Mr. Michael Bowe:

I thank committee members for the invitation to speak to them. The Irish Local Development Network, ILDN, is the representative body for the country’s 49 local development companies, LDCs, often referred to as partnership companies. They are not-for-profit, multi-sectoral partnerships that deliver community and rural development, labour market activation, social inclusion and social enterprise services across the country. Last year they supported more than 15,000 communities and community groups and 173,000 individuals by delivering approximately €330 million worth of programmes on behalf of Departments and State agencies. Examples include the social inclusion community activation programme, known as SICAP, employment supports, Leader, education, child care, public health and social enterprise programmes and supports. The ILDN supports its member organisations through liaison with funders, research and policy development, publicity and communications, networking opportunities, advocacy and representation, training, group procurement such as insurance, Garda vetting, etc.

Specifically, in the context of the Department of Employment Affairs and Social Protection, local development companies deliver the following programmes on its behalf: the back-to-work enterprise allowance; Tús; the rural social scheme; the local employment service; jobs clubs; the community employment scheme and the jobs initiative. Through these programmes, in 2016 we placed almost 9,000 people in employment and 5,772 in self-employment; supported 336 social enterprises to employ a further 4,808 people, and placed and supported almost 11,000 other individuals in Tús, rural social scheme, community employment scheme and jobs initiative programmes. In addition to these outcomes, employment and training supports were provided for a further 20,000 individuals whose employment journey had not yet led to a job, including those experiencing multiple barriers to entering the labour market. A further societal benefit is the several thousand communities and community groups, the daily lives of which are enhanced by the contributions of programme participants to their local areas.

The background to the formation of local development companies is that they were set up by the voluntary sector on the invitation of the State to link hard-to-reach communities and individuals with State services and programmes. The relationship dates back almost a quarter of a century through all parts of the employment-unemployment cycle. We continue to enjoy a fruitful, ongoing collaboration with the Department of Employment Affairs and Social Protection and other Departments, on behalf of which we deliver so many services. Local development companies are community-led, bottom-up and not for profit in ethos. Their boards comprise local, voluntary directors alongside public sector personnel and, in many cases, employers, union and elected representatives. They link with local economic and community plans and local community development committees, usually known as LECPs and LCDCs, ensuring wide-ranging oversight and democratic accountability. We make decisions and base our services close to where they have an impact, ensuring our links with employers, job seekers and communities are harnessed for maximum effect. Because we operate multiple programmes in multiple sectors, our programmes do not compete with each other, but complementary supports can be offered to service users. For example, they may use our training, job seeker, child care and health promotion services simultaneously.

These are some of the distinguishing features of local development companies, but it is important that we also give the committee and the wider public assurances as to the quality, effectiveness, governance and value for money we provide. In that regard, let me make a few observations.

Regarding performance, LDCs are evaluated and audited by a range of external bodies. For instance, Pobal’s rigorous monitoring of our delivery of SICAP shows a significant surpassing of the prescribed KPI targets which have been circulated for the information of members. Included is the achievement, to a figure of 138%, of the progression to employment indicator, KPI1, for the latest year on record. Therefore, we are not opposed to independent measurement and evaluation. All of our programmes are subject to funder audit and inspection by local, national and EU statutory bodies and, in some cases, all three.

We still await publication of the Indecon report on the LES and jobs clubs, but in the meantime we can give some details of value-for-money aspects of the LES. Using methodology employed by the UK Centre for Economic and Social Inclusion which the Department engaged during its cost modelling for JobPath, Mayo LES has returned a minimum of €1.96 million to the Exchequer, while costing the latter €871,000. A three-year study at Ballymun LES found that a societal value of €2.77 was generated for every €1 invested. While these statistics are a few years old, we would welcome the release of the Indecon report on the LES and jobs club as a contribution to the current discussion. My comments are offered to demonstrate that LDCs are not seeking protected status, or a reduced level of oversight than the investment of public moneys deserves. We do not fear competition, KPIs or detailed oversight, but we do have reservations about using a payment-per-results model for social programmes owing to the impact on participants. Thus, we share the concerns raised at the committee on 25 January by Dr. Mary Murphy when she critiqued the impact of tendering and commissioning, as applied, saying it made operators "compete with one another for the attention of recipients rather than figure out what the best service is for those recipients."

