HC 163 - Minutes of EvidenceHC 163

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Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 3 June 2013

Members present:

Mr Clive Betts (Chair)

Mrs Mary Glindon

James Morris

Mark Pawsey

John Pugh

Andy Sawford

John Stevenson

Heather Wheeler


Examination of Witnesses

Witnesses: Geoff Little, Deputy Chief Executive (Performance), Manchester City Council, Jackie Mould, Director, Strategic Partnerships, Birmingham City Council, and Steve Robinson, Chief Executive, Cheshire West and Chester Council, gave evidence.

Q38 Chair: Good afternoon, and welcome to the second evidence session of the inquiry into community budgets. Just for the sake of our records at the beginning, some of us have interests to declare. I am a Vice-President of the Local Government Association.

Simon Danczuk: My wife is a borough councillor.

Andy Sawford: I have accepted an invitation to become a VicePresident of the LGA at their General Assembly.

Mrs Glindon: My husband is a councillor in North Tyneside.

Heather Wheeler: My husband is a councillor. I am ViceChairman of the LGA. My husband is also on the Board of the LGIU.

Q39 Chair: That is our interests on the record. Welcome to the three of you. Just for the sake of our records at the beginning, could you say who you are and the organisation you represent?

Geoff Little: My name is Geoff Little. I am Deputy Chief Executive at Manchester City Council, but I represent the Association of Greater Manchester Authorities.

Steve Robinson: My name is Steve Robinson. I am the Chief Executive of Cheshire West and Chester Council.

Jackie Mould: I am Jackie Mould. I am the Strategic Director of Partnerships for Birmingham City Council.

Q40 Chair: Thank you very much for coming, all of you. We are talking again about community budgets, and the feeling is that we have been talking for a long time. We have had lots of initiatives, pilots and intentions to move forward. Do you think that what we have now, with the Whole Place enabled budgets, is actually a real step forward? Have we learnt enough lessons now to move forward in a more general approach across the country?

Geoff Little: Yes, this is definitely a big step forward compared to previous initiatives. If you look at what we achieved through our pilot in Greater Manchester, we ended up with a number of business cases that moved the concepts of community budgets and how you overcome those barriers to investment and reform, such as: one agency invests, and a different agency gets the benefit in terms of reduced demand, and also that barrier of the time lag between investment in early intervention and the return on that investment in terms of reduced demand.

Our community budget pilot produced business cases that showed how those barriers could be overcome. Our business cases presented a realistic set of proposals to reduce the total spending in Greater Manchester by £270 million over a five-year period. In the context of total public spending, that is not a huge amount, but it is additional to what would have happened anyway and is net of the investment in improvement. That much is worth giving us confidence to go forward.

If you do compare it to what has gone before-take, for example, all the money we have put into things like Single Regeneration Budget, Neighbourhood Renewal Fund and New Deal for Communities-in every case we have spent a lot of public money, I think very wisely, and we have had a real impact on regeneration. Where that money was spent on modernising public services, what we were not so good at was tracking the money as well as the impact on outcomes. If, every time that sort of investment had produced a beneficial outcome, we had decommissioned something in the mainstream to release resources to keep the innovation going forwards, then we would have made more progress in the past. This initiative has gone beyond that sort of thinking and really followed the money so we know what works, but more importantly we now know how we make it work financially as well.

Like colleagues elsewhere, we were very keen in 200809 to get involved in the Total Place initiative, a more recent initiative, and rather than simply stop at counting all public spending in Greater Manchester, we were determined to understand how we get better value for that total spend. We were very interested in initiatives such as Complex Families, which was a classic example of how we were not getting good outcomes for the totality of spend on families.

What this pilot has enabled us to do is move beyond those sorts of initiatives and track how you integrate public services around individuals and their families at a street and neighbourhood level, how you actually show how that can produce much better outcomes and reduce spending-because we need less spending-and how that can then be taken forward. Having proved the theory to a certain extent, the big challenge now is how we think about scaling up to the level that will have a real impact on the challenges that are facing us going forward over the next five to 10 years.

Steve Robinson: The big difference between this and previous initiatives has been that there has been a model of collaborative leadership between local government and central Government. By that, I mean it has been a relationship of equals where there has been a joint understanding of the problems, working together on the solutions, and being clear about the assumptions that go into those solutions. In the past, often it is felt, for local government, that we have had to sit an exam, we have submitted our exam paper and central Government gives us a mark, which, if we are lucky, is a good mark and we might get some money. The new approach around community budgets has been one very much of working together, shared solutions and shared assumptions.

That comes together in what we have referred to as detailed business cases, where it is very clear how services are delivered today. A lot of thought goes into how services could be delivered differently and an understanding of the costs and benefits that will emerge from delivering differently. What emerges from that has been the ability to tackle prevention and get upstream from particularly vulnerable individuals and families who have had difficulty with public services, and really address the root causes. That has very much been the difference; it has been very much one of teamwork between us and central Government. The challenge going forward is how we actually build this into the DNA of the relationship for all local government and all public services at a local level with central Government.

Jackie Mould: Our experience has been very similar to the ones that you have heard. We have been on this road for some time now, trying to move more towards prevention, and looking at the root causes behind some of the challenging difficulties that some of our residents and families have. We have seen some of our big, city-wide service changes bring dividends, such as the work we did around our Section 75 agreements for people with learning disabilities and mental health issues. By co-commissioning and working with our Health colleagues, we saved around £51 million.

We feel now, though, that we really need to stop doing pilots and start to move on whole system change across these big agendas. Our pilot has been focusing mainly on neighbourhood-level initiatives. That has been a very fruitful partnership with colleagues in Government. In the way that our budgets as a local authority, and those of other public sector agencies, are managed at the moment, they are not really designed to be able to respond at a very local level. Yet we feel, from the work we have done so far, that by empowering local residents we can often find solutions to problems and help them to co-design some of those solutions, in ways that maybe we cannot do when it is a very top-down approach. The way that systems and budgets are run at the moment makes it very difficult to do that.

We feel that, if we take that neighbourhood level approach, we can really start to tackle some of the lifestyle issues and influence and work with residents around tackling those. We can start to bring some of the nudge issues into play at a local level. That is where we think we will get the biggest gains from this.

