Public sector mutuals must add value, says National Audit Office

23 Jun 11
Social enterprises that take over public services should be required to provide better value for money than the public sector, auditors warned today
By Richard Johnstone | 24 June 2011

Social enterprises that take over public services should be required to provide better value for money than the public sector, auditors warned today.

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The National Audit Office found that the 20 existing social enterprises operating in the NHS had not been contracted to deliver savings or any other additional benefits. Neither had the Department of Health set measurable objectives against which to evaluate the success of the contracts.

While primary care trusts expect social enterprises to deliver more benefits than other providers, the NAO says not setting out objectives reduces the likelihood that any will be delivered.

The NAO concludes that the Cabinet Office should ensure emerging mutuals and public sector commissioners are given appropriate information and support, including clear objectives and a means of evaluating success.

Its report, published today, finds that the DoH’s £900m Right to Request programme will need to be managed carefully if value for money is to be achieved as there are a number of risks and liabilities for PCTs.

The programme enables staff to leave to set up health social enterprises as independent bodies providing services to PCTs. The aim is to improve quality by giving clinical staff working in community services greater freedom to innovate.

Types of NHS services being transformed into mutuals include health visiting, GP and dental services. The government also plans to establish similar Rights to Provide across the public sector.

The NAO report, Establishing social enterprises under the Right to Request Programme, notes that NHS social enterprises will be operating in an increasingly competitive market following the proposed changes in the Health & Social Care Bill. It argues that this means PCTs and their successor clinical commissioning groups will need a clear idea of what they will do if enterprises fail.

NAO head Amyas Morse said: ‘There are many risks to be managed if the DoH is to get value for money from the £900m contracts awarded to social enterprises. The DoH needs to reassess its approach, when contracting with social enterprises, of not requiring efficiencies over and above what would have been achieved if the services had remained within the DoH.’

However, a DoH spokesman said that the report did not ‘understand the point of this initiative in terms both of the quality of care delivered and of cost savings’.

‘We want to see even more of the frontline staff who know their patients best given the power and freedom to shape services around them through our Right to Provide scheme, the first such scheme to be launched in the public sector.’

The DoH said that it is ‘not accurate’ to claim that there were not clear objectives for the Right to Request programme as it was part of a wider Transforming Community Services programme.

The Social Enterprise Coalition – which is working with the DoH on the setting up of social enterprises – said the programme had been evaluated too soon. The coalition added that centrally driven targets would undermine social enterprises.

Chief executive Peter Holbrook said: ‘It is very difficult to draw any accurate or fair conclusions based on the evidence. Research to assess value for money would have been much better carried out at a later date with a larger sample size.’

He added: ‘The suggestion that social enterprises be requested to deliver additional benefits is unfair. A level playing field is required in which social enterprises can compete with other providers to deliver primary and community care services for PCTs.’

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