House of Commons - Community Budgets - Communities and Local Government Committee

Community Budgets - Communities and Local Government Committee Contents

3 Monitoring and accountability of Community Budgets

49. The ways in which Community Budgets are monitored will be important because of the need to demonstrate better outcomes and savings to partners in order to encourage investment and to ensure that public money is spent effectively and transparently through improved and integrated services. Effective monitoring also ensures accountability, particularly financial accountability. Because the current pattern of funding in England is not adapted to the close co-ordination, let alone pooling, of budgets new arrangements will have to develop. In this chapter we examine monitoring and accountability and also explore how Community Budgets will be funded.

Use of data

50. The collection and sharing of data will be key to both the operation and monitoring of Community Budgets.[116] Data collected on public services—before and after the introduction of a community budget—will play a crucial role in persuading local partner agencies and central departments to invest their limited resources in Community Budgets.[117] In addition, data sharing between agencies will be essential to enable the creation of whole-family facing services where people who require services from a range of agencies do not have to repeatedly fill in forms provided by different agencies that seem unable to share information securely between themselves, in the process wasting effort and resource.

DATA COLLECTION

51. The Whole Place Community Budgets (WPCB) pilots, unlike previous initiatives, have focused on data collection,[118] though the picture is not yet complete.[119] Witnesses from the Cheshire West and Chester and Manchester City Council WPCBs and the Birmingham Neighbourhood Community Budgets (NCB) agreed that complex areas of public spending required intensive data collection but that this would become simpler over time.[120] Essex County Council's approach to the need for data was to pilot initiatives and collect data concurrently so that work on rolling out Community Budgets could proceed more quickly.[121]

Data collection requirements within Neighbourhood pilots

52. The emphasis on data collection and planning was a particular issue for some NCBs which had fewer resources and spent less time on data collection.[122] Some of our evidence suggested that it was possible to spend too long collecting and analysing data before starting work.[123] Witnesses pointed to the difficulties involved in mapping spend over a large area and between agencies.[124] The Local Government Information Unit said that accurate spend mapping was "very challenging" and "not the most important aspect of a NCB" although it did provide "contextual information".[125] Tunbridge Wells Borough Council argued that given the huge cost involved in some services "endless debate about a few hundred [pounds] seems to miss the point".[126]

53. Collecting and sharing information will be vital to the success of Community Budgets as without data demonstrating service improvements and better outcomes for service users as well as savings it will be difficult to attract local partners and support from HM Treasury. The collection of accurate and comparable data will require local resources and is also likely to begin well before any savings are realised.

54. Local authorities will require access to information, resources and expertise to enable them to collect and share data that is comparable with pre-community budget spending. Local areas beyond the current pilots that choose to adopt Community Budgets may require assistance from central government departments in accessing, collating and analysing the data on current public sector spending. Such assistance could, in our view, take the form of guidance, loans of staff to work directly with local areas, or specific financial assistance.

DATA SHARING

55. Given the importance of sharing information in order to join up services we asked whether there were problems with sharing data. We were told that to an extent reticence about sharing of information was a cultural issue within local government,[127] which was often risk-averse when it came to sharing data[128] and creating the right working environment and attitudes to resolve this issue would take time.[129] We heard that some voluntary arrangements between local authorities, partners and individual families had been reached in the pilots but that these might not extend to sharing data about, for example, families with more complex needs who were less likely to give their consent.[130] Tendring District Council told us that ultimately "legislation will be needed to ensure that people who have got the data can share it".[131] Data sharing problems were not, however, restricted to local government. Jackie Mould from Birmingham City Council told us that there had been an "ongoing issue" in terms of data sharing with the Department for Work and Pensions.[132] The Secretary of State for Communities and Local Government said that "most of the barriers against sharing data are entirely artificial"[133] but he gave an undertaking that, if presented with evidence of legal barriers to data sharing, he would work hard to find out if such barriers could be "overcome, either by legislation, secondary legislation, guidelines or silver-tongued eloquence".[134]

56. Since we began our inquiry £100 million was announced in the Spending Round in June to help cover the initial costs of joint working within public services including the creation of a centre of excellence for data sharing between services to reduce complexity. It was announced that this centre would also explore options for legislation.[135]

