In 2002, the treasury’s review, The Role of the Voluntary and Community Sector in Service Delivery, recognised the potential of the third sector of charities, voluntary organisations and social enterprises as uniquely valuable partners in the delivery of key public services. The review established both an £80m Futurebuilders fund for investment in innovation and set aside another £70m for the sector’s infrastructure, to boost the sector’s chances of winning public service contracts. Five years on, public sector contracts have grown to comprise 20% of the sector’s income and, in already established areas such as social housing and personal social care, voluntary and private organisations now account for a third of all provision. But this is, perhaps, evolutionary rather than revolutionary.
A delegation of voluntary sector chief executives met Tony Blair at Downing Street in January last year to argue that growth in the sector’s service delivery role was hampered by unequal funding arrangements. The delegation claimed that commercial organisations are incentivised to take up public service contracts with guaranteed profit streams, while voluntary organisations can struggle to cover their costs and have to subsidise the service from their own voluntary income.
One charity, Sue Ryder Care, has estimated that it has gifted the state at least £50m since 2000 through topping up under-funded contracts.
The type of public service contract that the third sector can expect to receive does not always compare with that on offer to the public and private sector. Unlike the 20-year PFI contracts, voluntary organisations often rely on one-year contracts from local authorities and primary care trusts. “The same public sector bodies that are perfectly willing to enter into seven or ten-year contracts with the private sector for back office functions,” said an incredulous Sir Peter Gershon last March, “are also perfectly willing to drip feed the voluntary sector on a month-to-month basis to provide essential social services.”
According to Richard Gutch, chief executive of Futurebuilders, “The public sector still views the voluntary sector as marginal, as add-ons that can be expected to fund services through their own voluntary income, rather than as potential business partners.”
But this could all be about to change. Last May, frustrated by the lack of progress so far, Blair told new Cabinet Office Minister Hilary Armstrong to bring about a “step change” in service delivery by the sector. In December, the new Office of the Third Sector in the Cabinet Office published a public services action plan for the sector that sought to address failings since the 2002 review.
Chancellor Gordon Brown announced that contracts of at least three years, rather than one year, would become the norm.
A training programme for 2,000 public sector commissioners was launched to ensure that the public sector understood the third sector’s needs and involved it in the design as well as the delivery of services. The action plan also indicated where third sector service delivery can be expected to converge. It highlighted five policy areas – probation, employment, children’s services, education and training, and health and social care.
After years of stilted progress, change could be rapid. The Offender Management Bill, published at the end of last year, permits the outsourcing of £9bn of probation services to the voluntary and private sectors. The welfare reform minister, Jim Murphy, has also promised that 60% of the contracts to get one million incapacity benefit claimants into work will be given to third sector organisations.
But the government has also moved to quell some of the wilder expectations about how far the sector can go in “replacing the state”, in the words of a kite-flying Acevo pamphlet from 2003.
The minister for the Third Sector, Ed Miliband, has ruled out the transfer of large swathes of state provision to voluntary organisations, arguing that the debate is not “about a big battle for territory” and that third sector innovation as much as direct delivery can help to change the public sector.
“The greater involvement of the third sector in delivery must not be about government abdicating its responsibility to fund public services,” he told a voluntary sector audience in November. Instead, it is about ensuring that, in the right circumstances, the sector can deliver services where it is best placed to do so.”
According to Gutch, the real value of the third sector in service delivery lies in augmenting, not replacing, state services, such as in projects commissioned by GPs that offer cognitive therapy, unavailable on the NHS, to patients suffering from depression.
“It’s a question of playing to the strengths of the third sector in the design and specification of services and taking on services that the third sector is best placed to deliver. I don’t subscribe to the idea of wholesale transfer of services to the third sector,” he says.
Ministers are also keen to bring together both strands of public service reform. The National Offender Management Service, for example, which is overseeing the opening up of the probation service to competition, has called for “coherent” programmes “delivered by provider consortia with the private, public and voluntary sectors working together”.
Working together
Some alliances have already been formed. In the education field, ICAN and Serco have joined forces to support teachers developing the communication skills of primary school pupils. While the Offender Services Partnership brings together two charities, Crime Concern and Tomorrow’s People, with private sector security firm Reliance to run unpaid work and education and training projects for offenders. The CfBT Education Trust also provides training for persistent young offenders at a secure institution run by Group 4 Securicor in Milton Keynes.
Graham Beech, director of offender and justice services at Crime Concern explains the thinking behind such partnerships.
“We think that we can bring together the different strengths of private and not-for-profit organisations. It brings the private sector experience of managing large-scale public sector delivery contracts together with the not-for-profit sector’s technical expertise in delivery but also its reach into communities. It is important that these services are not delivered in isolation but do engage with communities. That’s our reason for getting involved in this kind of work,” he explains. (See case studies below.)
However, greater third sector public service delivery does not enjoy universal support. From within the third sector itself there is concern that voluntary organisations risk losing the trust of clients by taking on the state’s coercive functions in probation or welfare to work contracts.
