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Public Sector Reform
what it is and what it means
Issue 74 – Summer 2010
Urban
Forum’s
online
magazine
2 HOUSEKEEPING
Welcome to the
new look Clearway
You don’t need me to tell you, dear
reader, that Urban Forum has gone
online with its house magazine,
Clearway.
The clues are there. Firstly, you will have
read of our impending online-ness in last
issue’s Board Papers and secondly, you will
have received an email with the link to
this shiny new version!
Why are we doing this – well, it’s an
environmental move, obviously – and it
will save us a few quid!
But we also want to embrace the online
world just a little more (if you haven’t
signed up to our Twitter @urbanforum and
Facebook services, why not?). You’ll find
that we can do some things in this online
version that was impossible in the printed
version. For instance, all the links in this
document are fully functional, meaning
you can go straight to the linked page
without fuss, and email Urban Forum
direct.
We have other plans to improve the
content and interactivity of our
information service – and of course, we
will still be producing printed reports and
guides, like our fabulous new Guide to
Community Resilience (see special
introductory price on page 15).
But for now, we would be grateful for
your feedback on this new look issue.
Send it to me by emailing
tony@urbanforum.org.uk
Tony Hillman
Communications Manager
I
am happy to start these
Board Papers with some
good news. After a nail
biting few months we
have had a positive result
from our applications to both
Barrow Cadbury Trust for piloting
work on community rights in
Dudley and the Tudor Trust for
resilience research in Manchester
and Salford. This goes someway to
reinstating more normal
operations and you will be kept up
to date on these projects through
further articles in Clearway.
Trustees are trying to support
staff as much as they can, but it
is staff who are left to juggle
fundraising alongside the work
we are already committed to
deliver, with the additional
challenge of reduced staff
capacity. All Trustees are
impressed with the commitment
and continued high standard of
work produced by Urban Forum
Staff Team and I thank them on
behalf of members and trustees.
There are still ongoing discussions
with a number of other funders
and continued development of
proposals for new projects.
At our next Board meeting we
will be discussing a paper on how
we create, maintain and sustain
an Active Board. Some of the
issues raised were to ensure sub
groups were fully supported,
develop ‘pen pictures’ of Trustee
skills and experience, an internal
“Communities of Practice’
discussion board and trustees to
use their local intelligence to
develop new partnerships and
potential projects as well as
recruit new members.
Alongside this we are looking to
develop an organisational ‘pen
picture’ or one page profile to
promote the Urban Forum
succinctly to potential partners
and funders when we open
dialogue with them. There is
ongoing work in relation to
organisational collaboration and
progress in our work with
different local authorities.
Toby has reported on the
continuing debate in respect of
the different models for the
Community Organisers
Programme and I recommend you
access his blog and follow the
links therein to get a feel and
understanding of future
directions as well inform your
own preferred model.
Staff continue to raise our profile
by speaking at various events
about the issues current to the
sector at the moment such as Big
Society and Localism as well as
looking at ways to improve
contact and knowledge of our
membership which will
contribute to our business
development work.
Members will soon be receiving
their copy of the Resilience Guide
which has now been published
and we hope you will recommend
this to other organisations to
ensure that we not only reach a
wide audience but that we also
maximise our sales.
Board
Papers
with Urban Forum Trustee,
Jeanette Harold
Public Sector Reform
Go to page 4
3
Whitehall
Watch
Department for Communities
& Local Government
Over at DCLG recent press attention has been
on Eric Pickles’ climbdown over forcing local
authorities to do weekly bin collections. Cue
endless jokes about ‘rubbish ministers’. The
issue is important symbolically in the defining
the relationship between central and local
government in relation to localism. But of
more practical significance is the progress of
the Localism Bill, which is currently being
considered by the House of Lords. Eric Pickles
has put forward 237 Amendments to the Bill,
along with another 30 from the Opposition
and backbenches. The Bill is expected to
become law by the end of the year, though
with so many proposed amendments, things
may become bogged down and the timetable
could slip. It seems increasingly likely that
the Bill will come into effect in the Autumn
of 2012 and not the Spring, as had previously
been expected.
Of probably as much importance to VCS
groups as the Bill itself, is the regulation
(yup, more ‘red tape’) that will accompany it
– setting out how the new Community Rights
will be implemented. The recently ended
consultation elicited around 200 responses
(to each) and officials are now collating these
to enable Ministers to formulate their plans.
One of the DCLG officials working on the
Community Rights, Charles Woodd, was
awarded an OBE in the recent Birthday
Honours List. Charles, who will be retiring in
the Summer, moved from the VCS into
government to work on civil renewal
(remember that?), active communities,
community empowerment and most recently
localism and Big Society. Our congratulations
go to Charles, who has been a strong and
unerring advocate for the sector within
government for a number of years.
Financial Times columnist, James Crabtree, recently
suggested that Steve Hilton, the Prime Minister’s ‘brains
trust’ will soon be on his way out. Following Nat Wei’s
recent decision to stand down from his role, this would
leave David Cameron without two of the leading figures
behind the Big Society idea. Maybe the PM will be
thinking about bringing a suitable Big Society architect
into the fold? If so, can we expect a move into Whitehall
for Red Tory author, Phillip Blond? Perhaps not.
Changes to Big Society promoters?
Office for Civil Society
It appears as if the long awaited
Community First programme that will
provide small grants to local groups (not
wholly dissimilar to Grassroots Grants –
though you won’t hear it described like
that in Whitehall!) is finally on its way. We
understand that OCS has appointed a
delivery partner for the programme and it
will be launched shortly.
Another OCS programme, to train 5,000
Community Organisers, has been the
subject of fierce to-ing and fro-ing between
Cabinet Office, Treasury and HMRC. The
sticking point appears to be how to treat
tax and benefits of community organisers in
the programme. We understand things are
more or less resolved and the programme
can begin in earnest.
