Enquiry into Govt buying or Commissioning services from Third Sector

Paul Brian Tovey drew my attention to this enquiry and think it is pertinent to what this campaign has been about for the last 8 months and why there needs to be greater transparency, professional accountability , regulation and choice accompanying any transfer of public services to the third sector. If you have the time and the inclination, why not make a submission to the enquiry yourself.

There is a Third Sector Advisory Group - the website makes it clear that this is not a consultative group . There are two vacancies for this group. If you wish to apply to be a member of this Advisory Group you can do so here.

Public Administration Select Committee: Inquiry

Commissioning Public Services from the Third Sector

The Public Administration Select Committee today has launched an inquiry into the growing trend toward Government buying or commissioning services from the “third sector”: Charity or voluntary organisations and NGOs that do not fall into the traditional public or private sectors. The Committee is calling for interested organisations and individuals to submit evidence to the inquiry.

Since 1997 Government has increasingly emphasised the role of the third sector in helping to develop and deliver better public services, as part of the wider policy agenda of increasing competition and choice in public services. This is a key part of the role of the new Office of the Third Sector, established in May 2006 and reporting to Ed Miliband.

In some cases third sector organisations may be better able to provide a service or to innovate, or to involve groups which are traditionally difficult to reach. Conversely, critics suggest that the third sector’s independence could be compromised by becoming Government contractors and there are questions about how these “contracted-out” providers of public services can be held accountable.

The Committee’s inquiry seeks to explore the costs and benefits of the government’s policy - which may be different for the state, the third sector, and for those that use the public services - and to judge the effectiveness of the government’s approach.

Committee chairman Tony Wright MP said:

“More and more of our traditional state services are now being performed in the voluntary sector. There are real issues that need discussion here, and the time seems right for this committee to look into it. It’s an exciting new area for us as a committee, and I hope to hear from all kinds of groups and organisations we don’t usually hear from.”

Commissioning Public Services from the Third Sector
An Issues and Questions Paper

