Big society: ministers take an axe to the social enterprise bill

Big society: ministers take an axe to the social enterprise bill

Patrick Butler, The Guardian


Cuts-hit social enterprises and charities fear that government changes to proposed legislation could hamper their attempts to win more public service contracts


With impeccable localist logic, the government has taken the axe to the private members bill designed to make it easier for the voluntary sector, staff owned mutuals and social enterprises to compete for public service contracts.


For many of these organisations, already struggling for survival under the pressure of public spending cuts, the changes look ominously like another sign ministers are not prepared to back their "big society" rhetoric with real force.


The most striking of a series of amendments laid down by the minister for civil society Nick Hurd means the bill will no longer even have the words "social enterprise" in its name. Conservative MP Chris White’s Public services (Social Enterprise and Social Value) bill will now become (if it passes into law) the Public Services (Social Value) Act


Out also goes the proposed requirement on government to draw up a national social enterprise strategy, and the proposed duty on local authorities to set out how they will engage with local social enterprises. The amendments will be discussed at committee stage tomorrow. The government has a majority on the committee and is expected to get its way.


So what impact will these changes have? According to Gareth Thomas MP, Labour’s Shadow Minister for Civil Society, the amendments are important:


"After huge cuts in Government funding for civil society groups, now the Government want to axe plans for vital legal requirements which could have helped social enterprises to flourish. This measure would have forced those working in Government and Local Government to think through how they could promote the growth of social enterprises and could have been a huge shot in the arm for the sector. Instead it is yet more proof that the Big Society is just Tory-speak for ‘you’re on your own.’"
White’s office is not so worried. A spokesman described the amendments, which White had apparently anticipated, as:


"Not a significant change"
Social Enterprise UK, which helped draft the bill, said it was unsurprised the government wished to change the "strategy" aspects of the bill. But it added:


"A decision to remove the term ‘social enterprise’ could be very bad news for the Britain’s growing social enterprise sector. The Coalition Government has committed itself to creating a greater role for social enterprises as well as charities and co-operatives to deliver public services. In fact the Big Society vision hinges on this. We are concerned that this important signpost for commissioners everywhere may be removed and change the spirit and letter of the Bill."
Perhaps the most vital aspect of the bill remains unchanged, however: the requirement for public service commissioners to take into account social and environmental value when putting goods and services out to tender. Social Enterprise UK says this is cause for optimism:


"This means that, even with the proposed amendments, the bill will put social enterprises in a stronger position to compete for public sector contracts."
As we know, the Coalition has an irrational abhorrence of plans, strategies and central direction, and so the amended bill becomes less of a directive and more of a "nudge" to commissioners. Effectively, ministers hope that councils and government departments will do The Right Thing. The evidence of the past 12 months, however, suggests they will hope in vain.


The council raiding of unringfenced supported housing budgets (which have devastated third sector providers), and the emerging fiasco of the Work Programme are just two examples of where "big society" rhetoric has been predictably ignored, and where ministerial "nudges" have signally failed to change institutional commissioning behaviour.


As I have written before on this blog, public tenders tend to be stacked against social enterprises; most commissioners want cheapest price and are reassured by the financial muscle of the big private providers. But would social enterprise "strategies" have had any effect anyway? There is always the nagging suspicion that such plans are drawn up, published in glossy brochures and put away on a shelf to gather dust.


On the other hand, Hurd himself has admitted that strategies can be rather useful things to have:


"I am not theological about strategies. Having been in business for 18 years before entering Government, I think that on the whole it is probably a good thing to have a strategy. However, I believe that, particularly in this context, strategies should be governed by the need of the moment, and should be driven by conviction rather than by a requirement to comply with some bureaucratic process."
So there it is: bankers and businesses have strategies, public sector bodies have bureaucratic processes.


Curiously, I interviewed Chris White MP on Tuesday last week and we didn’t discuss the amendments (they were not laid down until the following day, although White’s office has pointed out that Hurd had made clear his intentions a year ago – see column 1217). That explains why my profile of White, which appears online here and in the Society pages of the Guardian newspaper on Wednesday confusingly makes no reference to them.


White believes strongly that the legislation will deliver more opportunities for social enterprises and community groups, even though much of his original bill will most likely now be lost. But when I re-read the interview transcript today, three interesting exchanges which didn’t make it into the final published piece spring out.


The first is his answer to my speculation that the bill might persuade a large national private outsourcing firm (I called it "Megacorp") to rebrand itself as a "social purpose" company to emphasize its "social value", win contracts, and then subcontract to local social enterprises. White replied:


"I don’t think that would be in the spirit of social enterprise, for Megacorp to just play with the rules. This isn’t what we are trying to achieve."
Second, I asked how the social value clause would be policed, and whether its success or otherwise in bringing in public sector business for social enterprises would be monitored. White’s answer begs the question to whom or what social enterprises who feel they have been wronged will complain:


"I suppose the policing and monitoring to a great degree will be done by the social enterprises. If local authorities are not playing by the rules it needs to be from the social enterprise to say this is not right, this is not part of legislation."
Third, I wondered whether White, as a Conservative, thought that his bill was a little too centralist for a localist government to stomach (remember, at this stage I was unaware of the amendments). White has made clear in previous speeches that the big society cannot be left to chance, and will not grow by itself without being nurtured. Indeed, White’s answers suggests he thinks that if a social enterprise revolution is to take place, a little centralism is in order.


"I suppose the extension of what you are saying is anarchy really, isn’t it. There needs to be a structure in place to allow this type of localism to take place."