Voluntary Power

A response to the reform scotland consultation on expanding the third sector in Scotland from the

Scottish Council for Voluntary Organisations

Contact: John Downie, Director of Public Affairs or Peter McColl, Policy Officer

Scottish Council for Voluntary Organisations

Mansfield Traquair Centre,

15 Mansfield Place,

Edinburgh

EH3 6BB

John.downie@scvo.org.uk peter.mccoll@scvo.org.uk

0131 474 8037 0131 474 6179

June 2010

Introduction

The Scottish Council for Voluntary Organisations (SCVO) is the national body representing the voluntary sector. Our latest figures indicate that there are over 45,000 voluntary organisations in Scotland involving around 130,000 paid staff equates to 5.2 % of Scotland’s workforce and approximately 1.3 million volunteers and the sector manages an income of £4.3 billion.

This response is usefully supplemented with SCVO’s response to the Independent Budget Review, which is attached.

SCVO’s Policy Committee is a forum that brings together 35 of the key individuals in the sector. This determines the policy direction of the organisation and develops policy based on the values and interests of the broader voluntary sector.

We believe that the voluntary sector provides huge opportunities for the next Scottish administration – it has the potential to emerge as a source of innovation that will re-design the delivery of Scottish public services. In short, support for the voluntary sector will result in:

• More positive outcomes for the end user
• Significant cost savings for taxpayers
• A healthier, fairer, greener and wealthier Scotland

This is a crucial time for the sector. It has the opportunity to develop and enhance its service provision. There are a number of changes that could catalyse that service provision. We have outlined those below.

The third sector has the ability to do things differently, with the highest quality and lower costs than the public sector. Much of the work is focused on prevention. Government can unleash this ability to do things differently by changing the way it views the sector.

Summary

SCVO welcomes the opportunity to submit written evidence to this consultation. The third sector agrees that there is a need to transfer power from central government and to local people. We believe that voluntary and community organisations are the obvious route by which this power can be exercised.

The sector brings the vital values of high levels of trust in delivery of services, work that focuses on prevention of future need, and higher quality than equivalent public or private sector organisations.

The voluntary sector is a major provider of public services, particularly to local government and the health service but also for Scottish and UK government departments. These services include very substantial provision of social care, rehabilitation services for drug and alcohol users and employment initiatives. In these areas third sector providers do things differently, particularly by delivering preventative services.

There are many excellent voluntary sector projects that could be effectively replicated elsewhere, or would benefit from being expanded. For example, the families centre at Edinburgh’s Saughton Prison could be replicated at ever Scottish prison.

The voluntary sector is very receptive to new ideas for funding such as Social Impact Bonds. This would allow investment in effective third sector projects to

There are a range of opportunities to learn from the evidence of how services are delivered in other countries in a way that is both effective and evidence based.

Our values

The third sector has led efforts to renew the economy, drive social mobility, create a strong society and shift to a low carbon economy. At the very heart of the third sector are the values of choice, empowerment and personalised provision. The sector does things differently, and to a higher quality.

We believe that policy should be evidence based, and which points to the need for further analysis of how effective voluntary sector provision of primary health and education services could be, and how effective it is in other countries.

We have identified the following areas in which third sector providers are particularly effective:

• Community-based alternatives to health and social care. These services reduce pressure on hospital beds and in-patient facilities by supporting community care, particularly in hospice outreach, home helps, support for carers, self-help and mutual support groups, and through the provision of community-led structured activities, sports and healthy lifestyles for young people
• Alternatives to custody and routes out of prison. These services are diverting individuals from Scotland’s burgeoning prison population through addiction treatment programmes in communities, sector-led employability programmes, befriending and mutual support groups
• Tackling poverty and inequality. The third sector pioneered Scotland’s financial services sector through the co-operatives and mutuals movement. Supporting the growth of credit unions, housing associations and co-operatives more generally will play a major part in providing cost-effective solutions to tackling economic inequality and multiple deprivation in Scotland’s communities
• Most grass-roots sport is delivered through the third sector. This plays an important role in building community cohesion and helping individuals develop life skills and confidence. It also contributes towards preventing health problems from arising in future
• Developing skills and tackling unemployment. Governments and political parties at both Holyrood and Westminster recognise the role the sector can and does play in providing employment routes. Third sector employment initiatives do three things. They build skills, particularly among young and long-term unemployed people; they make use of existing skills, for example through retraining people facing redundancy; and they provide direct community benefit
• Alternatives to waste. The third sector plays an increasingly large role in the green economy, in areas such as renewables and recycling. It does this through community-led renewable energy initiatives, recycling social enterprises and environmental volunteering projects.

