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CORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 540-ii House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE PUBLIC ADMINISTRATION SELECT COMMITTEE
Tuesday 12 June 2007 DR NEIL BENTLEY, MR DAVE PRENTIS, MR WILL WERRY and MS RACHAEL MASKELL Evidence heard in Public Questions 56 - 109
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Public Administration Select Committee on Tuesday 12 June 2007 Members present Dr Tony Wright, in the Chair Paul Flynn David Heyes Mr Ian Liddell-Grainger Julie Morgan Mr Gordon Prentice ________________
Examination of Witnesses Witnesses: Dr Neil Bentley, The Confederation of British Industry (CBI), Mr Dave Prentis, Unison, Mr Will Werry, Commissioning Joint Committee and Ms Rachael Maskell, Amicus, gave evidence. Q56 Chairman: It is a great pleasure to welcome our witnesses this afternoon. We have Dr Neil Bentley from the CBI, Dave Prentis from Unison, Will Werry from the Commissioning Joint Committee and Rachael Maskell from Amicus. Thank you very much to all of you for coming. You know that the Committee is inquiring into the question of commissioning services from third sector organisations. We have taken some evidence on this already but we thought it would be very good to get some input from all of you this afternoon. I do not know if any or all of you would like to say anything briefly by way of introduction or if we can just get straight into the questioning. Does anyone particularly want to say anything? Dr Bentley: I would not mind doing a bit of introduction, simply because we did not submit any evidence, for which apologies, just to give you a quick steer. I will be very brief. Mr Prentis: I would like to do the same. Q57 Chairman: Okay. Ms Maskell: I would definitely like to, yes. Q58 Chairman: If you could be fairly brief because I suspect a lot of it will come out in questioning. Dr Bentley: I just want to set out three main points where the CBI is coming from on this agenda, what we would like to see and what we think the key challenges are. To start off with, why business has an interest in this agenda, is really because we believe our members have a triple stake in public service reform. That is business as users of public services, as funders of public services and increasingly as providers of public services themselves. There has been major investment in public services over the past decade but there are changes in citizens' expectations for public services, how they are being delivered and increasing expectations for personalised services and on-demand services. We think what we need to see are continually improving services that offer value for money and are constantly innovating. What we would like to see is real partnership between the public sector, private sector and the voluntary sector working together to deliver improvements in public services. We would like to see the public sector as a commissioner of services going forward, not just a deliverer of services, and that is working with public sector partners and private sector partners and those in the voluntary sector. Underpinning this, we believe we need good market management; that is excellent public procurement skills, excellent commissioning skills, excellent delivery skills and project management skills underpinned by what we call competitive neutrality which is establishment of a level playing field between the public, private and voluntary sectors. Some of the key challenges we think are out there which really do need to be addressed, the beginning, the middle and the end, are better public procurement skills and commissioning. We want to see all providers of public services championing user needs, thinking about tackling social equity issues by the public sector Commissioner choosing the best provider to deliver services, involving staff in the reform agenda and the changes which are going on in public services as a result of this, focusing on quality of services, not just cost, embracing new forms of public/private partnerships (we are seeing now public/private/voluntary partnerships developing) and, as I say, treating all providers fairly through competitive neutrality. These are some of the issues on our mind. I am very happy to be here today. Thank you for the invitation and I look forward to the discussion. Q59 Chairman: Thank you very much. Thank you for being so succinct. Dave, do you want to follow that? Mr Prentis: Okay, Chairman. I will be succinct as well. What I would like to circulate round are three documents that we have prepared in the last two or three months. They are False Economy? The Cost of Contracting and Workforce Insecurity in the Voluntary Sector and also the report that we have undertaken The Third Sector Provision of Local Government and Health Services which we think are directly relevant to the work that you are doing and also a short statement on our support for the voluntary sector as it is at the moment.[1][2] We think these are directly relevant to your work. What I will not do, which I could have done, is do a long harangue about the direction of public service reform and the use of market competition. Q60 Chairman: We will take that as read. Mr Prentis: Yes, take that as read. I will concentrate on the way in which we are talking about commissioning and competition in the markets in the voluntary sector. My worry is that approach will undermine something which is very, very dear in the hearts of people of this country, which is a strong, vibrant, independent voluntary sector. We have got 60,000 members of the voluntary sector and we believe it should be independent, innovative and it should campaign for progressive social change and it should fill in the gaps that the public sector provision misses at the moment. Its advocacy role is absolutely essential within our society. We are very, very concerned that a dogmatic push towards markets and competition in the voluntary sector will weaken the role that the voluntary sector has had traditionally over the centuries, let alone decades. It is that strength that we think we should be retaining because it makes a huge contribution to our society. The one thing that tends to be forgotten in all of this, and you would be surprised at a trade union General Secretary saying this, I am totally committed to voluntarism in our communities. I think voluntarism is at the heart of community, people doing things in their spare time for other people. We have hundreds of thousands of volunteers, not paid, just doing it for people's welfare because they want to give something back to society. I think the whole system of voluntarism in this country which is really based on the community and voluntary sector is under threat by the direction of travel that we could be going down if commissioning in the markets is brought in to that particular sector. Why would volunteers work for multinational companies? Why would volunteers work for organisations making profits? It does not work that way. I think it is an unintended consequence that this Committee should put at the top of their agenda when they are looking at the use of the community and voluntary sector. When we talk about markets and competition, we believe that there is not just one third sector. When you look at the way in which it is divided into small, middle and large organisations, there are just 306 of the 190,000 which receive 39 % of the total annual income for all charities. The Charity Commission is saying that small charities are being squeezed. What we would like you to look at is how this will be exacerbated in the rush into market, competition and commissioning. We believe an unintended consequence is that this direction of travel will lead to increased insecurity for the voluntary sector organisations, many of which do not want to be part of this commissioning process. In a nutshell, and I am not going to go through all the points I was going to make, if the community and voluntary sector involvement in public services is based on the principles of markets and competition, you are going to lose a distinct value of that particular sector. As you go along, more resources in the voluntary sector, very tight resources will have to go into winning contracts, less will come from grants and donation. It will skew how these organisations operate and it will make them less and less effective in the jobs that they are doing for our society. It will convert voluntary organisations into service providers. The independence, the advocacy role will go out of the window, campaigning and advocacy to identify gaps in public service provision has always been an important factor of the work they do. They help to develop it smoothly so that it can be taken up by the public sector itself. Work has moved from the voluntary sector and back into the public sector knowing that they can get special, not advantage but a better feel for the way in which public services run. As the voluntary sector and community sector will have to prioritise winning contracts, all that development work they do for us at the moment, and the investment they place in that, and the ideas they come up with, will go completely out of the window because contracts will be all important. What it says in the contract will be the thing that dominates whether that organisation stays in being. The voluntary sector is not homogenous, you cannot talk about the third sector. The people who are involved in it are very, very different, some do not want to provide services and yet could be pushed into it. The competition angle means that the scarce resources which, say, Barnardo's, who we work very closely with, the National Children's Homes and other children's organisations have, they will be competing for contracts against each other. What will happen is you will push down the pay, the conditions, the training that workers in those organisations get and we have all the experience of it, it will be like school cleaning, it will be like cleaning in hospitals, the lowest contract wins and then those particular contracts are no longer fit for purpose. It will push down standards in the voluntary sector, something that we cannot possibly as a Government, and as people wanting to improve our public service, want. You cannot lose sight of the transformational role of the community sector. You cannot lose sight of the advocacy role. You cannot lose sight of its independence. What we will do is fragment far more than we need to do. There is also the equity issue, that the voluntary sector will not be able to talk about the equality issues in the way that we can, in the large public sector. Eighteen per cent of voluntary sector workers are disabled, in the public sector and private sector it is only 13 %. They will be pushed down in the rush to make