"Transformative capacity of 3rd sector
a rhetorical storm in a fiscal teacup"
So says the Public Administration Select Committee in a report published on 9 July.
In a frank and sometimes startling review of the Government’s policy of involving
third sector organisations (TSOs) in public service delivery on account of their
‘distinctive strengths in transforming services’, the Committee finds that the case
is not proven at present and calls for more empirical evidence to be gathered.
The Government’s
Third Sector Action Plan in 2006 signalled a greater involvement for the third sector in delivering public services such as offender management,
employment services, children’s services and education, health and social care and
local government services. Despite a marked increase in contracted income for TSOs
from £2bn in 2006 to £6.9bn in 2006, this still
only accounts for 2% of total spend on public services.
The Committee set out to examine whether the claims that TSOs have distinctive characteristics,
such as a unique focus on service users, specialist knowledge and expertise, ability
to offer joined up delivery, ability to inspire users’ trust and the independence
to innovate, really hold true.
Key witness, Martin Narey, Chief Executive of Barnardos said, “There is nothing
that the voluntary sector can do that the public or private sector cannot do just as well. There is nothing special about us..
A lot of people think.. we have a monopoly
of compassion, and it most unfair, we do not..” In his view, it was competition
that drives improvement in services.
An examination of the evidence showed that, although there were examples of good
practice in many service areas, particularly in building users’ trust and joined
up working, the case was ‘not compelling’. The Committee felt that the benefits
were derived, not form any inherent advantage of the sector, but from the way in
which services are designed and commissioned. The report highlights the need to
focus more effort on good commissioning practice, in particular understanding how
to get the best outcomes for users and citizens.
The Committee highlighted some areas of poor commissioning practice which deter
this, such as short-term contracts, unrealistic tender deadlines, and disproportionate
legal contracts with inappropriate balance of risk and reward. There are, however,
many practical steps that commissioners can take to ensure that those with something
distinctive to offer can bid: simplifying tender processes, helping organisations
to bid, in particular facilitating consortia and prime contractor arrangements,
breaking up contracts into smaller lots. Stuart Etherington of NCVO said that TSOs
acting as sub-contractors to larger corporates may be the shape of things to come.
The Committee recommends the way forward is for public sector organisations to beef
up their commissioning functions, in particular by recruiting talented managers, soft market-testing service specifications before procurement; and specifically
including any wider social benefits required in the core service requirement, rather
than hoping they will come out in the bid process. The Committee recognises this
will involve a significant cultural change. “A commissioning authority like NOMS
is not judged on the generation of social capital or a spirit of voluntarism, it
is judged on core outcomes such as prison accommodation, or prevention of reoffending.
It is
also judged on how much it spends. The challenge for government is to foster
a culture where added value is routinely taken into account in addition to core
costs and outcomes and find the right incentives for commissioners to think about
specifying wider benefits where
these are appropriate.” At the moment there is a
lot of confusion about how far commissioners can go in developing the market and
using social clauses under EU procurement rules.
Ultimately, the Committee concludes it must be right to judge all service providers
on their merits. To do that, we need a vigorous mixed economy of provision capable
of eliciting the various distinctive strengths of different organisations in different
sectors. This report is something of a wake up call for any evangelists tempted
to rest on their third sector laurels. Winning public service contracts will come
through genuine innovation that provides a competitive edge, not through special
treatment from commissioners.
The report has provoked an angry response from social enterprise leaders: writing
in The Guardian, Nigel Kershaw, head of Big Issue Invest, wrote that the report
was 'as heartening in its recognition of the breadth and variety of the sector as
it was disappointing in its underestimation of our abilities'. He called upon the
committee to 'wake up and smell the fair-trade coffee'!
If you are a commissioner and would like to discuss how to elicit the best bids
from the market or your flexibilities to use social clauses under procurement rules,
please contact us. Similarly, if you are a service provider considering a bid for
a public service contract, we would be delighted to help.
Committee finds accountability deficit
in public service contracts
In its July report, the Public Administration Select Committee highlighted the need
to make public service providers more accountable for service delivery. It noted
that public service contracts frequently do not contain a requirement to operate
a complaints procedure. Many service users do not know how or to whom to complain
about service performance. The role of the Local Government and NHS Ombudsman in
relation to contracted out public services is confusing. The Committee calls for
a strengthening of accountability mechanisms, including controversial proposals
already under development to extend the ambit of the Human Rights Act and the Freedom
of Information Act to contracted out service providers. These proposals, if implemented,
will surely increase the regulatory burden and costs for service providers.
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London SE1 ODB
t 020 7620 0888
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e info@tpplaw.co.uk
Email:
Mark
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