Extension of self directed services

The third sector welcomes the opportunities provided by direct payments for self directed services in social care. In Edinburgh this was instrumental in ensuring that service users retained high quality services in the face of a Local Authority threat. This indicates that the number of users employing direct payments will increase with more changes in service provision. There may also be a ripple effect in the take up of direct payments as users and carers become more aware of what happened in Edinburgh.

Enhancing the role of the Third Sector

The third sector is effective at delivering public services. It does things differently. But it needs the government to facilitate this role. Government can do this by increasing opportunities for third sector involvement and by removing barriers to third sector delivery.

These barriers to the sector providing more public services include:

• Lack of sustainable funding to the sector;
• Tendering processes that fail to give sufficient weight to quality;
• Stifling bureaucracy that means multiple reporting to funders and regulators;
• A lack of co-production approach which puts service users and delivery organisations at the heart of service design.

Sustainable funding for the sector could be secured by delivering the following:

· Parity of pay and conditions between public sector and voluntary sector workers;

· Minimum 5 year contracts;

· Best value guidance;

· Training of public service commissioners;

· Guidance for commissioning authorities;

· Adoption of co-production approaches to commissioning services;

· An end to multiple funding reports and multiple inspection regimes by regulators.

We believe that adoption of these proposals would dramatically expand the ability of the third sector to deliver choice for service users. It would allow the third sector to be even more effective at delivering even more of the quality services it currently delivers. It would also allow the third sector to move its provision into new areas.

The independence of the third sector would be greatly enhanced through more financial security. Local Authorities and Government should be obliged to adopt a co-production approach to service design and commissioning.

How public support can be built to encourage a greater role for the third sector in the provision of public services

The third sector is prepared for and enthusiastic about the devolution of more functions to independent organisations under contract. This devolution of power is likely to support better designed and delivered public services. The third sector is supportive of extending the powers of the Scottish Parliament beyond the Calman Commission, but we believe that how we do this needs further consideration. Scottish civil society should be fully involved in these discussions from the outset.

There may be utility in developing a Scottish equivalent of the Total Place initiative currently being piloted in England and further consideration of it's community-scale equivalent; 'Total Neighbourhood'.

The third sector supports more discussion about how powers for welfare and benefits, health spending and other government spending can be aligned at local level. There may be utility in developing a Scottish equivalent of the Total Place initiative currently being piloted in England. This will require some devolution of responsibility for welfare spending amongst other powers. Any move to a ‘Total Place’ approach must, though, ensure that the third sector and service users are fully included in proposals for service design and provision.

Conclusions

The third sector contributes very substantially to the well being of Scotland. Its work is not in silos, but cuts across all policy areas. This means that it is especially effective at delivering cohesive communities, collaborative services and at preventing social problems.

Government can open up the potential of the third sector to deliver, but it must create opportunities for this to happen. This requires barriers to be broken down and attitudes to change.

The sector needs to be recognised as:

· An effective provider of public services;

· A significant player in the creation of a stronger Scottish society;

· Capable of delivering services, especially those that prevent future acute need;

· Deliver early intervention effectively;

· Trusted by users and funders;

· An effective manager of assets.

There are a number of areas where government can enhance the ability of the third sector to deliver effectively:

· Working in collaboration and partnership;

· Better, more intelligent funding;

· More effective inclusion in local and national decision making structures;

· More devolution of decision making powers to communities;

· Removal of barriers such as over-regulation and multiple reporting.

