Osborne sets out Tory vision for third sector public services

Better commissioning, streamlined procurement, payment by results and longer-term contracts will help deliver radical improvements to public services, shadow chancellor George Osborne told third sector leaders today.

A key role for the Social Investment Wholesale Bank also emerged as Osborne and a host of his colleagues outlined their plans at a third sector summit organised by Acevo (the Association of chief executives of voluntary organisations).

A clearer commissioning and procurement process would provide a more level playing field for small organisations and not-for-profits, Osborne told delegates.

Once the third sector was providing these services, they would be paid on their outcomes. Funding for contracts of at least five years would come through various streams of social investment such as the Social Investment Wholesale Bank, Osborne added.

Further funding would have to be levered from government departments based on the savings made by these 'added value' providers.

An example given was an organisation successfully tackling the UK's high reoffending rate and saving some of the £20,000 to £30,000 it costs to keep an offender in prison for a year.

'We want to ensure that you are a much greater part of public service delivery and that up-scaling happens under a Conservative government,' Osborne said.

In return, the shadow chancellor said he expected third sector organisations to 'deliver at scale with innovation and originality'.

'We need professional commissioning and expect professional tendering, and we expect value for money and greater productivity,' Osborne said.

Francis Maude, shadow minister for the Cabinet Office, later said that payment by results would not lead to a postcode lottery and that there would need to be change in 'the culture of the media' to ensure it wasn't promoted as such.

'Different decisions will be made in different areas and they will be voted for locally,' he said.

Throughout today's summit, Tory support for the Social Investment Bank was repeatedly stressed. Shadow work and pensions minister Andrew Selous said the Tories hoped to put £200m into the bank using dormant bank accounts and other funding streams like public spending savings, which would be invested into payment-by-results initiatives.

Maude added about dormant bank accounts: 'It's really important that this money is put in something that's enduring and can make a real enlargement to the social investment market.'

Maude said a Tory government would see an end to small, 'penny piece' government funds, each with 'their own bureaucracy'.

'We'd pull them all together and get more for your buck. We need to make sure the money gets spent well and the maximum critical mass is achieved,' he said.

Other areas of discussion today included productive public services, health and social care, schools and children's services, and unemployment. Reoffending, however, seemed to be central to many of the Tory discussions.