Q41 Chair: You have presumably told us that there is an improvement and we have moved forward, but we still have further to go. The point that Steve Robinson made was about this being a model of cooperation between local government and central Government, rather than central Government telling local authorities what to do. Is that true of all central Government? We know that the Department for Communities and Local Government is clearly committed to engage with this, but are all Departments equally engaged or are there still problems around where a bit more encouragement is needed, for some Departments to be co-operating as much as you would like?

Steve Robinson: We would not say there are problems. It is fair to say that the journey of the pilots at the beginning of 2012 in terms of the relationships with central Government Departments got better as we went through the year. It would be fair to say that we produced outline business cases in July 2012, and met with Permanent Secretaries of all Departments. When there was clarity on the costs and benefits, and there was a real understanding that integrated public services really could deliver, I think there was total buyin.

Clearly, some of the asks from the pilots are more challenging for some Departments than others in terms of their current policy development, and there is further work to do around that. Generally, my view would be that there has been buy-in from more Departments.

Q42 Chair: That is a very general comment. Can you be more specific?

Steve Robinson: The particular area where it has been made clear is: there has been a change in the policy landscape on skills, but the work that has come out of community budgets says there could be even more advancement in the area of skills, in terms of funding for local areas so that we can address the linkage between colleges, communities and employers.

Geoff Little: I would not personally single out particular Whitehall Departments for praise or blame in this process. There is a wider question: for places, as well as the nation, the priorities are economic growth and then, secondly, getting the proceeds of that growth connected to residents so that more of them contribute to and benefit from that growth, reducing dependency on public services. The real challenge for us all is that we have to do that with a real focus on place.

Consequently, the challenge for Whitehall, and places like Greater Manchester as well-we have our own challenges around culture-is that you cannot do that with an assumption that the lives that are being wasted are equally distributed across the country. You do need to focus on those places with the greatest opportunity and the greatest capability of taking the opportunities of growth and reducing dependency. How you do different deals with different places on both growth and dependency is a huge challenge for Whitehall. Places like Greater Manchester really have to be working harder with Whitehall to help them do different deals in that way.

We have to be clear that a command and control system will not deliver this; you have got to allow innovation to flourish in the places where people are grappling with these problems. We need Whitehall to understand how they can change their systems to make that innovation flourish quickly and get to scale at speed. These are some of the big cultural questions. There are also questions about skills in the public sector that apply in places like Greater Manchester as well as they do in Whitehall. When you get into this in a serious way, you need high quality commercial legal skills, commercial financial skills, the skills to do cost/benefit analysis and evaluation, and we all have to work together nationally as well as in our places to get those skills into this sort of work.

Jackie Mould: At a local level, we have had very good cooperation between different agencies, but some agencies have found it difficult sometimes to do some of the things that we want to do. We have had particular issues around things like data sharing, for example, particularly with DWP, and that has been an ongoing issue. Although, locally, we have found ways round it, really we would like to see DWP and other Government Departments get a very clear message that you can share this data and work in this way.

Q43 Andy Sawford: Can I just specifically pick that point up? You said DWP, which I do not think would surprise any of us, but then you said "other Government Departments". Did you have some in mind?

Jackie Mould: Not so much around the data sharing. We have found, more recently, for example, as things have settled down, the CCGs and health and wellbeing boards are in place, and the public health teams have moved in, it has become so much easier to work with Health colleagues. It has taken a long time, but we have seen quite big changes just over recent months, so that has been really positive.

Q44 Andy Sawford: This very much follows on from remarks you have all been making. In particular, Geoff, you were talking about the systems that might be put in place centrally for Whitehall to be more joined-up. This is for all of you: do you think that Whitehall should be compelled to contribute to community budgets? The example is that there might be a section of the budget of a Department that is locked, and can only be released if it is evident that it is contributing to a community budget.

Geoff Little: It is difficult. If one simply compels Departments to lose some of their money to put into a pot for a place, to an extent that can work. I can see that in the proposals for growth, where there will be a single pot on growth, and places will compete for access to that pot. On the people side of the equation, that will be of limited use because, once you go down that route on its own, the debate becomes about not what is in the pot, but how Whitehall Departments keep more out of the pot. It becomes a win-lose debate.

It will always be more important to enable local places to ensure that their priorities for public service reform, which can reduce demand and the need for spending, influence the way in which budget holders and commissioners actually exercise their accountability for spending the money they are responsible for. Where those accountabilities lie in Whitehall, the same should apply.

We should be making sure that we get an influence in Whitehall on how the core of public spending is applied. That is much more difficult to do than simply taking a slice of departmental budgets and putting it into a single pot, but in the end that is where we need to get to so that the core of public spending is dealt with in a different way. We need to be decommissioning and re-commissioning, on the basis of evidence, what works on the ground. Therefore, Whitehall has to be much more flexible.

Steve Robinson: A way forward would be to top-slice departmental budgets, create a new fund called "preventative spending", and get local authorities with their partners to bid into that pot with clear priorities and business cases showing how the costs and benefits can be delivered around prevention. If you think of it, the initiative around Troubled Families did exactly that. It moved from 16 pilots and was rolled out to 150 local authorities within a year. That would be an incentive to move it on.

Q45 Andy Sawford: How much would you top-slice?

Steve Robinson: That would be for others to view, but the beauty of top-slicing is that you could grow it.

Q46 Andy Sawford: Where would you start?

Steve Robinson: You could start small and, as opportunities develop, you top-slice more and more.

Q47 Andy Sawford: What would your ambition be, though, Steve?

Steve Robinson: I would have thought we ought to be looking at something about 5%.

Q48 Andy Sawford: How do you think the Treasury would respond to that?

Steve Robinson: If you think of it as a long-term agenda, I would have thought it is for the benefit of the Treasury to tackle the prevention agenda for public services. It also encourages Whitehall Departments, local authorities and their partners to work together on real, clear business cases and integration.

Q49 Andy Sawford: Jackie, should Whitehall Departments be compelled to contribute?

Jackie Mould: I do not know. There is a difficulty. If we are serious about doing prevention, then we have to find a way of being able to spend that money up front and get the benefits later. I am not a finance person, so I do not know the mechanics of how you would do that, but we definitely need to shift into that territory so that we can invest up front to make the change. Equally importantly, we should be looking at collaborative working across agencies and across Departments at a local level. We need to look at real system re-design at a local level as well. It is not just about the money; it is about how we do that whole system change.