We look forward to future consultation and are happy to provide any further material requested.

John Downie Peter McColl

Director of Public Affairs Policy Officer

APPENDIX: Response to the Independent Budget Review

Summary

SCVO welcomes the opportunity to submit written evidence to the initial call for contributions to the Independent Budget Review. We believe that there needs to be a more radical approach to delivering efficient public services. This period of unprecedented budget contraction is the opportunity to do so.

The sector is a major provider of public services, particularly to local government and the health service but also for Scottish and UK government departments. These services include very substantial provision of social care, rehabilitation services for drug and alcohol users and employment initiatives.

However, to further develop the innovative approaches taken by the third sector, the Scottish Government needs to radically re-think its relationship with the third sector. The sector delivers services essential to improving Scotland’s economy and quality of life.

And there is opportunity for sector to do much more in all areas of society by up-scaling and replicating alternative models of delivery, which are currently on a small scale delivering the Scottish Government’s policy objectives – making Scotland healthier, fairer, greener and wealthier.

Recent research shows that Scotland’s third sector is better trusted than local authorities, banks and the police and delivers higher quality care services than either the public or private sector[1]. The charities, social enterprises and voluntary organisations that make up the third sector also generate significant savings for the public purse through delivering alternative community options that prevent greater need further down the line.

This type of approach – dubbed ‘frugal innovation’ in the private sector – has even greater potential in re-designing ‘services and processes’ to cut out unnecessary costs as well as delivering significantly better outcomes for the end user and, most importantly from a government perspective, huge savings.

For voluntary organisations, the impact of the public expenditure reductions is already being felt. It has led to short-term panic cuts by local authorities – of so-called ‘non-essential’ services - and is already damaging our capacity to deliver. This comes just at a time when the services that voluntary organisations provide to the most vulnerable are needed the most. In this context, it’s clear that the efficient services we provide are very much essential ones.

The cuts are exacerbating pre-existing funding constraints on our sector such as poor procurement practice, the move away from grants and a lack of parity for our sector in negotiating terms of contracts.

There are new sources of finance and assets for our sector such as mutualisation of public assets, social investment trusts and social performance bonds but the models to support these need further development and refinement.

Opportunities also exist to build on recent findings that the public places much higher trust in our services than in either the public or private sector.

All organisations, including those in our sector, have the potential to share services more and work together better. However, the shared services agenda in itself is not enough to meet the public expenditure challenge. We need a fundamental and radical approach to changing the nature of many public services to make them more effective, not just efficient.

We agree with the emerging consensus which suggests that public services move closer to the ideals of community empowerment, co-production and personalisation – consulting the end user is a precursor to more efficient and cost effective delivery of public services, with better outcomes - areas where our sector can play a major role.

The planned cuts in public expenditure is an opportunity for many of the alternative community-based options that our sector delivers to take centre stage. These initiatives are innovative and built around the user. They are already taking place but they need to be recognised, up-scaled and replicated.

We make a number of recommendations;

· In the immediate term: fund demonstration projects that can upscale and replicate existing and promising alternative approaches provided by our sector

· In the short term: Scottish Government should set up a social partnership with civil society on developing an effective budget for 2011-14. Public participation in the development of budget options has never been more essential.

· In the medium term: we need a priority review of the incentives for public authorities in addressing longer-term public service positions. In other words, we need direct government intervention to ensure that public authorities consider new models of delivery. Financial incentives for third sector organisations must also be a key element of this new model for the delivery public services.

Compared to larger-scale projects, all of the above are small adjustments financially. Yet they have the potential to have a much bigger impact on the viability of Scotland’s public services.

The third sector has the potential, if given the opportunity, to bring forward innovative new business models which will deliver significant savings to the public purse. This “disruptive innovation”, to use the private sector language, has the potential to challenge the status quo of service delivery and introduce new models across the whole range of public services.

Question a): Impact and capacity

Assuming a public expenditure reduction on the scale envisaged, what would be the impact upon your organisation or sector, and upon its capacity to maintain service levels and quality of outcomes for service users?

