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Policy briefing 19 July 2010
(5 July - 19 July 2010)
Last week saw the release of radical plans to reform the NHS to further encourage competition and choice.
The plans, released by Health Secretary Andrew Lansley present both opportunities and threats to the sector. There will be a greater role for third sector provision and a disavowal of any notion of the public sector as “preferred provider” of services.
Hospitals are to become foundation trusts run on a social enterprise basis, with more power to raise capital and tailor governance arrangements to local needs. GPs will be given additional responsibility for commissioning services - entailing skills in finance, accounting, management and data analysis, which they do not necessarily have.
Such changes will need new accountability frameworks and may entail widespread use of private sector advice on upskilling GPs and managing complex information on patient records.
In other news, an independent review was produced for BIS on the future of funding for Further Education. The review, written by former LSC Chairman Christopher Banks advocates greater employer and individual investment in skills development as well as outlining new means of reducing the dependency on public funding. Finally, today sees the launch of the first official “Big Society” week.
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Skills
An independent review written for BIS by the former chairman of the LSC, Christopher Banks, suggests a rethinking of how individuals or employers can share the costs of further education. The review recommends an expansion of Career Development Loans; greater choice between courses, training providers and accredited qualifications; the creation of a Learning Account system; and a redefinition of the language used to communicate with individuals and employers. Such reforms would also set Maximum Contributions per course from government and the level of investment expected from either employers or individuals.
Skills minister John Hayes used a speech to the Association of Learning Providers to announce the Government’s plans to develop a new strategy for skills over the forthcoming months. Hayes also declared the intention for colleges and training providers to act as “effective networks” to collaborate with Local Enterprise Partnerships in identifying local employer demand and in developing economic priorities.
Vince Cable has outlined his vision for higher education, conceding that in the present situation, deep cuts are necessary. To ensure continued support, universities may have to consider longer terms and more intensive teaching as well as an increase in part-time courses, apprenticeships, and distance learning. Cable also argued that the benefits of HE vary by subject and differential funding needs to follow high value-added subjects such as technology and engineering. Finally, there will be consideration over the feasibility of changing the system of financing student tuition so that repayment is tied to earnings.
UKCEs has published a report which explores the issues to be considered when implementing a learning accounts model. The report suggests that such schemes can be successful in encouraging individuals to take up learning opportunities that they might not otherwise have done through providing a direct financial incentive for the individual. However, some evidence does suggest that subsidies tend to favour those who have relatively high skills already and conversely do not provide sufficient incentive for low-skilled, low-income individuals to participate.
Skills gaps continue to exist despite significant unemployment according to Chris Humphries, CEO of UKCES. Humphries said that, according to research conducted by the UKCES, 19% of employers report that their employees don’t have the skills to do their job effectively.
The National Institute for Adult Continuing Education has published a paper exploring funding for lifelong learning. The report found that roughly £26 billion is currently spent on provision from the public purse; £20 billion on training by private and non-profit organisations; and £9 billion by individuals. The report recommends that individuals who benefit most from learning contribute to their costs as well as the implementation of tax incentives for employers to invest in training.
Political
Radical plans for health reform have been unveiled in a new white paper. The plans outline how £20bn of efficiency savings will be made by 2014 and reinvested in frontline delivery. The Department of Health is to play a reduced but strategic role in plans, with a focus on improving public health, tackling health inequalities and reforming adult social care. A new Public Health Service will also be created to streamline existing health improvement and protection bodies. Primary Care Trusts and Strategic Health Authorities will be phased out by 2013, with local authorities taking on most of their functions. Plans also promise greater patient involvement, with the ability to choose any health provider that meets NHS standards and prices and greater control over their own care record. Healthcare employers and their staff are set to agree plans and funding for workforce development and training to ensure the implementation of these changes.
The health white paper has promised to strengthen the collective voice of patients and the public through the creation of a powerful new consumer champion, HealthWatch England. This new body will be located within the Care Quality Commission and will act to ensure that the views of patients and carers are taken on board by local commissioners and help people to access and make choices about services.
Cabinet Office minister Francis Maude has asked the 20 biggest suppliers to government - including BT, Serco and Capita - to cut their contract prices as part of the coalition’s deficit reduction plans.
David Cameron promised a “people-power revolution” during a speech in which he stressed the need for the civil service to move beyond “bureaucratic accountability” into an era of “democratic accountability” in which government activity is transparent, competition and choice exists in public services, and power resides at a local level. In his vision, social enterprises and charities will have the power to compete in the public sector in order to increase competition, drive down costs and put pressure on existing providers to raise their game.
Communities secretary Eric Pickles delivered a speech on his priorities for localism at the Local Government Association annual conference. Pickles pledged to put “businesses and councils back in charge of economic growth” and put “town halls back in charge of local affairs.” He promised that the new government would take power away from quangos and bureaucrats, scrapping the Regional Spatial Strategies and making all Government savings over £500 publicly available.
The Department for Communities and Local Government has declared its commitment to the Compact. The pledge follows a letter from Compact Voice which voiced concerns over a lack of consultation with the sector over recent spending cuts such as RDAs or the Working Neighbourhoods Fund.