OCS has been holding discussion with its
Strategic Partners on work programmes to
support key Big Society priorities. Given
that the application process required fairly
detailed plans to be submitted, one
wonders what has happened to these…as
lead and contributing partners are
required to develop joint plans? These
were clearly not in the original funding
applications which were submitted.
Another example of unnecessary
bureaucratic burden on charities perhaps?
The government has made no secret of
its desire to strip away state
bureaucracy that impedes business and
charities. We’ve had ‘barrier busters’, a
cutting red tape taskforce and the Red
Tape Challenge – which puts a specific
sector or industry in the spotlight to ask
citizens for ideas on cutting unnecessary
regulation.
Topics such as food and drink and retail
have previously come under the red
tape spotlight, but this month’s focus is,
somewhat surprisingly, the Equality Act –
the legislation that protects minorities
from discrimination. Not only is this the
only Act of Parliament to be considered,
it’s also subject to international law
such as the Human Rights Convention,
which makes asking whether it should be
scrapped something of a hypothetical
question.
There has been a predictably strong
reaction on the Red Tape Challenge
website with nearly 6,000 comments
posted at the time of writing, the vast
majority (of those we’ve read) in
defence of the Act. [By comparison, the
number of comments on other topics
are; Pensions – 22; Company Law – 47;
Health and Safety – 279 and
Environment – 975].
Red Tape trouble
Meanwhile over at
Her Majesty’s
Revenue & Customs
(HMRC), the ‘fit
and proper persons
test’ recommends
Charities take
appropriate steps
to ensure that
anyone being
appointed as a
trustee is suitable
to do so. This
means more
regulation to
comply with, in
addition to forms
that have to be
submitted to
Companies House
and to the Charity
Commission.
HMRC says it will
‘work closely with
charity regulators’,
though seemingly
not closely enough
to join up their
regulatory
procedures to
reduce the burden
on charities
though?
The government
seems to have a
fairly unusual take
on what is and
what isn’t red tape
by the look of it.
4
Public Sector Reform
With the Open Public
Services White Paper
now published, Urban
Forum looks at the
issues surrounding
this contentious issue
and gives you some
useful background.
Let’s start with a look
at the White Paper
T
he government has
published its Open Public
Services White Paper,
setting out its policy
framework for how it wants public
services to be owned, delivered and
funded in the future.
Some of the measures outlined are
already underway (Free Schools,
Academies Act 2010), some are being
taken forward in legislation already
being debated in Parliament (the
Health and Social Care Bill and the
Localism Bill), and some will be
subject to further development and
consultation.
The main features of the White
Paper proposals are:
n Contracting out of public services
to be the norm – the only exceptions
being core policing, the military, the
judiciary and national intelligence.
n More commissioned services to be
paid for by results.
n Individual services (e.g. health,
social care, education etc.) to move
to a personal budget system – with
individuals purchasing services from
a choice of providers.
n Neighbourhood services (e.g.
parks, museums, sports facilities,
parking, community centres etc.) to
be provided by community
organisations, organised and
commissioned by neighbourhood
level councils.
The delay in publishing the White
Paper has been widely attributed to
the level of opposition to proposals
on health, and some commentators
think the government has slowed
down the pace of the change. The
Open Public Services White Paper
says that the government
’acknowledges the limits of a pure
market approach’. Not withstanding
this qualification, the Open Public
Services White Paper is based on a
belief in ability of the market to
drive standards up and costs down.
The government says that
reorganising how public services are
delivered will save money, with
competing providers finding new ways
to cut costs and increase efficiency.
Critics say that ‘cost savings’ are
translated into profits which does not
benefit the taxpayer or service users
such as the £35 million netted by
the directors of the ill-fated
Southern Cross care homes and that
new mechanisms to bring in private
capital through PFI, have proved
hugely costly to the public purse in
the long term and brought limited
benefits in the short term.
The paper says that quality will
increase as providers compete for
service users, with services
increasingly being paid for on a per
head basis. Responding to opposition
to NHS reforms, the proposals
emphasise the role of government in
scrutinising providers and setting
standards. They give incentives to
local authorities to improve local
health services by giving authorities
a block grant based on local health
outcomes.
Critics have asked how local
authorities and regulators, already
stretched, are going to scrutinise,
monitor, inspect and set standards
with far more providers and far
fewer resources. They have also
pointed to a possible conflict
between the role of local
government in holding providers to
account and maintaining standards,
and its role in ensuring free
competition.
Many, including Urban Forum, have
highlighted areas where the reforms
risk exacerbating inequality. This risk
is explicitly acknowledged in the
White Paper. It addresses concerns
expressed by many VCS organisation
involved in service provision that
Open for business
Open Public Services White Paper
5 PUBLIC SECTOR REFORM
providers could have a perverse
incentive to provide services to those in
less need or more likely to show positive
outcomes. The White Paper claims this
will be prevented by regulation, which
says providers can only select their client
group if the selection ‘advantages the
disadvantages’ and insists on equality of
access - for example a new schools
admissions code to be enforced by the
local authority. The Paper also points to
where it is proposed to give extra
resources to the most disadvantaged,
providing incentives to providers to
prioritise targeted help – such as the
Pupil Premium, which provides additional
funds to schools when they admit
children from the poorest families.
Critics highlight the risk, with
neighbourhood services being devolved
to communities, of those communities
already better resourced and more
affluent being able to benefit themselves
at the expense of those less resourced,
and less affluent. The government has
said that additional support services for
communities to access information,
advice and funding will address this.