57. There is a culture in central and local government that is averse to sharing data which in part may be derived from existing data protection legislation, or perceptions about the legislation. This culture must not be allowed to obstruct the sharing of information needed for the development and operation of Community Budgets. We note the Secretary of State's view that barriers to data sharing are entirely artificial and not the result of the correct application of the Data Protection Act 1998. However, we recommend that, if methods of sharing data within the requirements of the Data Protection Act 1998 cannot be developed by central government departments working with local authorities, the Government bring forward legislation. We welcome the assurance given to us by the Secretary of State that he will address quickly any problems with data sharing arrangements that emerge. As we discuss elsewhere in our report the role of secondees in breaking down barriers and improving communication between central and local government will be an important part of changing the culture around data sharing.

Financial accountability

58. Community Budgets require joint decision making and working as well as pooling financial resources. We looked at whether specific pooled budgets would be necessary and whether they would require any changes to accountability arrangements—both in terms of financial and democratic accountability.

59. The current arrangements vary. The pilot areas have put in place their own structures to manage financial accountability within joint working arrangements. Strategic boards consisting of local partners that have been established to take the lead on a specific project and hold its associated budget to provide financial accountability.[136] In addition, through links between members and non-executives of partner agencies and the officials in Whitehall to which they report, a degree of financial accountability (through Parliament's scrutiny of central government) can be achieved as well.[137] Essex County Council said that accountability in its WPCB operated through the production of business cases including cost benefit analyses which were signed off by all partners on the Whole Essex Partnership Board.[138] For this type of arrangement to provide longer-term accountability data will of course need to be available in order to assess where money has been spent and what the outcomes of expenditure have been. A combined authority such as Manchester City Council could also hold financial responsibility for spending decisions were its powers to be extended to cover social as well as economic spending.[139]

60. The Secretary of State said that, although he had not been proscriptive about the way the pilots had gone about creating financial structures, he could not point to an instance where things had "gone terribly wrong".[140] Both he and the Local Government Minister, Brandon Lewis, agreed that local areas needed to be given the flexibility to develop their own approaches to budgets and accountability.[141] We found, however, that more work was needed in this area. Geoff Little from Manchester City Council said that central government needed to allow greater flexibility in the way services were commissioned so that, for example, staff on the ground could obtain the services that a particular family required.[142] This would mean changing accountability arrangements. He suggested that System Accountability Statements (SASs) developed within DCLG could be used to achieve flexibility without "breaking the accountability in Whitehall";[143] delegating authority downwards whilst maintaining a clear chain of accountability. These SASs, produced by central departments, set out the accountability systems that exist, in the case of DCLG, between local and central government. They also set out how the core accountability system for local authorities, their financial management and democratic accountability will operate.[144]

61. Some questions remain about how arrangements to ensure the financial accountability for Community Budgets will work in practice, including accountability for spending within pooled budgets. Questions will doubtless be raised about accountability as pilot areas design their own arrangements for agreeing and monitoring spending. More questions about accountability for public money will arise if, as Community Budgets require, central budgets are devolved to, or pooled at, the local level. We have therefore written to the Committee of Public Accounts suggesting that it examine the financial accountability of Community Budgets.

POOLED BUDGETS

62. Pooling budgets—as opposed to entering into cross-agency spending agreements—raises questions not only about financial accountability but whether agencies can be persuaded to contribute to a shared pot of funding over which they would have limited control.

63. We found that pooled budgets had not been a significant feature of the pilots so far as they had focused on identifying and achieving outcomes rather than creating financial structures.[145] In most cases we found that local partners had entered into agreements within their community budget area to invest in certain activities or to move their resources from one area to another. Chief Inspector Faulconbridge, working closely with the Sherwood NCB, said that, while the police had not "physically put money on the table", "what we put in and what every organisation has committed is resources".[146] Cheshire West and Chester said that:

. The approach does not necessarily lead to a single pot of funding for public services but does provide clarity on the outcomes expected for investment across the partnership.[147]

