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Increase in role of VCS in public service delivery

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This driver has now been replaced by Public Service Delivery

The operating environment for VCOs delivering public services continues to be broadly favourable.  Many government policies seek to expand VCS involvement in the delivery of public services and there is growing recognition of the role VCOs have in transforming public services.  This part of a wider trend of bringing markets into public services. Public services that the sector may become more involved with in the future include probation services, employment services, extended schools and childcare. In light of constrained public finances (see levels of public spending) the future level of income from government is an uncertainty in the medium term, particularly as money coming into the sector currently represents only 2% [1] of total government spending on public services.

What are the implications?

  • The opening up of markets may lead to a growing interest in the VCS as innovators and transformers of public services.
  • However, there may be a greater complexity of competition, with the potential for the private sector to move into new areas.
  • The reduction in funds available for public services could lead to a potential decline in the role of the VCS in public service delivery unless VCOs are able to offer the most value for money.
  • Blurring boundaries between sectors as VCOs and businesses start to deliver services traditionally delivered by the State.
  • This may create an increased demand for VCOs to provide informationabout themselves.
  • The development of hybrid organisations and increased collaborative working between sectors.
  • Increased competition for available funds for VCOs may lead to increased collaboration and partnership working.
  • Increased pressure to demonstrate that services are efficient and provide value for money by whoever is next in government, particularly in a period of reduced spending on public services.
  • VCS procurement practice that is increasingly professional, complex and bureaucratic which may divert organisational resources.
  • Polarisation of the VCS as larger VCOs are often better placed to bid for contracts due to economies of scale.
  • Medium sized organisations are most likely to suffer from cuts in public spending as on average they receive 40% of their total income from the state and do not benefit from the same level of resources particularly in terms of fundraising as the bigger organisations.
  • Focus on innovation can lead to better services but can also require organisations to constantly reinvent already successful services.

Moving Forward

An increased role in public service delivery offers many opportunities for the VCS but also comes with risks such as: mission drift; loss of public trust; loss of independence; and becoming more like the public sector organisations that traditionally delivered a service.

  • Is public service delivery the best option for your organisation?  Are funder imposed outputs and outcomes compatible with your mission and constitution?
  • What measures do you need to take to ensure accountability and easy access to information by the public?
  • Will a service delivery contract account for a disproportionate amount of your income?  What steps can you take to ensure a sustainable mix of funding?
  • Do your staff have all the necessary skills to take on public service delivery such as managing contracts?  Is training available to fill skills gaps?

The VCS has a good reputation for innovation and creative thinking.  It is important that public services are not simply transferred to VCOs, but that they are able to use their innovative skills and relationships with communities, to transform services.

  • How can you identify need amongst communities to design and influence public services?
  • Can you use partnership arrangements at a local level to communicate needs and influence public services?  Which VCOs sit on the Local Strategic Partnership (LSP) and can they communicate your message?
  • How can you ensure that your organisation's ability to innovate continues to flourish if it becomes a public service provider?

Want to know more?

Partnership in public services: an action plan for the third sector

Published by: HM Government, Office of the Third Sector

Date: 2006

Format: PDF

What is it? A Cabinet Office action plan for third sector involvement in public services. It sets out the steps that government has already taken to support the sector in the public services arena, and the steps that will be taken in the future.

How useful is this? This document provides an overview of the policy environment for third sector involvement in public services. The plan outlines future government proposals to improve partnership, in both commissioning and procurement and, support innovation from the third sector to help design and campaign for improved and more accountable public services. The plan also details measures to improve the capacity of the sector to deliver public services in the future.

Other comments: For a short summary of the key recommendations of the action plan for VCOs, see NCVO’s briefing.

The voluntary sector delivering public services: Transfer or transformation?

Published by: The Joseph Rowntree Foundation – a social policy research and development charity

Date: 2005

Format: PDF

What is it? The two papers in this study review both the political impact and the practical effect of the proposed expansion in the role of the voluntary and community sectors in delivering public services.

How useful is this? The first paper – ‘The voluntary sector and the state’ highlights the VCS’ role in providing public services and its contribution to civil renewal, examining how these agendas interact and what the future might hold for the sector. It also contains an overview of recent policy and trends impacting on the sector in this area. The second paper – ‘Beyond transfer to transformation’ examines how best to manage the transfer from state to VCS to deliver effective and sustainable change. Drawing on several case studies, it shows how different organisations have transformed a particular service.

Other comments:

Transforming public services

Published by: NCVO

Date: 2006

Format: PDF

What is it? This 15 page document sets out the VCS policy response to the government drive of increased VCS public service delivery.

How useful is this? Although a policy position, this briefing gives a good summary of the VCS policy perspective on its recent increased role in public service delivery. It also discusses some of the risks and opportunities associated with this role for VCOs and how they can think strategically to ensure that any future public service delivery is appropriate to their organisation.