Open Public Services suggests public
services will be accountable to service
users and residents in two ways. First,
through democratic structures and
involvement, strengthening the existing
powers of local councillors, and creating
new democratic structures and ways in
which service users can be involved in
services – such as the Health and
Wellbeing Boards, support for service
user-run services, such as Tenant
Management Organisations. And second,
through consumer ‘power’ - with service
users able to vote with their feet and
move to new providers if they aren’t
satisfied. The government also says it
will strengthen the ability of service
users and taxpayers to hold providers to
account, by requiring publication of
consumer feedback, and data on
performance and outcomes.
Critics of the proposals say that
outsourcing weakens democratic
accountability; that diversification to
many more providers makes the job of
councillors in holding providers to
account even harder; that involving
service users and communities in services
takes time and money and won’t happen
without more resources; and that the
experience of service users having to
navigate their way through various
providers, contractually linked in
different ways, gives them less control
over services, not more. They also point
to fact that while the government is
fairly clear on the data that public
services should be publishing, they are
not so clear on whether or how they will
make the same requirements of private
and VCS companies to publish records on
spending and performance. The
government says that this is something
that they are going to look at further.
The mixed reaction to the White Paper is
not just to proposed changes, but the
‘direction of travel’ of successive
governments. Open Pubic Services
outlines an approach that the paper
itself makes clear is a continuation of
policies of previous Labour
administrations - the personalisation
agenda, the growth of outsourcing, the
creation of new autonomous public
bodies like Academies and NHS Trusts,
Private Finance Initiatives in schools,
hospitals, transport, the fire service. The
paper states that whilst the approach is
not new, its systematic application to
every area of public service is a
qualitative change.
Whilst there may be (in practice if not in
rhetoric) a high degree of agreement on
this between the main political parties,
the same consensus cannot be seen
amongst the general public. According to
a Mori poll carried out in 2009, we are
fairly evenly split between those who
want a society that emphasises social
collective provision of welfare and those
who want a society where individuals are
encouraged to look after themselves.
Inevitably public opinion on this is going
to be a concern for the government.
According to a leak from CBI, some
within the Coalition are concerned about
the political acceptability of a rise in
outsourcing. And recently, the Archbishop
of Canterbury questioned the
government’s democratic mandate in
relation to public service reform.
Read more about the White Paper by
accessing our full policy briefing and
blogs from Toby Blume and Head of
Policy and Research, Rachel Newton.
6 PUBLIC SECTOR COMMISSIONING
Public Sector Reform
‘C
ommissioning’ is used to mean the process whereby
funders, usually statutory authorities, pay for services
from organisations, mostly through contracts. Many
voluntary sector activities that used to be funded
through grants are now commissioned.
Voluntary sector organisations compete with each other and the
private sector to get the contract. For a local service, an
organisation based in that community could be competing with a
national or international organisation. Whereas with grant funding
the organisation could put forward a proposal to deliver a service
based on need it had identified, with commissioning the statutory
authority decides what it wants the service to be and specifies
resources available, outcomes expected and often, how the service
or activity should be delivered. The most important consideration
in comparing different possible providers for a commissioned
service is usually cost.
This process began in the 1980s and was intended to make delivery
of public services operate more like a market place. The current
government intends to accelerate further the process of
privatisation of public services through initiatives like the ‘free
schools’ model and GP commissioning in the NHS. Its Open Public
Services white paper expresses its vision for virtually all public
services to be open to delivery by the voluntary and community
sector and the private sector.
The push towards privatisation of public services is not because this
delivers the best service or the best value for money. The TUC
reports that ‘research by economists at Imperial College shows
that, following the introduction of competition in the NHS in the
1990s, under a system that allowed hospitals to negotiate prices,
there was a fall in clinical quality’. The policy is the result of the
government’s ideological commitment to market principles and of
lobbying from companies who stand to gain.
In the commissioning model, a service will be funded if it fits the
priorities of the commissioners. Brand new or innovative work is too
high risk for a market-based system and too hard to cost and
evaluate. While grants supported the principle behind an
organisation’s existence, sometimes providing core funding for office
and staffing without specifying activities, commissioning is project-
specific. The loss of support for the broader philosophy
of an organisation can mean the loss of its ability to
respond flexibly to changing local needs.
The rigid monitoring of most commissioned
services and the growing practice of ‘payment by
results’ discourages holistic or preventative
services which have less clear or immediate
outcomes. Long term thinking and planning are
impossible because contracts are short with no
guarantee of renewal and government priorities
and funding systems are always changing.
A defining feature of voluntary sector
organisations is their ability to act as an
external point of pressure to hold the
state and the market to account. The
more they get drawn into delivering
public services, the less they will be
able to question and comment on
government policy and to act
independently from it. The Baring
Foundation’s submission to the
previous government’s Inquiry on
Commissioning Public Services from
the Third Sector said that
commissioning forms ‘a significant threat
to the sector’s independence.’
What is commissioning?
What is
commissioning p6
Commissioning and
the VCS p7
Who has the
winning ticket? p9
10 things you need
to know about social
enterprises p10
Accountaability
Rules p11
Councillors ready
for the challenge
p12
What price
democracy p13
Voluntary Action
under threat p14
Bridging the
Mismatch p15
7 PUBLIC SECTOR COMMISSIONING
Public Sector Reform
Commisioning
and the VCS
T
he voluntary and community
sector (VCS) has provided
services of all sorts for the
public for centuries, but in
the last 20 years this has increasingly
meant charities (along with private
businesses) running services previously
run by the State as part of their
statutory responsibilities.
In the last few years the funding that the
VCS gets from the State has increased
rapidly, now accounting for over a third
(36%) of all of the sectors’ funding. As
grant funding has been in decline, this
increase is accounted for in the rise of
contract funding through commissioning.
n In the five years between 2000/1 to
2006/7 statutory funding of the VCS
increased by 43%, from £8.4bn to £12bn.
n The proportion paid as contract
funding increased in this time by 105%
from £3.8bn to £7.8bn, and rose again to
£9.1bn by 2007/8.
n The proportion of this money that was
received as grants during this period
declined by nearly one tenth (£4.6bn in
The last twenty years
The Coalition now wants to see further
expansion in the role played by both the
VCS and the private sector in public
services, opening up contracting to
virtually all areas of public service.
