The Big Society, the Third Sector and Health

The 'Big Society' appears to offer great opportunities for the third sector to become more involved in the delivery of public services.  However, it is in the early stages of its development by the coalition government and so far there is little detail to help boards plan their response. Ian Hempseed looks at what the Big Society will mean for the Third Sector.

We take the lead from the publication of the White Paper Equity and excellence: Liberating the NHS. This intends a plurality of providers in health by enabling commissioners to contract with the new concept of 'any willing provider' which could be a state, private or third sector enterprise. This is the time for third sector organisations to check that their business, governance and operational models are sufficiently robust to satisfy commissioners in what will be a competitive market.

'Localism' is likely to be a major driver in assessing 'willing providers', which raises its own challenges. National charities may need to show that they are already operating effectively in the locality and have the capability to engage with local stakeholders. On the other hand, the issue for some small local community organisations is that their business model and systems may never have been tested in delivering contracts, or contracts of the size which are to be commissioned. Whether there will be funds available to capacity build those organisations to make them fit for delivery could be a key concern.

Payment for services will be directed away from full cost recovery towards, especially in health, payment by results. Boards will need to watch how this concept develops. The concern would be that the contractual results are difficult to measure or can only be assessed a while after completion of the services and therefore, in addition to possible uncertainty of payment, this could create cash flow problems, particularly for smaller organisations which may not have the reserves or working capital to tide them over.

We can also take a lead from the proposed spin out from the public sector of new delivery organisations. The Department of Health has recently announced the second wave of 'Right to Request' where employees of Primary Care Trusts can request to set up a social enterprise to run public services. Also, on 12 August the Cabinet Office announced the first wave of public sector workers establishing 'John Lewis-style' employee-owned organisations to deliver public services. Boards of existing third sector organisations should be considering the implications. These new organisations could become their competitors.

However, in the immediate term there may be opportunities for existing organisations to provide support as the fledgling enterprises may need to fill skill gaps in management and business planning. Those organisations which have developed transportable models of governance, financial and accounting services, stakeholder engagement and specialist service delivery could offer a form of social franchising. In return for a fee, they could provide an agreed set of know-how and services under a brand with the recipient agreeing to adhere to quality standards.

The relationship could be expanded into a closer collaboration under which the franchisor could become a member of the organisation or make its expertise available through representatives on the board. Through closer collaboration, the franchisor might negotiate 'step-in' rights in exceptional circumstances of a serious service failure to ensure the viability of the franchisee and continuity of provision for users.

The NHS White Paper proposes consortia of GP practices commissioning on a statutory basis the great majority of NHS services. Many providers over the years will have built up good relations with managers at Primary Care Trusts. These new GP consortia will require legislation but in the meantime we strongly recommend that providers should be identifying and making contact with any Practice Based Commissioning Groups of GPs which have already been set up in their area. The new GP commissioning consortia will have a duty of public and patient involvement and therefore third sector organisations will have a key role to influence the design of services where GPs do not have the expertise in areas of care.

Ian Hempseed is a partner and head of third sector at Hempsons. He can be contacted on 020 7484 7530 or via i.hempseed@hempsons.