Other comments:

The State and the Voluntary Sector: recent trends in government funding and public service delivery

Published by: NCVO

Date: 2009

Format: PDF

What is it? A report analysing the funding relationship between the statutory sector and VCS.

How useful is this? The guide contains clear, simple statistics on government funding and public service delivery by the voluntary sector for use in presentations or funding bids. It also contains an analysis of 16 different themes, including grants and contracts, social enterprise, and expenditure by central government departments as well as easy-to-read charts and tables showing trends over time.

Other comments:

The future of services to the public – reviewing the pressures and challenges for long term change

Published by: The Chartered Institute of Public Finance and Accountancy (cifpa)

Date: 2007

Format: PDF

What is it?  Report presenting a long-term perspective of public service delivery (up to 2030).

How useful is this?  The report examines how changes in society, funding and legislation are likely to impact on public service delivery in the future, and what the resulting structures might look like.  By examining how and why changes happen, and projecting their likely direction in the future, the report concludes that a society in which public and governmental bodies remain working discretely is not sustainable, and only those societies in which agencies work across sectors will continue to offer appropriate and sustainable services to the public.

Other comments:

References

  1. The State and the Voluntary Sector: recent trends in government funding and public service delivery [back]
Last updated at 15:56 Wed 23/Feb/11.

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There are major impacts for infrastructure organisations like ourselves not only in terms of providing services but in supporting other local organisations to ‘up the ante’ and, where appropriate, become more commissionable. Training in impact and outcome assessment being a key priority.

My concern is for those groups delivering quality services at a local or neighbourhood level who lack the capacity to engage at commissioning level. Partnership arrangements need to be developed to enable smaller, local groups to be funded to work on local priorities and feed back through appropriate frameworks without being overly bogged down with administration. It is my firm belief that a small grants programme should form an integral and meaningful part of partnership arrangements.

I agree Saskia, smaller groups need to be assisted to engage with commissioning.

I also think it is important that in taking government money, VCOs are still allowed a degree of operational autonomy as the high quality services they deliver are often a result of their public service ethos.

In designing an ‘action plan’ for the 3rd sector it is important for the government to recognise that part of the attraction that voluntary organisations hold is due to their very nature of being ‘voluntary’ and that bureaucracy and regulations might make it impossible for voluntary organisations to continue delivering a high quality service once funded by local commissioning.

Karl's picture

Karl

Third Sector Foresight

This driver raises some fundamental questions about the future of the sector in the mixed economy of welfare, to use the academic language. The arguments are well-rehearsed: should VCOs deliver more statutorily funded services (but in essence only really provide a sticking plaster) on the basis that it helps them to deliver their mission, or should they focus on campaigning to head off the root problems of social ills?
Presenting the future of the sector in such a binary format is of course splendid for debate but of little use for strategy. I don’t have time to properly research my arguments either, although my colleague Ann Blackmore has written eloquently on the issue of service delivery and independence a number of times. But for now, I’ll ask you to cross the pond and read an article forwarded to me by Professor Mark Rosenman of the Union Institute (who, incidentally, is well worth googling to read his numerous insightful articles). This op-ed piece from the New York Times compares the philanthropic efforts of givers with the expenditure of the federal government and is well worth a read. Its short and well researched.
The article raises a number of issues that are not just about the future of public service delivery, but about the future of our sector and our common purpose of a civil, indeed a civilised, society. Is it right that individual philanthropy trumps democratically accountable collective welfare? Should the latter subsidise the former? And will philanthropy ultimately resource the sorts of services that are needed by those most excluded from society? In asking such questions it implies some potentially difficult truths about the role and limits of philanthropy and perhaps voluntary action. It might suggest these are two quite different things, though I wonder if we conflate them and, worryingly, don’t question them.
But back to public services. If service delivery is fundamentally bound up in the future of our sector then strategies to deliver services to the most difficult to reach surely cant depend upon philanthropy seems to be the gist of the NYT article. That worries me: the US is frequently held as a model of where we might head; it is also widely acknowledged as a country with a strong not for profit sector. Both Labour and the Tories are speaking at NCVO’s annual conference in February…and I will be listening closely to see what they have to say about the role of philanthropy, and indeed if they make a connection with the role of the sector as a deliverer of public (though not publicly funded?) services.

Karl's picture

Karl

Third Sector Foresight

There have been a couple of replies to the NYT article here.

They both seem to be critical of the original article, standing up for the role of philanthropy, and in one case berating the performance of government. But I thought the original article was a bit more nuanced than that. Anyone got a view?

