Making Ends Meet - Partnerships

Budgets

It is essential for all partnerships to be clear about the financial resources they are allocated and how they will discharge their responsibilities for managing these resources. They should also develop clear criteria for deploying resources based on the aims and objectives of the partnership and identified need. Specific information should be included in the partnership agreement.

This section outlines some options on managing the money in partnership, the benefits this can bring, and some detailed information on 'pooled budgets'.

Financial benefits

There are a number of potential financial benefits from partnership working:

A whole-systems approach can lead to new, more cost-effective, solutions and services.
It can avoid duplication and overlap in service delivery and in the use of resources by the respective agencies.
It can achieve economies of scale.
A larger joint budget gives more capacity, flexibility and, when used to jointly commission services, can have a greater influence on the market.

"….a joint approach with health, housing and other agencies, based on a shared vision for older people is paying dividends in many parts of the country. An increasing number of councils are engaging with their partners to carry out 'whole systems' Best Value reviews of older people's services, looking at the broad shape of current service provision and exploring how best use can be made of all agencies' resources in the future."

Tracking the Changes - Joint Review Team Sixth Annual Report 2001/02

Nottinghamshire is an example of an Authority which is linked successfully with partners to carry out a best value review, with tangiable benefits. See Good Practice Nottinghamshire.

Changing mainstream services

Whilst some partnerships are making good progress in aligning their mainstream budgets, it is easier - and therefore more common - for agencies to focus initially on the use of special grants or ring-fenced monies. Imaginative use of such funds can help to lever change, but it is important to think early on about how new projects will be sustained or 'rolled out'. Ultimately, substantial change for large groups of local people is likely to require the jointly planned use of mainstream funds.

This is one of the earlt lessons of the wave Children's Fund Partnerships:

"Discussion on the means to achieve sustainability is not sufficiently considered at the outset. HArd-pressed programme managers have acted quickly to get the services established. However, even when there are compelling ewasons for the early consideration of options, this does not happen...

There are many different opportunities,which include disseminating the lessons learned so that provision can be improved; empowering local communities parents and children so that they have the capacity to provide their own services; and pooling funds so that performance can be secured for services with proven effectiveness".

The Children's Fund -First Wave Partnerships, published by the Ofsted, SSI and the Audit Commission, 2003. For a copy of this inspection report, click here.

Managing resources together

There are a number of options for councils to consider regarding the management of financial resources in partnerships.

Exhibit 10 below outlines some examples from different authorities and partnerships. The examples highlight different ways that partnerships can work together to either obtain new funding or make existing resources go further. The section on Practical examples provides more information on each example.

EXHIBIT 10

Managing resources together - options for partnerships	Example
Budget management responsibilities remain with the respective agencies, but partnership arrangements are entered into to help to influence the price paid for services.	In London and the South West of England, local authorities have joined together to agree contracting and pricing arrangements with independent sector residential care providers.
Work in partnership to jointly secure new funding, sometimes by contributing from 'core' budgets to attract the new funding.	In Kent, the County Council and the PCT worked together to secure funding and develop a new service which provides alternatives to nursing and residential care. See Kent Working together to obtain additional funding. More information is included in the Practical examples section.
Agencies allocate resources from their own budgets to support multi-agency working to develop services to achieve cost-effective outcomes.	The Early Intervention Panel in Ealing is multi-agency and is contributing to improved and cost-effective outcomes for children and young people, by providing services which prevent children and young people coming into the care system. See Ealing Good Practice Example. More information is included in the Practical examples section.
Partner agencies allocate resources to create 'ringfenced budgets' to support specific service developments.	In South Tyneside, the Joint Commissioning Group for children's services worked on placing more looked after children in local placements. The resulting saving is being re-invested in local services and on developing the capacity to undertake more joint commissioning work. For more detail see the South Tyneside example. More information is included in the Practical examples section.
Section 28A agreements under the National Health Service Act, 1979. This involves the transfer of resources from health authorities or primary care trusts or Local Health Boards (Wales) to support specific service activity, where the responsibility for managing or commissioning the service has also been transferred to the local authority.	Some authorities have been using the provision under Section 28A for some time as a means of creating joint budgets for joint and integrated services. For further information see the Good Practice Example of Wiltshire in the Practical examples section.
Section 28BB of the National Health Services Act, 1979. This is the same as Section 28A except the local authority transfers funding and the management of services to health bodies.
Agencies allocate commissioning budgets to support joint commissioning and purchasing of services.	Budgets remain with the respective agencies, but are used to commission services together.
Lead commissioning using flexibilities under the Health Act 1999. Budgets are allocated by the agencies in the partnership, and one agency acts as lead commissioner for all the services prescribed in the partnership agreement.	One agency acts on behalf of the others - budget transferred for a specific purpose
'Pooled Budgets' using flexibilities under the Health Act, 1999. Partner agencies identify their respective contributions towards the delivery of a specific service, and the 'pooled budgets' are directly managed by the Partnership.	The Wiltshire in the Practical example section provides examples from Wiltshire which illustrate how the use of pooled budgets can lead to more efficient use of resources including making savings which can be re-invested into the 'pool.'

First steps

Irrespective of which option for allocating and managing resources for a partnership is chosen, there are a number of issues which need to be addressed to ensure effective management of those budgets by the partnership, and clear lines of accountability for budget management back to the agencies involved in the partnership:

Effective financial management of partnership

There needs to be agreement between the agencies involved in the partnership regarding their respective budget allocations to the partnership and how this will be handled over time (for example, planned for future years).
Accounting and audit arrangements must be agreed.
The rules for budget management must be agreed, including how variances will be handled.
There needs to be clarity about management accountability for the budgets within the partnership.
Information requirements regarding budget management and service activity need to be specified.
Budget reporting arrangements need to be specified.

Experience from Joint Reviews suggests there have been difficulties with resolving these issues. Agencies often have different approaches to accounting and financial management, different information systems and disaggregating management and other overheads costs can be problematic. It is important that agencies work hard to resolve these problems and get to a point where each agency's budgets and activity information is clear and transparent. The potential rewards, including more effective and efficient use of resources, improved service delivery and better outcomes for service users, are considerable.

"The sharing of expenditure and activity data between agencies, and the use of these to inform planning, continue to be major areas for development in some places. Without such analysis, it is very unlikely that agencies will achieve the necessary shift - from developing good new services 'on the margins' to reshaping their mainstream services."

Tracking the Changes - Joint Review Team Sixth Annual Report 2001/02

The Good Practice Example illustrates how Kensington and Chelsea approached this.

'Pooled budgets’

Guidance on the Health Act, 1999 - Section 31 Partnership Arrangements and a checklist for using Health Act flexibilities can be found here and Wales here. Both include specific sections on setting up and managing 'pooled budgets'.

The key points noted in the Guidance include:

A pooled budget is a discrete fund to pay for an agreed set of services.
Contributions may come from health authorities, primary care trusts Local Health Boards (Wales) and local authorities.
Once funds are in the pool they can be used to cover anything noted in the partnership agreement.
The partners have to make written agreements stating the functions to be covered by any pooled funding, the agreed aims and outcomes of pooling financial resources, the funds to be contributed by each partner, and which partner will act as host partner.
Host partners will be responsible for accounts and auditing.