sure that they are lean organisations. Their whole way of working will be affected by what is proposed. The point I would like to make to you, and I shared a platform with Ed Miliband on the voluntary sector Unison organised event in order that we could talk about how we get improvement through the voluntary sector, something that we are absolutely committed to, Ed Miliband made a very, very strong point, which I think is at the heart of what this Committee should be looking at. He said that as far as he was concerned the third sector was one of support rather than one of substitution. I think this Committee should lay that down as a premise, as a preamble, as a principle by which it judges how far we take public service provision being transferred into the voluntary sector. It should not be a matter of transfer, it should be a matter of how the voluntary sector and the public sector can work together to improve our public services. Thank you. Q61 Chairman: Thank you for that. I am tempted immediately to ask you things but, in fairness, let me ask very quickly if our other two witnesses would like to say something. Ms Maskell: Yes. Obviously I totally reiterate all that Unison has presented there and welcome the opportunity to answer questions today. As far as Amicus is concerned, we are now part of Unite and as a union we, too, have got 60,000 members working within the not-for-profit sector. I think what that does echo is that trade unions are represented over the sector and are representative of the people on the ground in the sector delivering services and therefore really do understand the impact of certain policy decisions at this time on their organisation but also on the service users. The whole raison d'etre for organisations is to deliver to service users and therefore in day-to-day experience they are seeing the impact of the whole contracting market and what that means. Also, as unions, obviously we see the impact on employees within the sector and the whole experience of terms and conditions now being put in that competitive realm. We are seeing a race to the bottom within the contracting market and one thing we have experienced, certainly, is organisations now turning to us with the plea that we cut terms and conditions, whether it is pensions, training budgets or whether it is core terms and conditions, additional allowances and so forth, in order to meet the market demands to win the contracts because without the contracts there are no jobs and it is a very painful decision not only for organisations, going down routes that they do not want to go, but also our members having to make those difficult decisions. Likewise, as far as the stability of the sector is concerned, and I think that is one of the most important things to consider at the moment within public services, there is a public understanding that in time of need you will get a service and there is an expectation of what that service means. Obviously, reform is important, however within a contracting environment there is less stability. For a start, we are talking about short-term funding cycles, as has been the experience to date, often 12 months long. If you can imagine the experience of an employee in that scenario, once the clock starts ticking on that 12 month period, you will be wondering at the end of that period how you are going to pay your mortgage, feed your family and what about your own career and opportunities there. What we find is that within three year funding cycles that is not long enough to bed in somebody as an employee. Extend that to a service and thinking strategically about designing a service and delivering services, there is no way within a three year period that can be delivered. Certainly if we are talking about delivering at the public services where there is that stability moving into this insecure environment, what are we saying to the public within that environment about what their expectations can be of the public service delivery? We would also express real concern about this whole concept of the ethos of the third sector and what this whole contestability, marketisation, is actually doing about the ethos. Again, we have organisations coming to us and saying, "Do not put out a press release about the shocking funding situation because if our organisation is named we know we will not be winning the bid next time round". While all the right words are coming out, we want the third sector to be strong on advocacy, the reality is that they are not able to be strong on some of the issues which really do impact on the eventual delivery of service. Why? It is because they are in direct conflict with their funders regarding the funding of human policies which are detrimental to the service users. Straight off, organisations are being silenced in this whole environment about third sector working together, we have found organisation by organisation, and I think the children charity example is key in that. Organisations which used to work very collaboratively, very closely together to produce the best services possible, for instance for children and young people, are not speaking to each other now because there may be something that they can put in their bid which will give them the edge over the other organisation. It is direct conflict, almost war, trying to win these contracts, and the huge financial cost to organisations has contractors swinging between organisations. It is incredibly painful for these organisations, stopping them planning and, needless to say, a very serious detriment to the employees within the sector. Actually if you think what the impact on the service user is, often the most vulnerable in our society, they are no longer able to have those stable relationships with an organisation. Often it takes, for instance in areas of mental health, a long time to adjust to a particular way the service is delivered to find that constant change can often be more detrimental than having the service in the first place and, therefore, the whole contracting environment is damaging to those who closely depend on the services. One thing that we would say about the whole thing of closeness of the commissioning as well is that it does throw out a huge bureaucracy for organisations. One thing that we are finding is that organisations which would have been putting resources into the front line of delivery of services are now putting resources into form filling in order to draw down resources for the next cycle. For small organisations which had a niche market and a very specific delivery this is very damaging for their organisation and many are just not able to engage in the process. I am sure many other comments will come out within the process of questioning but that is just by way of introduction. Q62 Chairman: That is very helpful. Thank you for that. Will? Mr Werry: Thank you, Chairman. I can hardly say absolutely nothing, can I, after all that. Q63 Chairman: What you should do, really, is just say something so we can understand what the Commissioning Joint Committee does. Mr Werry: Thank you, Chairman. That is all I want to explain. It is an inter-disciplinary body covering all the disciplines in local government, wider local government I might perhaps call it, all the disciplines involved in commissioning work and in competition plus the local government contractors' organisations and the in-house organisations. Our objective is to produce practical guidance to practitioners, for which purpose we are trying to get to the bottom of exactly what different propositions and initiatives are trying to achieve. Our object is to try and work out who is going to have to do what to make that happen, if possible without too much collateral damage. I like to think of it being a fairly street level exercise. We do indeed produce guidance about that, including recently the third sector guide. I have to say I sense that your objective might be something similar; looking at the subject in a street wise fashion, in order to sort out the practicalities. If so, I am delighted to co-operate in any way I can. Perhaps I ought to add, among all these disciplines, I was myself an auditor, a district auditor for Birmingham long ago, but I have put that behind me and I try to accommodate all the other viewpoints that we collect. Q64 Chairman: Thank you very much. I think what is interesting, listening to most of you, is that up until this point it is fair to say we have had people come in and give us undiluted enthusiasm for increased third sector provision, despite Ed Miliband saying on record that he wants to expand third sector provision, that is what he sees as the direction of travel. Our job is to say, "Look, if that is the objective what flows from that" and that is what we are trying to explore. Let's start with basics, then. As I say, we have had these enthusiastic accounts given to us about the great virtues of using the third sector, the added value that comes from that. Listening last week to Turning Point and Rainer, where they were pointing to the kind of things they were able to do and the way they were able to do them because they were not the State, my question would be, if it was the case that the third sector is able to provide services in a way that has advantages over the way in which the State can provide services, then presumably we would want to use them, would we not?