Q50 Andy Sawford: I am struck by the way you and Geoff express that, Jackie. It sounds more like aspiration than something that we could practically recommend as a Committee to central Government. We would all share the aspiration that you make the system work more effectively or that we are ambitious about the scale of this rather than perhaps a more limited approach of compelling budgets. Actually, though, do we not really need to nail down some mechanisms?

Geoff Little: We do. For example, in the community budget pilot we were able to demonstrate, for troubled families in Greater Manchester, on a randomised control trial, that compared to an investment return of £1 in the old way of doing things-an unintegrated way that is not focused on evidence-based interventions-in the new way of doing things you get £1.52 back. It is hard evidence based on outcomes for real families. In this case, it was 105 families who have been through our programme for more than six months. I would not say it is unique, but that quality of evidence is very rare in the public sector. We are doing that work now across all of our community budget work on health and social care, early years and particularly low skills and worklessness, where the big money is.

How do you apply that sort of evidence to actually make a difference? It is very clear that, when you talk to partners on the ground, if we want to do the deals to spend their money in ways that get the outcomes they will benefit from in the end, it will not all happen within one year. Yet we are all given one or, at best, one plus an indicative year allocation of the money we get. Leaders on the ground need some certainty over a three to four year period so that they can take a bit of a managed risk to do this at the scale that is necessary. That is a real system change that Whitehall could put in place. I know it is challenging, but nevertheless it would change the psychology of the way in which public service leaders on the ground tackle these sorts of issues.

Q51 Andy Sawford: What financial incentives do you think could be put in place in the absence of central Government funding to incentivise areas to take forward community budgets? Some of our conversation is about how you unlock Whitehall funding, and that is the prize for local authorities, but if that is not present as an ingredient, how would you get local areas to take this forward? What localised financial incentives could there be?

Geoff Little: In Greater Manchester, we will do this with or without central Government resources being unlocked, because we have to. To be frank, we have nowhere else to go. We have to not rely on getting ever more efficient at meeting existing levels of demand; we have to reduce demand itself, otherwise not just local government but other public services cannot get through financially. Therefore, we have to reduce demand, and we will use the evidence we have created through this pilot to implement these business cases and go as far as we can within the current system.

I just think it will only take you so far. There is a huge opportunity for us all to see this in a bigger sense: how can you be both promoting growth in a place and reducing the demand on public services so that people become more productive; working on the regeneration of places so that people stay when they become more productive?

Q52 Andy Sawford: With respect, that is the theory, Geoff. As the Chair referred to at the beginning, we have all gone around that block three or four times. What are we actually going to do? What are the specifics of how we are going to move this forward? Steve, what would you be saying to the Chancellor for the Spending Review?

Steve Robinson: When we went into this process, it was assumed that there were lots of rules that were getting in the way of joining up public services at a local level. As we looked through it, we found that was not the case. Most of the reasons were cultural, and it was because there was not a culture at a local level between partners around innovation, and there was not a belief that partners at a local level had permission to be innovative.

The process that we went through changed that relationship between the partners and, that was very much because of the leadership that came out of our Whitehall secondees, who were linked back into main Departments, which ultimately freed the system up to think quite radically and quite innovatively. That is all it needs at a local level, as long as there is a group of willing people wanting to do it.

There are challenges for local authorities. Are all local authorities the same? Do all local authorities think that they are the leaders of their place and can actually make a difference, even though they might not ultimately be the beneficiaries financially but their citizens will be? I would suggest not all local authorities are the same in that sense. If there is leadership from local authorities and the push from central Government to their partners at a local level, there is no reason why this cannot happen.

As Geoff said, it does take time to see results on the ground. You will not see them in 12 months. It is a process of a minimum of three to four years and, ultimately, that requires long-term commitment from everybody who is involved. That may well result in a need in certain areas, particularly Health, for long-term funding commitments to local partners.

Geoff Little: Could I briefly come back to the charge that this is just theory?

Q53 Andy Sawford: We actually have a lot to get through. What I really wanted to hear were some really practical ideas that people like me who share your enthusiasm for community budgets, or this Committee, can go out there and champion. Jackie, do you have anything we should be recommending to the Chancellor for the Spending Review, specifically? Are there any mechanisms that we might recommend?

Jackie Mould: We have talked before about how we would like to be able to have deals at a city level and have more control and flexibility over budgets, like the skills budgets coming into our area. When we have looked at this before, we have looked at issues around governance that came up, for example; we did a piece of work with the University of Birmingham to look at how we might be able govern a community budget.

Ultimately, we would like more flexibility over the budgets that are coming into our area, with local control around how we use those so that we are working to shared outcomes across agencies, and do not have different Government Departments working to their own centrallyset agendas and outcomes. That would enable us to start to deliver different models on the ground. At the moment we are trying to make the budgets that come down fit, but that is the sort of thing we would like to start to move towards.

Q54 Mark Pawsey: Could I ask some questions about payment by results and the principle of "invest to share"? Steve, you made a remark earlier on about local government sitting an exam paper, central Government giving it a mark and then the money flowing. That is quite a good way of explaining what payment by results is. How appropriate is payment by results? Is it appropriate for all budgets? Where would you draw the line?

Steve Robinson: There is no doubt that payment by results is a clear driver for performance. It has certainly worked for local government and central Government on Troubled Families. There is a danger with payment by results that there is too narrow a focus, and we end up ticking boxes again, creating new silos within local government and its partners. Weighing all of those up, I still believe that payment by results is a good approach. There should be even more incentives: if we, with our partners, achieve even more savings at a local level, we should be allowed to keep those savings and reinvest them locally in the things that matter and that are written into our priorities we want to address. I would go one step further in terms of that.

Q55 Mark Pawsey: Jackie, you have done some work on payment by results in Birmingham, and you have said there were some positive and negative reactions. Does payment by results mean somebody has to set a target to determine whether or not the results have been achieved?

Jackie Mould: We think it is a good model, but it depends where you apply it. You need to be careful where you apply it.

Q56 Mark Pawsey: Where would you apply it?

Jackie Mould: We have found that it means different things to different Departments.

Q57 Mark Pawsey: What about Steve’s definition?

Jackie Mould: The most straightforward one is the one that DWP uses about outcomes: getting somebody into a job. For that kind of activity, it works really well.

