Public service delivery wiki

Definitions of public service delivery and its importance to non profit organisations.

Income for delivering public services is the sector’s largest source of funding. Think carefully whether public service delivery is the right strategy for you.

The Government is promoting the role of the sector in public service delivery because of the added value it brings and its ability to serve hard-to-reach groups. The sector’s overall role in public service delivery is still very small - only 2 per cent of public service spending. So there is still plenty of scope for the sector to do more. But public service delivery will not suit all non profits. There are potential risks and constraints.

If you do decide to deliver public services, you will have to learn about commissioning and procurement and you will need to get ready to negotiate and manage legally binding contracts.

People who are doing it:

• NHS commissioning: a perspective from the Director of Commissioning at one PCT.
• Every Child Matters: How to survive commissioning (NAVCA event) - presentations and viewpoints for those delivering services to children and young people.

What are ‘public services’?

Public services are those which public bodies (such as central or local government) either provide themselves or commission others to provide.

For example, the police service is a public service, but the lifeboat service, which is provided by the Royal National Lifeboat Institute out of voluntary income, is not. Services, which used to be privately funded, can become public services, as the social and political environment changes. Education is a case in point.

Public services also include social housing or childcare services, which may be funded partly through benefits, such as housing benefit or working family tax credit, which are paid for out of taxes.

What is ‘public service income’

Public service income means that which the sector secures, directly or indirectly, from public bodies for the provision of particular services on their behalf. Public service income is therefore different from voluntary income (from fundraising) and different from sales income (from people who use services).

“Public service income will usually be via an agreement with the public body such as grant or a contract. This will usually determine what the money is to be used for and how success will be measured.”

Commissioning and procurement

The important point to realise about public service delivery is that ultimately it is the relevant public body that decides what service it wants to see delivered - not the service provider (that is, you). The process used for deciding this is called commissioning.

Commissioning involves assessing the needs of people in an area, designing services to meet those needs and then selecting an appropriate service to meet those needs. An ‘intelligent’ commissioning process will consider a range of options for delivering and funding public services. These could include:

• providing the service in-house
• providing direct payments to individual service users to buy the services they require
• providing grants to non profit organisations
• procuring an external provider through a contract.

Procurement is thus one part of the commissioning process. It refers to a specific method of purchasing services which involves tendering for a contract. Sometimes it is more appropriate for a public body to fund a service through the provision of a grant, but then it will have less control over the precise outcomes to be delivered.

See the Commissioning and procurement section for further information.

Types of funding agreements

There are three main ways in which a public sector body can fund a non profit organisation:

• through a grant (a gift or donation type of relationship that may have a ‘service level agreement’ attached which will dictate what the money is to be spent on)
• through a grant-in-aid (a gift or donation type of relationship for the general purposes of the organisation, less service specific than simply a grant)
• through a contract (a legally enforceable agreement)

There are important differences between these types of funding. The Charity Commission Guidance on Public Service Delivery provides helpful guidance on these differences. An important point to remember is that if both parties to a funding arrangement intend the arrangement to be legally binding, then it is a contract, even if it has been called a grant or a service level agreement.

The NAO Successful Commissioning guide gives more information about these differences.

Why does the government want the non profit sector to deliver public services?

A cynical answer might be because it wants to save money. You should therefore always be clear about the full cost of the services you are providing and make sure your price reflects this.

A more accurate answer would be that the sector is well placed to bring distinctive or added value to the services it provides. This might be because of its

• specialist knowledge or experience
• involvement of users
• independence of government
• ability to reach hard to reach groups
• innovative approaches to service delivery.

Some organisations might also be able and willing to provide more than the public body has asked for - through involving volunteers or using voluntary income- thus providing ‘icing on the cake’ and creating ‘social capital’.

What are the risks involved in public service delivery?

The Charity Commission Guidance on Public Service Delivery highlights the following areas of risk:

• loss of independence (for example, because it is the public body that ultimately decides on the service to be provided)
• danger of mission drift (for example, through delivering services that don’t fit with your mission, simply to generate income)
• financial risks (for example, through not being funded properly to deliver the service)
• contractual risks (for example, through agreeing to excessively onerous terms in the contract)
• reputational risks (for example, through being perceived as too closely associated with the public body).

All these risks can be managed, but where your funding agreement is in the form of a legally binding contract, you need to ensure you have explored the risks involved thoroughly and have decided how best to mitigate them. You should also seek legal advice before signing the contract.

The increasing trend towards public service delivery is not universally welcomed by the sector. The main concerns are:

• replacement of grants by contracts (which often disadvantages smaller, local groups and can therefore damage communities)
• becoming agents of the state rather than responding to local needs and demands
• loss of community-based services to more professional, national organisations, who are better placed to win contracts
• public perception of loss of independence leading to reduced trust and confidence in the sector.

Help available with public service delivery

NAVCA (the National Association for Voluntary and Community Action) has published a leaflet, on behalf of the Local Grants Forum, with details of resources you can use at local level to convince councillors, commissioners and procurement officers that contracts are not always the right funding mechanism and that, in many circumstances, grants should continue to be used to fund local organisations and groups. See Defending grants on the NAVCA website.

Changes in public service delivery - personalisation

There are some important changes ahead which will affect the way public services are delivered. The increased emphasis on the personalisation of services, and the introduction of individual budgets for disabled and older people to enable them to purchase their own services direct to meet their needs, will bring major changes for service users and providers.

Read Richard Gutch's article on the challenges and opportunities presented by personalisation.

Have your say

Does your organisation have experience in public service delivery or are you considering tendering for a contract?

Share your experience on the Commissioning and procurement forum.