[3] Ms Maskell: If I can start by giving you an example of one of my representatives, a social worker who worked for the local authority, he was funded in such a way that he had a caseload of over 30 people to look after, moved to third sector and had eight. If those kind of resources are switched, so we are talking about more resources being made available, then obviously you are going to able to deliver a far superior service. But the whole argument is the fact that there is additionality, and we recognise that that is the third sector's prime purpose. It is good at moving on the debate, at working and finding creative solutions to situations, and has always done so, but also it is there as an addition, so you have the core service and then, with the extra resources put into that service, of course you can deliver, if you like, a top service. We want to see that across the board but that takes money to able to deliver, so we are talking over and above. We are not saying "more for less" because the sums do not add up. Q65 Chairman: Dave Prentis, you talk about gap filling, and you think that is fine, but more than that is not fine. It is clear the Government is not interested in gap filling; it is interested in developing mainstream, third sector provision, as it is interested in developing private sector provision. It wants a mixed economy of provision. Now, apart from an ideological objection to this, if this is either more efficient or it produces better services, why would we not be interested in it? Mr Prentis: When I mentioned gap filling that was part of a whole range of issues around the voluntary and community sector, including the innovative role and advocacy role it plays, and the way it could transform the provision of our public services if we do it on the right basis. What concerns us more than anything in the increasing role of the voluntary sector is yes, that we should take measures to improve and probably increase the role of the voluntary sector, but it should not be based solely on markets and competition. It should be based on what the voluntary sector does best, and that is not necessarily part of the equation. We talk about if there was a level playing field, if it was not an ideological push, if we were looking at how we could improve the voluntary sector, and in our submission to you we come up with a number of recommendations about how this can be done without using competition and without using markets. We do talk about full cost recovery, which is a major issue because when the voluntary sector has taken over the work it is not getting full cost recovery, and that is the Audit Office saying that, not me. Rachel has mentioned contract length and the way in which a bidding process takes away from the other work that the voluntary sector organisations are undertaking, but we are not saying that we want in any way to restrict the voluntary sector; we want to expand it, to make it better, to help us develop solutions, but we want it more collaborative rather than competing with each other for contracts. The smaller voluntary sector organisations will go under because they will not be able to provide the resources needed for the bidding process; they will not be able to provide decent pay and conditions, and lots of their resources will go into putting in bids and tendering which they will not get. And all our experience of commissioning and of competition is that over time it goes to the big players, and is that what we want the voluntary sector to become? Q66 Chairman: But if the claims that are advanced for the third sector are true, that is, that they have characteristics which enable them to offer a better quality of service than the State can provide in a variety ways, if that is true and you may dispute it, then presumably we would want to develop that provision, would we not? Mr Prentis: You are talking in generic terms that the principle could be true. We are not that far away from you because what we are saying is it should be a level playing field, and if there is to be development of a particular voluntary organisation we need to know that it will improve things. But the whole emphasis on markets and competition is it is a bidding process, and usually under that process the lowest tender wins, and it becomes very much a means of not being able to talk about quality and how we can improve it. As a union we have 1.3 million public service workers; we have never ever argued that everything has to be in the public sector. What we have said is that the push through commissioning and through contracting is leading to a worse service, it may be cheaper but it is a worse one, and you are saying, "If we could prove this", but show us the evidence because nobody has yet. Q67 Chairman: Can I add this to my questioning? I was expecting, you, Neil, to be rather more negative about this, because when you think of the arguments about bringing the private sector into public provision over the years, here in a sense it seemed to me from your point of view the argument had been largely won, that is, that it was absolutely appropriate for the private sector to provide a range of commissioning functions, but no sooner are you there than suddenly the Government gets enthusiastic not about you, but about the third sector and wants to bring them into the picture, and I thought you might find this a little bit threatening. Dr Bentley: Not threatening in the slightest; the CBI believes competition works. We are very much in favour of an increased role for the voluntary sector. All of our work being produced on public service reform is founded on the principle of the mixed economy and diversity of supply, and we talk all the time about public, private and voluntary sector working together to deliver that. The best provider, whoever the public sector Commissioner decides should deliver a public service should be based on who is the best provider, from the private, the voluntary or the public sector. I think that what we are seeing is developments of new models of delivery, and yes, the voluntary sector can reach parts of the community that other sectors cannot reach. I am sure Rainer, Turning Point and Stephen Bubb from Acevo have probably been here telling you about what long traditions they have working in communities. There are lots of examples where they are able to do that better than the public sector, for example, but what we are seeing developing is also the private sector and the voluntary sector working together in joint bids to work with the public sector. It is particularly prevalent at the minute in offender management where we have seen Turning Point and Rainer and the private sector organisation called Serco working together to get ex-offenders back into employment, and we think that is an excellent model and the way forward for public service provision. I think some of the issues that Dave and Rachel have been raising about contract length, funding, terms and conditions of employment all come back to public sector procurement skills and market management. How does the public sector procure to deliver services? All of these, funding issues and employment terms and conditions and contract lengths, have to be properly considered and the public sector needs to think about properly funding these contracts to get the best quality service, not driving down to the lowest cost. None of us wants public services on the cheap; none of us wants a return to local government compulsory competitive tendering; we all have an interest in making sure there is proper funding for public services, and that responsibility lies with the public sector Commissioner to make sure they have all of that right before they go out to tender. Q68 Chairman: On exactly that point we had, as I say, Turning Point and Rainer last week, and we have heard it from others, who when asked what for them is the big issue, say it is the Commissioner, and it is their demand for what they call intelligent commissioning, and they think at the moment there is too much unintelligent commissioning going on. Is this true? Are you remedying it? Mr Werry: Thank you, Chairman. It is a fair point but it always needs looking at more deeply when people say that. The people who say it are, by and large, the people who lose and the people who are not getting enough work, and they say it of all sectors, of course, not just local government or whatever. I am very anxious to get to the bottom of why it is that we have particular types of contracts and what size contracts should be, and things of that sort, and that is part of the reason why the small third sector bodies are not getting much of a crack at the whip. It is because so much of procurement is directed towards maximising savings and competitive clout and all the rest of it. Small contracts are very unfashionable so it takes a bit of an effort to get them established, and this goes right to the heart of the argument about the third sector - that, by and large, the big third sector providers do not need any particular change, which may very well lead people to put your own question in a slightly more forceful fashion, Chairman, which is if the third sector is so good, why are they not winning now? That is the crunch question. I think there is an answer to that for the small third sector providers which is that so many things are geared up to bigger contracts for bigger operators. It is not because there is not a level playing field; you just cannot make the level playing field right. The intelligent client has first to decide which sorts of service provider are going to give them the best deal and if, indeed, they give it to big service providers - well, leave it like it is. It is ideal for that. But, of course, if that was the case there would be no work at all virtually, apart from a bit of lotting and things of that sort, as Neil has mentioned. Apart from that there would be very little in it for them, and they complain about that, and I confess I feel a little bit of sympathy for that. I feel intuitively that there must be one or two, or perhaps more, types of work which the right small third sector bodies would be very good at. I cannot prove that, there is no evidence whatsoever that I know of to prove that, but I think it is worth a try, and that means that to make something happen purchasers are going to have to recast the packages and contract conditions and payment mechanisms and all the rest of it which they use at the moment. I do not expect them to do it at the drop of a hat because for every winner there is going to be a loser, so you burn your boats if you do that because big contractors are not going to apply, I should not think, for a welter of small contracts, and possibly not the in-house organisations, so it is a pretty fundamental change we are asking for. Nevertheless, I think with care it should be tried, and then it will find its own level, I think. We will start to suss out what things small third sector bodies really are good at, and of course if we establish there is some particular line of country they are good at then we go a bundle on that, and authorities would normally arrange for that sort of work to be offered in such a form that they would readily tender for it. Mr Prentis: You can always find any argument that you can agree on 70 % but it is the 30 % which causes the difference. Neil would see advantage in the voluntary sector developing public service work as long as it is in the image of private sector delivery, and this is the problem with markets and competition, that what we are doing is mirroring the private sector within the voluntary sector and obviously it is of interest to the private sector advocates like Neil, but the issue which you have to face is the vulnerability of the voluntary sector as well and the fact that you are creating a vulnerable work force by pushing through commissioning and markets in the model of the private sector. When I did a CBI conference with John Hutton and John Cridland both of them were arguing that the way to get public service reform is to raise the morale of the work force, and the commissioning process is worsening the morale of the work force both within the public sector but especially in the voluntary sector, which