Individual budgets and the third sector

With individual budgets the emphasis is on providing a quality service to users, something the third sector does well, so what's the problem with public sector commissioners?
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Individual budgets will give service users greater control. Credit: EPA

Proponents of individual budgets as a part of public service reform usually argue for them on the grounds that they bring greater engagement from service users and allow them to tailor services around their own individual needs and aspirations. Put another way, individual budgets result in better outcomes because they unleash service users' potential to co-produce and personalise services themselves.

But there is another creative force that individual budgets could unleash – that of service providers. For years the basic complaint of third sector organisations providing public services has been that we are good at engaging with service users, but bad at engaging with public sector commissioners.

Service users trust us and like us, commissioners distrust us and misunderstand us. Where we get the chance, we can deliver high-quality services that service users want.

But more often than not, commissioners design contracts that practically exclude the third sector, or that tie third sector organisations down in a straightjacket of required outputs and processes, backed up with excessive, bureaucratic monitoring, or that are preceded by a forest-worth of pre-qualification questionaires and invitation to tenders.

Individual budgets could break that mould. Crudely speaking, we are good with clients but bad with commissioners. Crudely speaking, with individual budgets the first quality matters, and the second does not.

Crudely speaking, individual budgets could dismantle one of the greatest barriers to third sector provision of public services – the fact that the relationship that really matters is the one between commissioner and provider, and that in the third sector's case it is often not a happy one.
Individual budgets could, then, be the key for unleashing the third sector's potential in all kinds of public services, from long-term health conditions to employment, from mental health to education.

Clearly, however, they are no instant panacea.

Firstly, many third sector chief executives would be worried about the impact individual budgets could have on their beneficiaries. Would the real motivation behind these reforms be simply to drive down costs – potentially at the expense of service quality?

Would individual budget holders really have access to the support they would need to make the most of their budgets. Support such as advocacy, brokerage, or information provision? Could the reforms result in an increase in exploitation – in the example of social care, either of the budget holder or of the budget holder's family carers?

Secondly, third sector capacity issues would remain. If the capacity to write a tender or negotiate with a commissioner would become less important, others would become more so (the ability to gather market intelligence, or to market services to large numbers of potential clients, for instance).

Many third sector chief executives will have put considerable resources into ensuring that they do have the capacity to secure block contracts; for them the shift to individual budgets would necessitate significant and potentially painful organisational change.

And some specific capacity issues are likely to persist, such as the ability to work in partnership. Those dreaming of working in splendid isolation with their individual budget-holding clients – with no need to engage the evil commissioner or the evil private sector competitor – could be disappointed. Indeed the benefits of working in partnership to create coherent packages of support could become all the greater.

How do we tackle these issues? How do we ensure that individual budgets (already raising their heads in a variety of areas) are an opportunity for our beneficiaries and our organisations, rather than a threat?

The key is what we do now.

Rather than allowing the individual budget agenda to happen to us, we need to make it our agenda. Our agenda in two senses: an agenda that we have shaped, and one that we are ready for.

First, shaping the agenda. This is a prime example of where the third sector's power to campaign should come to the fore. We need to ensure that this is not about cost-cutting but about empowering the disadvantaged, not about slashing services but about improving service quality.

And we should be fighting that battle not just where individual budgets are already starting to happen, but where we believe they could improve services elsewhere – in employment support, mental health or education, for instance. So where individual budgets are happening, we need to make them happen on our terms.

And then we need to make them happen elsewhere.

Second, we need to be ready for individual budgets. We need to have in place the business models that will allow the sector to thrive.

That is why, for instance, Acevo is working in partnership with Demos to provide workshops for social care providers on how they can change the way they work to cater more effectively to individual budget holders.

That is why we are working again in partnership with Demos to provide workshops for Acevo members to consider what other areas of social policy individual budgets might be applied to next.

The introduction of individual budgets should be a third sector agenda. We need to make sure it is. If we can do that, the third sector will be the winner and more importantly, so will the causes third sector organisations stand for.

Ralph Michell is head of policy at Acevo

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