NAO urges Department of Health to set targets for NHS social enterprises

Watchdog report finds little evidence of value for money so far from spun-out NHS bodies

The success of NHS social enterprises cannot be accurately measured, the National Audit Office has found.

The watchdog's report on the Department of Health's right to request programme - an initiative to encourage Primary Care Trust (PCT) staff to form social enterprises - has found there is no evidence of its value for money.

The NAO said it is too early to accurately measure the success of the programme as only 20 social enterprises are in operation. Most of these only came into effect in April 2011 and so do not yet have a track record.

The Department of Health did not set specific targets for the programme because it is a sub-set of the wider transforming community services initiative. The NAO found that by not doing so, PCTs are reducing the likelihood of benefits being delivered and their value for money cannot be accurately reported.

PCTs have not accounted for any benefits that social enterprises could deliver beyond what would have otherwise been required of alternative, in-house providers, according to the NAO. PCTs are therefore urged to specify all the benefits social enterprises are expected to deliver in initial commissioning contracts.

But some in the social enterprise sector have questioned why the programme has been evaluated so early. Peter Holbrook, chief executive of the Social Enterprise Coalition (SEC), said it was difficult to draw any accurate or fair conclusions and said that stipulating the benefits to be delivered by social enterprises in the way suggested by the NAO would "negate the ability of these organisations to empower their staff and communities to develop quality services". He said the suggestion that social enterprises should be requested to deliver additional benefits was unfair.

The sustainability of social enterprises is still heavily dependent on NHS funding and the report found PCTs are ill-prepared for a situation where they fail. Contingency strategies need to be developed should social enterprises not survive when contracts are put out to competition.

Amyas Morse, head of the NAO, said that the department must "reassess" its approach to contracting social enterprises, adding that there are many risks involved if the department is to get value for money from the contracts awarded to social enterprises.

A report in February by the University of Birmingham on the programme concluded that NHS staff needed more support to become social entrepreneurs.

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Read the complete post at http://www.guardian.co.uk/public-leaders-network/2011/jun/24/nao-report-nhs-social-enterprises