you are saying may well be able to improve the public services. I think we have given you details of the survey that UNISON commissioned but what it found was that to win contracts on costs led community and voluntary sector organisations to cut staffing, pensions and training, and that was impacting on service delivery; it said that one major charity with a commitment to staff training and development has had to cut its training budget by 50 % in the last two years in order to compete, and that staff were expressing great concern about the lack of continuity of care for service users caused by reductions in staffing levels and turnover. That is what has been created by the model based on commissioning in the market. Other models could work and the voluntary sector could be developed, but the only model that is being talked about at the moment is this competitive environment through which work is transformed. Q69 David Heyes: I am having some difficulty forming a question on that. I am so taken with what Dave and Rachel said which matches my own experience as a voluntary sector manager before I became an MP. Given what you say is the truth it is difficult to formulate questions that do not have heavy bias within them, but I will try. I will give you an example that might provoke you into giving more examples from your experience. My local area does not have a debt advice service for this any more, and it is because the CAB[4] who won the contract from the LSC[5] and faces competition, saw that that undermined the voluntarism. We had a very strong voluntary group of people giving the advice free of charge and the introduction of paid staff and the requirements of the contract meant that there was an exodus of volunteers. The competition that took place to make sure that the CAB won the contract meant ultimately they were not able to offer sufficient rates of pay or working conditions or pensions to be able to retain the staff; huge advertising costs because of increased staff turnover and so on, just a spiral of decline, at the bottom of which I do not have a money advice service in my area and I am battling with the LSC to get something done about it. That is my experience of the real world and the question is would you like to expand on that from the experience of your members? Ms Maskell: I certainly would and I am very familiar with the example you gave because I know that for the CAB to win back that contract the employees were working 24/7 excessive hours as were the volunteers to try and ensure that service delivery was up to scratch, and yet they still lost that contract, so I think it does show people within the sector were more than dedicated to try and work to win things for their own organisation, and that does bring in the point about people working in the sector. We know from research that 20 % reduction in their salary is one of the prices they paid for working in the sector, and therefore over dedicated to deliver the service for those that most need it, and they too are echoing concerns you raise. I will give a couple of examples around the pain of contracting. There is a public example about voluntary action in Manchester where they lost a contract to the Scarman Trust, and as a result of that all the community links were lost and therefore, although on paper it might have been a cheaper bid that came in, what you lost was the value of the sector, the links into the community, the relationships, which is often how the sector works. It is not a very neatly boxed sector, and unfortunately, as a result of that, the service delivered is far worse for the people in Manchester because, if you like, the heart of what an organisation can deliver might cost a little bit more but it was at such value. How do you put a price on some of those factors? Another example is an organisation which delivers social care within housing associations. That organisation lost a contract to a private sector organisation not familiar with the territory which then subcontracted on the work to another organisation employing people on little over the minimum wage, and certainly for those working within the contracts the ability to be creative was ripped out of their job descriptions, and for those people dedicated to the sector it lost all meaning, and therefore you are losing the very things which the sector is so well able to deliver. With those examples, what it shows is that the third sector delivers on a slim financial level in order to be able to deliver the best service it can, and therefore it is not about charging too much for the contract; it charges what has to be delivered. One thing we are incredibly fearful of is that this whole contestable market is just a Trojan horse down to the private sector involvement, because it can come in cheaper because the terms are worse, and I would want to draw to your attention the fact that of all organisations 77 % have said they are experiencing turnover problems, and retention problems of employees in the sector, recruitment and retention is 16 % across the economy, 21 % in the third sector. Now, if you are talking about delivering services to vulnerable people that has a damaging effect on those services, so if you put into the equation the cost of the contract retaining employees and expertise within the sector it is equally important. Finally, when talking about organisations contesting for work, what we are often talking about is going to multi sources of funding and multi contracts. One small project may well have contracts within a number of organisations, a number of PCTs, a number of local authorities, in order to deliver a service, each one having its own bidding mechanism, its own auditing process. From a very small organisation it just gets totally tied up in a whole bureaucracy in order to deliver what it knows how to deliver, but unfortunately the layers are put in between which are costly for the organisation, so that does need to be pointed out. Q70 David Heyes: Does anybody else want to kick into the open goal I have created? Dr Bentley: I think the example of organisations losing contracts happens all the time. The point I made earlier is the public sector Commissioner is choosing the winner based on a set of criteria which they have set out in the bidding process, and if they are funding and willing to choose another provider, whoever that is, to deliver that service, then they have made that decision based on transparent and open criteria, and if that service fails or if the service delivery is impaired in some way, then that provider is not going to win the contract second time round because they will not have delivered what the public sector Commissioner wanted. Now, that is part of contestability and part of the competitive market which is about trying new ways of working, driving up innovation, driving efficiency and helping to improve the service delivery to users. Now, if that is not the case in certain circumstances then the current incumbent will not win again. Q71 David Heyes: What you have just said is completely at odds with what you said earlier about the rhetoric about partnership and public and private working together. On the one hand you put forward that argument and want to have it sit with the opposite argument which is it is a harsh world, and whoever fights hardest wins. Dr Bentley: It is, and they are not incompatible. You have competitive processes to decide who is going to win a contract, which you can do on your own or within a partnership with other organisations to bid together for contracts, and once you have won it then you have to work in partnership with the public sector to make sure you are delivering the best contract possible to make sure you maintain that contract and win the service on re-bid. Those are the principles we believe are delivering the public service reform. Q72 David Heyes: We would say these issues can be addressed in getting commissioning right, so would it be legitimate, in picking up concerns about staff retention and employees getting proper working conditions and as part of the commissioning process, to specify good levels of pension and levels of pay that were consistent with comparators in the public sector? Is that happening? Can you give us examples of where that is working? Dr Bentley: Last year the Institute of Employment Studies did some research on behalf of the CBI to look at these issues of good employment practice in contracts, and they went round and interviewed contract managers, employees, union representatives and employers to talk about these very issues and terms and conditions of employment. We have set out a set of 10 good practice guidelines and the first is that public sector procurers must take good employment practice into account when they are choosing whoever they want to deliver that service, whoever the best provider is, and that has to be a priority for them in terms of terms and conditions, investment in skills in training, in terms of good employment relations and pensions. It is all set out in the report which I would be more than happy to share with you.[6] That is why we engage with the TUC and other public sector unions to work on these issues; why we are sitting down together to work on developing employment compact in public services around skills and access to unions and access to employment advice. All of this is about joint working together to address some of these issues. Q73 David Heyes: Is Neil's rhetoric about getting the commissioning right and so on happening in the real world? Mr Werry: It does not happen in tender evaluation, which is the crunch point. Are conditions of employment a legitimate factor in tender evaluation? In general, no, and it is important for us to think about why that is. It is because TUPE[7] and the way in which TUPE has been managed in the United Kingdom is designed to make it not a factor in tender evaluation. What happens now is that the employees of the service currently employed, whoever is employing them, move to the new provider, and the more that third sector bodies move into services on annual contracts or period contracts, the more they themselves have to cope with this. It has been made particularly watertight in the United Kingdom because, although it is European legislation, the British Government has exercised a right which it was given by the EU to apply it to pensions as well, for which TUPE European style does not apply, and they have gone beyond even that to say that while the contract is running the employer almost always will need new starters to fill any vacancies, and the requirement now is that they have to be given the same terms and conditions as the transferred staff. So the law is very hostile. Dr Bentley: I do not think it is because TUPE requires the information and consultation of employees