SCVO’s research indicates that local government was responsible for around 28%[2] of the annual income for our sector in 2006-07. This has been increasing over the last 15 years as the sector takes on a greater share of public service delivery. This funding comes in two main ways. Smaller sums of money are often paid as grants, while larger sums most often flow through contractual arrangements, particularly in the care industry.

Public services currently delivered by third sector organisations are under the most immediate threat. There has been a move to introduce cuts this year as part of the consideration of the financial position of authorities. The problem of cutting now, is that this creates major problems for public services in the future, particularly acute services such as hospital care, prisons and the benefits system. The decisions on where the axe falls seem to be arbitrary and based on the status of the delivery body and the nature of the funding relationship rather than any consideration of evidence-based service priorities. [3] It is clear that the current situation is not a level playing field.

Small cuts in the wrong areas will make a big impact. Many of the sector’s services are heavily personalised and embedded in communities and help prevent more expensive interventions further down the line. For example, care at home for elderly and disabled people often allows those individuals to lead a fuller and more independent life than if they had to travel long distances for care, or if long term problems were allowed to develop, resulting in the need for acute services such as residential hospital care in the future. As such, individual voluntary organisations delivering local public services act as a buffer addressing need within communities before these escalate into acute health and social care interventions, benefits users or in the criminal justice system.

Short-term cuts in one area can also create immediate demand for services in another seemingly unrelated area. For example, Dumfries and Galloway Council applied a cut to community transport in their predominantly rural council area. This service was used heavily by older people, who would otherwise not be able to get out and about. With the service cancelled, the older people’s restricted mobility is now placing a strain on health and social care budgets. The costs of home visits has also risen and the self-help that was aided by the transport provision is now used much less. Overall costs are not saved, and further problems created, resulting in reduced community resilience and unnecessary expenditure for the public sector.

Just as short-term cuts are not the answer, ring-fencing specific areas of public spending is similarly misguided. For example, ring-fencing health spending will simply mean deeper cuts in other areas, but will also act as a barrier to reform.

In the past voluntary organisations often subsidised their services through volunteers, grant funding from investment based trusts and foundations and from donations.

The financial crisis means that funding from trusts and foundations reliant on the stock market are now much less available. Furthermore, donations from individuals and organisations are down, as people and businesses feel the pinch. And whilst the number of volunteers has risen in many areas, many voluntary organisations simply don’t have the capacity to manage that additional demand.

At the same time, the demand for the services delivered by the third sector – from tackling drug and alcohol problems to preventing homelessness – has grown rapidly. This paradox of rising demand and falling income means that there is a serious risk that many larger organisations will have to close programmes and many smaller organisations will have to close altogether.

The closure of such services will take away a buffer to unprecedented demand for institutionalised care, crime, and health needs in the public sector.

Short termism is the enemy of prevention and saddles statutory services with additional demand. The financial crisis and impending cuts do not produce a climate which is favourable to investment in prevention.

There must therefore be far reaching cultural change in the planning of public services to ensure that spending is targeted at preventative services. This will also go some way towards meeting the Scottish Government’s ambition of sustainable economic growth.

Question b): Constraints and opportunities

Are there constraints which would need to be addressed (and which could readily be addressed in practice) to permit you to realise savings, maximise income or increase productivity?

The routine re-tendering of existing services provided by third sector organisations is an increasingly frequent phenomenon. It appears that this is based on a short-term opportunism for driving down costs at the expense of quality. Yet re-tendering is a costly process not just for the third sector but also for the public sector.

A survey of the sector commissioned by SCVO and Voluntary Action Scotland (VAS)[4] suggests that contracts are still being offered on a short-term (less than one year) basis to third sector organisations. This works against service planning and stability of service from a user perspective. Contracts should be of a minimum of 3 years and 5 year contracts should be considered as way of delivering continuity of service. This would allow voluntary organisations the room to invest in innovative services and would mean that both the organisations and the local authority would avoid the costs associated with expensive tendering processes. Within this, an outcome approach and a user focus would mean that the services delivered by third sector organisations remained relevant and tailored to the end users.

