire, the unitary council and the PCT, NHS Herefordshire, have had joint chief executive and a single management team, together with a single corporate plan, since 2008 across the three organisations. Budgets have already been pooled for service delivery for learning disabilities, adaptations, mental health and continuing care and a public sector joint venture is now being set up to carry out back office services together with a multi-sourcing approach for smaller services. It is estimated that this transformation of services will produce savings of £4.3 million per annum after full implementation further amounting to estimates of £33 million over 10 years.

4. Arrangements to Deliver Services by Not-for-Profit Businesses

The increased emphasis on the role of civil society and the provisions put in place with the Localism Act 2011, combined with cuts in local authority budgets and the knock-on effect on front line services have generated increased levels of interest in employee-led mutuals as an alternative to in-house delivery of services.

Local Partnerships, a joint venture between the Local Government Association (LGA) and Partnerships UK (PUK), has been co-fund manager of the Department of Health’s (DH) Social Enterprise Investment Fund (SEIF) since 2009. The SEIF has supported a number of spin-outs from the health and social care sector the lessons from which are of relevance to this inquiry and to councils interested in developing these models.1

Key issues for consideration identified by the Department of Health which are more widely applicable include:

Ensuring staff groups know what to expect as they progress towards launching a stand-alone entity.

Clarity on asset arrangements, particularly but not exclusively around property.

Funding for external expertise as groups will have some in-house capabilities to develop their business plans and their organisations but it is rare to find all necessary skills amongst the staff team leading the spin-out.

Local authorities may need to commit some resources to be able to engage with the spin-out as the local authority will have a lot of financial data (and other knowledge) that will be important for successful business planning.

As mentioned in previous sections however, mutual and spin-outs are only one among many options that councils are exploring as they seek better outcomes for their communities. One aspect of this is the Co-Operative Councils Network,2 a group of Labour councils and opposition groups who are adopting co-operative approaches to transform public service delivery in their areas.

Appendix B contains further examples of ways councils are working innovatively with the VCS, social enterprises, other public sector bodies and the private sector to deliver responsive, effective, accountable and local services.

5. Drawbacks to Providing Services and the Differences Local Residents will see

Responsive and efficient services should be designed so as to improve outcomes for service users and taxpayers. This means starting with a need or challenge and delivering a service that can effectively and efficiently respond to these needs. Commissioners should not make assumptions about which type of provider is best placed to deliver different services, as the focus must remain on the outcome and not the process. Unnecessarily restricting the type of service provider expected may also stifle innovative delivery models from other sectors and organisations.

Additionally, local areas will differ in the capacity and ambition of different providers to take on service delivery roles. Therefore, the advantages and drawbacks will be different in different places and will need to be considered on a case-by-case basis. Councils are best placed to weigh up the different options in their role as commissioners and also, through their councillors, as the ones who have in-depth knowledge of the needs of their local communities and neighbourhoods.

The goal should be to ensure that services are provided by the service provider that can provide the best level and quality of service to users and tax payers. Successful not-for-profit businesses can offer benefits, including operating from a lower cost base, innovation, delivering what their customers want and reinvesting surpluses back into the community.

They may also be able to offer locally-grown solutions that have been specifically developed meet local priorities. Making the best use of this local knowledge is particularly important as councils look to involve civil society organisations at the earliest stages of commissioning and comprehensively assess local needs.

Many councils and councillors are working locally to grow and strengthen relationships with civil society organisations. The LGA is complementing this through its ongoing relationships with national civil society organisations to develop ways to support our respective members.

APPENDIX A

Member Councils of the Co-operative Councils Network

Oldham

Oldham Council is taking steps to become co-operative council. It is devolving power and resources to neighbourhood levels with a town hall, neighbourhood manager and dedicated council contact number in each of the boroughs six districts. It also has an employee volunteering scheme to allow every council employee time to give to local community groups. The Council also has a Co-operative Commission to oversee the work.

