This page is part of our decommissioning toolkit.
Decommissioning is not the same as cuts. Cuts are usually decisions taken simply on the basis of reducing the costs of service provision, while decommissioning is a process which, while sometimes leading to the stopping of services, can mitigate the potentially damaging effects of cuts.
Although the results of cuts and decommissioning may appear the same, a well managed decommissioning process can go beyond immediate short-term ‘efficiencies’ and think more strategically and radically about how to reduce cost in the long term. Cutting spending effectively requires commissioners to take a strategic overview to avoid an erosion of service quality in priority delivery areas. Commissioners should clearly prioritise what matters most, based on an accurate, realistic assessment of the costs, benefits and risks of the options. And, successful decommissioning can leave third sector organisations (TSOs) feeling that they were appropriately consulted and fairly treated, an important consideration.
Conversely, poor decommissioning may lead to poor value for money and lost opportunity (see Practical example, below). Uniform top-slicing of budgets or indiscriminate cost-cutting can leave commissioners exposed and unprepared for the future and can lead to higher overall costs or the displacement of costs elsewhere. Although the issue of cuts may dominate the public discourse, it is important that the concept of good decommissioning– which can be either a good, indifferent or bad process in terms of how it is handled – is not lost. Decommissioning, as we have said, can help mitigate and reduce the risks associated with a more narrow and resource-focused approach to cuts.
Although commissioners should try to implement a strategic and effective process of decommissioning, there may be circumstances where an ‘intelligent’ approach to decommissioning, that is commensurate with the principles of good decommissioning, is not possible. For example, the speed of budget cuts may militate against an approach which involves the substantial involvement of users and providers in the decision making process.
For many commissioners, finding a perfect balance between the needs of commissioners, providers, users, value for money and service quality, and the needs of the workforce may not be realistic or achievable. So, wherever possible we also set out the risks of not carrying out good practice and the basic steps commissioners can take to minimise these risks when they are under pressure to decommission quickly.
The table below outlines the differences between a cuts-driven approach to decommissioning and one driven by an “intelligent” commissioning approach. The latter approach, drawing on good commissioning practice, improves the outcomes of the process, and mitigates risks to commissioners, providers and service users.
Practical example – The cost of poor decommissioning
Context
A council faced with significantly reduced funding sought to make swift budget savings by cutting a number of small grants and contracts with local TSOs (the majority of them for £30,000 a year or less) under its ‘tackling health inequalities’ strategic priorities. These were funded through a pooled budget arrangement with the local Primary Care Trust (PCT). Services provided included:
- a charity promoting the health of older people in supported accommodation;
- a local asthma organisation supporting the development of child friendly environments; and
- a local needle-exchange service increasing awareness of blood borne viruses among injecting heroin users.
What happened?
All of the TSOs affected were given one month notice of the complete withdrawal of funding, even though the council had previously indicated that funding was secure, would continue until the end of the financial year, and it would give three months notice of any withdrawal of funding.
In conjunction with the local Council for Voluntary Services (CVS) the TSOs requested a meeting with the council to understand the reasons for the abrupt funding cuts and to ensure the process was Compact compliant. The council refused to meet and maintained that the TSOs targeted were ones where they were able to give only a month’s notice, as there were no valid contracts in place, and hence it was Compact compliant.
The TSOs’ legal advice suggested they had a very strong case so, despite the risk of the financial costs of challenging the council’s decision, the TSOs decided to seek a judicial review. The TSOs informed the council of their decision to allow an opportunity for a change in approach.
The council had also not consulted the PCT about its decision. This led to a dispute between the two, with the PCT voicing concerns as it was joint funding these services through a pooled budget. As a result, the PCT entered discussions with the council to see how this could be resolved.
In addition, all of the local MPs were contacted and the majority supported the TSOs, increasing the pressure on the council.
Outcomes
Given the groundswell of political and public support for the TSOs, the council felt that it was suffering significant reputational damage, faced the potential costs of losing a judicial review and risked worsening relationships with local stakeholders such as MPs, elected members, the PCT and the wider community.
The council deferred the decision to decommission. As well as the time and resources wasted so far, it still has not managed to make the savings required. It now needs to re-start the budget and option analysis process with improved consultation and stakeholder engagement.
Differences between “cuts-driven” decommissioning and “intelligent” decommissioning
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Related content
Table of contents
Decommissioning toolkit: Table of contents