Indeed, Essex County Council argued that pooled budgets were neither necessary nor practical within the Essex WPCB. It said that pooling budgets was not "a sensible place to start"[148] and that there were "risks associated with the creation of a single funding pot that goes against the grain of Open Public Services".[149] The Council also said that pooled budgets "across an area like Essex" would involve the centralisation of financial decision making and undermine the "shared commitment to subsidiarity" among partner agencies.[150] Instead, local partners worked together on a voluntary basis and decided on the basis of cost benefit analysis whether to invest in each project.[151] Essex County Council, however, commented that progress using this working method had been "challenging" and warned that without "sustained government focus" there was a risk that local partners would cease to invest in long term system change in the face of financial pressures.[152]

64. A pressing issue for Community Budgets will be what happens when the product of the efforts of one agency—investing in and improving services—accrue to another agency.[153] There is no single 'invest to share' model across local or central government to allow an agency benefiting from savings produced by another to reinvest in services or 'pay back' the investor agency. There may be a risk that an agency which would not be the direct beneficiary of investment would be reluctant or unable to invest upfront in a community budget and so become a barrier to joint working.[154]

65. The Secretary of State suggested that agencies would be motivated to invest upfront by the prospect of creating savings,[155] which would accrue to them in the medium to long-term. In addition, Mr Pickles expected that pooled budgets would solve this problem in the longer term[156] because all agencies would invest and share savings from a single pot of funding.[157] The Secretary of State also made the point that while pooling funding was important, the more significant issue would be agencies giving up sovereignty and using joint decision making and working. Mr Pickles said that: "It is not people sharing budgets; it is accepting other people's judgment".[158] As we have noted, in the absence of pooled budgets, the community budget pilots have been developing local savings-sharing agreements between public service partner agencies, in order to encourage joint investment.[159]

66. In the short and medium term progress can be made towards integrating services through Community Budgets without the use of pooled budgets but in the longer term they will be needed to complete the process of integration. Negotiations for the creation of pooled budgets should continue locally with the assistance of central departments where necessary.

67. A key outcome from the Community Budget pilots will be a solution to the problem of what to do when one partner invests to the direct benefit of another agency. It may take some time before pooled budgets are used widely and a single 'invest to share' model may not be universally applicable. It is therefore essential that local authorities in Community Budget areas work with their partners and central government to develop model approaches for producing savings-sharing agreements within 12 months.

Spending Round 2013

68. There have been some recent developments in the use of pooled budgets outside the community budget initiative. The Spending Round 2013 made several changes to local authority budgets including a pooled budget for health and social care of £3.8 billion, designed to promote joint working and reduce hospital admissions, and £200 million from the NHS budget in 2014-15 for investment in new systems and ways of working by local authorities.[160] A £50 million fund for joint working between police forces and local authorities was also announced in the Spending Round.[161] We welcome the move towards pooled budgets in the 2013 Spending Round. The pooled funds available only represent the beginning of what will be needed in order to fully integrate public services. We expect to see significant expansion in the use and scale of pooled budgets before 2015.

FUNDING

69. A key issue from the pilots will be to establish how central government funding should be made available to local areas and how this could be done with the flexibility necessary to allow decisions to be made locally on how money is spent. Although no overall model for funding Community Budgets by central government has yet been agreed, HM Treasury has said that one of the "range of ideas" it is considering is 'top-slicing' departmental budgets and creating a single funding pot across central government for Community Budgets,[162] an approach favoured by the Local Government Association (LGA).[163] Under this arrangement national agencies that failed to cooperate would receive less money.[164] Sharon White, Director General for Public Spending, HM Treasury, told the Public Accounts Committee in April 2013 that this method had advantages and disadvantages. One disadvantage being that it would be difficult to use with protected budgets.[165] Looking at central government funding from a different perspective, Geoff Little from Manchester City Council argued that much more difficult, but necessary, would be for local areas to influence how central government managed the way "the core of public spending is applied".[166] The implication was that local areas needed to be given greater control over how central budgets were spent on a local level based on local evidence.[167]

70. Following the success of the pilots at local level the Government must now assess how best to fund public services through the Community Budget model. We recommend that the Government create one cross-Whitehall system for incentivising departments to invest in Community Budgets, which will have the effect of allowing authorities to commission services on the basis of local need. This will require local authorities to be given maximum flexibility over their budget for public services.