Long term contracts would also allow voluntary organisations to borrow capital, for example to meet set-up costs or invest in premises and equipment. Short term funding, by inhibiting the use of loan finance denies organisations the capacity to invest in innovation and to expand examples of good practice.

The SCVO and VAS research also showed that a third of local authorities continue to claw back surpluses from projects delivered by the third sector. This seems to be based on an assumption that third sector organisations need to be treated differently from private sector providers in contract delivery, and is wholly unacceptable to our sector.

In the Fairer Funding Statement[5], SCVO set out a suite of proposals that would improve the funding of third sector organisations. These included:

· Parity of pay and conditions between public sector and third sector workers

· Minimum 5 year contracts

· Bets value guidance

· Training of public service commissioners

· Guidance for commissioning authorities

This Statement was jointly signed by the Scottish Trades Union Congress, Community Care Providers Scotland, UNITE/TGWU and UNISON Scotland in November 2007

In the Joint Task Group between CoSLA, SOLACE, Scottish Government and SCVO, the partners committed to a number of basic expectations in the relationship between third sector and Government at a local level[6]. There is now a need for full and proper scrutiny of how the principles of this Joint Statement are implemented effectively at a local level.

Question c): New Finance

Are there new sources of finance you could develop in the short or medium term to maintain the range and scale of services offered to the public?

There is an urgent need for creative thinking around ideas to invest in the sector. The recession has meant that many of the traditional non-public sources of income such as charitable grants, public donations and investment income have been strained. Alongside the private sector, much of the sector’s self-generated trading income has also suffered.

Our sector had originally pinned some of its hopes to the potential funding released by the Unclaimed Assets Fund, the repurposing of ‘dormant bank accounts’, worth an estimated £40m to Scotland’s third sector. However, the secondary legislation required to set this in motion has stalled both at UK and Scotland levels. Action is needed by the new UK Government in conjunction with the Scottish Government.

Lottery funding also suffered at the start of the recession as up to 70% of funding was diverted to the Olympics. The Big Lottery Fund has however weathered the storm by reprioritising support for the transition of many organisations to sustainability through programmes like Growing Community Assets which supported community led initiatives. The BLF in Scotland has also put in place an innovation and replication fund which will be useful in contributing to some of the upscale and replication of the alternative options our sector can provide to public services.

Despite, BLF’s careful management however, it is vital that Lottery money is not diverted away from the third sector and into public projects such as the London Olympics or upcoming 2014 Commonwealth Games in Glasgow.

There is currently a great deal of interest from politicians of all parties in the development of community ownership of local amenities such as post offices, village halls and parks. Similarly there are various models emerging for new kinds of investment in the sector. There are three main areas here where SCVO believes that there is potential for Government to enable our sector to do more:

These are:

· The transfer of underused public sector assets to our sector for development as community activity hubs (or ‘community anchors’)

· Using windfall taxes on energy companies exploiting new renewables to build a Scottish endowment fund for community benefit

· Greater support for microgeneration of energy for local communities to use, such as wind-turbine generators, to generate a sustainable revenue for community projects.

We are aware of a growing debate on the mutualisation of public services. There has been particular mention of Scottish Water, housing stock and re-mutualisation of financial services. We are broadly supportive of the mutualisation of public services but to be genuinely user-led, mutuals need to ensure that they are governed by their users. This can be difficult to achieve for very large-scale mutual organisations.

Our experience suggests that mutuals work best when they are initiated by communities. Secondly, a simplistic approach to mutualisation - as a way of dumping risk on communities - will not work. Mutualisation needs to include clear incentives for the third sector or it will simply fail. We are keen to work with the Scottish Government and private sector funders to develop new models for mutuals which are appropriate to the third sector and which will deliver the most positive outcomes.

