Radical thinking needed on future of National Citizen Service says Public Accounts Committee

Work is required if National Citizen Service is to become a sustainable investment in young people, the Committee of Public Accounts says today.

In a new Report, the Committee concludes “now is the time to think radically” about what can be learned from the programme’s achievements to date in order to fulfil its ambitions.

Since 2011 more than 300,000 16- to 17-year-olds have taken part in National Citizen Service (NCS), which usually takes place over four consecutive weeks and involves groups undertaking residential courses and community projects.

The Government intends it to become a ‘rite of passage’ for young people and lead to a more cohesive, responsible and engaged society.

However, the Committee concludes the programme “may no longer be justifiable” if it is unable to meet its targets for increasing the number of participants, or achieve its long-term societal aims – both at a cheaper cost per head.

The Committee finds the Department for Culture, Media & Sport (DCMS), which has overall responsibility for NCS, lacks the data to measure long-term outcomes of the programme or understand what works.

It also concludes the NCS Trust (the Trust) and DCMS cannot justify the “seemingly high” cost per participant.

For 2016 this is expected to be £1,863 of taxpayers’ money, which the Committee compares to The Scout Association estimates of £550 to create a place in the Scouts that lasts at least four years.

The Committee highlights that the Trust paid providers some £10 million in 2016 for places that were not filled and expresses disappointment at the Trust’s “relaxed attitude about the non-recovery of these funds”.

It raises concerns about the transparency and governance of the Trust, and finds it is “unclear” whether the Trust has the skills and experience necessary to oversee growth of the NCS programme.

The Committee’s recommendations, detailed below and in the attached Report, set out measures to address these and other concerns.

Meg Hillier MP, Chair of the PAC, said today: “There are considerable long-term ambitions for National Citizen Service, a legacy of David Cameron’s vision of a ‘big society’.

“But in our view it has already reached a critical juncture.

“The Government intends to push on with plans to grow participation, citing evidence that NCS has had a positive impact on young people who have taken part.

“However, this does not in itself justify the level of public spending on the programme, nor demonstrate that NCS in its current form will deliver the proposed benefits to wider society.

“The NCS Trust has received some £475 million of public money – 99% of its income – since 2014-15.

“This and future commitments are significant sums yet it is not at all clear why NCS participation costs should be so much higher than those for a voluntary sector organisation such as the Scouts.

“Nor is it clear why the Trust, as the recipient of this public money, should apparently be so reluctant to voluntarily disclose financial information such as the salaries of directors.

“This attitude does nothing to build public confidence in an organisation that has lacked discipline in recovering overpayments of taxpayers’ money, while running a programme for which there is still no clear evaluation plan.

“If a Bill currently before Parliament becomes law then the Trust will become a Royal Chartered public body and will therefore be obliged to comply with basic principles of governance, accountability and transparency.

“But this is no barrier to action. As a body primarily funded by taxpayers, the Trust can and should comply now.

“Beyond that, we urge the Trust and central government to review fundamentally the way NCS is delivered and its benefits measured before more public money is committed in the programme’s next commissioning round.”

PAC REPORT SUMMARY

Early indications, from the Office for Civil Society’s (OCS) evaluations, suggest that the National Citizen Service (NCS), a programme bringing together groups of 16- to 17-year-olds to undertake activities, has had a real impact on those participating.

It has improved their confidence, developed team-building and life skills, and increased their awareness of the local community.

However, what remains to be seen is whether NCS will become a ‘rite of passage’ and meet its ambitious targets for increasing the number of participants or achieve its long-term societal aims.

Without achieving both these, at a cheaper cost per participant, NCS may no longer be justifiable and the future of the programme could be called into doubt.

Now is the time to think radically about what can be learnt from achievements to date and outline what is needed to grow NCS, bring costs under control and ensure NCS becomes a real and sustainable investment in our young people.

The National Citizen Service Bill also provides an opportunity to revisit the Trust’s governance and management arrangements.

The Cabinet Office set up the NCS Trust (the Trust) as a community interest company almost wholly funded by government, but it has not adopted the transparency and robust governance arrangements we would expect to see.

CONCLUSIONS AND RECOMMENDATIONS

NCS has shown early signs of success but the Department lacks the data to measure long-term outcomes or understand what works.External evaluations commissioned by the OCS assess the short-term impact of NCS on a sample of participants. This showed, for example, that over 80% of young people participating in the summer programme felt more positive towards those from different backgrounds afterwards. Long-term impact measures are not yet in place although the Trust and Department have started thinking about linking with UCAS and HM Revenue & Customs data to measure long-term outcomes. The Department also has plans to track and link schools’ outcome data to past NCS participants. A more detailed understanding of outcomes in the short and long-term, and of what works, could help differentiate NCS from similar schemes aimed at young people, such as the Duke of Edinburgh’s Award, and allow the Trust to better explore opportunities to, for example, mix young people from urban and rural backgrounds.

Recommendation: We expect the Department to establish a clear plan, and secure agreement with other government departments where necessary, by September 2017 for how it is going to evaluate the long-term impact of NCS.