David Cameron, February 201 1

2000/1 down to £4.2bn 2006/7 and
reduced further by 2007/8 to £3.7bn).
The experience in the sector of state
funding is uneven. Three quarters of
charities do not get any funding from
statutory sources. Of those that do, most
(16% of charities) tend to be heavily
reliant on it, with 16% of all general
charities, typically the large national
charities, getting 75% of their funding
from the state.
Contracting out to VCS organisations
started in earnest in the early 1990’s,
and was mainly concentrated in social
care and health, prompted by the NHS
and Community Care Act 1990. The
process speeded up from 1997 onwards
to move into all areas of welfare and
housing. Today the services provided by
the VCS which are most reliant on public
contract funding are employment and
training, law and advocacy, education,
housing and social services.
When Labour came into power in 1997 it
sought to increase the proportion of the
VCS involved in public service delivery,
focusing on building capacity (such as
the Futurebuilders programme) and on
improving commissioning to meet the
needs of the sector, leading to
developments such as ‘intelligent
commissioning’ practices and the
Compact.
In opposition, the Conservatives argued
that the sector had become too emeshed
with the public sector (becoming a ‘mini
public sector’). They put forward
proposals to reduce bureaucracy and
perceived state interference, longer
term contracts based on outcomes, and
going beyond full cost recovery to
suggest financial returns on public work,
and payment on results.
From 2008 both Labour and the
Conservatives became interested in the
idea of social enterprises taking over
areas of public service, in the form of
‘mutual’ organisations of employees, and
in 2008 the Right to Request was
introduced in the NHS enabling this.
Taking forward ideas on outcome-based
contracts, and mutualism, the Coalition
is now seeking to open up new areas of
public service, introducing this as a
default position for all elements of
public services, barring the judiciary and
the security forces.
Whether this trend in the last 20 years
has been a good or a bad thing either for
the sector, or for service users, has been
subject to much discussion and research
from the early 1990’s onwards.
Discussions have tended to concentrate
on two broad areas, the role of the
sector in relation to the state, and the
impact on services.
The established selling point for the VCS
has been that it is more creative; better
able to respond to the needs of service
users; able to do things that public sector
providers can’t do; and enjoying a
qualitatively different relationship with
service users.
So for many in the VCS changes in the
last 20 years have been an opportunity to
expand, to improve services, and at the
same time become more professional and
accountable to beneficiaries.
But there have also been worries in the
sector about the impact of a ‘contract
culture’, undermining independence,
sidelining other activity previously
integral to mission (campaigning,
advocacy and community action), and
creating a situation that has meant
shifting goals and priorities to fit with
new funding.
Whilst the increase in public sector
contracts has been significant for the
sector, it is still only a tiny fraction (2%)
of total statutory expenditure.
A far bigger change has been the amount
of public expenditure spent on contracts
with private outsourcing companies, with
8
the Treasury estimating that the
present value of Private Finance
Initiatives (PFI) contracts alone account
for £121.4bn.
In response to the growth of the private
outsourcing business, some larger
charities are seeking consortium between
large charities and businesses, such as
the joint bid in 2008 by NACRO to run
prisons with Group 4 Securicor. This trend
is likely to continue, as too is charities
becoming subcontractors to big firms – a
widely anticipated development of the
new DWP Work Programme.
The statutory services that the VCS
provides happened in the context of
major systemic changes, not just in who
delivered public services, but how they
were delivered.
From the 1980’s, an approach to
organising public services was adopted,
termed ‘new public management’.
Borrowed from big business in the United
States, sometimes described as neo-
Taylorism, or managerialism, the
approach divides up services into
different functions, with each function
run seperately, working to contract
specifications underpinned by targets,
pursuing efficiencies of scale, and
Some questions
posed for the VCS
Public service reform poses a number
of serious questions for the VCS as
we look to the future:
n Can the VCS influence public
service reform so it delivers its
promises for communities? How does
it need to be different from previous
public service reform?
n Can VCS organisations compete on
cost for public service contracts
whilst maintaining integrity of vision
and the sector’s strengths and
values?
n Will a greater number of small,
local VCS organisations deliver public
contracts, or will there be an
expansion of large national charities?
n What will a new relationship
between the VCS and business sector
look like? Can we make it on terms
good for the VCS and beneficiaries?
Will it just be large national charities
or smaller ones too?
n Given the decline in grant funding,
what are the implications for parts of
the VCS that are not interested in, or
appropriate to, deliver public
services?
n Does delivering public services
have to mean compromising
independence for VCS organisations?
reducing labour costs through
standardisation.
For many this approach modernised
public services, ironing out
inefficiencies, breaking up ossified,
monolithic structures, bringing in choice
and fresh ideas. For others, the result
has been less accountability, less
responsiveness to service users,
deskilling of those working in the front
line, with a focus on targets, efficiencies
and outputs rather than actual
outcomes.
Social housing, homelessness services,
advice services, and social work are just
some of the areas that this approach has
been a focus of discussion and debate,
all areas now heavily populated by VCS
providers.
The Coalition has picked up on many of
these themes in the new public sector
reform it proposes, talking about ending
the target culture, giving back power to
frontline workers, bringing services
closer to communities, and encouraging
creativity and pluralism in how we meet
society’s needs.
Whilst the Coalition’s solution is a
shrinking of the state, it could be said
(and many are) that the ‘post
bureacratic’ state proposed by the
Coalition in fact draws heavily on the
model of service delivery that led to the
target culture and all the problems
associated with it.
