01 September 2006
The CBI's discussions on public service provision tend to treat the private and voluntary sectors as if they were one and the same. But they are worlds apart in both their motivation and way of operating
It is wrong to see close similarities between the voluntary and community sector on the one hand and the private sector on the other. Contrary to the arguments of the CBI's Neil Bentley, the two sectors both operate and are motivated differently ('More room for the third sector', August 4–17).
Confusing the two sectors might serve the CBI's purposes, but it does a disservice to the voluntary sector and misleads public bodies sympathetic to commissioning it to deliver public services.
The CBI argues that the public sector should recognise that contracting problems — such as the need for prices to include full cost recovery — affect the private and voluntary sectors equally. Wrong. Large private companies, buffeted by their shareholders' investments, can often afford to take the short-term hit of a loss-leading contract if it offers the potential of client dependency and future increases in contract prices.
Voluntary groups have no venture capital behind them to cover contract losses, nor are they motivated by the lure of profits. Rather, they seek to provide public service contracts because they believe they can provide the services better, or perhaps differently, and often with a direct line of accountability to service users.
There are significant differences in the way the private and voluntary sectors approach public service delivery. This is particularly so with the locally based groups that our members work with. Service users can be influential in deciding the delivery model used by a voluntary organisation, but they are unlikely to have the same impact on a private company.
The private sector might assert that commercial imperatives can drive it towards a customer-focused approach to public service delivery. But this is not obviously backed by the evidence of experience. Failures in housing benefit outsourcing contracts suggest that some outside companies brought in to administer the service were no better, and arguably much worse, than the local authorities that previously ran the failing services. No sign there of better customer communications or service user empathy.
Ultimately, it comes down to the private and voluntary sectors seeking to fulfil fundamentally different objectives. The private sector exists to make profits to pass on to shareholders as dividends. By contrast, voluntary groups were established and are maintained to achieve social purposes. They see service users not as consumers, but as citizens — indeed, often as members. The nature of the relationship is different.
This is precisely why there is so much enthusiasm for mental health services, for example, to be provided by mental health charities. We can all be much more confident that the services will meet the needs of their users. I challenge anyone to make a similar assertion if Any Country Plc took over the running of a mental health trust.
And because the voluntary sector is committed to its service users, its groups are committed to making service contracts work. The same cannot always be said of private companies, which can be tempted to say: 'Don't ask us to do that, it's not in the contract'. The voluntary sector is interested in the outcomes, not the bottom line — which puts us firmly at odds with the private sector. For us, it is not how much business we can scoop up, but rather how we can work with the public sector to improve people's lives.
But we can agree that there is a problem with the contracting out of public services — and to us that means the frequent lumping together by the government of the private and voluntary sectors. This is most obviously apparent in the discussion over the administration of the welfare-to-work programme at the Department for Work and Pensions.
Media coverage has speculated that contracts will go to the third sector when in reality the private sector is well placed to win most of the work. The model being used is Australia, where the private sector has 50% of the market. Voluntary groups in the UK could play an important role in improving the delivery of job advice and brokerage services and in running more labour integration schemes. The real question is whether they will be allowed to do so.
Contrary to the CBI's argument, there needs to be greater awareness of the distinction between the private and voluntary sector delivery models — not less. Bentley contentiously argues: 'Undoubtedly, Blair sees the voluntary sector as a way of sweetening the pill of public sector reform.' It might be more accurate to conclude that it is the CBI that wants the voluntary sector to act as its outrider for outsourcing.
But that is not our role. We have an agenda that is shared across much of the public sector — but that doesn't make us anyone's patsy.
Neil Cleeveley is director of information and policy at Navca, the National Association for Voluntary and Community Action (formerly NACVS)
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