The operating environment for VCOs delivering public services continues to be broadly favourable. Many government policies seek to expand VCS involvement in the delivery of public services and there is growing recognition of the role VCOs have in transforming public services. This is part of a wider trend of bringing markets into public services. The idea is that the services will be transformed as they are delivered by a different supplier, opening up space for innovation, improving services and increasing efficiency. “Big Society” policies are also likely to change the structure of public service delivery although the details remain unclear.

Public services that the sector may become more involved with in the future include probation services, employment services, extended schools and childcare. In light of constrained public finances (see levels of public spending) the future level of income from government is an uncertainty in the medium term, particularly as money coming into the sector currently represents only 2% [1] of total government spending on public services.

What are the implications?

• The opening up of markets may lead to a growing interest in the VCS as innovators and transformers of public services.
• However, there may be a greater complexity of competition, with the potential for the private sector to move into new areas.
• The reduction in funds available for public services could lead to a potential decline in the role of the VCS in public service delivery unless VCOs are able to offer the most value for money.
• Blurring boundaries between sectors as VCOs and businesses start to deliver services traditionally delivered by the State.
• This may create an increased demand for VCOs to provide information about themselves.
• The development of hybrid organisations and increased collaborative working between sectors.
• Increased competition for available funds for VCOs may lead to increased collaboration and partnership working.
• Increased pressure to demonstrate that services are efficient and provide value for money by government, particularly in a period of reduced spending on public services.
• VCS procurement practice that is increasingly professional, complex and bureaucratic which may divert organisational resources.
• Polarisation of the VCS as larger VCOs are often better placed to bid for contracts due to economies of scale.
• Medium sized organisationsare most likely to suffer from cuts in public spending as on average they receive 40% of their total income from the state and do not benefit from the same level of resources particularly in terms of fundraising as the bigger organisations.
• Focus on innovation can lead to better services but can also require organisations to constantly reinvent already successful services.

Moving forward

An increased role in public service delivery offers many opportunities for the VCS but also comes with risks such as: mission drift; loss of public trust; loss of independence; and becoming more like the public sector organisations that traditionally delivered a service.

• Is public service delivery the best option for your organisation? Are funder imposed outputs and outcomes compatible with your mission and constitution?
• What measures do you need to take to ensure accountability and easy access to information by the public?
• Will a service delivery contract account for a disproportionate amount of your income? What steps can you take to ensure a sustainable mix of funding?
• Do your staff have all the necessary skills to take on public service delivery such as managing contracts? Is training available to fill skills gaps?

The VCS has a good reputation for innovation and creative thinking. It is important that public services are not simply transferred to VCOs, but that they are able to use their innovative skills and relationships with communities, to transform services.

• How can you identify need amongst communities to design and influence public services?
• Can you use partnership arrangements at a local level to communicate needs and influence public services? Which VCOs sit on the Local Strategic Partnership (LSP) and can they communicate your message?
• How can you ensure that your organisation's ability to innovate continues to flourish if it becomes a public service provider?

As competition for public service contracts increases, it will be important to distinguish your organisation from its competitors. It will also be important to identify ways in which you can collaborate with other organisations.

• How can you demonstrate the unique value you would add to a service?
• Is it possible to expand your work to include other services?
• Delivering value for money is important, but do you recognise the true costs of projects to your organisation? If you decide to bypass full cost recovery, is this sustainable and beneficial to your organisation in the long term?
• Are there other organisations with different areas of expertise that your organisation could work with to complement your services?

Want to know more?

Transforming public services

The future of services to the public – reviewing the pressures and challenges for long term change

Growing the Big Society

The State and the Voluntary Sector: recent trends in government funding and public service delivery

http://www.3s4.org.uk/drivers/public-service-delivery