Finally, there have been some interesting new ideas emerging on encouraging more capital investment from private funders. Social Finance recently called for government backing for Social Impact Bonds.[7] There is some support for this in the recent Budget from the current UK Government and the Conservative party have announced that they favour the model. Although we are broadly supportive of the principle for this form of asset funding, the current models proposed still need to be developed to ensure that the risk does not fall entirely upon our sector. There is clearly a need for greater incentives to be developed which would allow the third sector to fully participate in such a model.

Question d): Innovative approaches

Are there innovative approaches to service provision or financing which you might consider using within your organisation or sector?

The third sector already excels in offering a way of ‘doing things differently’ through community-based services.

Each of the approaches outlined below is preventative and is therefore considerably less expensive than dealing with social problems once they become more entrenched. Each option also has the added advantage of bringing communities together thereby building trust, networks and resilience.

The services we provide also deliver added value. For example, our sector brings in as much as £25 for every £1 of public money invested. And we’re helping the Scottish and UK Governments to meet their policy objectives and deliver savings. These alternative services are already in place and working. What is needed now is consideration of how to upscale and replicate these examples of good practice.

We would be happy to provide specific examples of each of these community-based services in practice if the panel found it helpful.

· Community-based alternatives to health and social care. These services reduce pressure on hospital beds and in-patient facilities by supporting community care, particularly in hospice outreach, home helps, support for carers, self-help and mutual support groups, and through the provision of community-led structured activities, sports and healthy lifestyles for young people

· Alternatives to custody and routes out of prison. These services are diverting individuals from Scotland’s burgeoning prison population through addiction treatment programmes in communities, sector-led employability programmes, befriending and mutual support groups

· Tackling poverty and inequality. The third sector pioneered Scotland’s financial services sector through the co-operatives and mutuals movement. Supporting the growth of credit unions, housing associations and co-operatives more generally will play a major part in providing cost-effective solutions to tackling economic inequality and multiple deprivation in Scotland’s communities

· Most grass-roots sport is delivered through the third sector. This plays an important role in building community cohesion and helping individuals develop life skills and confidence. It also contributes towards preventing health problems from arising in future

· Developing skills and tackling unemployment. Governments and political parties at both Holyrood and Westminster recognise the role the sector can and does play in providing employment routes. Third sector employment initiatives do three things. They build skills, particularly among young and long-term unemployed people; they make use of existing skills, for example through retraining people facing redundancy; and they provide direct community benefit

· Alternatives to waste. The third sector plays an increasingly large role in the green economy, in areas such as renewables and recycling. It does this through community-led renewable energy initiatives, recycling social enterprises and environmental volunteering projects.

But despite the positive impact of these approaches on communities across Scotland and on the public purse, they still suffer from a lack of awareness of their benefits amongst politicians.

Short term investment in pilot programmes to replicate and upscale these projects, followed by sustained support for innovation and development would undoubtedly help the Scottish Government to meet its ambitions.

Indeed, the Government’s overriding aim – “to focus government and public services on creating a more successful country, with opportunities for all of Scotland to flourish, through increasing sustainable economic growth” – is perfectly served by the kinds of preventative, personalised, co-produced public services delivered efficiently and effectively by the third sector.

The kinds of services provided by the third sector are also often radically different to the conventional “safe” models with which risk-averse service commissioners may be more familiar. The public sector’s size and statutory obligation to provide certain services often means that it is unable to efficiently deliver new models. In contrast, the third sector’s alternative community-based approach mean that it is more flexible and able to pilot and deliver effective new services which meet the needs of service users. What is needed is increased recognition of the third sector’s ability to deliver excellent quality services, as well as intelligent funding to allow for both innovation and sustainable development.

The third sector plays a significant role in health in Scotland but this is currently under funded, accounting for less than 1% of the NHS budget. This is ironic, given that in all analyses of future services it is the kind of interventions that third sector organisations make which are seen to be critical – supporting self help, the hospice movement, support services, carers’ networks and an array of informal, community based care.

Similar issues exist in the social care field, where informal services are already being cut back by local government and an aggressive competitive tendering approach is reducing quality and innovation.