PUBLIC SECTOR COMMISSIONING
Public Sector Reform
9
I
n February, Prime Minister, David
Cameron, pledged to bring about a
complete ‘transformation’ of public
services to end the era of “old-
fashioned, top-down, take-what-you’re-
given” public services. The Open Public
Services White Paper promises a right for
private sector and voluntary sector bodies to
bid to run almost all public services.
Public sector reform is seen as a vital part of
the government’s Big Society agenda - giving
service users more control over the budgets
for the services they receive, and
communities rights and responsibilities for
local services. Whilst Cameron acknowledges
that the State still has a role to play in
ensuring ‘fair funding, fair competition, and
fair access for all’ he stresses that these
responsibilities must never become an
excuse for returning to central control.
However, in the run up to the publication of
Open Public Services, there has been much
vocal opposition from people who see the
reforms as a green light for private
companies to make big(ger) profits from
public services. Critics have argued that
large companies would use competitive
pricing and commissioning to get in first and
push out smaller providers, including
charities and social enterprises. Financial
journalist Ben Laurence, in a Channel 4
Dispatches programme, found that the big
outsourcing companies already accounted
for £79 billion of state expenditure every
year. The programme highlighted concerns
that executives were getting rich on
taxpayers money and that workers'
conditions, pay and pensions are worsened
by outsourcing public services and was
featured in the Daily Mail
Speculation of a split in Cabinet over how to
deliver public service reform was fuelled by a
report from the Unite union. It claimed that
the Conservatives wanted the market to be
the driver, whilst the Liberal Democrats
prioritized more local control by taxpayers. In
addition to this reports emerged that the
Treasury had reservations about the spending
consequences of outsourcing services.
The White Paper, originally due to be
published in Autumn 2010 was delayed.
Things took an unexpected turn. Notes
marked strictly confidential from the
Confederation of Business Industry (CBI) of
meetings between Cabinet Office Minister,
Francis Maude, and the CBI's Director
General were leaked. The notes suggested
the government was scaling back plans to
outsource to the private sector in favour of
charities, social enterprises and employee
owned mutual organisations.
The leak claimed that "wholesale
outsourcing" would be politically
"unpalatable" and private sector
involvement would be limited to joint
ventures with not-for-profit groups.
So it seemed at that time that maybe the
Cabinet Office no longer believed it was a
simple choice between state provision or
outsourcing to the private sector – both of
which some saw as symptomatic of a ‘control
from the centre’ mentality. Opening up
public services to SMEs (small and medium-
sized enterprises), employee co-operatives,
voluntary organisations and social enterprises
was seen as the way to create more
innovative and localised services, whilst
increasing efficiency and reducing costs.
Reaction to this news varied. Ian Mulheirn,
Director of the Social Market Foundation,
suggested voluntary organisations are not
equipped to bear the financial risks
involved, especially where payment-by-
results models require substantial up-front
investment. He envisages a return to
central control of public services if the
not-for-profits can’t handle it.
Former Labour Minister, Hazel Blears warned
that this policy could be a ‘halfway house
to privatisation’ and said that she feared if
social enterprises are unable to deliver,
private sector firms will be quick to step in.
So now the long awaited Open Public
Services White Paper has been published,
what does it say? Whilst the devil may be in
the detail of plans to be drawn up by each
department from November, on the face of
it, the White Paper suggests no such
limitations on the role of the private sector.
There are messages within it encouraging
VCS organisations, public sector mutuals and
local small and medium sized businesses to
bid for public service contracts. But there is
nothing yet to suggest this will be backed up
with regulation, and the eligibility criteria
to take over our public services seems firmly
set to be ‘any qualified provider’.
THE COMMISSIONING DEBATE
Public Sector Reform
Who has
the
winning
ticket in
the public
services
lottery?
Instead of having to justify why it makes sense to
introduce competition in individual public
services – as we are now doing with schools and
in the NHS – the state will have to justify why it
should ever operate a monopoly.
Prime Minister, David Cameron

10 PUBLIC SECTOR COMISSIONING
No one really knows what
they are but everyone
loves them so how are
social enterprises
managing to put the
pizzazz into biz!
1
What are social
enterprises?
A social enterprise is a
business that not only
trades to make a profit
but puts social or
environmental objectives
equal to financial ones.
2
Give me some
examples
Some of the more
celebrated examples
include Jamie Oliver's
‘Fifteen’ youth-training
restaurant empire, Divine
Fair Trade chocolate,
Cafédirect – fair-trade
coffee company, the Eden
Project and The Big Issue.
3
What is the history of
social enterprise?
Whilst the pioneers of
social enterprise can be
traced back as far as the
1840s (the Rochdale
Pioneers – setting up a
workers’ cooperative),
there has been a
resurgence of social
enterprise in the UK since
around the late 1990s
including co-operatives,
community enterprises and
enterprising voluntary
organisations.
4
How many are
there and what do
they contribute?
There are over 62,000
social enterprises in the
UK contributing over
£24bn to the economy and
employing approximately
800,000 people.
5
What is the gender
balance of social
enterprises?
Social Enterprises have
more women in senior
positions and are twice as
confident of future growth
as typical SMEs. 41.1% of
all board members are
women, compared to just
11.7% of board members in
FTSE 100 companies and
4.9% in AIM-listed
companies.
6
What is the Social
Enterprise
Coalition and what is
its role?
The Social Enterprise
Coalition is the UK's
national body for social
enterprise and was
established in 2002. The
Coalition represents a
wide range of social
enterprises, umbrella
bodies and networks, with
a combined membership
reaching more than 10,000
social enterprises.
7
What is the Social
Enterprise Mark
all about?
The Social Enterprise Mark
is a brand to help people
recognise social
enterprises and feel rest
assured that at least 50%
of their profits are being
put into social or
environmental causes.
8
How are social
enterprises faring
in the current
economic climate?
56% of social enterprises in
the UK have shown growth
through the downturn,
compared to 28% of SMEs.
