Community Budgets

Written evidence from the Department for Communities and Local Government (CB 00)

This submission sets out evidence from the Department for Communities and Local Government.

Summary

This note sets out DCLG’s approach to empowering local agencies and communities through three different ways that redesign services to protect resources and improve services for users. In October 2011, the Community Budgets Prospectus [1] set out how places could bid to trial new ‘local’ approaches for integrated services. In December 2011, Communities Secretary, Eric Pickles announced that "Fourteen areas are to pioneer a public service revolution that will slash financial red tape and duplication so they respond to local need and save taxpayers’ millions".

Four areas [2] were selected to pilot Whole-Place Community Budgets to test how local services could be redesigned around users. The pilots have shown that:

· It is possible to rewire to deliver better outcomes at lower cost;

· The robust analysis of money flows supports the opportunity to redesign services;

· By identifying high cost cohorts, there is scope for improvements in the design of services;

· Although challenges for Whitehall have been identified much can be achieved within existing local powers;

· Collectively the pilots outline £800m net savings over five years when their plans are fully implemented;

· Independent analysis [3] suggests that there are net benefits of £9.4 to £20.6 billion if adopted across the country.

The Prime Minister’s announcement on 15th December 2011 of the Troubled Families [4] Programme set out how the Prime Minister’s commitment to turn around the lives of 120,000 troubled families by the end of this Parliament will be met at the pace and scale required. His announcement also confirmed that £448 million had been identified from government departments and brought together to support this delivery.

Funding is available primarily on a payment-by-results basis and local authorities are using it to redesign ways of working with these families, ensure that these families are supported into education and employment, that their crime and anti-social behaviour are tackled, and, that overall costs to the State are reduced.

All 152 upper tier local authorities in England have signed-up to their share of the target and have been working on identifying families. Current delivery is on track. The year 1 goal of identifying troubled families has already been exceeded and by March over 23,000 families were already participating.

Neighbourhood-level Community Budgets were tested in 10 areas covering 12 neighbourhoods. [5] They set out to test how communities and local people can have greater control and influence over the services delivered in their neighbourhood at a very local level. The business cases from these pilots were sent to Government at the end of March 2013 and their key findings are being considered.

Results

All three approaches have shown that rewiring services around individuals and families can help to make a practical difference. They have also shown, for the first time, that it is possible to make the required changes when there is a clear understanding of the costs and benefits.

The pilots’ experiences identified three key elements for success:

• It must be locally driven;

• Co-design is key: local agencies and Whitehall working together;

• Data and evidence are crucial: having clarity at a local level of where the costs are incurred and where the benefits arise provides essential information that enables the redesign of better services.

These approaches, together with the evidence, are driving local agencies to put together local packages that drive reform.

As announced in the Budget, the Spending Round 2015-16 will focus on growth, efficiency and public service reform. To support such reforms further the Government is establishing a new multi-agency network to support the pilots towards implementation, help co-design practical reforms in new areas and spread innovation and learning from the first pilots. The Local Government Association has also published a new Guide [6] and website [7] to further disseminate good practice.

QUESTIONS

The following material sets out how each of the three approaches [Whole-Place, Troubled Families and Neighbourhood-level Community Budgets] contribute to and drive public service reform.

1. Initially, Troubled Families was one of the themes looked at under Community Budgets, but in December 2012 the Prime Minister announced a new programme to deliver his commitment to turning around the lives of 120,000 troubled families in England by 2015 with the necessary pace and scale . Th is programme contribut es up to £4,000 to the cost of successfully intervening with eligible families across England on primarily a PbR basis.

The DCLG report, The Cost of Troubled Families [8] , identified similar scope for reducing duplication, realising savings and achieving better outcomes. This report makes the case for all local agencies to examine what they spend on troubled families, how they spend it, and how effective that expenditure is in helping turn lives around and preventing the emergence of future troubled families.

All of the Whole-Place Community Budget pilots have focused on joining up local services to support troubled families. Examples of their redesign and reduced costs include:

· Greater Manchester proposes replacing numerous agencies with a single case worker to work with the whole family. Investing £138 million in 8,000 troubled families has the potential to save £225 million over the next 5 years.