before the point of transfer. They have to be involved in the process of transfer and before the decision is made to transfer employees. What we are saying, and we have evidence to back this up, is that public sector employers need to be considering this more in the procurement decision-making process and to involve employees in that process to make sure they understand what is going to happen. This is about managing change and I do not think the public sector has been brilliant at managing change through this process, which is where you get the instability and uncertainty referred to earlier on. Mr Prentis: If you want to know what is happening on the ground rather than what we talk about as theory read the report that we put before you, False Economy: The costs of contracting and workforce insecurity in the voluntary sector. Very briefly, the voluntary organisations suffer all kinds of job insecurity, threats of job losses, changes in terms and conditions, groups such as the elderly and disabled are particularly vulnerable, 12 % of the workforce are in temporary contracts; there is major evidence of worsening staff/client ratios to meet the contracts; and again - and this is an issue for the public sector - local authorities more often than not are focusing on cost rather than quality, very similar to compulsory competitive tendering which you should all have learned from. The profound unease amongst staff usually amounted to what one described as a "sword of Damocles" hanging over them, and usually they had to wait until the last minute before they found they definitely were able to remain in employment. The issue about TUPE is that it does lay down basic European rights but we all know that private companies are getting round TUPE by employing agency workers, paying the rates they want to rather than the rates for the TUPE staff. There is still a two-tier work force within this country despite the commitment of the Prime Minister, which was genuine, and there is still a major issue of lack of monitoring of that agreement which came from the Prime Minister. I have to give him his due, this agreement came directly from him, and yet when it comes to monitoring across the public sector, what monitoring takes place? It does not. Q74 David Heyes: One way of addressing these concerns about staff being inadequately treated is good trade union organisation, so I want to hear how difficult it might be to organise in the voluntary sector compared with the other areas -- Mr Prentis: Very briefly, the voluntary sector is fragmented. You are looking at the bigger organisations like Barnardo's, and we are very large in those bigger organisations. In the smaller ones where you get turnover it is quite difficult because of the fragmentation, but despite that there is no aversion to the trade union in the voluntary sector. The one thing we know about the voluntary sector is that we really do work closely with the employers. Many of the things Rachel and I are saying are the employers in the voluntary sector and the people who have developed it have developed it out of commitment rather than they want to be making private sector bonus salaries that we all read about. They are happy with their lot and they want to make a difference within society. They are as much concerned about what is going on as trade unions and staff are. Ms Maskell: One thing we note within Amicus is the voluntary sector is the fastest growing sector of the union. Putting that in context, we are faced with turnover challenges but also organisations are totally geographically spread, so we may have one organisation employing 2000 people but, in fact, there are only ever about five or six people working on over 100 projects, and it is trying to build that organisation which is a constant challenge for us. The majority of employers within the third sector are employing one person. That is the challenge. Mr Werry: Perhaps I should apologise for raising the question of TUPE at all, Chairman, but it is useful. Whatever happens the voluntary organisations, or the small ones, are now going to be in the position of having all the problems of staff transfer which we are talking about; they will not be using their own staff for a term service contract which they tender for; they will be receiving the local authority staff on transfer who will bring all their conditions of service with them and, indeed, their pension rights. How different people might abuse this procedure I would not wish to go into, but I think we should flag up that there is this major problem which the small third sector bodies need to address. Q75 Chairman: Is it a problem? Mr Werry: I do not know because it has not really arisen yet. The volume of contracts at this level is fairly small, as we have heard. The large third sector bodies know all about it and are geared up to it and know they are going to receive the staff. Mr Prentis: There is a major problem with pensions and training. Q76 Mr Prentice: Would that always be the case? Let's say a local authority wanted to float off fostering services to a third sector organisation. Are you saying that third sector organisation would be obliged to take the local authority employees that were dealing with fostering? Why could they not just advertise and hire new people? Mr Werry: That is a fair point. It is not every contract that attracts TUPE. The law is a bit different from what happens. The law is that if the work is to be done in a sufficiently different way under the new contract then the staff who did it in some different way do not transfer. That is the law of TUPE. But the weight has been taken off that because the United Kingdom government has gone out of its way to say in the Cabinet Office code of practice that even where TUPE does not apply the Government expects its principles to be applied, and by and large they are. What that adds up to is that there are very few exceptions to the TUPE rule. Q77 Mr Prentice: I am not an expert in TUPE but does this mean, if the TUPE regulations were going to apply in work that is transferred between local authorities and the third sector, we would not see much work going across because TUPE would be just too restrictive? Mr Werry: Well, it might have that effect, I could not say it would not. Dr Bentley: I think what we need to avoid is TUPE avoidance in the third sector. I am sure colleagues will talk about the trade unions supporting the third sector but I am not sure there is the capacity to make the resources in the sector available to deal with transfers of staff. I honestly do not know, because there has been a huge amount of build up of resource in the private sector to be able to do this. They are very complex regulations and there are complex processes to be gone through, but I am sure if this came up in your discussions with voluntary sector organisations they would be able to advise you, but it is certainly a big issue about capacity building and capacity and professional HR management. Q78 Mr Prentice: We have had some very good memos submitted and I am looking at a memo from Amicus that says this about the CBI: "The campaign by the CBI to push for a system of competitive neutrality in public service contracts is ... part of a campaign to bypass the third sector and privatise public services rather than constructively reform them."[8] So that is what Amicus thinks, that this is all a smokescreen, and you just want to privatise these public services. Dr Bentley: We are very much in favour of bringing in the voluntary sector. The work we have done on competitive neutrality has been endorsed by the voluntary sector and we work very closely with the voluntary sector in developing a lot of our policy positions. The organisations you have been talking to come along to our events and have been involved in our policy making or involved in the work we have been doing. Q79 Mr Prentice: Why is there such a misunderstanding, then, between the CBI and the unions? Dr Bentley: There is an ideological difference between whether there should be other providers involved in providing the public service, and we do not believe there should be that division, but there should be a mixed economy of supply. Q80 Mr Prentice: And that is not ideological? Dr Bentley: No, because what we are saying is that the best provider should provide. It should be the private sector where it is appropriate, the public sector where it is appropriate, or the voluntary sector. Q81 Mr Prentice: We have spent a lot of time talking about terms and conditions, Dave Prentis talked about the two tier work force, we heard about pensions, we heard in the union's memorandum about turnover in the voluntary sector, low pay in the voluntary sector - it is all documented in memoranda put to the Committee - so are you saying it is possible to have a level playing field when that is the reality on the ground? Dr Bentley: It is possible, yes. Mr Werry: If I may, in a way everybody is right in this debate! There is an important point behind it which is that you have to ask yourself, if the third sector is to get more work, by what mechanism are they going to get it? One way is to go for grants, of course, but my feeling is that does not have very much future in it for one reason - because the third sector keeps saying: "We want full recovery of costs", and it is a bit hard to have any arrangement of full recovery of costs without people saying: "Well, OK, we are going to pay you all your costs but what exactly are you going to do if you are going to charge us the full cost?" So no power on earth can stop it becoming a contract, so really what we are talking about is contracts. If, indeed, they are biggish contracts we are talking about, and additional big contracts, it could very well be that the client authority has said: "These are a good idea, we will put them up for competition", and it could very well be that unfamiliar biggish third sector bodies will be beaten by the private sector. Nobody can stop that either. Q82 Mr Prentice: It is like the force of nature? Mr Werry: Well, there is the propriety in the law and all sorts of things that come into play when you are putting work up for competition. You cannot say that is only in a particular sector. Anybody who is legally qualified to tender can. Q83 Mr Prentice: You speak for the local authorities, do you not? Why were leisure trusts created, and is it a good thing they were? Mr Werry: I am sure it is a good thing but they are outside of the competition, in a way. Very often businesses have been sold but the key thing about a leisure activity is the property and all the facilities and so forth, and the authority leases those. The authority usually retains them. Q84 Mr Prentice: This sounds like a three card card trick. The unions would say that this is just the way of