Despite revising downwards the target for the number of NCS participants, the new target remains extremely challenging. In February 2017 the Department for Culture, Media & Sport revised its aim to grow NCS participation from 360,000 in 2020-21, which had been in the Cabinet Office’s single departmental plan, down to 247,000. The Department and Trust told us they felt this figure to be more realistic. However, the new target still requires an increase in the rate of participant growth from 17,000 to 38,500 more participants each year, and so remains very challenging. To meet this aim, the Trust and Department told us they needed wider support from the Department for Education and to encourage young people from all backgrounds to participate. The Trust should also do more to work with existing youth organisations, with differing delivery approaches, to understand how similar youth schemes can work alongside NCS. For instance, The Scouts Association has very similar objectives to NCS. The target for participation requires a step change in activity which creates a challenge in maintaining and assuring quality. To date, the Trust has adopted a one size fits all approach to rolling out NCS - it needs to think more imaginatively about the options for how the programme will be delivered. 

Recommendation: The Department and Trust need to think radically about what meeting the revised target means for how NCS is provided and works alongside other organisations. We expect to see detailed plans to support achieving the revised participations figures within six months.

The Department highlighted the importance of safeguarding NCS participants. In a dispersed delivery model involving different organisations it is vital to have a robust assurance model concerning the safety of young people going through the programme.

Recommendation: In its response to this report the Trust should provide us with details of how it will ensure safeguarding will be embedded as it expands.

The Trust and Department cannot justify the seemingly high cost per participant of NCS. The 2016 expected cost per participant is £1,863 of taxpayers’ money, compared to the expected unit cost of £1,562 that was in the 2015 spending review settlement. The Trust has benchmarked some costs against private sector comparators but not against similar voluntary sector youth organisations which provide input at a much lower cost. For instance, The Scout Association estimates it costs £550 to create a place in the scouts that lasts at least four years. The cost per NCS participant needs to fall to at least £1,649 for NCS participation to grow to the level aspired and for OCS to remain within its spending envelope. The Trust and Department do not have a complete understanding of NCS spend, such as the amount spent locally on marketing or the value of the pro bono support received.

Recommendation: The NCS Trust and Department need to develop a robust and complete NCS cost model and publish benchmarking of its costs in advance of the next commissioning round in 2018.

The Trust paid providers around £10 million in 2016 for places that were not filled. The Trust pays providers 50% of the contracts costs, based on the contracted number of places and contracted unit cost, up-front. In 2016, as providers only filled 87% of these contracted places, the Trust overpaid an estimated £10 million for places not filled. In late 2016, the Trust began an audit to better understand its providers’ costs and potentially recover the 2016 overpayments. The audit did not explicitly cover overpayments before 2016, although the Trust estimates these were around £6.6 million for 2015 alone. This is taxpayers’ money and we were disappointed at the Trust’s relaxed attitude about the non-recovery of these funds. The Trust’s current contracts with its providers end in autumn 2018. New commercial arrangements provide the Trust an opportunity to revisit cost and payment structures.

Recommendation: In its response to this report the Trust should update us on progress with recovering monies paid to providers, in respect of 2016 and previous years. With new provider contracts due next year it must take the opportunity to minimise the risk of paying for unfilled places in future.

The NCS Trust has not met the standards of transparency to be expected from organisations funded almost entirely by the taxpayer. There were salary increases and other figures in the Trust’s annual report that the Chief Executive of the Trust could not explain. This lack of knowledge of the finances concerned us. As a community interest company, the Trust’s published annual report and accounts do not legally need to include some of the disclosures, such as director salaries and pensions contributions, that are required from public sector organisations. Since 2014-15, the Trust has received an expected £475 million of taxpayers’ money, 99% of its income. The Trust has not published these additional disclosures despite there being no legal impediment to doing so. The Trust cannot be properly held to account without adequate information in the public domain. The National Citizen Service Bill and Royal Charter, currently being considered by Parliament, will make the Trust a public body so it will be formally obliged to comply with stricter public sector transparency requirements and standards. But there is no reason why it cannot, in the spirit of openness and transparency publish additional disclosures in the meantime, and we were concerned by the Trust’s apparent reluctance to do so.

Recommendation: Rather than waiting until it receives a Royal Charter, the NCS Trust should comply with public sector expectations and standards of financial reporting for the current year.

The Cabinet Office set up the Trust without appropriate governance arrangements. The Cabinet Office set the Trust up as community interest company to manage NCS outside of government. It told us the aim of this was to make the Trust sufficiently arms-length so it did not appear as a government body to young people. The Chief Executive of the NCS Trust and the Chief Executive of the Civil Service both confirmed that as a non-public body they did not expect Managing Public Money (the principles for managing public resources) to apply to the Trust. The Department suggested that its governance and departmental risk management processes would only apply once the NCS Trust formally becomes a public body. We would expect that basic principles of governance, accountability and transparency should apply to all bodies who are primarily funded by the taxpayer or controlled by government, regardless of their legal form. It is worrying that, despite our previous concerns, some bodies substantively funded by the taxpayer are still not subject to basic principles for managing public money, and that the Cabinet Office has sanctioned this situation.

Recommendation: We expect the Cabinet Office to provide us, within six months, a list of all companies substantially funded or controlled by the government that are not currently required to apply the principles of Managing Public Money, and its plans to regularise their accountability.

It is unclear whether the Trust has the skills and expertise necessary to oversee a project of this scale. We were concerned that the skills and experience needed to oversee the projected increase in participation were not clearly evident. The Trust has been expanding its staff numbers rapidly since 2013, but only appointed a ’Chief People Officer’ in summer 2016. The Chief Executive of the Trust told us that he has no experience running an organisation of this size but has set up a youth organisation and worked with bigger budgets than NCS as a consultant. We were unclear how these roles equated to setting up a project and implementing changes of the scale required.

Recommendation: Alongside its response to this report, the Trust should provide us with a timetable and action plan for how it will put in place the governance, leadership and expertise necessary to deliver the expansion.