In light of the fact that the Government is commissioning ever more service delivery from organisations in the voluntary and community sector, the Public Administration Committee recently published a report on Public Services and the Third Sector: Rhetoric and Reality. The approach taken is slightly different, since it looks not just at the effect on Government and the sector but also at the effect on service users and the public at large.
The report makes a number of recommendations in order to get the best out of commissioning. Perhaps the most significant argument (certainly the one that made most impact in the press) is that users’ rights should not be affected by the identity of the service provider. It follows that the scope of the Human Rights Act needs to be extended so that non-public sector organisations can be considered public authorities when they are discharging functions on behalf of the State.
A similar issue is addressed with regard to information rights: again, the report calls for bodies outside the public sector to be considered public authorities under the Freedom of Information Act when delivering public services.
The Government’s Response to the Committee’s Report agrees ‘the exercise of public functions should be covered by the HRA, regardless of who is performing the function’. But it also says that charities should be subject to the act only when they are providing public services. It is proposing to consult on extending the Human Rights Act to voluntary organisations delivering public services

Helen's picture

Helen

Guest specialist

It’s interesting that there is little comment on this driver! My experience of working with local Age Concern organisations is that they are very busy trying to win tenders, work out how to collaborate effectively, and analysing the competition. Being a federal structure means that local Age Concerns could end up competing against one another, so in London we are discussing simple protocols that enable organisations to tender across each others’ patches. Age Concern organisations at a local level are also busy trying to influence Local Area Agreements, looking at local indicators to tease out where services for older people are relevant and affected. It’s a really competitive environment and the key issues for local Age Concerns are capacity, skills and resources. Competition is particularly key for smaller Age Concern organisations in this environment where their capacity to make and maintain local partnerships is vital; Saskia’s comment of over a year ago still holds true. We’ve also noticed that funding is drying up outside of the tendering process meaning that the VCS map will look very different in another few years.

Helen's picture

Helen

Guest specialist

Just to add to my last comment, there’s also a live debate amongst local Age Concern organisations about whether to focus purely on tendering or to seek alternative sources of funding. Another question being debated at present is whether there is a potential conflict of role in attempting to influence commissioners around provision of services for older people and also tendering for those services; a familiar conundrum for Age Concerns who manage the inherent conflicts in offering information and advice and also trading services, and who are now in some cases providing navigation services for older people as well as offering some of those services themselves.

Helen's picture

Helen

Guest specialist

Joan Bakewell's (Older People's 'Tsar') comments this morning were interesting re poor practice and neglect identified in care delivered directly to older people in their homes, by private sector organisations whose staff are poorly paid and whose price is driven as low as possible in order to compete. It highlights all the current tensions for VCS providers of public services for older people; will the driving down of costs result in poor quality services ? Does the development of a market place for care actually mean affordable effective services, and how can they be funded ? And how will the gap between government policy on people staying at home as long as possible, and the delivery of high quality services with sustainable providers be bridged?

Ade's picture

Ade

Interesting and useful questions from Helen here. But I think there are bigger issues ini terms of equal and fair treatment being endangered by cost cutting mechanisms being implemented through the back door by public sector partners. Service delivery ‘on the cheap’ will have a detrimental effect in terms of equality i.e. will increase inequality and discriminatory practices. Older people are massively discriminated against in service delivery and this needs to be tackled by voluntary sector partners challenging the public sector, on behalf of the people we serve and work with. We currently have this issue with the Legal Services Commission wantinig to drive down the costs of legal advice (in housing advice sector). This has the potential of limiting access to legal services for vulnerable groups such as older people and those who do not speak English as a first language. The extra effort and ‘positive action’ required to cater for these groups of people in our society requires extra resources and, inevitably, will mean extra costs.

We are always looking at ways to respond to the challenge posed by this driver - one of the key things that the Public Service Deliver Network does is brings together both VCOs and commissioners from public bodies to help them gain the skills to work together productively.

In September and October 2009 the network is running a two-day training suite for commissioners and front-line service providers. The topics are Navigating Funding Agreements (24 Sept) and Tendering for Better Services (22 Oct). I have posted more details on my profile page.

In the run-up the the 2010 UK general election the parties have been competing to show they have the best model for public services.

This included discussing the benefits of mutuals and co-operatives. I summarised this in a blog post addressing the question Do mutuals and cooperatives offer a new alternative for public services and the voluntary sector?

Where it comes to alternative models of public service provision, many of our members are already out there, doing this kind of work. This includes user-led service providers, such as those in the disabilities sector. These organisations know that there’s more to it than government just saying – there you are, take the money and do it differently.

Despite the tricky issues, one of the widely acknowledged strengths of mutual and cooperative models is the stability of these organisational models.

The key message is that the politicians like to present quick fixes, but despite the value of using different organisational models it will take hard work and dedication to make public service reforms work. What's great is that they are at least talking about this kind of thing!

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How will this affect your organisation? Have you considered it during your strategic planning? Can you share any interesting relevant links?

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