privatising public services, the creation of leisure trusts. Mr Werry: They could do but they are up against the difficulty that most of them are voluntary and the staff, by and large, have had a say in the sale of their organisations. Q85 Mr Prentice: I am looking at the UNISON memorandum here and they say that Trafford Community and Leisure Trust and Wigan Leisure and Culture Trust were both set up as charities after it became possible for charities to provide public services which public authorities have a statutory duty to provide. UNISON has grave worries about these organisations which emerge merely to boost competition often by removing sections of the public sector. Now, these leisure trusts are all over the country. Mr Werry: They are indeed. Q86 Mr Prentice: And they have taken work from local authorities? Mr Werry: It is not quite true to say they boost competition, that is a bit of a technicality, but they certainly boost rolling back the frontiers of the State, and what is more it is about to go a stage further because there is a good bit of pressure now on authorities not to retain the assets. A virtue is being made of giving or selling the assets to the trustees or whatever. Dr Bentley: Are those leisure trusts, and I do not know to be honest, delivering a better service, a more efficient and more innovative service than the local authority was able to do? That is surely the question, because public service reform is about delivering a better service to the public and in all of this debate the public get lost. We are supposed to be thinking about the outcomes of public service delivery, not getting caught up in debates around who is doing what and why. It is about efficiency, innovation, and better value for money. Q87 Chairman: Do we know the answer to that question, Will? Mr Werry: It is certainly true to say that they have a reputation for providing a rather insecure service, or at any rate the private sector competitors have. The incidence of bankruptcies and so forth has been fairly alarming. Q88 Mr Prentice: This is one of the problems, that the Government is ideologically committed to moving great tranches of public services to the private sector and the third sector, and there is not the evidence, and if there is you will tell me because you used to be the auditor in Birmingham, on the ground about how these third sector organisations perform in practice. So where is the evidence? Can you tell the Committee where the evidence is that the third sector performs well in these circumstances? Mr Werry: It has never been my business to look for it but I have to agree that in the highways and byways where I have been I have seen no evidence of it, either way. Q89 Mr Prentice: So it is all ideological, is it not? Mr Werry: It is surprising that a major national exercise is based on -- Q90 Mr Prentice: No evidence? Mr Werry: -- supposition. Dr Bentley: I do not represent the voluntary sector and cannot talk on their behalf but if there is no evidence to say that these leisure trusts are not delivering a good service then why are so many local authorities procuring them to deliver it? Q91 Mr Prentice: I was not just talking about leisure trusts but about the third sector generally, and I quote in my defence this document that has been produced by the third sector chief executives, Acevo, and it says here on the need for better evidence: "Although politicians have championed the third sector role in service delivery for nearly a decade, data on the quantity - let alone the impact - of third sector provision remains inadequate."[9] And that is the chief executives of the organisations you are talking about saying the evidence is not there. Ms Maskell: Certainly Amicus in all its dealings with the third sector has been asking: "Give us the evidence", and they have come back and said to us: "There is not the evidence base, we need to build it". So we are all searching for the questions you are searching for. But one thing I would like to draw out rhetorically is "Are we creating an environment where people are good at winning contracts or good at delivering services?", and if we look behind that at what the voluntary sector is, the majority of voluntary sector organisations are run by volunteers. They are not experts at filling out the contracts, in order to know which buttons to press to win the bids for their organisation. Their expertise is delivering to service users and getting that niche service to the people that really matter, and therefore if we are looking at the whole contractual environment we have not seen any evidence that if you have a contract and you can put the right words in the right boxes you are going to deliver a better service. That is the question we have been seeking, and today I think confirms there is not the evidence base for this whole public service reform on contestability. Mr Prentis: This is what you as a Committee are going to have to look at. In a nutshell, is this really about rolling back the frontiers of the State or is it about public service improvement? We would argue very strongly that it is about an ideological rolling back of the frontiers of the State and not at all about improving services. We have no evidence and we believe there should be an evidence-based approach to public service provision. There is diversity there that everything we do is based on taxpayers' money, and we should be ensuring that it improves our public service, from wherever it is going to be provided. There is no evidence base whatsoever about this push into the voluntary sector that says this whole approach is a model for improving public service delivery. The biggest disappointment about the work that is going on really is that people in position seem to talk about how we can do it, not whether or not it is right that we should do it, to improve the service. Q92 Paul Flynn: We have had interesting role reversals in that we have a leader of the CBI telling us he does not believe in compulsory competitive tendering and a leader of a trade union saying he believes in people working for nothing as volunteers. The Bill that introduced competitive compulsory tendering in July 1987 was wildly applauded by the CBI at the time, and we were told by the then Government that it would not reduce standards at all because you could measure the price of the contracts and so on but also the quality of contracts, and there was no danger of an erosion of contracts. Where were you on the road to Damascus when you changed your mind? Dr Bentley: Learning from what actually happened on the ground: that there was a huge drive from public authorities and local authorities to drive down costs, and that affected quality of services and the quality of services that alternative private sector providers were able to deliver. That is what we do not want to see happening in the voluntary sector or for other providers, which is why we keep talking about quality of public service provision, and that needs to be properly funded by the public sector. Coming back to employment terms and conditions as well as the quality of service delivery, we have learned from those mistakes. We may have said at the time that that was the right thing to do but we have learned and we are no longer saying that CCT[10] was good. We have learned from that and we have got to move on from that and not return to it. Q93 Paul Flynn: So what is the major change? Most government policies from all parties is evidence free. It is ideological and based on prejudice, bias or the first thing that came into the Prime Minister's head. Policies are not based on evidence per se. Why should we think now that we can go ahead into this section and have effective services? Are we not going to repeat what we did with CCT? Dr Bentley: Not if we start from where I am starting from and talking about partnership. One of the things we have been advocating recently, particularly in local government, is a national forum for supplier dialogue between local authorities and suppliers to make sure they all understand what it is they want to achieve and can work together to deliver. Q94 Paul Flynn: Mr Prentis, is your enthusiasm for voluntary work curbed when those volunteers take the job from your low paid workers? Mr Prentis: It is an issue, of course, and I said at the beginning it is surprising that a general secretary of a trade union would say this, but when you look at the trade union we have 40,000 volunteers, shop stewards who represent our members for free. There is an issue in our society, and it is at the heart of public service provision and the ethos of it, that all of us have rights in our democratic society but I also believe people have responsibility to give back whatever they can, and I think the volunteer movement is tremendous within our society. It gets people involved in their communities. There is community in our country and people are involved, and I have seen it in hospices and I have seen volunteers working with people who are dying and thinking how can they possibly do it? I have seen it when I was having chemotherapy myself after major surgery and listening to the volunteers in the next beds suffering very badly from cancer. It is a tremendous thing to be able to volunteer and I think the way in which we are now bringing the profit motive into public service and saying that everything can have a value and a cost means we are going to undermine what has been an essential component of our country, not in recent times but going back 100/200 years. I think that is something that is worth keeping. Q95 Paul Flynn: If we want to look at evidence of what is likely to happen by handing huge numbers of public services over to the third sector we have to look at America, where this has happened, and to a great extent, where they have Nicholas Ridley's paradise of meeting now and again dishing out the contract and that is it. Do you regard what has happened in America as paradise, hell or purgatory? Mr Prentis: It is not something that you could regard as relevant to this country, unless you are looking for mistakes. But, extending the remit of this Committee, if you look at the Local Government Bill which Labour is now putting through Parliament, there is no doubt that built into it are all the ideas that Ridley had in the 1980s, that local authorities could become just commissioners of work meeting once a year to sign contracts, and the voluntary sector are going to be sucked into this new approach. The point I will make is that there is no evidence that this is being done to improve services; it is merely about process and who provides the services. But in everything we do, in any change we make, we should ask will this improve the service to the user? We get dismissed as a producer interest, but our members are public service workers