Q58 Mark Pawsey: That is a black and white one, though. It is dead easy. Do they all have to be dead easy like that?

Jackie Mould: It is easier for those. We would like to explore moving into other areas. The advantage to it is that it gives us-

Q59 Mark Pawsey: What other areas?

Jackie Mould: We have been looking at young people in care, for example, and those young people getting positive outcomes when they leave care.

Q60 Mark Pawsey: How would you measure the positive outcomes?

Jackie Mould: We have defined what those would be.

Mark Pawsey: By setting a target.

Jackie Mould: Yes, and we have put timelines against them. It has a lot of benefits in terms of sharing the risk and being able to have that up-front payment to do the development work at the beginning. In some areas, it is very positive.

Q61 Mark Pawsey: Geoff, I might come to you on the issue of who gets the saving. Steve referred to a relationship of equals, but the LGA has done some work suggesting that, in the pilots that have been run so far, 80% of the saving goes to central Government and 20% goes to local councils. That does not sound to me like a partnership of equals. What is going wrong?

Geoff Little: That is the reality of the way in which the public sector-

Q62 Mark Pawsey: Do you agree with the 80/20?

Geoff Little: It is true to say that 15% of total spending in a place like Greater Manchester is accountable to democracy at a local level. The rest is accountable centrally.

Q63 Mark Pawsey: Is that where the savings are accrued?

Geoff Little: No, the savings will accrue across the system. The key lesson to learn from the Whole Place Community Budgets work is that we have to be able to track the investment to the impact on people’s lives, and then the impact on people’s lives to reducing demand for public services.

For example, the police in Greater Manchester are seeing real, positive impacts on the levels of antisocial behaviour and crime from our work on Troubled Families. It is not actually the payment by results metrics, though, that they need to focus on. It is callouts that are their key metric in terms of spending money. You have to be able to track the investment to impact on people’s lives and how you capture the effect of that in terms of reduced demand for public services. The trick is to get some of that through decommissioning and then re-invest some of it to scale up going forwards. Therefore, you do need to have investment models and not just delivery models.

Q64 Mark Pawsey: To all of you: who is making the investment? How do we identify who is going to be the best investor to get the greatest result? Is that going to be central Government spend or local government spend?

Steve Robinson: It varies, depending on the issue. The example you quoted of 80/20 was exactly the case in our borough, where we believe that over five years we will save £100 million, but only £20 million of that will come back to the local authority; the rest of the savings will go to other partners. We break that down into particular areas of activity, whether it be services for older people, domestic abuse or whatever the particular service is, and we ask where the costs are now and how we are delivering services.

When we redesign services, and are clear about the costs and benefits of the new service compared to the old, whoever is spending at the moment invests on that basis. For example, in domestic abuse, there is a significant amount of cost to the police. It is in their benefit to actually invest in tackling a new model to address domestic abuse. They then get the benefit out of that, as long as they are satisfied that the model works and we each sign up to an investment agreement.

Q65 Mark Pawsey: There are other agencies that then benefit from that work. How can they put some investment in to give an even better result?

Steve Robinson: The agencies that would benefit would all be locked into that agreement and would all commit cash to that.

Geoff Little: In some cases, this can work. We can see it working with Troubled Families, because we have such good evidence. However, if we take a different example like early years, we know from our work in this pilot that the spending on early years is probably 60% from Health and 40% from local government. Most of the inputs to our new delivery model in the early years between pregnancy and two or three years old are in the Health Service, then local government starts to take over. Between us, we know in the Health Service and local government what we need to do. We are very clear about what will work and how much we need to invest to have an impact on the proportion of children who are ready to take up the opportunity of effective education when they go into primary school.

The beneficiaries will be the primary schools. They will need less pupil premium; they will need less SEN; they will need fewer additional support assistants. Yet they are not able at the moment to invest downstream with us in something that will benefit them. Indeed, they are actually incentivised such that the more children they have arriving in their school who are not schoolready, the more money they get. There are some fundamental system changes here that are needed, if this is going to work at scale.

Q66 Mrs Glindon: Data has been touched on briefly, but I would just like to go a bit further. The National Audit Office has called for the collection of accurate comparable data on community budgets to demonstrate their efficacy. Do you think there is a danger that concentrating initial efforts on collecting a large amount of accurate data on baseline spending will impede the implementation of community budgets?

Steve Robinson: This whole approach is based on costs, benefits and evidence. That is one of the key differences. Therefore, you do need good quality data. There is no doubt about that. We have found that we were able to build on the work that was done by the 16 Total Place pilots that had gone before, who had put in place some very clear models that we could take advantage of. The work that we have done as the four authorities enabled us to have some commonality of that approach as well. We need to do it, but I think we have managed over the last 12 months to make it much more streamlined and simple. For others to follow, templates and processes are able to be put in place.

Geoff Little: If I can add to Steve’s answer, we also need to recognise that this quite difficult and, in some cases, complex way of working is not needed all the time across public service delivery. If we have ordinary, universal public services for ordinary use by ordinary citizens, then normal arrangements can apply. However, where you have complex sets of issues-like early years, Troubled Families, some aspects of offending behaviour and of how money moves around in the health system-quite often most of our money is tied up and excess demand is locked in; these are issues that have been intractable for not just years but generations. That is where you need these sorts of intensive pieces of work.

Steve is right: the evidence is the evidence. The more we keep doing this, building up the evidence and sharing it across the country, the more we get used to doing it and the easier it will become. There should be a snowball effect if you just keep going at this way of working.

Jackie Mould: I cannot really add to what Geoff said. The evidence base and developing it is the key to all this.

Q67 Mrs Glindon: Are you confident that you have sufficient staff in your local area with apt technical and financial skills to assess community budgets across all local government services?

Steve Robinson: The short answer is "no", but that is nothing new. Local government often gets asked to do new things, and we buy certain people in who have that expertise, work with them, develop those skills and move on so that we can then adapt to that new world. That is the way we always operate.

Geoff Little: It is a major risk to this way of working carrying on, because these skills are in short supply across the public sector. We need more commercially-minded expertise being brought in to help us do this. For some of us, we have had to reorganise the way our cases are run. Because of this, we have separated out our targeted and specialist services-what used to be called social care services-into those that are focused on integrated commissioning, where you really need to understand how the money moves around the system, and those people who are actually focused on the delivery side and getting integrated delivery. We are all trying to make sure we get our skills in place to do this, but Steve is right: there is a shortage of those skills.