9
In which economic
sectors do social
enterprises work?
Social enterprises operate
in almost every industry in
the UK, from health and
social care to renewable
energy, from retail to
recycling, from
employment to sport, from
housing to education.
According to a DTI survey
in 2005, health and social
care services is the largest
category of trading
activity for social
enterprises as it was the
principal trading income
source for 33% of
respondents, followed by
education at 15%.
10
What is the
public’s opinion
of social enterprise?
A 2007 YouGov poll found
that 60% of the British
public would prefer their
local services to be run by
a social enterprise instead
of government, private
businesses or charity.
POPse burst into the world on Monday 9th May,
2011 and promptly disappeared again on Friday
13th May, 2011! Why? Well, in the spirit of its
name – POPse (Pop up social enterprise) – it was a
think tank only ever destined to arrive, conquer
and take off, leaving a legacy of “energy and
robust analysis of social enterprise policy and
practice” through think pieces, pamphlets and its
web-blog.
The aim of POPse? To explode some of the myths
and policy bubbles in social enterprise thinking.
Below are 10 of our favourite ones!
1. There is nothing more tedious than a social
enterprise definition debate (apart from two of
them…)
2. Choose legal structure after getting clarity on
mission, activities, financing, governance (form
follows function)
3. It’s estimated that that there are as many
social enterprise support agencies as there are
actual social enterprises!
4. It is possible to go to a social enterprise
conference or seminar every working day of the
year
5. Financial management matters; you need to
know your way round a P&L and cashflow
6. Social entrepreneurs’ work has a ripple
effect: mobilising and inspiring others to get
involved
7. There is an over-supply of loan finance
already, with not enough organisations fit, able
or willing to take it
8. There are many social impact measurement
tools, with more in common than they care to
admit
9. “slacktivisim”: you can’t really solve or
change much from your desktop
10. For ‘niche in the market’, read ‘need in the
community’ (and vice versa)
10 things you should know about . . .
Social Enterprises
11 ACCOUNTABILITY ARTICLE
Public Sector Reform
E
veryone agrees that accountability
is a good thing. But it means
different things to different
people, and how to make it work
in practice without imposing bureaucratic
burdens is often unclear. The Centre for
Public Scrutiny (CfPS), a national charity
which promotes and supports scrutiny and
accountability in government and public
services, has developed a new framework for
helping organisations think about
accountability and how it can help them
transform what they do and how they work.
In developing our new approach we at CfPS
first sought to define more clearly what
accountability means and why it is
important. Our 2010 research,
Accountability Works, argued that there are
different kinds of accountability:
n Through the ballot box
n Through regulation and inspection
n Through the operation of markets and
consumer choice
n Through individual complaints and redress
mechanisms
n Through transparency and the media
n Through scrutiny by non-executives.
These are all important in different ways and
our argument is that they need to operate as
a ‘web of accountability’, each playing their
part in ensuring that those who spend public
money are accountable for the outcomes
they deliver. We also believe that
accountability needs to be seen alongside
transparency and involvement, as the three
pillars supporting an effective democracy. In
other words, elections alone are not enough,
and nor is greater transparency – publishing
more data about spending – or better
involvement of service-users and citizens: we
need all three to work effectively.
We are now piloting a new framework,
called Accountability Works for You, to help
organisations assess their own
accountability, transparency and
involvement arrangements. It involves a five
step, flexible approach that can be used on
a self-assessment basis or with external
challenge and support.
We think that the framework offers many
benefits, from enhancing public trust by
enabling organisations to improve their
governance and demonstrating that they
have done so, to delivering better services
that are more responsive to clients and
customers. The organisations with whom we
have been piloting the framework agree
about its value, its practicality and – most
importantly – that accountability is not
about structure and process, it is about
culture and transformation:
“Using this framework has helped us to think
completely differently about accountability.
We’re now in a position to demonstrate how
central it is to value for money and
organisational change”
“Accountability Works for You has helped to
ground in practical reality what could have
been quite vague discussions about the
importance of transparency and openness in
our organisation”
CfPS has launched the framework and is in
talks with the Department of Health about
using it to embed effective accountability in
the new health service commissioning
arrangements. We also think it has value for
voluntary and community sector (VCS)
organisations, and our Trustees have decided
to use the framework to evaluate CfPS’s own
governance and accountability arrangements.
CfPS trustee, Jim Clifford, says:
“Using Accountability Works for You is a
great way for CfPS to learn about this
framework, live our own values of openness
and good governance, and ascertain the
value that CfPS gets from its trustees and
other stakeholder groups . . .”
As VCS organisations shift from holding
public services to account to delivering
more of those services themselves,
questions of accountability go to the heart
of what they do.
We would be happy to
hear from any
voluntary or
community group who
may be going through
transformational
change in services or
structure, or which just
wants to improve its
accountability, to see if
Accountability Works
for You can help them
through the change.
Visit our website for
more information, or
email Jessica direct
Accountability is a good thing. We
believe it should point to the people
who actually use and pay for public
services.
DCLG Essential Guide to
Decentralisation and the Localism Bill

Accountability rules
by Jessica Crowe
Executive Director, CfPS
12
Government reforms to public
services, initiatives to establish
the Big Society, localism and cuts
to public spending . . . we all
know that these are becoming a
reality.
But what do these changes mean
for local councillors? What is the
place for local representative
democracy and the role of local
councillors in this context?
Councillors’ importance cannot
be overlooked, particularly in
times of significant changes in
the ways that councils deliver
services and work with local
people.
Urban Forum’s recent report,
Local Democracy Revisited: The
changing role of local councillors
investigates how new government
initiatives, particularly
surrounding the Localism Bill and
Big Society, are changing how
councillors do their job and the
role they play in their
communities. Given the scale of
cuts to public spending and
changes to public services,
councillors can and should play a
mitigating role in helping their
communities to weather
the storm.