According to statistics released under the “Reshaping Care for Older People Programme”[8], The cost of meeting our future care needs without radically altering our approach will cost an extra £1 billion by 2016 and an extra £3.5 billion by 2031.

The shifting demographic alone clearly presents a significant challenge. However the tightening of public expenditure both narrows the options and shortens the timeframe for implementing a decisive plan to address these.

The third sector’s ability to pull in additional investment on top of public sector funding, our innovative services and our strong track record on the personalisation of services all point towards a solution that heavily involves the third sector in both the design and delivery of future public services.

This combination of ‘doing things differently’, intelligent funding and ‘frugal innovation’ have the potential to prevent Scotland’s spiralling health-care costs from increasingly overwhelming the rest of the economy.

Question e): Working better together

From the perspective of your organisation or sector, are there ways in which public sector bodies and other service providers could work better together, across existing institutional boundaries, to make significant improvements to the efficiency of service provision and the effectiveness of public spending?

Much of the current debate around tackling the expenditure downturn is focused on the ‘shared services agenda’. We would argue that efficiencies will take us only so far. It is more important to focus on effectiveness using the approaches described above.

Nevertheless, many organisations in the third sector already share offices and equipment. These are often delivered by sector intermediaries or network organisations such as SCVO, the local Council for Voluntary Service network, and the sector’s thematic intermediaries. But there is much more that can be done. We believe that there is scope for voluntary organisations to share more back office functions, trimming down on unnecessary expenditure and creating a more efficient service, and we recently explored our options for this as a sector, through the Supporting Voluntary Action programme funded by the Big Lottery.[9]

However the capacity for shared services to save money and make the third sector more efficient is limited, just as efficiency savings in the public sector can only account for so much. It is important that we can reduce as much unnecessary duplication and expense as possible. However, the savings from efficiency savings will simply not be enough to deal with the projected £1bn per annum real-term budgets cuts that the Budget Review group have asked us to consider.

A more effective way of working together may involve more use of consortia approaches to service delivery. For the voluntary sector, it does not pitch charity against charity but involves a joined up approach to working out how a range of partners can fit in, help ensure the service is effectively framed and then bring their unique contribution to a public service pipeline.

Public Social Partnerships (PSPs) are one example of a consortium approach tested in the third sector. Public Social Partnership has its foundation in a co-planning approach, where partners from the public sector and the third sector share equal responsibility for service design. The EQUAL Social Economy Scotland Development Partnership[10] piloted three initiatives to test public social partnership, reporting in 2008. The three initiatives were the Edinburgh Employability Consortium (EEC), Reaching Older People Across Renfrewshire (ROAR) social care consortium and Homereach, A North Lanarkshire furniture recycling consortium. The approach was influenced by development work in PSP and co-planning from other European countries, particularly Italy.

Question f): Fundamental reform

Are there more fundamental changes to organisational structures or the way public services are provided which you see as essential or desirable in addressing the budgetary challenges facing the public sector in the short or medium term?

Many of the alternative community options as well as the consortia approach are based on the principle of co-production and personalisation of services. Current service design creates waste through poor understanding of the needs of service users and the ways in which services can be delivered. It can also be argued that the current service design process delivers expensive outputs and not significant outcomes.

Co- production helps to create better designed and more effective public services by supporting service users to participate fully in the design of the services they receive. The flawed and expensive social care tendering exercise in Edinburgh demonstrates the significant costs associated with poorly designed commissioning processes. As a result the initial effect was for many exasperated service users to opt for direct payments instead of the new care package offered, thereby actually increasing the cost of the service to the council. Now that the local authority is having to re-run the process, there will be substantial additional costs. A co-production approach would have avoided these costs, and delivered a higher quality service.

Personalisation of public services is one of the fundamental reforms which we believe is necessary moving forward. At a basic level this means giving service users a say in the services that affect them. A further development of personalisation would be giving users an allowance or some limited control over the budgets within which they can procure their own services.

