Commissioning: or how to kill the goose that lays the golden egg

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A personal view from Peter Bird, Coordinator of Fulham Good Neighbour Service

The Council’s Proposals

Hammersmith & Fulham Council have recently published a consultation document on their strategy for the third sector. Their definition of the third sector being all organisations that define themselves as voluntary and community organisations, charities, social enterprises, and mutuals or cooperatives. They wish to change the way that they give financial assistance to organisations including Fulham Good Neighbours. A copy of their document can be obtained via their website.

It is my belief that the strategy poses a threat to our culture and independence, and that it will make us mere contractors, or subcontractors, of the statutory sector. Since I think that it is important that volunteers know on whose behalf they are working, aside from that of the clients, I offer this brief paper.

The council’s strategy document describes how they wish to change, ’ from a grant making function to a commissioning/investment model’. It speaks of it’s, ‘ten year strategy which offers the third sector the opportunity to develop confidence and capacity in competitive bidding for contracts‘. It goes on to say who will be eligible to bid for a contract and makes stipulations about what the, ‘return on our investment’ must be. It offers no evaluation which suggests reason for such changes, nor any evidence to demonstrate that commissioning produces better outcomes than grant aid. It consults about various aspects as to how it should be done but not whether it is an inherently good idea.

The Historic Role of the Voluntary Sector

Up until a point towards the end of the 1980’s, grants were given by local authorities to cover the costs of running agencies, or for financing posts. For example I worked, during the 80’s, at a multipurpose community centre which received around £100,000 pa (in 1980’s values) from Lambeth Council. In fact some of the money originated from the Department of Environment but it was allocated by the local authority. This was not untypical. Another source of funds was the Greater London Council, until it was abolished by central government. When we, at the community centre, developed a plan for a new additional service, we obtained all the necessary finance from the GLC. Organisations were substantially left alone to spend the money, as long as they acted lawfully, within their constitution and charitable aims, and were productive. This positive funding culture made local people feel that they had truly independent local community services which they valued and could trust. As a member of staff in a user lead service, I was busier than I have ever been since. I ran evening advice sessions which often didn’t finish until 9.30pm, and we had no trouble getting people to serve on the board or the subcommittees which fed into the board of trustees. There was sometimes even competitive elections at the AGM.

In the late 1980’s community care legislation stipulated that the social care/health sector had to ‘enable’ outside agencies to deliver services. That is contract work out. This could be seen as the origin of the current contract culture in our sector, and the subsequent commissioning culture. Grants given by local councils changed into ‘service level agreements’. They resembled grants in that the voluntary organisation applied for them saying what they wanted to money for, but there was usually a far lower amount of money available. Organisations could no longer request money to cover an agency’s costs or the cost of a post, but had to request that the local authority purchased a service. In our case, currently, LBH&F do pay an amount more or less equal to my salary, but they stipulate that various outputs have to be provided by us in exchange for that money. Also, the recipient organisation is expected to raise money from elsewhere, often as a condition of retaining the financial support the local authority is giving them. Now most agencies receive only a minority of their income through local authorities. When I worked in a voluntary organisation in Wandsworth, the local authority tried to put specifications in the service level agreement giving them a degree of management control. Every year the trustees refused to sign the agreement, the grant was paid pending an agreement being made, a couple of meetings took place resulting in deadlock, nothing was signed, and it all went by default until the same scenario was repeated the following year.

Service level agreements exerted far more control over voluntary organisations compared to the grant aid of the 1970’s & 80’s. and it became increasingly more difficult to involve local people on boards of trustees. After all they had far less latitude to make decisions and to be creative. Managing service level agreements was far more legalistic and demanding than spending grants used to be. My own experience has been that the achievements of voluntary organisations has decreased more or less proportionate to the growth of funders control mechanisms. The agency I mentioned, where I worked in the 1980’s, set their own expectations, and didn’t have to account, to somebody else, for their work, as happens now. However, it achieved far more, involved local people far more, and had a bigger impact on local policy and practice than you could have as part of a modern Local Strategic Planning Forum.

The current proposal to move to commissioning isn’t an innocuous adjustment as CaVSA, our local voluntary service council, would have us believe. It is a very fundamental change which will further disempower local groups, damage the voluntary sector culture they profess to admire, and damage the creativity that grew out of a culture of greater freedom.