· West Cheshire estimated that their approach would avoid future costs and release net savings of £2m over the next five years.

At Neighbourhood-level, it is still too early to say for sure but the signs are that there is potential for Neighbourhood Community Budgets to be an effective approach to working with troubled families. The Sherwood (Tunbridge Wells) pilot is starting to deliver a new way of working on the Sherwood Estate with high risk, vulnerable and ‘just coping’ families (families not yet on the Troubled Families register, but who, without intervention might move onto it).

2. The recent National Audit Office Report [9] is positive regarding Whole-Place Community Budgets. Amyas Morse, Comptroller and Auditor General, Nation al Audit Office commented that : " … The community budgets concept, like ' Total Place ' before it, aims to use funding flexibly to meet local needs. The difference this time is that government is trialling this method properly. We encourage government to continue to work closely with local areas to understand fully what works and what doesn’t."

The Local Government Association’s commissioned report [10] from Ernst & Young on the potential for aggregation of the Whole-Place work concluded that the approach does have the potential to deliver better outcomes and to release substantial financial benefits. The importance of understanding quantified costs and benefits in redesigning processes has been set out in The Guide. [11]

Within this context, the prospects for models of payment-by-results are encouraging. The focus on cost benefit analysis, data and evidence has added to the opportunities for such approaches. The Troubled Families Programme uses a nationally operated payment-by-results delivery model. To incentivise local authorities, funding is available primarily on a payment-by-results basis, distributed as a contribution of up to 40% of the costs of actions needed. The remaining 60% is being found from the budgets of a range of local bodies.

In addition to capturing the successes of the Troubled Families programme via its payment–by-results scheme, the department has launched a three-year national evaluation. The department views the Troubled Families programme as a once in a generation opportunity to understand the problems that affect troubled families at a national scale and to build a rigorous evidence base for effective practice and system reform for the future. This evaluation will ensure that we take this opportunity and provide ongoing evidence to improve performance during and beyond this programme. To undertake this work, the department has appointed a consortium of highly experienced research organisations [12] :

Evidence shows that user-involvement in co-design can deliver efficiencies, eliminate waste, and release untapped community resources [13] . The Neighbourhood Community Budgets pilots have tested whether giving people greater influence over the services in their area and ensuring that they are targeted to local need and creates the best possible results with resources available locally. The pilots have submitted their Operational Plans and these are currently being considered. As yet payment-by-results have not been explored by the pilots.

3. All three of the approaches require local agencies and Whitehall to work together to find solutions. .

From the outset, cross-Whitehall engagement has been important in the Whole-Place process. By working in this way, the policy team was established locally and given the freedom to co-design solutions locally with support from Whitehall, rather than being led by Whitehall. Across the pilots, teams included:

· over 30 secondees from across Whitehall;

· local authorities, agencies such as health partners, the police, fire service and Jobcentre Plus;

· voluntary sector partners.

An example of such engagement is around health: Acting in collaboration with NHS England, Monitor, the Local Government Association and others, the Department of Health is supporting the development of a joint response to the challenges identified by the Whole-Place pilots. In parallel, the pilots are helping inform these national partners in working towards developing a joint response to their new duties in relation to health and social care integration.

The pilots have also demonstrated that Whitehall involvement helps to get local partners around the table even when proposals from localities do not require direct Whitehall approval. And that greater use of informal consultation and collaborative engagement by Whitehall is likely to help local areas respond more purposefully than relying on conventional forms of consultation.

The changing relationships continue to support a co-design way of working. In Budget 2013, Government announced to establish a new Public Service Transformation Network. This Network will be made up of both civil servants and local and sector experts. All three approaches show that this new form of open policy making is effective and helps produce better proposals and also builds capacity across workforces in line with civil service reform.