However, at its full potential, personalisation means ceding control over areas of public services where users set up their own service or mutual organisations within which they sit on the management boards to deliver services not just to themselves but other services users in their communities. Voluntary organisations take personalisation to its full potential because the services are not just built around the needs of the user but are often user-led.

It is therefore in the interest of Government not just to promote the principles of co-production and personalisation, but to also promote the role of the third sector in delivering public services. In doing this, we can deliver better outcomes for service users, and in meeting shared goals.

In addition to the innovative approaches on offer in the third sector, we believe that there is also room for reform of the public sector. From our experience across Government and its agencies, there is a strong case for rationalisation and streamlining the public sector. Structural reform ought to be part of the answer; the end of no-redundancy agreements is also required (they simply export job losses to the voluntary sector); a de-layering approach within Government would reduce transaction costs and create additional capacity.

Question g): Key issues for consideration

In the context of the remit and timescale of the Review and of the need for practical options, are there particular key issues which you consider should be addressed by the Panel for the purposes of its report?

In the immediate term: seed-fund demonstration projects that can upscale and replicate existing and promising alternative approaches provided by our sector

• We propose a series of pilot projects in local areas that takes proven alternative community-based services currently provided by the Third Sector, and supports an initiative to replicate the service to another area or upscale the service within the same area
• This should be a proactive initiative, taking existing alternative provision that is delivering an effective and efficient service for the users. It should not be a small-scale responsive fund as currently delivered through the Scottish Government’s enterprise and investment programmes.
• The benefit of the pilot approach is that the impact of the service will be felt immediately, while also helping us to learn what mode of scale or transfer will work best for the medium term.

In the short term: Scottish Government should set up a social partnership with civil society on developing an effective budget for 2011-14:

• The third sector is a key social partner that can bring experience and expertise from service delivery and advocacy that will help make the impact of the budget realistic and deliverable.
• We can learn from Ireland here where its pre-recession growth in the 1990s and 2000s benefited from a social partnership between government, business, civil society and unions.
• However, this requires clear and accessible information on Budget options, specifically on what changes and allocations are possible to be available publicly in advance.
• This would require a longer-term independent Budget function building on the work done by the Review group to act as an information point and to demystify the budget for social partners and the general public.
• A commitment from the Government to publish preliminary budget statements. These would present the Government’s proposed high-level expenditure allocations for each public spending period well in advance of the draft Budget Bill
• A public participation strategy will help with support for difficult choices and build public understanding of the potential and limitations inherent in the Scottish budget. This ought to make change easier to manage.

In the medium term: we need a priority review of the incentives for public authorities in addressing longer-term public service positions. The users of public services are simply too important to suffer from short-term planning and spending cuts. In order to address this damaging short-term approach:

• Recognise and emphasise the value of preventative services
• Ensure that local authorities in particular take into account how cutting a service in one area will impact on another area
• Highlight and reinforce the value of quality and trust alongside cost of services
• Ensure that local authorities set out clearly how they will assess the quality of services and fund external bodies
• Review the incentives within the Single Outcome Agreements and be clearer about the longer multi-year outcome cycles
• Ensure that there is adequate provision for equalities in Single Outcome Agreements
• Consider what changes to auditing arrangements may be required to allow for longer-term investments in service outcomes

Conclusion

It is clear to us that many of interventions described above will require very modest investment in the short term to generate considerably bigger impact in the medium to long-term.

Although, we do not underestimate the difficulty of winning the case for such investment at this time, the roles which voluntary organisations play as animators of community and as advocates and enablers are becoming ever more central to the future service mix.

It is our aspiration that, far from being a short term fix to address a dip in public finances, such an approach can precipitate a radical overhaul of public services in the future.

We believe that the third sector is the solution – it has the potential to emerge as a source of innovation that will re-design the delivery of Scottish public services. In short, support for the third sector will result in:

• More positive outcomes for the end user
• Significant cost savings for Scottish Government
• A healthier, fairer, greener and wealthier Scotland

John Downie

Director of Public Affairs

Ruchir Shah

Head of Policy & Research

Scottish Council for Voluntary Organisations

April 2010