Jackie Mould: We definitely need to develop skills in this area, and across agencies as well.

Q68 Mrs Glindon: You know there is a need and it could in the future be a bigger problem, but it is not impeding the work currently.

Geoff Little: This is one of the issues where the public service transformation network, which DCLG has led the creation of as one of the outcomes of this pilot, is a really strong opportunity for us to develop the access to these skills right across the country. I would really support that network being delivered, as far as possible at scale, so we all have access to the skills and support that we need.

Q69 Mrs Glindon: What is your opinion of the systems in place within the pilots for sharing information between partner organisations in the local authority?

Steve Robinson: We always get into this thorny issue of data sharing. Again, we found, once we started looking at this, it was actually more cultural rather than legal. For example, we put in place integrated teams. We based teams from various agencies in one building to deliver a particular service with a single case management system. That showed that there was a need to share information. When we started having the beginning of those discussions, they were around, "This organisation needs to have this set of filing cabinets over here, and this organisation needs another set of cabinets over there, and actually for us-we are so important-there is a red line down the middle of the office and you can’t walk across the red line".

That is where we started from, but we solved that problem by getting all of our data experts in a room, every week, and getting into the fine-grain discussion of what data we kept, what we wanted to use it for, and how we were going to use it. That resulted in real clarity about what the database was and how we could share it. That led to what we called tier 2 information sharing agreements. I am of the view that data sharing is about really getting into the detail, having those discussions and you can get through it.

Let’s use the analogy of health and safety. Health and safety is always used as an excuse for not doing something, and that is broadly because the people who use that language are risk averse. To a certain extent, data sharing has gone down the same route. We have found that, if you have those fine-grain discussions, you can crack this.

Q70 John Pugh: Can I go to the discussion on the holy grail of integrated budgets, which is health and social care? That promises better outcomes for clients, as well as the potential savings across the system that Jackie mentioned. How are community budgets helping on assisting that highly desirable goal? What savings if any are being made?

Geoff Little: It is true that this area is challenging for a community budget approach, partly because we have a National Health Service that is national. Therefore, those who represent it on the ground, more than most other public services, do have very close links into their seniors in Whitehall. However, I think it is changing. That is partly because of the new arrangements that Jackie referred to. Clinical Commissioning Groups show great promise of leadership from people who understand not just how the Health System works, but understand their patch and their patients. For them to have access and control of the money in the health side is a promising way forward. The health and wellbeing boards are a real opportunity to get the system into one focus. The system changes, then, are promising.

What is really making a difference on the ground within that context are the financial challenges facing not just local government, but the Health Service. Hospitals are under severe pressure; it is in the news all the time. Behind that news about A&E and unplanned admissions, there are real financial pressures in the system. Health colleagues on the ground are seeing that, if they see this through the prism of one organisation only, they will not get through; they need to see this in terms of a system.

If we connect and manage, through strong local leadership, the opportunities of integrated care out-of-hospital around patients and residents in their own homes, the redesign of primary care and how that improves access outof-hospitals, and, thirdly, how those two things are connected to reforms in the hospital sector, those three things together can make real progress. You cannot deal with them in isolation, though.

Q71 John Pugh: Do you regard pooled budgets here as necessary or highly desirable?

Geoff Little: I would not focus on pooled budgets, but I would focus on community budgets or an investment-led approach, where we understand in depth how much capacity needs to come out of the hospital sector to be invested in out-of-hospital integration. Long term, that would mean we can properly not just reduce the flow going into hospitals but, more importantly, have effective services outside of hospitals to take up that demand, where we expect people to do better than they would sometimes have done being in hospital. That switch of resources needs to be understood and really managed in a closer way at scale over a period of time.

Q72 John Pugh: You mentioned the problem of perverse incentives. Clearly, obviously, if somebody stays in hospital, they are not costing the social services anything; if they are with social services they are not costing the Health System. To get people out of hospital earlier in a better or more seamless way might not suit everybody or even, in some cases, the relatives of the person you are trying to get out of hospital. Given that these perverse incentives exist and you do not have pooled budgets, can you guarantee any level of saving?

Geoff Little: You are absolutely right to raise that as a danger. If we do not do this collectively at place level, we will just start pushing citizens, residents and patients towards each other to avoid costs. That way lies complete system paralysis. We have to do this collectively at place level. For example, in Central Manchester, where the GP sector actually did reduce the flow of older people with long-term conditions into the hospital, the hospital did that on the basis of a block contract, not being paid on a tariff. That meant that, instead of getting more money the more people they got, they had a certain amount of money. Because they had control of the community services, if they got more of their patients into community service rather than their own wards, they saved money overall. They agreed to put some of their savings back into a joint investment fund with the CCG and the Council to actually get us to invest some of the proceeds in scaling that up.

The break comes in the reality that CCGs are only allowed to hold money for one year; they are not allowed to carry it over. I just think that if you want to do this-and that was a tiny scale example, if a very good one-we need longer settlements. The health and social care system in Greater Manchester is worth £6 billion a year, year in year out. If you are going to affect that, you have to have a different financial system.

Q73 John Pugh: You are saying that pooled budgets are not essential, but you need to have financial incentives stack up so that savings across the piece are savings to everybody and all the players concerned get something out of it.

Jackie Mould: Then having proper joint commissioning around those shared outcomes, which is what we did with the mental health.

Q74 John Pugh: People have had joint commissioning for years without those outcomes.

Jackie Mould: Yes. If you are clear what your investment plan is and you are clear what outcomes you want to achieve, then that is when you start to get the savings coming through. That is certainly what we did with the learning disability and mental health model.

Q75 John Pugh: Could you pluck a figure out of thin air of how much you could potentially save across the piece-not necessarily to any individual constituent part, but to the social service/health system?

Steve Robinson: The figure for us in West Cheshire, out of £100 million worth of savings, is £26 million. We believe that is actually still just scratching the surface of what could be saved, because that is about new delivery models of integration between health and adult social care.

When you factor in the ability for prevention in terms of the acute sector, the savings there are significant. It involves actually stopping delivering acute services; that is where you make the real saving. Then, clearly, there are also opportunities around significant integration between the NHS and local authorities, whether it be commissioning or back office. There is a whole range of ways you could make savings between the two families.