Liverpool

Liverpool Council is keen to use co-operative principals and models for the community. Liverpool a history of housing co-operatives, and as the strategic housing authority the council has continued to support them where possible. The Council is developing a “Liverpool Apprentice” model which is intended to create over 100 apprenticeships. The Council are inviting interest from partners such as co-operatives to deliver the scheme. Liverpool Council is also working with a community group in one part of the city to better provide community assets such as leisure centres through the local co-operative and to ensure a high quality service is maintained, but owned by the community.

There are 17 Labour councils and Labour groups within councils in the Co-operative Councils Network. These are:

Lambeth.

Oldham.

Rochdale.

Newcastle.

Telford and Wrekin.

Salford.

Liverpool.

Sheffield.

York.

Stevenage.

Redbridge.

Sunderland.

Kirklees.

Brighton & Hove.

Plymouth.

Stoke.

Cambridge.

APPENDIX B

Further Detail on Councils’ Work on Commissioning and Diversity of Supply

Brighton and Hove City Council

Brighton has developed an “intelligent commissioning” model, that will involve reorganising its current structure so that senior officers are principally accountable, not for managing delivery but for securing strategic outcomes, like making people feel safe and secure, and will call on 11 “delivery units” to help meet this objective. The restructuring process will reduce the number of posts from six to four and also establish a “commissioning group” to ensure that the best services and facilities are available for their residents. One of the three “intelligent commissioning pilots” held in the locality aims to tackle the problem of domestic violence. As well as the social cost, the direct and indirect costs to the city are estimated at £123 million per year.

Hartlepool Borough Council

Hartlepool Borough Council worked with Hartlepool PCT and Turning Point to determine the needs and aspirations of residents of Owton ward and their views on health and social care provision. The resulting Connected Care service is delivered through a social enterprise managed by residents and local community organisations. An evaluation of the scheme concluded that services were more accessible to local people, take-up had improved and people were less likely to disengage from the system. Connected Care has improved access to services and delivered a range of outcomes for residents in the Owton Ward.

Suffolk County Council

Suffolk County Council asked ACEVO to form a partnership with Social Finance, the Young Foundation and Equity Plus to design and deliver a programme to develop a sustainable market of public service providers across the Eastern region. This programme created a network of voluntary sector leaders and commissioners who are working together to create a shared understanding of what a functioning “market” looks like, how a market can be shaped, the levers commissioners can use to enable the voluntary sector to compete with the private sector on an equal playing field, the skills required to operate effectively in a market and the shifting role commissioners will play in creating choice and control for service users.

Essex County Council

Established in 2009, Essex Cares was the first social care local authority trading company in the country. ECC has found that local authority trading can enhance effective commissioning through empowering the staff to be more responsive to, and engaged with customers. Within the first year of operation Essex Cares had met its efficiency savings requirements, exceeded predicted profit levels, and delivered a dividend return to the Council. They have also delivered discretionary services to generate additional revenue and greater adaptability provided by the trading company model has made partnership working across the public sector more straightforward. User satisfaction has increased, with 99% of those surveyed satisfied with the service they received.

London Borough of Camden

Camden has identified co-production with the VCS as an important vehicle for delivering meaningful outcomes for communities. To facilitate this, Camden are investing in a new “equality and cohesion fund”. Voluntary and community groups will be invited to apply for funds by identifying one to three year projects they would like to deliver. Officers will then work with successful groups to jointly agree clear outcomes to be achieved, based on an exchange of insight and ideas about community need, and to co-design outcomes and evaluation frameworks. This is an alternative to contracting with the VCS but attempts to be much more engaged with identifying outcomes than a traditional grant mechanism or SLA. Camden sees the process as not about procuring a service and monitoring it, “it’s about saying we are investing in you to provide a solution”. Camden engages with the VCS long before the procurement cycle begins. This process of early and non-prescriptive engagement builds capacity in the VCS and provides local insight, from all sectors, to inform the prioritisation and identification of outcomes before even getting to stage of service design.

