Predicting the impact of the recession on the third sector is a hard call to make. On the one hand, the policy environment for the sector has never been better. It is delivering more public services and has achieved most of the policy changes it campaigned for. So, on this scenario, we could expect it to be asked to step forward and play an even bigger role, helping address the growing needs resulting from the recession; implementing Keynesian style social housing, employment and environmental projects; and demonstrating a more ethical and responsible approach to doing business.
On the other hand, the implementation of government policy, particularly through commissioning and procurement, has been described by the sector’s chief executives as ‘appalling’, ‘dreadful’ and ‘a complete disaster’. So, on this scenario, as the recession bites, the sector can expect to be asked to do more for less, to subsidise contracts through (declining) voluntary income and even to lose contracts altogether as they are taken in house or axed.
On this, more pessimistic, scenario, many of the policy gains achieved by the sector over the past ten years could be put further at risk. In health, the focus on patient involvement, and increased priority for people with chronic conditions, is a tribute to the efforts of the Long Term Conditions Alliance and its members. Self management is now a core theme of NHS policy; the Expert Patient Programme, based on the pioneering efforts of Arthritis Care, is now being rolled out by a Community Interest Company.
The Mental Health National Service Framework and the commitment to spend £170m on Talking Therapies are both welcomed by Mind and Rethink. For those working at the cusp of health and social care, like the Women’s Royal Voluntary Service, the White Paper, ‘Our Health, Our Care, Our Say’ and the follow up report by Lord Darzi, are seen, in the words of WRVS’ chief executive Lynne Berry, as having ‘enormous potential’ for their work, because of their emphasis on joined up, person centred services and preventative strategies.
Recognition of the need to improve the care system to cope with the needs of an ageing population is welcomed by Counsel and Care and Independent Age and the publication of a Carers Strategy signals that carers, according to Crossroads National Association’s chief executive, Anne Roberts, are ‘higher up the policy agenda than ever before.’
‘Every Child Matters’, and the accompanying investment in 3500 children’s centres, are widely praised. Those working with young people welcome ‘Aiming High’ and the ‘My Place’ youth centre programme. More specifically initiatives like the Teenage Pregnancy Strategy, the HIV Sexual Health Strategy and the increased focus on those leaving the care system are all seen as very positive.
The biggest development of all, welcomed across the sector, is the personalisation of health and care services and the introduction of individual budgets. This brings the promise of truly independent living for disabled and older people, but is also viewed as the ‘elephant in the room’ by Paul Farmer, chief executive of Mind, and others, because of the challenges it will bring to commissioners, providers and service users alike.
Good intentions, but…
So, why is it that policy, in the words of Joyce Moseley, chief executive, Rainer Crime Concern, gets 8 out of 10, but implementation only scores 3? Part of the answer is that policy is set at a national level, but usually implemented locally and may not be accorded the same priority; indeed, sometimes, funds allocated to local government for one purpose get used for another. More generally, the policy of devolving responsibility to local government means central government is reluctant to intervene. Also agencies that were part of central government, such as Connexions and Learning and Skills Councils, are now becoming part of local government.
Delivery is increasingly being managed through the process of commissioning- a complex process, requiring new skills. The Commissioning Framework developed by the Dept. of Health is an excellent piece of work, but is not yet embodied in local practice. Many third sector chief executives feel the fundamental problem is a lack of understanding of the difference between commissioning and procurement. Too many officials still seem to believe their role is just to purchase a service as cheaply as possible.
Potential providers are often excluded from initial discussions about the tender specification.
Prices are often based on averages, not allowing for more complex cases, and payment can be in arrears with no allowance for inflation. Contracts are too often over-specified (what, how, when) rather than focussing on outcomes. Contracts are also being broadened, both in scale and scope, to reduce transaction costs for the purchaser, but this can make it harder for local groups or single issue organisations to bid.
Third sector organisations often experience cash flow problems and are subsidising public services from voluntary income. Meanwhile, smaller, local groups are being squeezed out; there are increasing instances of national third sector providers, such as the Shaw Trust, or commercial providers, such as A4E, winning tenders against local providers, and then asking them for help with local information and contacts. There is a real danger that the valuable social capital which groups like the CABx, Home-Start and local community groups provide will be lost.
What can be done?
How can this disjunction between fine policy intentions and poor practice be addressed, particularly in the difficult times ahead? The Commissioning Framework is a good start and the training programme for commissioners, which the Office of the Third Sector has commissioned, should help improve local practice. But the government and the third sector itself must also be prepared to play their part.
Whilst recognising the importance of devolution, the government should highlight examples of good and bad practice, incentivising the former, and penalising the latter. Victor Adebowale, chief executive of Turning Point, thinks the localism excuse is ‘rubbish’; there must be standards against which local government can be held to account.
Meanwhile, third sector organisations must engage actively at all stages of the commissioning process and bring their experience of providing services to influence service specifications. They should develop partnerships and consortia, involving local groups wherever appropriate, and they need training to raise their game at tendering and improve their ability to manage contracts.
Most importantly of all, they must ensure they generate unrestricted income though surpluses on contracts, other trading or voluntary fundraising. Some belt-tightening, driving down of costs and avoiding over-exposure to risk will also be necessary to survive the troubled waters ahead. They can then decide when to walk away from a contract or when to bring added value through providing services beyond the specification.
Remaining mission-focussed and value driven may not be easy when faced with the prospect of reducing resources and increasing demand, but these are the prerequisites for independence and, after all, it was the sector’s independence that enabled it to press for, and secure, all the positive policy changes of the last 10 years.
Richard Gutch is an Associate at the third sector recruitment agency, Prospectus. This article is based on interviews he has done with 100 chief executives of third sector organisations.
Richard Gutch
Prospectus Associate
31 October 2008
