James Rees

Proposed reforms to public services have had a high profile in the news in recent months, particularly in the fierce debate over the Health and Social Care bill. Much hinges on whether third sector organisations (TSOs) can grow into a role as a respected deliverers of services. Or, as widely feared, is their greater level of public acceptance  merely being exploited as part of a wider privatisation of services?

Since 2010, the Coalition Government has promoted a Big Society that envisages a larger role for TSOs. This includes  opening up public services to providers from any sector, ‘spinning off’ parts of public organisations to mutuals and co-ops under a policy of ‘right to provide’, and legislating through the Localism and Social Enterprise Bills.

The involvement of TSOs in the delivery of public services is not as new as some people like to portray. Large charities such as Barnardo’s, Age UK, RNIB have long been significant deliverers of services in their own right (in many cases predating the welfare state) and over 50% of social housing is now  owned and managed by TSOs. A huge number of small and community-based organisations operate at the local level to address niche needs, traditionally with local government grant funding.
 

What we are witnessing is at the very least a radical speeding up of the previous government’s interest in ‘partnership’ with the sector, if not a step change with a changed underlying rationale and within a new funding framework in the context of a government determined to rein in public spending.

This new landscape involves the different levels of government commissioning public services with a strong concern for the sorts of outcomes that government expects, within delivery chains that, because of their large scale and complexity are directed by ‘prime’ contractors who deal directly with government. The Government has clearly indicated that the use of the payment by results mechanism will become more widespread. If no results equals no pay, service providers have to shoulder much more of the risk.
 

What does this mean for TSOs? In a time of cuts to traditional sources of funding  and limited capacity to manage these financial risks,  the main opportunities for service delivery lie in contracting or partnering with large organisations in supply chains. Only a few large charities have the scale to become prime contractors, and almost all will at least be looking for private sector backing or joint ventures.

So there are opportunities. Over time a kind of equilibrium might emerge whereby (mainly private) organisations specialise in management of supply chains and TSOs are freed up to deliver on their specialisms and understanding of particular communities of need. Such a system would be ‘integrated’ with different organisations playing to their comparative advantage.
 

On the other hand, if the prime contractors are able to cream off a large part of the financial value from supply chains, as many have claimed, then there is a strong incentive for large charities and social enterprises to continue to explore the potential for third sector primes, perhaps as formal consortia or joint ventures.

Some sectors have  experimented with different ways of managing the tensions between scale and responsiveness, for example through consortia bidding for contracts in the supporting people field, local ‘total place’ approaches, Turning Point’s  Connected Care approach, and values-based partnerships between large and small TSOs such as those promoted by the HACT ‘Together for Communities’ programme.

The forthcoming ESRC/TSRC Policy Seminar will focus on whether and how  these developing approaches can provide the holy grail of ‘marrying scale and responsiveness’. But controversies are likely to remain…

Within the third sector some welcome the opportunity to rationalise and streamline  ‘back-office’ activities, avoid overlaps and duplication, and focus investment into approaches that can be proven to work rather than merely giving off a ‘warm glow’.

However, for many others the all too familiar fears about lack of room to manoeuvre, to criticise government, and to advocate on behalf of service users will rear their heads. The truth is that no-one can be certain what service commissioning and delivery arrangements will emerge from this time of considerable upheaval.