Local and Central Government Relations Research 46 - April 1996
The relationship between local government and voluntary organisations

The relationship between local authorities and local voluntary organisations is often characterised by tensions. The NHS and Community Care Act requires closer working between the voluntary and statutory sectors and has increased pressures. This study by Compass Partnership pinpoints the key issues in the relationship and identifies good practice in addressing them. The study found that local authorities that had been effective in managing their relationship with the voluntary sector demonstrated the following characteristics.

• 'Good practice' authorities recognised and supported the different contributions of the voluntary sector. They developed a strategic approach, and identified how they could enable the voluntary sector to make a wide range of contributions to the local community. They supported voluntary organisations in delivering mainstream services on behalf of the local authority, and in the more traditional role of providing experimental and complementary services and promoting self-help and advocacy.
• These authorities deployed a range of funding mechanisms. Grants, service level agreements and contracts were all retained, and the circumstances in which each should apply were specified. Balancing of block purchasing (purchasing a quantity of services at one time) and spot purchasing (one-off purchasing) was needed, and policies were developed regarding which contracts should go out to tender.
• The authorities developed a mixed approach to monitoring and evaluation. A monitoring system to ensure quality and value for money combined performance indicators with regular meetings to discuss overall objectives and progress towards them. Success depended on developing a good, stable working relationship between local authority and voluntary organisation representatives.
• Co-ordination and communication systems were developed. Regular meetings within the local authority enabled officers and councillors across different departments to discuss issues relating to the voluntary sector. A forum was also established for local authority/voluntary sector liaison, and this was backed up with the support of voluntary sector infrastructure.

Background

The NHS and Community Care Act (1990) heralded major social policy changes. These included both a refocusing of care from institution-based to home-based provision and a change in the traditional roles of local authorities and voluntary organisations. Local authorities have now been cast primarily as enablers rather than providers of services. As such they are required to plan according to an assessment of need and to consult with the voluntary sector in making this assessment. Voluntary organisations, on the other hand, are now being encouraged to move into the field of provision of services on behalf of local authorities. Thus, they are increasingly being brought into the mainstream, both in service planning and provision.

These changes are fundamentally altering the nature of the relationship between local authorities and voluntary organisations. Rather than the traditional funder and fundee relationship, the relationship is increasingly becoming one of purchaser and provider. The changes are also increasing the complexity of the relationship, with voluntary organisations filling many different roles from user consultation, to policy formation, to service provision.

The purpose of this study was to identify the main issues and problems in this relationship as a result of these changes, and to identify good practice in order to help local authorities and voluntary organisations manage the changes and work together productively.

The issues and good practice for local authorities

Figure 1: Adapting to the mixed economy of care

The study found that local authorities are finding it difficult to identify sufficient voluntary sector providers to develop a true mixed economy of care. Many voluntary organisations have neither the desire nor the capacity to provide sufficient mainstream statutory services to implement the requirements of the NHS and Community Care Act to the full. Furthermore, some voluntary organisations that have scaled up their provision of services on behalf of the local authority are experiencing a range of difficulties. These include having to use voluntary income to subsidise the service and not having sufficient resources to continue providing other services for which there is no contract.

For example, one local authority that wanted to purchase community services for people with dementia or severe mental health problems was unable to locate any providers, voluntary or profit-making, in their area.

Those local authorities which demonstrated good practice in this area had recognised and supported the full range of contributions of the voluntary sector. This involves developing a strategic approach in which the authority identifies what it can do to enable the voluntary sector both to deliver mainstream services on behalf of the local authority and to fulfil its traditional role of providing experimental and complementary services, promoting self-help and advocacy.

Figure 2: Managing the transition from grants to contracts

The study indicated that changes in the funding mechanism from grants to contracts are giving rise to problems. Some of these problems result from the fact that those drawing up the contract sometimes have insufficient understanding of the nature of the service being provided; and some problems are due to contracts being used in situations in which a grant would be more appropriate.

For example, as a result of a change in funding mechanism, one voluntary organisation was no longer funded to assess the care needs of clients to whom it was providing a home care service. These assessments were undertaken by local authority contract managers instead. The result was often a mismatch in the services the voluntary organisation was commissioned to provide and their understanding of the client's needs.

Good practice in this area involves deploying a range of funding mechanisms. This requires the retention of grants as well as service level agreements and contracts as a funding mechanism. It also involves specifying the circumstances in which each should apply and the balancing of block and spot purchasing.

