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National Audit Office Press Notice

Local Area Agreements and the Third Sector: Public Service Delivery

THIS STATEMENT IS NOT FOR PUBLICATION OR BROADCAST BEFORE 00.01 HOURS ON FRIDAY 22 JUNE 2007

Report by the Comptroller and Auditor General
2006-2007
22 June 2007
ISBN:
Price: £13.50

• Full Report (210 KB)

Local authorities should work more collaboratively with voluntary and community organisations to help them improve the delivery of public services, according to a report out today by the National Audit Office.
The report looked at whether Local Area Agreements (LAAs) are helping to promote better value for money in the way government works with the third sector to deliver public services. It also examined the impact LAAs have had on the role of third sector organisations in the delivery of public services.

LAAs are a new form of contract between central and local government and were designed to devolve greater power over public services to local communities. The Department for Communities and Local Government (DCLG) and the nine Government Offices for the Regions (GOs) have worked to introduce LAAs over the past three years and by April 2007 every local authority in England had one. The amount of public expenditure covered by the agreements is expected to reach around £5 billion in the next three years.
Government is keen for third sector organisations (TSOs) – including charities, voluntary and community organisations and social enterprises - to play a greater role in public life, building ‘social capital’, promoting volunteering, representing the community and delivering public services.

The NAO found that government has put in place a range of initiatives to support TSOs and to encourage public bodies to work with them. These particularly focus on changes to public procurement and grant funding which will put TSOs on an equal footing with other suppliers. The Office of the Third Sector (in the Cabinet Office) has responsibility for leading this work and is supported by the Treasury in its work with other government departments.

It is still relatively early days for LAAs, but today’s report shows that LAAs and work to increase the role of the third sector in public services have been developed by different parts of central government with few, weak links between the two. LAAs include only limited references to the third sector and there are as yet no visible changes in local patterns of service provision or in local public bodies’ funding practices towards the third sector.

Where changes have occurred, they are due to other initiatives rather than to LAAs. The opportunities which the introduction of LAAs offered, to help place TSOs on a ‘level playing-field’ with other potential suppliers, have mostly been missed.

Much practical work remains to be done to translate the principles of LAAs into practice. Policy in this area is developing fast; the Local Government White Paper, published in October 2006, proposes changes to the structure of LAAs which are likely to lead to even more local decision-making. Changes to LAAs are to be accompanied by moves to encourage local authorities to move away from a "traditional service perspective" towards a commissioning role.

Among the NAO’s recommendations are that the Department for Communities and Local Government and the Government Offices should encourage local bodies to consider third sector organisations as potential partners in the delivery of public services, alongside other private and public partners. They should also further develop existing programmes to improve commissioning by local government. The Office of the Third Sector and the Treasury should promote awareness of guidance on the third sector and should find ways of spreading good practices more widely.

Joe Cavanagh, Director of Business Development at the NAO, said today:

“Both main political parties have highlighted the third sector’s important role in building a civil society. It is therefore disappointing that the new Local Area Agreements have not embraced the potential of the third sector to help deliver public services.

“More needs to be done by the departments involved and by local authorities to understand the work of third sector organisations, and how it can be used to obtain better value for money in delivering services.”

Neil Cleeveley, Director of Information and Policy at the National Association for Voluntary and Community Action (NAVCA), said:

“NAVCA welcomes this report and is pleased that the Government is starting to address the issues it raises. Many of our members have been heavily involved in their Local Area Agreement, giving a good deal of time and effort to make them a success, often with very little recognition.

“NAVCA wants to see local area agreements work – the local third sector has a key role helping to bring about the improved public services they promise, especially in the most disadvantaged communities. It is still relatively early days – however NAVCA and its members will do all we can to help our partners in the public sector make the most of the third sector’s potential.”
 

Notes for Editors:

1. Press notices and reports are available from the date of publication on the National Audit Office (NAO) website, which is at www.nao.org.uk. Hard copies can be obtained from The Stationery Office on 0845 702 3474.
    
2. The NAO employs some 850 staff and is totally independent of government. NAO has had a specialist team examining government policy on the third sector since 2005, when the Value for Money report Working with the Third Sector was published. This report by the Comptroller and Auditor General, Sir John Bourn, who is head of the NAO, examined government’s progress against a series of commitments to improve third sector funding practices.
    
3. Today’s report is the second of three reviews of the third sector’s relationship with government, which NAO is publishing in summer 2007. The first, published on 6 June, examined ‘full cost recovery’ (the question of whether third sector organisations receive the full costs of the services they provide to public bodies). The third report will look at the public funding of large national charities.
    

Press Notice 29/07
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