Care charity Leonard Cheshire has warned that charities participating in government services to help incapacity benefit claimants into work could “end up being complicit with a system that is punishing and impoverishing the people they work with” because they will be forced to provide information which could lead to benefit sanctions.
Some trade unions have condemned the transfer of services to voluntary organisations as “soft privatisation”. A report for the Public and Commercial Services Union in June last year criticised charities bidding for Job Centre Plus contracts for aligning themselves with large private providers in the Employment Related Services Association. It also questioned the evidence base for the assumption that third sector organisations perform better than statutory agencies.
The issue of contestability
Amicus, which has 30,000 members in the third sector, has also come out against an expansion of third sector public service despite accepting that it is often better than the service provided by the state.
“We know that the third sector delivers good services, we’re in no denial about that,” says National Officer Rachael Maskell. “It has more opportunities to deliver better services than the state because of resourcing issues and ethos.” But she argues that the open market developing in public services means that third sector organisations are becoming a “stepping stone” to privatisation. “We’re really fearful that third sector organisations are being used and abused in order to sell off state services,” Maskell maintains as she calls for an end to contestability.
But, according to Stephen Bubb of Acevo, contestability will not only drive up standards, contracts will increasingly be won and kept by third sector organisations on the basis of their emerging track record.
“As the market opens up, which inevitably it will, we would expect third sector organisations to be able to compete successfully because they combine an extremely good service offer with the value added that comes through our commitment to professionalism and involvement,” he says. “When we bid, we bid to win and we think increasingly our offer will be seen as better.”
The manner in which services are transferred to the third sector has also raised questions. Fears have been expressed that the National Offender Management Service contestability agenda could exclude small, innovative organisations and result in rigid, target-driven contracts that undermine the very expertise and flexibility that the third sector was brought in to supply.
Greg Clark, the Conservative shadow minister for Charities, Voluntary Bodies and Social Enterprise, echoes these concerns. “The danger for the government in putting more activities the way of the voluntary sector is that it tells voluntary organisations to just do what is currently done by the state. But the whole key to their success is that they do things differently from the public sector. There is a real danger that they’ll be asked to replicate what is done in the public sector. That will actually detract from and smother their contribution,” he says.
The ultimate fate of third sector public service delivery seems to hinge on this question of who moulds whom: can the third sector provide a real alternative to public and private providers, whilst retaining its unique culture and ethos? Or will charities, voluntary organisations and social enterprises simply assume the responsibilities of the state, be re-cast in its image and leave politicians searching for a fourth sector?
As the experiment gathers pace, some in the third sector are already confident of the results. “The first inspection of social care in the public, private and voluntary sectors showed, on all indicators, third sector-run homes had better results than the other sectors,” says Bubb. “The bottom line for us is what’s the quality of the service delivered to the customer and to the client. That’s the only real issue.”
Case study 1: Rainer, Turning Point and Serco partnership
Government plans to involve the private and voluntary sectors in correctional and probation services have focused on the creation of cross-sector consortia. Serco’s alliance with the charities Turning Point and Rainer to help ex-offenders into employment is an early example of the kind of partnership that could flourish under the National Offender Management Service’s contestability agenda.
The partnership’s contract with the Probation Service is worth £1.4m over two-and-a-half years. “Sustainable employment is a crucial hurdle for ex-offenders to overcome if they are to resettle well into the community,” says Serco’s Heidi Watson.
The participants’ pooled expertise covers all of the seven pathways identified by the 2002 Social Exclusion Unit report on reducing reoffending by ex-prisoners, such as accommodation, education and training, employment and attitudes and behaviour. Rainer and Turning Point are offering a project-worker service to help ex-offenders deal with chaotic lifestyles, train and prepare for work and gain employment.
Serco is providing an employment advisor service to help employers understand the needs of the offender and the benefits of employing them, and to match the right offender to the right vacancy. Project workers and employment advisors from all three organisations will then work together to support the employer and employee to ensure they successfully sustain their employment. The first referrals were taken in early January.
Case study 2: 4Children, Continyou and Serco partnership
In October, Serco, 4Children and Continyou (both charities), began work on a £12m contract for the Department for Education and Skills to help local authorities reach the government target of setting up 3,500 children’s centres. The aim is to make public services more accessible for families with children under five.
The centres will bring together different agencies, such as social services, health, education and employment advice.
The partnership, known as Together for Children, fended off competition from 30 major consultancies to win the contract.
It will provide “support and challenge”, in the words of Elaine Simpson, Serco’s Managing Director of Education and Children’s Services, to 150 local councils charged with setting up a children’s centre in their area. “We aren’t going to run the children’s centres for the local authorities. Our role is to help to build their capacity and give the right support so that they can deliver on the target.”
Around 40 people from the three partners have been seconded to work on the project, divided into teams based on the nine government regions.
Simpson says the fact that the partnership brings together private and third sector organisations is integral to its success because children’s centres will involve different sectors to ensure they bring together the best expertise to best serve local communities.
“It has to be a private-voluntary sector partnership because we are trying to support local authorities to work in this way.” The two year project, which could be extended, is still in the early stages and has completed first visits to local authorities.
Mathew Little is a senior reporter for Third Sector