Q76 John Pugh: Given that you are looking at relatively successful outcomes and scenarios-and it is most encouraging that you have covered most of the areas you want to-do you think that local leadership is absolutely crucial in this?

Steve Robinson: It will not happen without it. It is as simple as that.

Q77 James Morris: The area of community budgets does raise some issues about accountability, particularly financial accountability. Geoff, in Manchester, what steps have been taken to ensure to ensure that there is accountability for the pooling of budgets across the piece, especially with the Association of Greater Manchester Authorities and so on? How is that working in practice?

Geoff Little: First of all, we are fortunate in having the Greater Manchester Combined Authority, which is a unique form of governance outside of London where the 10 councils have agreed to be part of an organisation that can take responsibility for public funds, particularly on the growth side. That allows us to have the governance in place where, when you start moving money around the system, there is governance for that system in a place.

At the moment, technically, that has authority to deal with certain amounts of funding around growth. We would need to get its powers extended to cover the people side of the equation, but there is no reason why that cannot happen. There would be a strong appetite in Greater Manchester for that to happen. We do have the basis of the governance to hold the accountability.

There is a more important issue, though. By the time we get to 2015, the majority of core cities outside London will have a combined authority for their city regions. The more important question is that question of leadership. You may have the governance, but do you have the quality and strength of leadership to make the difficult decisions to stop spending on something over here because you know, as a system, if you invest it over here, over time you will get better outcomes?

Q78 James Morris: Just focusing on the area of financial accountability, if there is a community budget sharing financial resources from a local authority, from a local CCG or whatever it might be, how do we retain democratic accountability for how that money is being spent?

Steve Robinson: There are a number of ways. First of all, you would need to embed this new form of partnership working within the structure of the local authority. For example, in my authority, we have a strategic board, made up of members and non-execs from all the partner agencies, who oversee the budget. Also, because it is a model of collaborative leadership, if there is a particular theme, one of the partners will lead on that and will hold the budget for it. Thirdly, ultimately, there is a relationship between all of the partners and the appropriate Whitehall Department, so there is no letting go from Whitehall. There is still an accountability of the local partnership to the Whitehall Department where an agreement has been made on those Whitehall service targets.

Q79 James Morris: Coming back to the way that Whitehall puts together budgets, is one of the constraints around this whole area that in the end Whitehall Departments, via their Ministers and the Secretary of State, are accountable to Parliament for the dispensing of public funds? How can we change that relationship?

Geoff Little: First of all, we need to maintain those lines of accountability. We have to make sure that those in Whitehall who are accountable to Parliament for those funds can exercise that accountability, but in more imaginative and, to be frank, productive ways. When we are joining things up at place level to get better outcomes for spending, we need to be reporting to accountable officers in Whitehall who can be held to account by Parliament.

Q80 James Morris: What is a more imaginative way?

Geoff Little: If you were to look at the way in which we are integrating services around individuals and families, in the end you do have to make sure that you are not being held back by the fact that this agency commissions these sorts of services in this sort of way. In the end, this comes down to public servants who have a leadership role around the family. If the public service cannot actually get this particular service, to the right quality, at the time it is needed, that person has to be able to affect the commissioning process so we stop commissioning this and commission what we need instead. That has to be fed up the line so that we actually get different things commissioned and things work.

Q81 James Morris: Is there something that can be done at the ministerial level in Whitehall Departments? We might need to have some kind of structural change, whereby we have a Minister for Troubled Families, who can then make decisions holistically.

Geoff Little: I know that Sir Bob Kerslake has been working on concepts such as system accountability statements, and I think that holds great promise. Without breaking the accountability in Whitehall, you might have a statement about how different lines of accountability come together to actually achieve better outcomes on growth and dependency in a place over a period of time. That sort of thing may well help. Although these are difficult questions, they are more realistic than assuming that pooling budgets is the simple answer. We do have to make sure that those accountable for spending public money do so in more effective ways. Just to repeat: this is not for everything. It is for those difficult, complex and costly issues.

Q82 Simon Danczuk: I want to start with a general question to all three of you. Whether it is Whole Place, Total Place or community budgets, there is real opportunity for saving significant amounts of money, bringing people together and coming up with solutions. It should really be exciting for local government, but I do not get the impression that this agenda is setting the local government world on fire. Why do you think that is, Jackie? Is it a branding issue or a lack of champions, or do you think I am being unfair?

Jackie Mould: It is just a very different way of working. It needs to have more prominence; it needs to have more of a push from central Government that this is the way forward. It is a different way of working. The last question really brought out the complexity behind this. In Birmingham, with our new cabinet structure, some of our cabinet members have cross-cutting portfolios, because they are looking at outcomes for the city rather than working in their silos. It is not an easy agenda to understand as you first get into it, and it is how we bring it to life.

I think we bring it to life through the evidence, the stories and examples that we are starting to develop now through these processes. We all have examples of really good approaches that have worked, like the Troubled Families work, and you can start to see individual families’ stories about how it has improved their lives. We do have models around working with ex-offenders and helping them get into employment. You can see the savings from that, but you can also see the turnaround in their lives and the effect locally. We have to start to bring it to life with some of that evidence.

Q83 Simon Danczuk: Steve, what are you doing to ignite the flames around community budgets?

Steve Robinson: To your comment around not setting local government on fire, we have to remember that, when we started this process, a lot of local government was scepticism. There was a lot of scepticism about the work that had been done on Total Place and people were not clear whether this would actually deliver anything in terms of these four pilots. We have broken through that. Also, local government has been thinking very much short term for the last two years in terms of how it balances its books. It needs to get those simple things out of the way. Most local authorities now are getting on top of that agenda.

You are right, though, that people do need to understand it better; it is complicated. It is not just about joining up services to make them more efficient; it is actually about integration to address prevention. That is far more complicated. This whole issue about how money flows around the system and how it is shared out is quite taxing.

As we have already touched on, it also requires significant leadership of the place, not just leadership of the local authority. By leadership of the place, we do not necessarily just mean the physical issues within the place; it is very much about the people issues within the place. I do think that people are getting to understand that, though, and the next round of bidding for community budgets has seen a significant increase in the number of authorities coming forward.