who provide services and also use the services themselves, and the interests of the user have to be paramount. Changes that are happening now are not perceived by our communities as improving the services that they have - it is all about markets and competition and politicians. When you go out and knock on the door in the next election and ask about public services and markets and competition, you think they are going to vote for you? Q96 Paul Flynn: Is the CBI agog at the American experience? Dr Bentley: We have not looked into it and we do not represent the voluntary sector, I am afraid, but we have learned from the experience of the private sector and we believe we have evidence which shows that public service outcomes have improved. The LEAs that were outsourced at the end of the 1990s and that were failing their GCSE results at A* to Cs are three times higher than the average of other LEAs. In the prison estate, the decency agenda, the time spent out of cells in constructive activities, has been taken up across the Prison Service. In two public sector prisons we had competitions which ended up bringing back the management of those prisons into the public sector, based on the improvements that had been adopted. In the Health Service waiting lists have been cut by the involvement of the private sector, and in local government we are seeing improvements, for example, involving users in street scene management contracts. These are the sorts of innovations that are helping to improve the delivery of service so it does not become about process necessarily but about delivering a better public service. Q97 Paul Flynn: Ms Maskell, you referred to I think 60,000 you represent who are involved in the not-for-profit area. Can there be a more bleak and less helpful title than "not-for-profit"? Why are they not called "more-than-profit? "Social gain"? Why should anyone define themselves by what they do not do rather than what they do do? I realise it is not your phrase but if we went out calling ourselves the "not-the-sleaze" party or "not-the-slum" party I do not think we would sell ourselves very well! Ms Maskell: Certainly the title of the sector is one of constant debate and is constantly changing and "not profit", "non profit, "third sector community" and "voluntary sector", all have been titles not adequately describing the sector, so as organisations and as a sector itself it continues to evolve its title, but what is behind it is the fact that organisations themselves recognise it is about service; it is not about their own financial margins; and it is not about making a profit out of the system, and that is really what drives and motivates the sector. Q98 Paul Flynn: You made a key point saying that the danger is the contracts are going to go to those skilled at winning contracts rather than those skilled in delivering services. We are all aware of this, I think. There are people who are very good at getting grants and writing prospectuses and so on. Is this a major problem now? Is the area of winning contracts becoming specialist where you can have some ramshackle organisation that is there with the service, and you do not know until you are way down the line that they have failed to deliver? Is this a real threat? Ms Maskell: It is, and it is a threat to service delivery. One of the things that we have found is that within an organisation, for instance, a project manager whose role is really about strategic development of service and also overseeing staff and delivering service is now full time bidding for the next round of resources, so what you are doing within organisations is concentrating their focus on winning contracts but also forcing them to be involved in subcontracting work themselves in order to deliver services, and what they are not doing is delivering the services. So for an organisation, say a project manager, with around £32,000 that they will get paid, before they delivered the service and today they are trying to get more resources for their organisation. It cannot be a good use of public money, and one of the things we are finding is that voluntary income to these organisations is dropping because people do not want to pay for what we have already paid for in our taxation system, and also the number of volunteers is dropping. Q99 Paul Flynn: Is there any added value from the third sector? We were told about Bulky Bob's in our Liverpool and Warrington group that collect bulky items and then recycle them to a great extent, and they are employing mainly ex-offenders and mostly ex-convicts. Is this an example of added value in the public sector? Ms Maskell: I would say yes, and there are lots of opportunities for added value. If an organisation is drawn into the mainstream delivery of services it is not able to do the additionality which is really why it is there in the first place. So what we are finding is organisations - I can think of a large children's charity which both of us worked closely with, and that organisation is totally reorganised, restructured, and has given itself a new identity and a new emphasis in order to win contracts to run services as opposed to doing what it traditionally did. Now, I think it is sad day when contracts are driving what organisations are about, as opposed to organisations driving what the services need. Q100 Paul Flynn: The crie de coeur we have had from all voluntary bodies is that up to 40 %, some say, of their time, energy, resources, attention is given to winning contracts and looking to surviving next year and the year after, and the other part of their work is being machine monitored with people looking over them and making sure that things are right, so they are only using half their time delivering on the job they are doing. What do we do about that? If we move into an area where there is more tendering, people are going to be doing less of the jobs they should be doing and more worrying about the future. Ms Maskell: Certainly in some areas it is even worse than that. If you look at Supporting People funding 50p in every pound is spent on the administration of that funding stream, and what we find within organisations is that huge resources are being shifted into this whole contracting market, with expertise being brought in just to deliver services, and we know that 1 in 20 bids succeed across the sector. If you multiply that up it is a lot of wasted resources, and if you are a small organisation you are hardly going to put resource into something where you may not succeed at the end of the day. So bearing that in mind, it is a huge risk that organisations are taking. Why should they take a risk in delivering services when they have been delivering services in a concrete way for a long period of time? The sums do not add up, and that is where we have been saying "Give us the evidence." Dr Bentley: It is a philosophical question, because I have been on platforms with speakers where some are very pro service delivery and contracting and some are not. There is clearly a lively debate in the third sector about its fundamental role and whether it is to deliver a public service or whether it is to promote volunteering and continued to be funded on a volunteering basis. Nobody is forcing any voluntary sector organisation to do one thing or the other, and individual organisations need to decide what their role is and how they are going to be funded, be it through donations or not, and if they want to deliver public services, I have seen some of the submissions to this inquiry where some voluntary sector organisations are arguing that delivering services and campaigning and doing all the other voluntary work they do are not mutually exclusive, and it is up to those organisations to decide what is in their best interests to do. Q101 Paul Flynn: Finally, is there a danger that if this goes ahead with the bureaucracy and all the people monitoring the services and this great monster sucking on the services it will not improve the services and we will create unnecessary bureaucracy that is wasteful and does not add to the value of the services in the end? Ms Maskell: I think the NCVO[11] put it neatly about transferring and transforming services, and what they are saying is transform by all means but do not transfer, and I think this whole bureaucracy which you describe is the reality which is being created within organisations. One example that we always look to is Northern Ireland where the whole issue of marketisation and competition cannot take place because of the sectarian issues. There if you pitch organisation against organisation you create a whole plethora of political issues let alone the delivery of services, so I think there are models out there which say you do not have to go down this line of competition and you can still deliver services, but unfortunately we are not seeing that drive on these shores. Chairman: I do not think we will adopt the Northern Ireland model. It is quite an extreme argument! Paul Flynn: I am grateful to you. Thank you very much. Q102 Mr Prentice: Just picking up a couple of points, Amicus believes that the Government has another agenda; it is not being straight with people; that a lot of what is happening is a stepping stone to privatisation - you used the words earlier "Trojan horse". In paragraph 16 of your memo you talk about housing associations possibly considering flotation on the Stock Exchange, and then you go on to say that they should be used as a stepping stone to full privatisation. Is it the case that housing associations can just decide, and legislation does not need to be amended or anything, to go public and be listed on the Stock Exchange? Ms Maskell: This is one of the issues that came out within the Cave review, about whether housing associations should be able to be floated on the Stock Exchange.[12] What our members will say within those organisations is they will automatically lose some of the ethos and the ability to deliver to service users. The majority of our members work in housing associations where they have an additionality of social care attached, and as a result of that there is a great fear it will just go down the route of other organisations and corporates, and will not have the vested interest and raison d'être of being about the services that are delivered.