PASC – the Public Administration Select Committee – is inquiring into the role of the Third Sector in providing services directly to the public on behalf of the state, and the potential benefits and risks of the Government's policy of commissioning services from non-government bodies.
Background: The Third Sector and Commissioning
The term ‘third sector’ describes the range of institutions which occupy the space between the State and the private sector. These include small local community and voluntary groups, registered charities both large and small, foundations, trusts and the growing number of social enterprises and co-operatives. Since 1997 government policy has particularly emphasised the role of the sector in helping to develop and deliver better public services. The government’s push to do this is part of a wider policy agenda of contestability, or opening up markets for public services to new suppliers from the private and third sector.
Under this model, public, private and third sector suppliers compete for public service contracts on a truly ‘level playing-field’ without discrimination on the basis of their sector membership. Successful bidders will be those that can deliver value for money services, combining quality with cost-effectiveness. No supplier will have a permanent or assumed right to public contracts; regular review processes will ensure that the quality of service is maintained or, if quality declines, that a new supplier is brought in.
The third sector has a key role to play in this new atmosphere of competition, the government believes, because of its unique benefits: expertise in its specialist areas; its ability to connect with groups which are difficult for state organisations to reach; and innovation to develop new forms of public services. The government has looked to overseas models – for example, employment training services in Australia, where third sector organisations are the largest contractors with government – as a potential model of the future for UK public services.
Although many third sector organisations, particularly the larger national charities and the membership organisation acevo, have seen these signals from government as an opportunity to help shape and improve public services – ‘transformation not transfer’ - their enthusiasm is not universal. Many third sector organisations, particularly the medium-sized and small, regional and local operators, fear an increasing ‘polarisation’ of the sector between large national players operating as government contractors, and smaller, marginalised organisations engaged in a struggle for shrinking amounts of grant funding. Opponents of the ‘public service delivery agenda’ see it as a threat to the sector’s independence and ability to campaign: they ask how likely it is that organisations which are dependent on government contracts will ‘bite the hand that feeds them’ by criticising government policy.
The concept of contestability also gives rise to some interesting practical and operational questions. Many of the government’s policy initiatives on third sector service delivery have resulted in measures which remove potential barriers to third sector organisations competing for public contracts. However, some of these measures do not apply ‘one rule for all’ but allow special approaches to dealing with the third sector. For example, government has a commitment to provide payment in advance of expenditure, where appropriate, to third sector organisations that might otherwise have difficulty meeting the ‘upfront’ costs of their service delivery activities. This approach would not usually be applied in contracts with the private sector, where cash-flow management is generally assumed to be the responsibility of the supplier. In January 2006 the Confederation of British Industry published “A fair field and no favours - competitive neutrality in UK public service markets” in which it outlined the barriers it saw to a level playing field between state, private and voluntary sectors .
Lastly, commissioning services will potentially change the way in which service providers are held accountable. Contractual arrangements will replace direct political accountability, and there may also be changes in the way in which users relate to service providers.
Key questions
This inquiry will be considering the evidence for the benefits of commissioning and contestability. However, there may well be different costs and benefits for the state, for the third sector, and for those that use the public services which are being contracted out. Our key questions seek to probe the extent of theses costs and benefits of the government’s policy, and to help us judge the effectiveness of the government’s approach.
The services involved also differ greatly in nature, scope and size of operation, from school transport to major medical treatment. Evidence that points to specific examples will therefore be particularly valued.
1. What are the benefits of contestabilty to the users of public services?
a. Have services which have been transferred to third sector organisations shown improvements in quality?
b. Is loss of accountability a threat of commissioning services? If so, how can this best be managed?
2. Is the third sector more likely to provide better public services than the state or the private sector?
a. Is there evidence that where services are provided by the third sector, that they are popular with those that use them?
b. Is there evidence of demand for more services to be provided by the third sector? If so, who from?
c. Do public services provided by the third sector more accurately reflect the changing needs of those that use them?
d. Is there evidence that contracting to the third sector leads to greater scope for innovation in public service delivery?
3. Does commissioning benefit the third sector?
a. Will contractual relationships with the state improve stability within the third sector?
b. Will close involvement with service provision prevent third sector organisations retaining the ability to be critical of government?
c. Is there a risk that the service providers will become increasingly bureaucratic?
d. Is there a risk that third sector organisations will lose their independence, their identity or their distinctive ethos?
e. Might the third sector become polarised between large service providing organisations and more radical groups? If so, would this matter?
4. Does commissioning services from the third sector have any benefits for the state?
a. Does the state risk losing control of service delivery in a way which might be damaging?
b. What capacity will the state need to ensure that it can be an intelligent customer of services?
c. How is duplication of effort in order to monitor and manage contracts best avoided?
d. How good is the state at managing bidding processes and defining contractual obligations when commissioning services?
5. What are the financial implications of providing services through the third sector compared with directly provided state services?
a. Are services cheaper to provide?
b. Are there ‘hidden costs’ such as contract oversight?
c. Are the benefits of the third sector participation in public service provision so great that it is appropriate to have financial rules which encourage this, or should the aim be to have "competitive neutrality" between public, private and voluntary sectors?
6. Are the costs and benefits to the state the same when commissioned from the third and private sectors?

How to respond to this paper
PASC would like to receive responses to any or all of the questions in this paper. Although some of the questions could theoretically be answered by a simple yes or no, the Committee would especially value extended memoranda with background evidence where appropriate. Some respondents may wish to concentrate on those issues in which they have a special interest, rather than necessarily answering all the questions.
Evidence submitted should:
 be submitted as hard copy on A4 paper and as an electronic file also, by email to pubadmincom@parliament.uk, or on computer disk in Rich Text Format, ASCII, WordPerfect 8 or Word. Hard copies should be sent to Eve Samson, Clerk, Public Administration Select Committee, Committee Office, First Floor, Committee Office, 7 Millbank, London SW1P 3JA;
 have a covering letter containing your full postal address and contact details;
 any memorandum of more than ten pages should begin with a one page summary;
 avoid the use of colour or expensive-to-print material;
 further guidance on the submission of evidence can be found at http://www.parliament.uk/commons/selcom/witguide.htm.
Memoranda will usually be treated as evidence to the Committee and may be published as part of a final report. If you object to your memorandum being made public in a volume of evidence please make this clear when it is submitted.
Memoranda should be submitted by 2 March 2007 as hard copy on A4 paper and as an electronic file also, by email to pubadmincom@parliament.uk, or on computer disk in Rich Text Format, ASCII, WordPerfect 8 or Word. Hard copies should be sent to Eve Samson, Clerk, Public Administration Select Committee, Committee Office, First Floor, Committee Office, 7 Millbank, London SW1P 3JA.
The Committee expects to hold oral evidence sessions from March 2007.