The new Challenge Network is very important. We see ourselves very much as the four local authorities who went first, and it is now important that we put something back in terms of providing support to the network, and giving guidance and support to other authorities that wish to come on. It is also fair to say that there are lots of councils already doing integration, even though it is not called community budgets. It tends to be around perhaps a few themes rather than a whole-system approach to how the local authority works with its partners. There is a lot of good work going on. The challenge here is to scale it up, and that is obviously what we all see as the next step in this journey.

Q84 Simon Danczuk: Geoff, you work for an authority within Greater Rochdale. How is it going there?

Geoff Little: We had a very good session with Rochdale, with the Chief Executive, Leader and partners, a couple of weeks ago to look at exactly this agenda because we are trying to ignite those fires across Greater Manchester. I found a huge degree of enthusiasm in the room to do this. Indeed, in Rochdale, these examples are actually happening on the ground. We have had major conferences at the Etihad Stadium; Sir Bob Kerslake came and addressed it, and was very positive about what we were achieving. I have found some key people in key positions of power nationally and locally have described themselves as converts to this over the last couple of years. That is not enough to make this happen at the scale we need, but it shows good progress.

There are two things for me. We are doing our best in Greater Manchester to get this moving at a faster scale. There is no silver bullet that can be plugged in off the shelf and everything will get better. Unfortunately, it is tough to make sure the money moves around the system in many different ways than we have done in the past-Jackie is right. There is a driver behind all of this, though: unlike the past, we are all going to get significantly less money for at least the next three, four or five years. That is the reality and we have to do some of this to reduce demand, so in the end we need less money because we have reduced demand, not because we try and meet the same demand in the same way. That is a huge driver in the system. It is not always a positive driver; it is a bit of a negative driver, but it is nevertheless very real.

In the end, you are right. It comes down to being able to tell those stories about how we can show with real evidence that just integrating services around individuals and their families-because that is how you change behaviour-does work. It is how you get the money flow to help that happen at scale as a matter of course. For example, we can all start telling some of the stories in our places that Louise Casey tells as an example of how this works. That is what I think inspires leaders locally to get on and do this.

Q85 Simon Danczuk: I just have a couple of quick questions. Geoff and Steve, you both mentioned the public service transformation network. Do you think that is going well and it is going okay?

Geoff Little: Yes. It is exactly the right thing to do as an outcome of this pilot. There is a lot more to do in terms of getting things up and running. We have to look at the scale of it, going back to the question of evaluation and whether we have the right skills in place. There is a lot to be done, but if I were looking for something out of the announcements for the Spending Review later this month-

Q86 Simon Danczuk: The Government has put £1.5 million into the network. Do you think that is enough?

Geoff Little: It is difficult for me to judge at this early stage. I would simply say that, the more we are investing in the skills to get this evidence flowing around the public sector system, the faster we will get to the scale that will make a real impact.

Q87 Simon Danczuk: That sounds like, "We need more money put in". Steve, what is your view?

Steve Robinson: I would endorse what Geoff says there. At the end of the day, we are seeing that the agenda is moving on and where we will see the benefits now is the next round: how many authorities come forward, how many are selected, how the network works with those, and how we, as the four that went first, start to deliver real practical examples on the ground of how services are delivering much better, saving money and making a difference.

Jackie Mould: The network is really important. We have to inject some pace, keep that pace going and start doing the practical delivery. We cannot do that without some support and investment to help us.

Q88 Simon Danczuk: Steve, you touched on this earlier. I have a final question about co-locating staff from different organisations and bringing them together around community budgets. Is that critically important?

Steve Robinson: It is important, but it is only the start. Putting people in one place is the start, but then it is about them working together on solutions to problems, redesigning services in a different way. That works. Not only do you get better outcomes, but you will actually get other efficiencies as well in the way you use buildings, the way you use IT and so forth. There are actually some back office asset-type savings that you will make from this approach as well.

Geoff Little: It is important and helpful, but not, on its own, the complete answer. There will always be services that are not in the room that need to be plugged into a bespoke package or a family for a particular issue. What is really important is that you can actually have that reach, right across the public sector, through integrated commissioning, so, if you need to spot purchase something for that person in that family next week, you can do it. There comes a point where you cannot get everybody in the same room, though. It helps at the core of this issue, but it is not enough on its own.

Q89 Chair: I have a couple of questions about the Troubled Families programme. Would local authorities have dealt effectively with families with complex needs if it had not been for this programme? Has it enabled local authorities, organisations and Government Departments at a national level to work more effectively together?

Jackie Mould: The Troubled Families programme has come out of the work that was done as part of community budgeting. It has injected that investment in and it really has helped to bring the agencies together to work around the family. Certainly, from the Birmingham point of view, we have found that really helpful. Some of the things that maybe we would like to have further discussions around would be in identifying the families and looking at which families we are working with.

When we started on this road and we were just piloting it, a lot of the families we were working with maybe had very complex needs; we were quite surprised at how complex some of the issues were. The Troubled Families programme has some quite clear criteria; maybe it is not hitting all of those really complex families, but it is helping us to really start to address some of the key issues for families in some of our most hard-pressed neighbourhoods across the city.

It is a bit too early to tell what kind of savings and long-term outcomes will come out of it, but we certainly see it as a way of completely changing the way that we work with families. We do not see it as an initiative that will come in, draw down the money from Government and then carry on as before. It is about system change; it is about having that "think family" approach, services integrating what they are doing and working across agencies. That is a very different way of working. It is not just about troubled families; it is about troubled organisations and getting the organisations to actually work more effectively together to get better outcomes for those families and reduce demand, as Geoff has been saying.

Geoff Little: What was really helpful about this initiative was that it got us some upfront investment, so that we can prove the case in reality of how community budgets can work. It was very helpful in that respect. We can now show with evidence that the integration-not things like family intervention projects, but the integration itself around individuals and their families-does add real value in terms of better outcomes, lives and reducing spending. The question for me is how we apply that sort of evidence now. Having stabilised quite a large number of families in terms of sending their children to school, antisocial behaviour having dropped away, the family itself being much more stable and families getting a grip of their debt and problems-having got that stability, how do we now move on and tackle the low skills and the worklessness issues, which are the route to financial stability going forwards, and the stability of these families?