Urban Forum ran a series of
workshops for councillors in the
East Midlands throughout autumn
2010 on empowering local
communities, and the report
compiles findings and interviews
from these events.
Throughout the workshops we
looked at how councillors can
contribute to the agendas
surrounding working with
communities, changes to local
democracy, community rights,
and planning reforms. Urban
Forum discussed the need to look
at scrutiny and commissioning
and procurement so that changes
benefit all communities, and
communities can hold service
providers to account.
Councillors are a vital part of a
thriving local community, and
Local Democracy Revisited
illustrates the ways in which they
can utilise their role to provide
democratic accountability and
representation to localism
initiatives and diversification of
public service delivery. Whilst we
found that some councillors are
apprehensive about some changes
that are being introduced, they
are also open to new ways of
working under localism, and saw
public service reforms as
potentially offering new
opportunities for both councillors
and local people.
We explored with councillors the
implications of the Community
Right to Challenge, which will
give local people the opportunity
to register an interest in bidding
to take over running a local
service. Many of the councillors
present recognised that their
ability to act as a link between
communities and the inner
workings of local government
could be a key ingredient for
successful community bids for
services.
Community rights will have
particular salience for parish
councillors, many of whom
attended our workshops, as
parish councils will be one of the
types of organisations eligible to
express an interest in taking over
services.
The Open Public Services White
Paper has been published now,
and in it the government
recognises the growing
importance of the role of local
councillors in holding a
diversified set of providers to
account, ensuring minimum
standards are met and ensuring
equality of access. It proposes
strengthening councillors’
scrutiny powers, and widening
these to cover overview of NHS
providers. It tasks local
government with improving local
health outcomes, with funding
linked to improvements and It
puts local authorities in charge of
ensuring schools operate in line
with a ‘Schools Admissions Code’.
Overall, Urban Forum’s work in
the East Midlands showed there is
much scope and willingness
among councillors to rise to the
challenges posed by the localism
agenda and public service
reform. It illustrated a growing
awareness of how critical this
role will be in supporting an
equitable take up of new
opportunities by communities,
and providing the democratic
accountability and strategic
leadership necessary if public
service reform is going to deliver
benefits for all communities.
Councillors ready to rise to the challenge
URBAN FORUM REPORTS
Public Sector Reform
Locai Domocracy
Rovisitod
The changIng zoIe oI
IocaI councIIIozs
By CaitIin McMuIIin
Find out more
about the
report here
13 ACCOUNTABILITY ARTICLE
Public Sector Reform
D
emocracy is the
missing dimension
of public service
reform. Although
the Government has taken
welcome steps to increase
access to information, local
decision-making and new powers
for citizens, these measures will
largely benefit people who
already have the confidence,
connections and resources to
use them. If the Government
really wants citizens to take
more power and responsibility, it
needs to do more to promote an
active and inclusive democracy.
Here the Government has taken
one small step forward, through
the community organiser
training programme, and two big
two steps back, by downgrading
citizenship education in schools
and abolishing the Duty to
Promote Democracy.
Practical politics – the art of
collective decision-making,
which includes campaigning - is
one of the most important skills
anyone can learn. Aristotle
called it the “master science”,
because politics sets priorities
between everything else. If
people don’t know how to take
part effectively, they will be left
out, because their voices are
simply not heard when decisions
are made.
For the public, local decisions
matter most: what is provided,
where & how makes a massive
difference to people’s quality of
life. Badly designed housing
estates with no amenities or
employment blight people’s
lives, while poor but integrated
areas let people (?) flourish. The
shape of an area and how
services work together are all
the result of political decisions,
usually over decades but
sometimes short bursts of
activity send an area down hill
or lift it up.
How each service (care home,
park, prison or school) is run
also matters. Where staff are
open, responsive and
accountable, outcomes are
usually better. This is democracy
of a different kind, that in
Britain is embedded in the
cooperative movement, social
enterprise and self-help groups.
But central government creates
the system conditions for local
and service-level decision-
making. Its rules and funding
regimes govern wider social and
economic conditions as well as
the scope for local action.
National politics determine the
extent to which local action is
based on cooperation,
competition, corruption or
coercion, for example. If
national planning laws protect
the green belt, for example, will
be difficult for local people to
build homes or set up businesses
on it. If national policy promotes
local autonomy and competition
between schools, it is much
harder for them to cooperate.
Having a voice, therefore,
matters at every level of public
service, not just as a service
user, but also in deciding the
rules and system conditions
under which they run.
Public service reform over the
past 50 years would probably
have been much better if the
public had had more say in the
process. We can all think of
local and national examples
where politicians got it wrong:
the great tower-block building
spree of the 1950s and ‘60s,
umpteen NHS reorganisations,
rail privatisation, nuclear
energy, the Public Finance
Initiative and many of the
target-driven, top-down
ambitions of the last
government. Today we can also
see grand plans that are likely to
run into the sand or fail to
deliver because some minor
decision has massive unintended
consequences.
Decision-making about our
collective affairs - the job of
“weaving the future” as Plato
called it – is difficult. In a
democracy the future is our
joint responsibility, as equal
citizens. Whatever happens we
will pay for it, through our taxes
and the kind of society those
decisions create.
The better-off can afford to
fund lobbyists, campaigners,
parties, politicians or think
tanks to pursue their interests.
They can also use their political
skill and contacts to make
others pay for their mistakes.
The majority should at very
least be able to learn how to
campaign and take part in
politics effectively. Better
campaigning helps society make
What place democracy in public service reform?
by Titus Alexander
Convenor of Democracy
Matters and Head of
Policy & Research at
Novas Scarman
titus.alexander@novasscarman.org
14
better decisions, solve problems
and increase opportunities for
people to lead better lives. It
strengthens democracy and
enables people to get their
needs met.
