The future of commissioning - New research

This event shares new research on how recent changes in government commissioning are impacting the frontline.

The research, supported by the Calouste Gulbenkian Foundation, was conducted by the Institute for Government and Collaborate at Southbank University. It looks particularly at the impact of recent changes on the social sector and on public services for those with complex and multiple needs. It covers commissioning of social care, substance misuse, probation and employment services and builds on past Institute for Government research on how government can make ‘markets in public services’ work effectively.

Panel:

Lord Victor Adebowale, Chief Executive Turning Point and Chair Collaborate

Michael Coughlin, Executive Director, LGA

Dr Henry Kippin, Director at Collaborate, who will present the findings of the research

Helen Stephenson, Director Office for Civil Society, Cabinet Office, and Co-Director of the Government Innovation Group

Chaired by Tom Gash, Director of Research, Institute for Government.

Henry Kippin began the event by presenting findings from a joint research project by Collaborate, the Institute for Government and Gulbenkian Foundation: Beyond Big Contracts: commissioning public services for better outcomes. This assesses the readiness of those commissioning and providing services to meet the needs of citizens. Drawing on surveys of local and national commissioners, focus groups, existing literature, case studies and expert workshops, the research identified three trends that have significantly changed the commissioning landscape during the past few years:

• Shift to outcomes-based contracts: There has been a major shift towards outcomes-based contracting. However, commissioners are concerned about their ability to understand outcomes and engage the community in co-producing these – particularly in areas where users have severe or complex needs.
• Transferring financial risk: Commissioners are transferring more financial risk to providers in the hope that this will incentivise innovation. However, the research found that excessive risk transfer was in fact squeezing out innovation.
• Relationships: Relationships are being broken and reformed. The distance between the commissioner and the end user is growing.

Helen Stephenson provided a government perspective on commissioning. She outlined the challenges commissioners currently face such as fiscal constraint, skills shortages and restrictive rules (e.g. EU procurement law). The Cabinet Office has helped to address some of these challenges by:

• Establishing a Commissioning Academy to train and support commissioners
• Introducing flexibility in EU procurement law
• Devolving more power to local communities so that the services are commissioned where they are delivered
• Running a series of “master classes” for the VCSE to help them successfully bid for contracts
• Investing £10 million into a “readiness fund”
• Giving VCSE access to data on service outcomes

She ended by arguing that Social impact Bonds (SIBs) are a powerful means by which more voluntary and community sector organisations can take on Payment by Results (PbR) contracts.  SIBs share many advantages to PbR (such as increasing innovation and efficiency), but have one major advantage – they diversify the supplier base by de-risking contracts for providers. SIBs can therefore enable us to leverage financial expertise and help smaller organisations build their business capabilities.

Victor Adebowale emphasised that there is no consensus around the terminology used in the commissioning space. For example, when people talk about rules this relates to procurement, but when people talk about outcomes this relates to commissioning. He argued that there was a need for a “Commissioning Version 2.0” that starts with understanding the needs of communities first and then embarks on a service design process around these needs. The new report starts a critical debate about the nature of commissioning by posing the following fundamental questions:

• What does the future of commissioning look like?
• How can we change the nature of collaboration?
• How can we build relationships across boundaries?
• How can we develop a reliable model to understand community need?

Michael Coughlin argued that the policy landscape is driving changes which create a “change overhead”. Collaboration, although important, introduces an additional burden in terms of time. Local authorities are already operating under severe financial constraint and it is often easy to overlook the influence local politics has on how local government interprets and translates national policy. He outlined examples of sophisticated commissioning practices at the local level and ended by suggesting a forward agenda for commissioning. The scale of change and scale of financial pressure should encourage a move towards demand prevention – i.e. commissioning services that don’t respond to current demand, but attempts to prevent that demand building up in the first place.

Questions from the floor covered a number of topics including:

• In the run up to the 2015 election, should political leaders be looking for big ideas, and, if yes, which ones?
• Given the financial constraints both commissioners and providers operate under, who should pay for innovation?
• Does government have a role in ensuring that innovation that works is taken up more widely?
• How do you define the outcomes of preventative services?
• Should the voluntary sector stop providing services?