Neighbourhoods are very diverse and refashioning public services calls for a very different kind of relationship between Whitehall, local partners and communities. We therefore adopted an open and collaborative approach towards the Neighbourhood Community Budget pilots. The Prospectus [14] explained the outcomes that we were aiming to achieve and offered support for areas that wanted to work out what was right for their area. DCLG’s role has been to enable bottom-up approaches to develop, not to impose a centrally-designed model.

The pilot areas range from deprived inner-city neighbourhoods to small country towns and each is developing its own approach, built around local priorities and dynamics. In addition to direct support from DCLG, the pilots are also learning from each other on-line and at a range of networking events, suggesting that peer support is important in complementing a direct relationship with Whitehall.

4. The importance of accountability for public funds in the Community Budget approaches has been an explicit theme from the start.

By undertaking cost benefit analysis in their areas on priority themes, the pilots have focused on aligning and influencing budgets, rather than pooling or devolving them. This has enabled places to focus on outcomes, using resources differently and more efficiently, without the need to unpick existing lines of accountability.

The Whole-Place pilots concluded that trying to re-design all services in an area and pool budgets across agencies was less important than focusing on the redesign of services for high cost cohorts. Instead, by analysing the spend data each pilot decided independently to focus on the low-volume, high-cost groups that place high demands on public services and suffer some of the worst outcomes [15] . The work on cost benefit analysis has encouraged Whole-Place pilots, especially Greater Manchester and Cheshire West, to work towards structured investment agreements where costs and benefits are shared more proportionately.

Local agencies remain accountable for the resources that they invest in Community Budgets and for assuring themselves that these resources will be properly spent. The same accountability arrangements apply that would be applicable to their other spending.

The Neighbourhood Community Budgets pilots who are looking to align or pool budgets have ensured that they have appropriate accountability and governance arrangements in place, for example through an elected town or parish council or other bodies which include elected members and statutory partners. In other pilots statutory agencies have retained the accountability function while involving the community in shaping services.

Accountability System Statements

Since the initial inquiry into Community Budgets, progress has been made on the publication on accountability System Statements for Accounting Officers [16] . The Government has provided greater clarity than ever before about local accountability arrangements by making it mandatory for departments who transfer money to local bodies (such as schools, hospitals or councils) to produce an accountability system statement. These statements set out the checks and balance to sure that public money will be spent properly. Department of Health, Department for Education and Department for Communities and Local Government, among others, have all published such statements [17] . In the case of local government, the accountability system is based around a robust set of financial rules, such as the legal requirement for councils to balance their budgets, and the ability of local people to hold councils to account.

5. For the first time, practical co-design approaches are backed up by strong financial data. Community Budgets seek to maximise the use of resources and improve service provision through co-design and co-production. By local and central government working together in such a way, the pilots have redesigned services which create more integrated approaches. Local partners working together can deliver better outcomes by "following the money" [18] , but this must be locally driven.

For co-design to work:

· Leadership is needed locally and centrally to aid open policy making;

· Partners need to know and agree what their roles and responsibilities are in co-design;

· Agreement is required early in the process

The National Audit Office’s case study report on Whole-Place Community Budgets acknowledged that Government and the pilot areas had taken a pragmatic approach to the project, particularly around the cost benefit analysis methodologies. The Comptroller and Auditor General said that Whole-Place is now trialling the delivery of integrated services properly, unlike previous initiatives like ‘Total Place’.

The opportunity for co-design is acknowledged by Professor Tony Travers [19] who commented that there was a "strong evidence-based case" for closely aligning the budgets and delivery of council services such as education, health and fire services, as demonstrated by Whole-Place pilots.

Neighbourhood Community Budgets aim to bring together a variety of different resources, in addition to public sector funding, for example making better use of voluntary effort, local knowledge, capacity for innovation, community buildings, social finance and philanthropy, corporate social responsibility, and building greater self-reliance within communities.

The pilots have shown that people are willing to get involved in their neighbourhood. For example, 9 out of 10 people surveyed in Poplar, east London, agreed that citizens should ‘do their bit’ and over half wanted to help in turning their neighbourhood around.