Voluntary agencies exist for a wide variety of purposes but all have in common a wish to address or meet the needs of user groups or communities. To do this voluntary agencies gain funds from a variety of places. Well managed organisations identify suitable projects which will further their constitutional aims and objectives in a way that is relevant to, and needed by, their client group at a particular time. They then seek sources of funding by matching their proposed projects to donor criteria for awarding funds. In our case, at Fulham Good Neighbour Service, two thirds of our annual income is provided by donors other than Hammersmith & Fulham Council. An important and considerable amount of money is, however, awarded by H&F, because our aims and objectives generally coincide with theirs, as well as with those of the other funders. In my opinion, bad practice happens when agencies submit funding proposals because they are led by the prospect of gaining money rather than by the aim of meeting their constitutional aims & objectives and the needs of their client group.

Front line agencies such as our own understand that their front line experience is put to better use, on behalf of their client group, when it is used to inform, or influence, the policies and practices of other service providers, such as local authorities. That is why they are generally willing to participate in local strategic planning where it is effective and where their input is respected. They do so as independent bodies whose interests coincide with those of both statutory providers and the public at large. Their independence has often been an advantage when bringing client concerns into statutory sector planning in that they have a different relationship to their clients, they break the monopoly of the statutory sector, and are free of conflict of interest. The voluntary sector also have a long track record of networking and joint working with each other to achieve results that are of greater value to those that they could obtain individually.

Commissioning changes and undermines the role of the voluntary sector

I now itemise fourteen reasons why I think commissioning, as opposed to grant aid, may be counter productive.

Competitively won contracts haven’t always brought better services

1.We know of wide spread discontent with contracted out home help services, but the clients concerned rarely feel confident enough to tell the provider directly. Council officers have been unable to make contracting of these services work to the satisfaction, of the users, but they are obliged to spread the contracting strategy. I feel that they should prioritise managing their existing contracts before they spread the practice to other sectors.

Sub contractors looking upwards for instructions

2. Commissioning would, to all intents and purposes, make voluntary agencies contractors of the council, thus putting the initiative solely in the hands of the council and undermining the independence of the voluntary sector. It would potentially change, detrimentally, the relationship with the client who would begin to see the voluntary agency as being part of the council, rather than as a distinct alternative they may have chosen to use.

Private sector look-alikes

3. The agencies will tend to look towards the needs of the commissioners rather than towards the needs of their membership, users, and communities, thus impairing the traditional strength of the voluntary sector.

4. The government/local authority agenda for the ‘third sector’ is to make it less distinguishable from the private sector. This will destroy the virtues of the voluntary sector, including those of passion & independence referred to by Councillor Lillis in his introduction to the council’s paper. This strategy will reduce the choice of the local residents not increase it.

5.If the council realise the vision of section 1 of their strategy which, ‘offers the 3rd sector the opportunity to develop confidence & capacity in competitive bidding for contracts,’ it will encourage the rise of large, predatory third sector agencies who can offer ‘economies of scale‘, and who have resources to promote themselves and to drive negotiations with funders. This will be detrimental to smaller organisations spoiling the diversity of the sector, offering less choice to the local resident, and limiting grass routes, or community, involvement.

6. The conditions will be created for predatory organisations to gain a monopoly in their field, seeing off opposition, after which they will be able to start making a profit by cutting employment and service delivery standards. This is already happening in some sub sectors e.g. criminal justice, health and social care.

The damaging role of competition

7. Commissioning, especially where bidding is done on a competitive basis, will encourage tension, secretive behaviour and competitive relationships between voluntary agencies which will undermine the capacity for joint working.

The effect on small and medium size local groups

8. Although we would support moves to make money available to new applicants, the proposed strategy presents serious threat to the future sustainability of locally based small and medium sized voluntary organisations and community groups that have developed by local activity in response to local needs, especially in communities on the margins of main stream provision. The strategy will reduce the diversity of the sector, offering less choice to the local resident, and limiting grass routes, or community, involvement.

Sector involvement in strategic planning and conflicts of interest

9. There is already an extensive voluntary and community network in the borough which is designed to feed into local strategic planning. It is currently part of the role of grant aided organisations, including many that get much of their income from donors other than H&F, to participate in those networks; or to attempt to use those networks to raise their voice in furtherance of their clients interests. There should, therefore, be no need for the council to wish to exert further control, which is what commissioning would amount to. They should instead be trying to make the existing arrangements work in a meaningful way.