The negative impact of the current model of competitive tendering on the beneficiary can be seen in the following ways. First, competitive tenders for social programmes are inefficient as they distract from the core work being done.

In addition, in their 2017 report, Back to the Future: Reimaging the Role of the LES in 2020 Ireland, Dr. Mary Murphy and Ms Audrey Deane list the high transaction costs of contract design and bid preparation, management fees and profit margins of 15% to 20% as impacting on any claimed savings to the extent that such savings may not be realised. Second, the current model limits the focus of the work to the narrow and specific terms of the contract being offered. It prohibits the service from adapting to the inevitable changes in the operational environment over the duration of the contract. In practical terms, a competition can only be run every three to six years, locking all parties into pricing and services that may be more appropriate to a different time. Finally, it promotes payment by a narrow, usually quantitative interpretation of results which promotes cherry-picking and does not allow for deeper work. Is 30 plus hours of work per week the only measure of success we should now allow for those who are most distant from the labour market? That yardstick does not value the contribution of many employees and is potentially discriminatory.

Although we greatly welcome the recent and ongoing reductions in the live register, our services are generally not located in a world of averages. We operate in communities of stubbornly high unemployment and with those most distant from the labour market even in areas where the live register is low.

The nature and scale of unemployment is never static. The Department has outlined to the committee the necessity for it to be responsive to changing need. We support that objective and offer the following observations on the current model of contracting, the rationale for which was outlined as follows by the Department at the committee meeting on 8 March: "Contracting is considered to be the most appropriate approach to augmenting resource capacity to deliver services during a period of peak demand." Crucially, however, this model, as it has been operated, has not facilitated flexibility and has only relatively recently been ramped up in a labour market that is very different from that in being in 2011 when the National Economic and Social Council, NESC, made its report on support and services for unemployed jobseekers that was used to justify current arrangements. Contracted services under the pay-by-results model did not reach truly operational levels until 2016, at which stage there was annual spending of €25 million. The years 2017 and 2018 seem likely to be the most costly, with annual spending of over €50 million at a time when we are told we are on the cusp of full employment.

In contrast, when local development companies, LDCs, were tasked with setting up Tús in 2011, a new scheme was initiated with 6,999 participants engaged by 2013. In response to lower numbers on the live register, the Department is currently revising the Tús quota downwards as well as reducing the overall amount allocated to local development companies in service fees. Another example is the flexibility of the local employment services, LES, network in taking on an additional 50,000 referrals for no extra fee in 2012. There was no lock-in for the taxpayer in those two arrangements. Where such lock-in exists in other contracts, it should not be seen in isolation as it inevitably impacts on programmes where quotas and referrals can be altered without contract breach, as is the case between the Department and local development companies.

The crucial point about the current arrangements is that the Department rightly wants to be able to respond and react to the changing profile of unemployment and underemployment. Partnerships with not-for-profit local development companies are the most effective way to ensure that flexibility and responsiveness. Such partnerships allow for changing terms within the life of a programme rather than a rigid enforcement of contract terms. They further facilitate innovation and value for money as evidenced by new practices such as LES group engagement sessions and their work under the EU globalisation fund, all taken on without industrial relations, IR, issues or any additional funding to the companies. That approach has served the State well and LDCs are willing and able to do more in partnership with our colleagues in the Department, with whom we work extremely well on the ground and on an ongoing basis.

The ILDN and its members wish to be part of a dynamic employment supports and activation framework that is person-centred, flexible and responsive as well as value for money. We are available for increased roles in the design and delivery of new programmes and approaches with jobless households, people with disabilities, returning carers and new cohorts that may be unemployed or underemployed but are not visible on the live register. There are current challenges for the companies with regard to their own sustainability and how they are funded to play their role, but we believe that these can be solved once a clearer framework on contracted services is put in place.

We welcome the committee’s interest in our work and will take any questions that members have.