Figure 3: Monitoring contracts and grants

The study found that many local authorities are having difficulties with monitoring and evaluation. Many have yet to develop the skills needed to monitor the quality and value for money of the services they have now contracted out to voluntary (and profit-making) organisations. There are two problems here. The first is that local authorities do not always know what data to collect, nor how to interpret it. The second is that because of frequent restructuring, heavy workloads and a focus on monitoring through statistics, the personal relationships and informal contacts that form a vital part of monitoring are breaking down.

For example, one voluntary agency providing services for children with learning difficulties was not told what information was required by the local authority until the contract had ended. This necessitated a detailed and time-consuming re-examination of case records, child by child.

Authorities which demonstrated good practice in this area had developed a mixed approach to monitoring and evaluation. They put in place a monitoring system which ensures quality and value for money by combining the use of performance indicators with regular meetings to discuss overall objectives and the progress made towards them.

Figure 4: Ensuring on-going co-ordination and communication

The study indicated that there are often tensions and misunderstandings between the local authority and the local voluntary sector, and also between different local authority departments. These often arise from the fact that there are insufficient mechanisms to allow different departments within the local authority to share information and co-ordinate policies on working with the voluntary sector, or to allow regular communication between the local authority and voluntary sector as a whole on issues affecting the relationship.

Good practice in tackling these issues involves developing effective co-ordination and communication systems. This requires putting in place regular meetings within the local authority so that officers and councillors across different departments can discuss issues relating to the voluntary sector. It also involves establishing a forum for local authority/voluntary sector liaison and supporting voluntary sector infrastructure.

Characteristics of good practice local authorities

In addition to the above policies and practices, good practice local authorities also shared a number of other, more general characteristics. These included:

• The existence of at least one councillor and one officer with a long-term vision regarding the potential contribution of the voluntary sector and a commitment to realising it.
• An attitude towards the voluntary sector in which it was seen as an asset to be cultivated.
• A 'culture change' approach in which the aim was to develop attitudes and understanding across the whole local authority.

Good practice for voluntary organisations

Voluntary organisations also share responsibility for developing positive working relationships with the local authority. To do this, voluntary organisations should:

• Be proactive in managing their relationship with the local authority.
• Take a range of actions to protect their organisational independence.
• Make use of new opportunities to feed into local planning.
• Develop their organisational capacity, particularly in the area of management expertise, financial management and performance monitoring.

Conclusions and wider issues

The authors conclude that tensions between voluntary organisations and local authorities can, if not resolved, lead to a vicious circle in which the actions of one party serve to reinforce the position of the other. The good practice identified in this study provides a way of breaking this circle, to increase mutual understanding and allow both local authorities and voluntary organisations to work more productively.

The authors also identify two underlying sources of these tensions:

• Relationship issues Voluntary and statutory bodies often have an incomplete understanding of the constraints and mode of operation of the other. To this is added the fact that many local authorities and voluntary organisations are still adjusting to the change of role implied by the NHS and Community Care Act. Both these factors put pressure on the relationship and can generate tensions.
• Wider policy issues The new mixed economy of care is putting pressure on voluntary organisations and local authorities, and therefore on the relationship, in ways that were not intended:
  • - the transaction costs in terms of the amount of local authority and voluntary organisation staff time required to negotiate and monitor contracts may be higher than expected;
  • - voluntary organisations may be less willing or able to deliver mainstream services than anticipated;
  • - taking on a mainstream service delivery role may be having an unanticipated negative impact on more traditional voluntary sector activities.

About the study

The study was carried out by Compass Partnership during 1995. It involved detailed case studies in five local authority areas which were widely regarded as demonstrating good practice in managing their relationship with the voluntary sector. Interviews were conducted with six to eight officers and councillors within the local authority and six to eight staff and management committee members of local voluntary organisations. In addition to the case studies, the authors drew on interviews with representatives of national voluntary organisations and voluntary and statutory umbrella groups, and on their own experience of carrying out consultancies within the voluntary sector.

Further information

To discuss the issues raise in the report please contact Joy MacKeith, Compass Partnership, 10 Barley Mow Passage, London W4 4PH, Tel: 0181 994 6477.

A full report, Partnerships for progress: Good practice in the relationship between local government and voluntary organisations by Chris Bemrose and Joy MacKeith, is published by The Policy Press in association with the Joseph Rowntree Foundation (price £11.95, ISBN 1 86134 009 5).

This title is now out of print.