6. Neighbourhood Community Budgets are about helping people to get involved in local services and that means playing a role in budgetary decision-making and civic affairs. Approaches like Participatory Budgeting have existed for several years: these give people choices (often a vote) over which local projects should be supported. Neighbourhood Community Budgets go further in that they involve residents in co-designing new and better ways to run local services, empowering them to make the changes they want to see. This can lead to more effective, joined up approaches, but also enables people to spot inefficiencies, waste and duplication, as well as finding ways to contribute to those services themselves, for example by helping out in the local library or running an exercise club.

The pilots have shown many different ways to get the local community involved, for example by targeting places where people congregate – in doctors’ waiting rooms or at school gates. Interestingly, in Poplar, where there have been several community consultations over the years, nearly 6 out of 10 people contacted through the pilot’s community engagement exercise said that they had never been consulted before.

7. Relationships are being reset. Through all three approaches, local led deals and arrangements are replacing top-down policy making. Successful public service reform will replace complexity, duplication, waste and fragmentation in service provision with demonstrably effective interventions, co-ordinated service provision which prevents as much as it tackles problems.

The Whole-Place pilots have shown that this includes:

· Pushing at previously established boundaries;

· Getting public service partners together to redesign services;

· Focusing on improving outcomes for the users rather than reworking structures;

· Identifying risk earlier so evidence-based interventions can be put in place which improve outcomes and reduce demand;

· Early engagement with local agencies to work with Government on how things can be done differently.

Neighbourhood Community Budgets aspire to create more self-sufficient communities, where people take more responsibility for themselves and their neighbours, making the changes they want to see and becoming less dependent on public services. There is the potential to do this, but such a fundamental re-engineering of relationships takes time. It’s about everyone bringing something to the table, for example:

• Residents in White City said that they want to do more themselves by taking responsibility for carrying out housing repairs and maintenance – this will develop through their ‘handyman’ scheme.

• In Haverhill careers advisers are coming together with local businesses to match training needs with work opportunities, offering more apprenticeships, work experience and work-based training to young people. In parallel, community volunteers in the town will be trained up to do minor repairs and maintenance jobs in public areas.

8. Local health and social care services are being placed under increasing pressure due to an ageing population.

The Whole-Place Community Budget pilots all focused on health and social care as well as reflecting the Department of Health’s reform agenda. The pilots’ proposals set out the potential for significant savings:

· A new integrated delivery model could result in a net reduction in costs of £26 million over five years (West Cheshire)

· Integrated commissioning suggests savings between £10 million and £18 million per year. (Essex)

· An integrated health and adult social care system could deliver annual net savings of £38 million. (Tri-borough)

· Early Years proposals will get more children onto a positive trajectory in terms of overall development. This will have benefits throughout life and has the potential to narrow lifelong health inequalities. (Greater Manchester)

Some of the Neighbourhood Community Budget pilots are exploring ways to improve community health. The Castle Vale pilot is focussing on tackling obesity and smoking cessation. ‘Expert’ patients are sharing their understanding of the barriers to losing weight or stopping smoking, and this is revealing wider issues which must be tackled for any health programme to take effect, such as self-esteem, confidence, in-grained patterns of behaviour and perception of service providers.

9. Health and Wellbeing Boards are extremely important in facilitating and shaping local health delivery around the users of the system. They do this by bringing together key leaders from across the health and care system to work collaboratively to understand their local community's needs, agree priorities and promote more joined-up working. Health and Wellbeing Boards also have the potential to influence and impact on the wider determinants of health such as poor quality housing.

The Castle Vale (Birmingham) Neighbourhood-level Community Budget pilot has begun to explore that potential, and local Health and Wellbeing Boards will be increasingly involved with the delivery of Castle Vale’s Neighbourhood Community Budget plan. However, it will take time for the new NHS arrangements, systems and working relationships to bed in.

Shadow Health and Wellbeing Boards have been encouraged to work closely with commissioners of health-related services in the pilots. This is supporting the development of good relationships with a broad range of local partners in order to influence other services that also affect health, improve outcomes and encourage the integration of s ervices across tiers.

April 2013