Democracy means little if
people do not have the
confidence, skills, knowledge or
power to use opportunities to
influence things that matter to
them. Relatively few people
take part in politics and almost
half the adult population do not
vote, even less in local
elections. Less than two per
cent of people belong to
political parties.
Many people do not take part
because they feel powerless.
Most people are not apathetic;
they care about many things.
But it is often hard to have a say
about what happens at work, let
alone your neighbourhood,
health centre or school. The
town hall is remote and
Parliament on another planet.
We pay a high price for the low
level of political participation
and ability. It is possible that
the financial crisis, costly wars
in Afghanistan and Iraq, as well
as local disasters such as anti-
social behaviour and the hard
drugs industry, could have been
avoided if more people had
been more politically effective.
At very least, citizens would
know that there always are
many alternatives and
democracy is about debate,
decision-making and taking
responsibility for the society we
live in.
We need to make the case for
practical political education to
different funders – democratic
services of the local authority,
health trusts and other public
services which need active,
informed and engaged citizens
to do their job well. The three
main parties all supported
public funding of practical
political education and
campaign training at the launch
of Campaigning is OK!, a guide
to resources for campaign
training and support, in the
House of Commons in July. But
we also need to make the case
to local businesses, community
foundations, social enterprises,
trades unions and, above all, to
citizens, so that they support
provision through local and
national taxes as well as fees or
subscriptions. We need to
remember that the cooperative
and trade union movements
were created and sustained by
the subscriptions of working
people, not state funding.
The coalition government seeks
to change the relationship
between citizens and the state.
It wants citizens to lead from
the bottom-up, organising to
take power over their services
and building a stronger society
that can stand up to both the
market as well as the state.
Many disagree. Local colleges
have a responsibility to enable
people to understand what’s
happening and influence the
powers that shape their lives.
We have a particular
responsibility to the poor,
marginalised and disadvantaged
who do not have the access to
power and influence, to help
them use their own voices and
not to speak for them.
Ten years from now, every town
and district should have a lively
‘democracy hub’, accessible
online as well as through every
local college, agency and
community group, to help
people learn how to have an
effective voice, so that taking
part in politics at any level –
from neighbourhood groups to
the global movement against
climate change – is as easy and
as common as shopping.
The ‘master science’ of
practical politics should have a
central place in any community.
ACCOUNTABILITY ARTICLE
Public Sector Reform
Voluntary
action under threat:
what privatisation means for charities
and community groups
The National Coalition for Independent Action (NCIA) is a
network of individuals and organisations who believe there
is a need to defend independent voluntary and community
activity.
With the publication of the Open Public Services White
Paper, NCIA has published four documents providing an
analysis of the government’s policy, presenting the dangers
it sees this posing to voluntary action. It argues that
privatisation is not delivering new or needed services but
about making profit out of existing services, whilst other
services are cut entirely. It makes the case that
commissioning and privatisation leads to fragmentation of
services, and reduced accountability to residents and
service users.
NCIA is critical of some voluntary sector organisations who,
by entering into competition to deliver services, which
NICA believes has contributed to the furthering of this
agenda, failing to recognise that, although they themselves
are not the private sector, they are still helping to turn
community provision into a market place. It suggests that
in taking on contracts, many of these organisations have
surrendered their autonomy, sacrificed the authenticity of
their relationships with their staff and their users and
blunted their campaigning role. See links below
Full policy paper
Ten page summary paper
Four page leaflet: ‘privatisation’
Four page leaflet: ‘big society’
15
Public service reform, the localism agenda
and cuts in public spending bring big
challenges for public bodies and
communities.
With the introduction of the Community
Rights to buy, build and challenge and new
opportunities for communities to engage in
neighbourhood planning there is the
potential in every neighbourhood for
stronger partnership working between
communities and local authorities and other
public bodies. However, there is also the
potential for increased conflict, especially
within a context of dwindling resources.
n How can public agencies build and
maintain positive communication and
relationships with local communities at a
time of major changes in public services?
n How can local residents themselves
contribute to making communication and
engagement work better for the benefit of
their own communities?
Urban Forum’s National Empowerment
Partnership funded project Bridging the
Mismatch ran programmes with several East
Midlands authorities aimed at building
better relationships between active citizens
and public bodies around service delivery.
The programme had three key elements:
1. Identifying local residents as
‘communication champions’ to facilitate
better communication in their own
communities and create a ‘sounding board’
to work with the authority in a practical,
solution-focused way
2. A short programme of workshops to hear
both sides of the story and identify
common ground that can be built upon and
any ‘mismatch’ that needs to be
addressed.
3. The development of a jointly agreed
action plan setting out how both sides can
take responsibility for improving how they
work together in future.
Evidence gathered demonstrates that
significant benefits can come through
providing citizens, officers and elected
members with a space for honest reflection
and creative thinking around the processes of
communication and engagement. The
development of communication champions
and sounding boards met with significant
success in Boston, Ashfield and Lincolnshire
with all three authorities showing a
willingness to continue with them beyond the
lifetime of the project. We feel that there is
a great deal of untapped potential in
involving local people as the agents of
communication rather than just the audience
that public bodies are trying to reach.
URBAN FORUM REPORTS
Public Sector Reform
Bridging the
Mismatch
To find
out more
about the
report
click here
The Urban Forum Guide To Community Resilience is an
invaluable resource for any community.
With the era of austerity upon us and the public spending cuts
bringing greater challenges, this handy guide, which has expert
contributions from many organisations, is a timely, practical way
to strengthen your community and make the best use of its assets.
We're offering this invaluable Guide, which offers a score or more
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There are sections on Local Food Schemes, Timebanking, Asset
Mapping, Local Exchange Trading Scheme (LETS, Co-operatives,
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Assets, Local Currencies, Local Enterprise, Community
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