The Department for Communities and Local Government has launched its structural reform plan. “Big Society” is central to the plan, which promises to decentralise power as far as possible, meet housing aspirations, put communities in charge of planning, increase local accountability, and let people see how money is being spent in their locality. The plan also confirms plans to dissolve the RDAs completely by April 2012.
Building Schools for the Future, the programme intended to stimulate capital investment in school infrastructure in deprived areas, has been cut by £7.5bn. Work on 715 schools has ceased with immediate effect. However, this announcement was surrounded by controversy as the initial list of affected schools announced by the Schools Secretary, Michael Gove, omitted 25 schools from the initial list.
The Department for Education has published its structural reform plan. The plan centres on greater autonomy for schools and increased parental choice via the expansion of the Academy programme. It also outlines the timetable for the phased introduction of the Pupil Premium to address the needs of the poorest learners.
The Ministry of Justice has launched its structural reform plan. The plan aims to reform sentencing, create a “rehabilitation revolution” which harnesses the innovation of the private and voluntary sectors, reform the legal aid system, and develop sustainable prison capacity. MOJ intends to hold a round table with private and voluntary sector providers to refine options for contracting out rehabilitation to third parties in August 2010.
Minister for welfare reform, David Freud is looking for banks and financiers to provide hundreds of millions of pounds of risk capital to put two million people on disability benefits and in long-term unemployment through welfare-to-work schemes. This is estimated to be a market worth nearly £3 billion per year.
The Department for Culture Media and Sport has announced its plans for structural reform. The plan aims to encourage philanthropic giving and facilitate fundraising by giving charities greater freedom to operate independently from government. DCMS will ban lobbying activities among Lottery distributors and reduce administration costs to 5% of total income
Think Tank & Research Activities
A report on Big Society by the Royal Society of the Arts suggests that more can be done to tackle anti-social behaviour and crime. The report suggests that public-service workers, local residents and volunteers play a more active role in crime intervention through the introduction of courses in community safety skills focusing on aspects such as self protection and restraint, “reading” a situation and defusing it.
Specialist law firm, TPP have launched a special report on how to set up a mutual to deliver public services. The report contains practical tips on aspects such as creating a business plan, market analysis, choosing the right legal format and workforce issues.
Smaller care providers are threatened by rising costs and cuts to council budgets according to a PWC survey. It found that 94% of providers faced rising costs and 92% face downward pressure on provider fees from councils. Although 61% of large and medium-sized providers expected their turnover to grow over the next three to five years, just less than half of smaller providers did.
IDeA and the Young foundation have published the findings of research on how local government can help support community cohesion. The research suggests that local government has a vital role to play in fostering community cohesion via effective partnerships, engagement and funding arrangements with the voluntary sector. It also points to the need for increased capacity building of black, Asian and minority ethnic voluntary organisations.
The coalition government needs to adopt a more sophisticated approach to scrapping quangos if it is to get value for money and better government out of the exercise warns the Institute for Government. The report, “Read Before Burning” warns that previous attempts to cut back on quangos had often led to poor performance as many such bodies play vital roles. The report recommends a reconsideration of funding rather than complete abolition. It also suggests that they should be subject to independent review every three to five years.
The Voluntary Sector
Shadow treasury chief secretary Liam Byrne’s proposed amendment to the Finance Bill to keep VAT at 17.5% for non-business expenditure has been defeated in the House of Commons. Byrne estimated that his amendment would have saved the sector about £70m a year. David Cameron has since said that he will discuss this matter with the Treasury.
Communitybuilders and the Social Enterprise Investment Fund, the grant and loan funds for developing social enterprise, ahev been suspended and placed under government review. The funds, worth about £170m between them, are currently administered by Social Investment Business.
ACEVO led a group of voluntary sector representatives to discuss the third sector’s involvement in the delivery of the new Work Programme. The aim of the meeting was to discuss how to overcome potential barriers to voluntary organisations becoming involved in the programme, such as the payment-by-results scheme that requires contractors to be financially robust enough to deliver services for a significant amount of time before payment.
The Big Lottery Fund will launch a new £200m grant fund for community groups. BLF are going to set up a charitable trust to distribute the fund and will look for partners to help run it.
Volunteering charity “V” has asked the Office for Civil Society for transitional funding that would help it become less reliant on statutory income. It currently receives about 80% of its income from the government but this is under review by the new government.
NAVCA have estimated that the voluntary sector will lose £100m in cuts to council budgets over the coming weeks. This is due to CLG cutting the £1.2bn Local Authority Grant which currently funds a number of voluntary projects.
A report by the Volunteer Rights Inquiry at Volunteering England suggests that the standard of volunteer management in relation to the treatment of volunteers. The report says that despite “the preponderance of codes of practice and guides on managing volunteers”, standards remain low and there are many incidences of bullying and harassment.
NAVCA have produced a guide on how the Compact, public law and equalities issues can be used when challenging public spending cuts. The guide advises acting rapidly and that in many cases the threat of judicial review is of more practical value than actually bringing a claim as the public body can be motivated to engage with the organisation in order to avoid litigation and resolve the dispute.
The voluntary sector workforce increased to 778,000 last year according to the latest Labour Force Survey produced by NCVO, the Third Sector Research Centre and Skills – Third Sector. The voluntary sector now constitutes about 6.5% of all employment. Meanwhile, employment in the public and private sectors fell by 0.5% and 2.3% over the same period.