Q103 Mr Prentice: I was surprised when I read that. I am not up to speed as much as I should be but do you have a list that you can give us of those public services that you think are on the hit list, secret or otherwise? We know from the Freud report what is going to happen in Jobcentre Plus, the work being floated off, people with disabilities, getting them to work and so on, and we have heard about offender management and we are told constantly by ministers of the Heineken effect, that the third sector can reach parts and reach people that conventional public services cannot reach, so can you give the Committee some kind of idea of those services which could be floated over to the third sector, if not now then maybe in a note subsequently?[13] Ms Maskell: Just answering the first part of your question, I do not think it is a covert agenda. It is very clear. What we are seeing is an opening up of the market. Reading the action plan on behalf of the third sector on public service delivery, it talks about public, private and third sector very clearly in parallel, not preferencing the third sector at all. Therefore what we are saying is we are seeing, because of best value principles or competitive tendering, call it what you want, the fact that on cheaper options the private sector does come in and with local authorities, PCTs, on strained budgets, trying to get their costs down they are going with the cheaper bids if the same services are being delivered. There are a few exceptions to that, but the private sector is increasingly winning the contracts. Q104 Mr Prentice: What about the other point, the Heineken effect, that good as public services are and committed as the people working in them are, there are certain client groups which are very difficult to reach - people taking drugs or whatever - and the third sector is uniquely positioned to reach those people? When we heard from the chief executive of Turning Point last week he said people would be seeing dead bodies on the streets of central London without his organisation, and he clearly felt that Turning Point was filling a function that conventional public services could not fill. Was it legitimate to say that? Ms Maskell: Often what we find is that people working in the third sector have worked for local authorities, PCTs, and are the same people with the same skills base and the same training and the same ability to deliver, but there is an issue about resourcing, and if we are talking about additionality you get state funding plus that, additional eyes, ears, hands, to deliver your service, and that is when you are able to pick up more work, have a niche delivery and work closely with service users in order to get results that you desire. Mr Prentis: Both of our submissions praise the community and voluntary sector and the work they are doing. They do work alongside the public sector in many respects, and they have ways of working which means that they can be very close to very vulnerable people that they are working with. We are not coming along and hopefully we have not given you the impression that in some way we want to denigrate the third sector; that is not the case. Our argument is that they provide a very valuable role and we should be nurturing it, rather than changing it out of all recognition. Q105 Chairman: We are at the end but could we have one more go at this? Gordon mentions Victor Adebowale, the chief executive of Turning Point who came along last week, and he said that he was making no claim for the intrinsic superiority of the third sector over the State or indeed the private sector, but that sometimes the State was better for doing certain things, sometimes the third sector was better, and sometimes the private sector was better at doing certain things. Is that not just a sensible approach, not to have any ideological predisposition in favour of one of these providers rather than another, and to say: "Where they can be most useful we should use them", and that the commissioning process, if it is done properly, bearing in mind all that has been said about the need to get fixed on costs and all the rest of it, is what intelligent commissioning should produce? Now, if that is the case, are we not all gainers? Dr Bentley: Yes. I could not agree with you more. Mr Prentis: How do you do the assessment of which is better? Who provides the better service? How is the assessment done? Our experience on the ground is the assessments are not done because the push is always to privatise them. The push is always that the work has to be transferred, and when this has been raised we are told that we have to grow the private sector, the voluntary sector. Now you are putting forward an ideal which has not been limited in this country, and I think there needs to be a real debate on the grounds that you are saying now, which is not taking place. The push is always in one direction. The push is not: "Well, let's find out which is the high quality service, where it can best deliver from, how it can improve things for the users of the service." The push is always one way and that undermines a lot of what you are attempting to say there. Nobody actually carries out fairly the assessment to find out whether or not it is better that it stays within the public sector, stays within the voluntary sector, or is a private sector issue. Q106 Chairman: Final word, Will? Mr Werry: Thank you, Chair. I have long since lost any feeling that I have any influence on anybody else's feelings about it at all -- Q107 Chairman: No, but you have an aura of wisdom about you which I keep looking at you for! Mr Werry: Basically you have to be right, I think, let's find out who is best, nobody could really resist that argument, but there are lots of practical ifs and buts about that making all propositions so difficult, and so many arguments, some of them being put forward today, to the effect that the wrong person wins anyway, and also that the mere act of having competition gets people's thoughts in the wrong sort of channels. I will not say whether that is a complete answer, either of those points disposes of the proposition that in competition the best man wins, but I do say that they are serious propositions and that they have to be addressed. I do my utmost myself to address them. Not only do they have to be addressed but you have to keep an eye on them, because they change. One of the things that has slightly bothered me recently is that you get a lot of difficulties with long-term contracts because they have to be re-negotiated, and everybody says how good they are at re-negotiating contracts, never do they say they made a mess of it, but it is very hard to see how well the parties do; it is a very hazardous business. But the longer the contracts that people want, and they want longer contracts all the time, the third sector wants them, the worse this practical problem becomes and the faster the rate of change in the world in pretty well everything, the more intense it is. So it is a real question, a real serious problem that we all have to address. It is far beyond our scope today but I only mention it to justify my own non intervention! Mr Prentis: Just on this point, one of the big issues is about contracts being flexible, and the flexibility you need to develop public services goes out of the window because of inflexible contracts 25/30 years long, and it is a major effect. When it comes to government departments, say the Department of Health, wanting to cut back on its expenditure, it cannot where there are contracts in some areas of the Health Service - 40-50 % of the expenditure - but only in those areas which are still within the public sector, so it is skewed. And what you are finding now is that a school has been built under PFI and is no longer required, you are going to have to pay for the cleaning and servicing of that building for 25 years. We have built PFI hospitals which are now community hospitals, and some of those big PFI hospitals may not be needed. Independent treatment centres are put in places where they are not required, and the question I want to put to you is why is it the competitive approach which is the one that drives change and not the collaborative approach? Dr Bentley: I do feel I have to reply. One of the issues around where, for example, PFI contracts are let and where hospitals are built and schools are built is around needs analysis, and it is difficult to predict future needs analysis as demography changes. Contracts do need to be flexible and there has to be re-negotiation and flexibility built into those, but if you want the private sector to take on the risk of funding these projects long-term there need to be long-term contracts to spread the cost of that risk, and that is what we are seeing now. But improving service design and construction design has to be taken into account upfront now so that, if hospitals are no longer in the right place or school rolls fall, those buildings can be used for another purpose. Q108 Mr Prentice: The Government wants to force-feed or grow the private sector in health so that independent sector treatment centres got an 11.2 % uplift in carrying out exactly the same operations as the NHS. Just for the CBI, do you think the Government should, when it is negotiating contracts with the third sector, offer a premium in order to grow the third sector, because there cannot be a proper market if there are not enough players? Dr Bentley: There was a pump-priming of the ISTC[14] market in order to encourage providers into that market because - Mr Prentice: That is taken as a given. I am talking about whether the principle should apply to the third sector as well, a premium. Dr Bentley: If the Government takes the view that the voluntary sector can help with a policy objective and needs to encourage them by pump-priming the market then yes, they should. Q109 Chairman: That raises questions about competitive neutrality though, does it not? Dr Bentley: Yes. Mr Werry: And the law, Chairman. There are limits. Chairman: I am grateful to you all. We have had an interesting session and the fact that we did not have a unanimous view amongst the people here was a great advantage and enabled us to get under the skin of some of the arguments. We hope at some point to make sense of some of those and we are grateful to you for helping us along the way. Thank you for your time. [1] Unison, False Economy? The costs of contracting and workforce insecurity in the voluntary sector, May 2007 [2] Unison, Third Sector Provision of Local Government and Health Services, May 2007 [3] Q1-58 [4] Citizens Advice Bureau (CAB). [5] Legal Services Commission (LSC). [6] CBI, Working Together: Embedding good employment in public services, May 2006 [7] Transfer of Undertakings (Protection of Employment) Regulations (TUPE). [8] Ev 21 [9] Acevo, The Case for Change: Third Sector Provision of Employment Services, October 2006 [10] Compulsory Competitive Tendering (CCT). [11] National Council of Voluntary Organisations (NCVO) [12] Department for Communities and Local Government, Every Tenant Matters: A review of social housing regulation, June 2007 [13] Department for Work and Pensions, Reducing dependency, increasing opportunity: options for the future of welfare to work, March 2007 [14] Independent sector treatment centres (ISTC). |