Going back to what Mr Pawsey was saying before, about the role of payment by results, if you have payment by results on a silo basis only, you can only go so far. When, like the Troubled Families programme, you actually have a way of joining up that payment by results, so you have horizontal integration at a neighbourhood level, with outcomes around work, school, antisocial behaviour and local government saying there are other things for these families we need to factor into the system, you get real results and everybody benefits. We need to learn from the Troubled Families programme as a really creative use of payment by results.

Steve Robinson: What we got from the first 16 Troubled Families pilots was that we learned the cost/benefit analyses that went in. We were able to use those in community budgets and that was invaluable. If we are not careful, there is a danger with community budgets that we focus on particular themes, whether it be domestic abuse, early years or worklessness. If we are not careful we create lovely new silos at a local level.

It is really important that we remember that most of these issues are the same cohort of individuals and families, and what we need to do is to join it up at a local level. We need a very much integrated service delivery, not just addressing troubled families but also, as Geoff said, worklessness, domestic abuse and so forth. That is very much the way we are developing things on the ground.

Q90 James Morris: I have one quick question on that. To what extent is the Troubled Families programme really a community budget? Is it not really very much centralised criteria, and if you fit the criteria we will give you some more money if you match it? It is not really a community budget, is it?

Geoff Little: I would agree with that analysis. It is a more thought-through use of payment by results, so you do have that horizontal integration. Our challenge locally is to use it to gather the evidence, so that, when this programme ends in 201516, we can continue it because we can get the savings by reducing our demand locally and reinvesting that at the local place. We have to show how, from this, we can create a community budget at our place level and carry it on.

At the end, you will need to do this in a place like Greater Manchester for at least seven to 10 years, I would have thought. I would not want for this to be subject to endless three-year, separately-funded programmes from Whitehall that start, end, then someone has to reinvent it with a different title. We have to get a way for the mainstream money to be saved and re-invested to keep this going for long enough. We do have to make it into a community budget.

Q91 James Morris: Louise Casey came and gave evidence to us some time back. Is Louise Casey-not her personally-defining what success is in this model?

Geoff Little: The criteria are partly set by the Troubled Families Unit in terms of people in work, children going to school and less antisocial behaviour, but there is a fourth criterion, which is what we locally say is actually costing us the most money. That gives us enormous flexibility to get to the right families in terms of this programme. It is partly centrally driven and partly locally driven.

Q92 Andy Sawford: These questions follow on about Troubled Families. Geoff, if I could ask you directly: Government figures show that seven families have been turned around in Manchester by the end of the first year of the Troubled Families programme. You have talked about better outcomes and lives, but can you tell us what saving will arise from that turnaround?

Geoff Little: First of all, those seven families include families where somebody in the household actually works. That has to compare quite favourably to the Work Programme in the same place over the same period of time. We have not yet got to a stage where we are reporting all of our progress because some of the criteria about school attendance, for example, we will be reporting at the end of this school year or term, and that has to be factored in. The antisocial behaviour gains being made have to be maintained for a certain amount of time.

Q93 Andy Sawford: I understand it is complex, but have you been able to put a figure on it?

Geoff Little: Yes, we can, in two ways. First of all, for the 105 families we have tracked through our randomised control trial, we can show a saving of around £150,000 a year. That equates, to about £607,000 over five years.

Andy Sawford: Per family?

Geoff Little: No, for the 105 families, but that is net saving, taking account of the investment. That is over and above what would have happened in the old way of doing things; it is additional savings. When you take an example of a family in that cohort, we can track who saves what. DWP, bearing in mind it takes a while to get the work outcomes here, so far probably saves between £7,000 and £8,000; the council saves £20,000 per family; GMP saves £5,500; and the Health Service probably saves about £40,000 over a five year period because they will make major savings in this process. We can show where the savings are falling in the system and, more importantly, we can show the real savings for a cohort and how that can scale up.

Q94 Andy Sawford: Can you send us that information?

Geoff Little: Certainly, yes.

Q95 Andy Sawford: I would be very interested to have that. This is a question all of you. How confident are you that the families you have turned around-I am not quite sure how we are defining that, but let’s take it at face value that you have turned around a family-will stay turned around? How will you measure that?

Geoff Little: Personally, I would measure it by economic activity. In the end, if that family have people who are not on out-of-work benefits or low skills going in and out of the labour market, and recycling around the same schemes; if they have somebody in the household working, they are on a career and they are getting promotions, that is what is going to make it last. That is why I focus on how we apply what we have learnt to low skills and worklessness. Why should the Work Programme not learn from this when it is next designed?

Jackie Mould: It is too early to tell would be the honest answer, but clearly, similarly to what Geoff said, if those families are getting back into work, if they have resolved some of the issues they are facing, and we can measure that over a reasonable amount of time-

Q96 Andy Sawford: Have you already devised a matrix to monitor that?

Jackie Mould: Yes.

Q97 Andy Sawford: When might you be able to identify how successful it has been? It will help the case if you can say there is a 50% success rate in maintaining, for two years or more, those that have been turned around-or ideally higher than that. That helps the case.

Geoff Little: This is a three-year programme, and at the front end it was about identifying the families and getting them in the programme. It is going to be probably 201516 until you start seeing, across the country, the big numbers who have been through the programmes for long enough so not only can we claim the money from DCLG, but we can claim that lives have turned round in reality. There is a big question then about whether the places will be turned around as well, because if these families simply move away only to be replaced by equally dependent families, we will go back to where we started from. Local government has a real role here in terms of working with housing colleagues to make sure that places change as well as people.

Q98 Andy Sawford: I have just a final question to Steve. Please comment on the previous question if you wish, but I want to move it on. Will the Troubled Families programme areas be in a position to persuade agencies to invest in any interventions once the programme funding runs out in 2015? How confident are you that you will be in that position?

Steve Robinson: I am very confident of that, because, actually, what we have proved to partners is that, if you deliver services in a different way, and you are clear about the costs and benefits, you will effectively sign up to an investment agreement and the service will carry on. You will not need additional central Government funding to run it, because the partners can see the benefits of that locally. That is how you get sustainability.

It is back to that point about evidence and clear cost and benefits so that people are convinced that you are making a difference. Back to the point about how you know if you are successful, it has to be qualitative, not quantitative. You have to get down into those families and be clear that you are making a significant change in their lifestyles to prove that it is making a difference.

Chair: Thank you all for coming to give evidence to us this afternoon.

Prepared 22nd October 2013