10. We say this without knowing what the service specifications will be, the council purport to be consulting us without telling us that, but there is a danger that the systems of commissioning, together with the existence of the current local strategic planning mechanisms, would give rise to a conflict of interest which does not exist to such a great extent where the authority awards grant aid to an independent agency. If you have a commission you are a contractor, doing the commissioners bidding for them; if you have grant aid you merely have to meet the conditions of the grant. The relationship between the two parties may be vastly different in both cases. If I attend a joint strategic planning meeting of some kind, I currently do so on behalf of an agency which receives a grant in order to deliver services to a client group; if however I sit in the meeting and am, or wish to be, in receipt of a commission to carry out a specific piece of work, I would have an incentive to prioritise my interest in securing or retaining the commission above that of commenting objectively about the merits of the strategy.

I will give a more concrete example, although still hypothetical. CaVSA are the voluntary service council in H&F. Voluntary service councils were established to represent the interests of the voluntary sector. I believe that approximately 20% of CaVSA’s income comes from borough funding. In certain circumstances that may be considered to give them a conflict of interest, especially when they are facilitating a dialogue between the sector and the council about funding arrangements. I can consider that, and decide that they can manage the potential conflict, they are a grant aided organisation, the same as us, and I assume that they can meet their outputs without compromising their constitutional reason for operating. If, however, they have been commissioned by the council, their contractual relationship is with the council, not the voluntary sector. They have bid and won their commission and they are doing the council’s bidding. If, in the future, they are in a position of having had to bid competitively (we do not know what level of cost may trigger, if that is the determining factor, a competitive process), we may wonder if they have even less latitude in what they do. Further, the commission may have been won by a cross borough agency who have submitted a lower bid, and who have no specific connection with Hammersmith & Fulham at all.

The government’s true agenda

11. The government’s agenda for ‘the third sector’, with which Hammersmith’s strategy is consistent, is not, in my opinion, born out of the wish to support it and see it thrive, but out of the recognition that it has a large reserve of cheap flexible labour. To express the distinction, ‘third sector’, is a classic piece of Orwellian newspeak. They don’t want the voluntary sector to remain distinct so much as they want it to adopt a business model which better supports their purposes and becomes part of a market economy. The historic advantage of it being a distinct sector within the British economy will be lost, narrowing the choice of the user, and the communities it formally served.

12. The current downturn in the economy will make life more difficult among our client group. This will require voluntary agencies to respond to changing circumstances to meet client need. Being locked into the conditions inherent in a commission may limit the flexibility that is necessary, and that the sector has previously been known for.

Undermining voluntary action

13. One of the ‘eligibility’ criteria mentioned in section 6 of the strategy document is that users and residents should be involved in the design and delivery of services. One way, although not the only way, is for local people to be part of voluntary sector management committees, or boards of trustees. This becomes an increasingly less attractive proposition where what they manage is increasingly proscribed by commissioners. All voluntary agencies are now finding it next to impossible to recruit trustees, let alone suitable ones.

In conclusion

14. The proposed strategy reflects a considerable misunderstanding of the voluntary and community sector (VCS). It is something that has frequently depended on the choice made by citizens to band together in pursuit of a shared interest, or cause, or in response to a common concern. The VCS has always been distinct, and frequently had management committees drawn from it’s community, because it was accountable to the people it was created by and for. The sector has been an alternative provider which formed a bridge between the public sector and local communities, and an alternative to the private sector. The commissioning process assumes you can buy that; that you can set top-down specifications and targets, and that it will be the same thing as it was before you did all that. Just in case it isn’t the same thing, the process sets eligibility criteria in an attempt to determine what it is.

Up until the abolition of grant aid, in favour of service level agreements, towards the end of the 1980’s, the economic freedom that the VCS had, gave space for user and community involvement. These conditions proved to be very creative and to produce good outputs, and outcomes, under the scrutiny of the community itself. Since then there have been increasing measures taken to control and monitor the sector. I am unaware of any evidence to suggest that commissioning produces better outcomes than grant aid.

Councillor Antony Lillis, the Cabinet Member for Community & Children’s Services, is leading on this strategy. He says, in the introduction to the strategy document, ‘I’m a passionate supporter of the sector, and I, along with my Cabinet colleagues, value the passion and independence of the sector’. Unfortunately he doesn’t value the independence enough to abstain from destroying it.

Many people, and communities, worked long and hard to secure premises, create constitutions, raise money, and realise dreams and get things done that otherwise would not have happened. That’s where the golden egg comes into it. The results have been admired for decades, as has the creativity, local accountability, and the sheer energy. Councillor Lillis, and his colleagues, in my opinion, now want to appropriate this for their own purposes. I hope they realise that they can’t expect the golden goose to produce the same egg to order, or commission, or the good will of the community to be as productive when it is subjected to their contract culture.

Peter Bird

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