What we believe about public services

The voluntary sector can help to transform public services – not just by delivering services but also by shaping service design, and supporting user and volunteer involvement in services.

Yet many charities are currently being side-lined by funding changes and poor commissioning practice, at a time when their knowledge, ideas and experience need to be embraced. The barriers to their involvement in shaping and delivering public services need to be removed.

Strengths of the voluntary sector in shaping and delivering public services

Many voluntary organisations have pioneered the services they provide – by being the first to identify and meet a need and then persuading the state to take responsibility for making the necessary services universally available. Charities are also often founded by people with direct experience as service users, or have services users on their trustee board.

By being close to their users and communities, voluntary organisations often have a unique perspective on needs and how to improve services. This includes identifying where earlier intervention could have prevented crisis.

Often based within the communities they work with, charities bring a local expertise to public service delivery and are able to reach and provide a voice for some of the most marginalised and isolated people

Charities are also able to use their advocacy role to apply the knowledge and expertise gained through working with service users to influence service improvement.

Improving commissioning and procurement

Public service commissioning must be improved if the voluntary sector's full potential is to be realised.

Pre procurement engagement

We believe that commissioners should engage with charities and communities at the earliest opportunity when designing services. This will help to ensure that commissioners understand local need, and how to make sure the service and the market can meet these needs.

Mixed payment models

Commissions need to use a mix of funding models to ensure that organisations of all sizes and sectors can deliver services. They should recognise that payment by results models, for example, can exclude smaller providers, including those from the voluntary sector, who do not have the access to capital required to set up and sustain services until payments have been made.

Contract size

We are seeing a trend towards larger contracts and commissioners' growing preference for prime contracting models. We recognise there are some advantages to this model; for example, in achieving coordination of services and potentially managing risk exposure for smaller providers. However, the trend towards larger contracts is excluding many charities as they often lack the capital required to compete. This is resulting in the lessening of local and specialist expertise.

Less burdensome bidding requirements

There should be a less bureaucratic approach taken to contract bidding. Many small charities find current commissioning practices very burdensome. This can prove difficult for small charities that do not have the resources to go through multiple expressions of interests and disproportionate bidding requirements.

Social value

The Public Services (Social Value) Act 2012 places a duty on commissioners to consider social value before procuring public services. Social value means wider social, economic and environment benefits to the community beyond the primary purpose of the service being procured. Social value helps public bodies get the maximum value-for-money when commissioning services.

Charities are ideally placed to deliver this added value. Charities have close connections to local communities and tend to focus on social outcomes for their beneficiaries as whole, generating broader value.

Despite the Act, social value is often overlooked in favour of the cheapest bid when public services are procured. This is a false economy as high quality and sustainable services require an optimum balance of price, quality and value for money.

However, there are encouraging pockets of development where local authorities have embraced commissioning for social value. Our interim report summarises the work of three councils; a full report covering additional areas is planned for late 2014.

Central Government should support local authorities across the board to effectively use the Social Value Act and commissioners should be trained on how to use social value in line with their authority's own procurement codes.

Case studies on social value:

New contracting models

Commissioners need to ensure that the design and implementation of new contracting models do not exclude charities from competing.

Payment by results

Payment by results (PbR) contracts pay providers for the outcomes they achieve, and not purely the activities they undertake. PbR is a key tenant of the government's Open Public Services agenda and is intended to drive efficiency and improve outcomes.

NCVO supports the principle of paying for impact. However, we have serious concerns about the implementation of PbR to date. It has presented a number of barriers for charities seeking to deliver public services and, in some cases, the design of programmes has failed to incentivise the right outcomes and enable service improvement.

To explore these concerns and pool learning about PbR, NCVO convened a working group of voluntary sector providers, social investors, charity accountants, solicitors and social finance intermediaries. This has resulted in a series of reports and blogs about the pitfalls of PbR.

Supply chains

Through our focus on the Work Programme, we have explored charities' involvement in commercial supply chains.

NCVO convenes a special interest group for voluntary and community sector Work Programme subcontractors. Drawing on discussions with the group, NCVO has published a series of reports about charities' experiences of the Work Programme:

We are concerned that the knowledge and experience of charities is being seriously under-used in the Work Programme, to the detriment of claimants with multiple or complex needs. This is through a lack of referrals, unfavourable conditions being imposed, unsustainable prices being offered, and the under-use of the sector's expertise in the wider service design and commissioning process.

The government should work more closely with charities to design future welfare to work schemes. The payment system also needs to be redesigned to recognise progress made towards work, not just into work.

Market stewardship

The introduction of new contracting models such as these is adding complexity to public sector markets. Poorly managed market transition can impose long term damage on market profiles, diversity and quality.

It is essential that public commissioners retain a market stewardship role, fulfilling their duty to develop, manage and oversee effective provision.

Market stewardship requires commissioners to effectively analyse market information and service user requirements, structure the market to best effect, and intervene when problems arise, or demand changes.

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