Worcestershire

Worcestershire County Council identified the need to change its commissioning practice to generate more transparent, fair and strategic funding arrangements for the VCS. This led to a new framework for financial arrangements entitled “Shopping, investing and giving” to facilitate procurement and contractual arrangements with external providers to deliver public services. The framework involves:

Improved communications to explain commissioning, procurement and contracting.

A framework to assess the added value or social impact of VCS.

Encouraging VCS providers to join service-based approved provider lists.

Funding infrastructure support services to strengthen VCS frontline organisations, champion the VCS and build capacity, and to promote volunteering.

Strategic, pump priming and community grants VCOs to support their independent roles, which also contribute to overall council aims and objectives.

Voluntary Action Sheffield

Sheffield City Council and Voluntary Action Sheffield (VAS) have worker closely together to help local third sector organisations become involved in public services through:

A “commissioning framework” committed to a “diverse and mixed supplier base”;

A dedicated officer in the council to engage with VCS;

Revised tender documents and clearer documentation from the council about their procurement practices (designed with involvement of business and SMEs);

A mentor scheme to help third sector suppliers get procurement officer support on their tender submissions; and

Capacity building support to local third sector organisations and support to help the creation of new consortia in the city.

East Sussex County Council has developed commissioning strategies for older people’s services (including those with mental health problems), learning disability services and services for carers. In 2012 the council will offer new commissioning outcomes through a Commissioning Grants Prospectus—essentially a list of grant-funded commissioning objectives set by the Council and the local NHS.

Bristol City Council have recognised that as commissioners they need to support providers in developing collaborative working. For example, the council secured Job Centre Plus funding for its Flexible Support Fund to support jobseekers to return to the labour market and the project will be delivered by a VCS-led collaboration, instead of the council. The council is supporting the development of the collaboration to take advantage of this £400,000 opportunity. The service should be in place February/March 2012.

Selby District Council intends to de-couple the council’s core democratic decision making function from the physical provision of services by transferring the majority of its staff to a new “service delivery vehicle” called “Access Selby” with the aim of reducing the overall budget. Access Selby is not currently a separate legal entity, and its officers are still council employees, but it could potentially become a mutual, a business (either privately owned or partially or wholly owned by the council), or some other form of joint enterprise. The intention is that eventually around 70% of the staff previously employed by the council will work for Access Selby.

Gateshead Council is providing advice to VCOs and social enterprises in bidding for contracts. They’ve also established a £1 million fund that VCOs can access to build capacity to make them more competitive in bidding for contracts.

Breckland Council

The Anglia Revenues Partnership (ARP) is a group of three local authorities working together to manage delivery of revenue services for Breckland Council, East Cambridgeshire District Council & Forest Heath District Council. The partnership, created in 2003, has provided both significant improvements in service delivery and annual financial savings in excess of £1 million per annum through improved benefits management, information, communications and technology, better use of buildings and joint procurement strategies. There has been a recognised 15% increase in caseload management, and staff productivity has increased by 50% with the introduction of home working. Initial set-up costs were kept low with the biggest expense coming from external legal support to draw up the partnership agreement. 

Herefordshire

In Herefordshire, the unitary council and the PCT, NHS Herefordshire, have had joint chief executive and a single management team, together with a single corporate plan, since 2008 across the three organisations. Budgets have already been pooled for service delivery for learning disabilities, adaptations, mental health and continuing care and a public sector joint venture is now being set up to carry out back office services together with a multi-sourcing approach for smaller services. It is estimated that this transformation of services will produce savings of £4.3 million per annum after full implementation further amounting to estimates of £33 million over 10 years.

May 2012

1 See http://www.lge.gov.uk/lge/dio/10341766 for more information.

2 See www.councils.coop for more information.

Prepared 6th December 2012