71. Evidence from the LGA suggested that there should be a strong incentive for central as well as local agencies to invest in the WPCB model.[168] The LGA told us that within the WPCB pilots savings accrued "roughly 80:20 to central government agencies and to councils".[169] This ratio raises the question of whether local government will be incentivised or able to invest in the short term in WPCBs when the majority of savings would accrue to central agencies. When we put this concern to the Secretary of State, he responded that "all savings are local"[170] while Local Government Minister, Brandon Lewis, said that "pump-priming" investment was not essential to start the process adding that much "can be done locally, without investment", such as redesigning services.[171]

72. We asked whether central government should provide upfront funding to kick-start local investment. Mr Lewis pointed to money that the Government was already providing through the Transformation Challenge Award, a fund to which local authorities could apply "to help them, if they do feel they need some pump-priming".[172] However, we heard from several witnesses that some further investment would be needed at a local level.[173] Steve Robinson from Cheshire West and Chester Council said—in the context of the use of 'invest to share' and payment by results—that local areas should be able to keep more of the savings they achieved and "reinvest them locally".[174] Sir Merrick Cockell from the LGA said that, in order to make Community Budgets work:

You have to invest upfront, and it will take four or five years before you see the real savings. [...] You cannot do one without the other, however, and there will be a need to invest upfront, and we know there is value in that, but in the financial position we are in that is really difficult.

Sir Merrick explained that the principle of central government investing from across several budgets in order to create savings had been accepted within the Troubled Families Programme where upfront funding was available alongside payment by results but that embedding that principle "will be very difficult".[175]

73. The likelihood is that significant savings from Community Budgets will accrue to central government which should therefore invest upfront in their development. Given the effectiveness of the use of central government secondees with the Whole Place pilots, funding an extension of this approach to other areas would be an effective form of investment. Departments should, in addition, respond constructively to requests from local government for pump priming funding for the implementation of Community Budgets.

CERTAINTY OF FUNDING

74. We heard that certainty about funding as well as availability of upfront funding was necessary, in order to allow local authorities and agencies to plan investment.[176] Geoff Little from Manchester City Council gave the example of Clinical Commissioning Groups which could not currently carry over savings from one year into the next, discouraging investment and the creation of long term strategies between partners.[177] Indeed, a similar point was made by Sir Bob Kerslake, Permanent Secretary at the DCLG, who told the Committee of Public Accounts earlier this year that, in order to allow agencies to invest in services, even when their investment might not benefit them directly, they would need confidence about their future funding and flexibility over how they allocated their budgets.[178]

75. Some long-term investment agreements between local authorities and their partners within Community Budgets would be greatly assisted by the Government providing a clearer indication of funding levels into the medium to long term. Such indications—though necessarily provisional—would give public sector agencies confidence about their budgets and encourage them to invest in service improvements. In addition, the ability to carry over spending from one financial year into another would enable agencies to be more strategic in the way they spent their budgets.

116 NAO, Case study on integration: Measuring the costs and benefits of Whole-Place community Budgets, March 2013, pp 9-10 Back

117 Ev 58 [DCLG], Ev 82, para 2.13 [Greater Manchester] Back

118 NAO, Case study on integration: Measuring the costs and benefits of Whole-Place community Budgets, March 2013, p 9 and the Guardian online, live discussion on community budgets, www.guardian.co.uk/local-government-network/2013/apr/15/lessons-from-community-budget-pilots, 17 April 2013 Back

119 Q 178 [Paul Warren] Back

120 Q 66 [Steve Robinson, Geoff Little and Jackie Mould] Back

121 Q 142 [Ian Davidson] Back

122 Q 178 Back

123 Q 178 [Nazeya Hussain, Steve Atkinson and Paul Warren] and Ev 100 [Tunbridge Wells Borough Council] Back

124 Ev 100 [Tunbridge Wells Borough Council] Back

125 Ev 103 , para 4.5 Back

126 Ev 98 Back

127 Q 141 [Cllr Halliday] Back