Social Enterprise – a mouthpiece for Britain’s New Colonialism

Social Enterprise – a mouthpiece for Britain’s New Colonialism
by Les Huckfield

How to Deliver Public Services ‘on the cheap’ – Britain’s Export to the World


This piece is mainly intended for readers outside the UK, especially for trade unions, and those now facing outsourcing and external contracting pressures, especially from ‘Social Enterprises’ funded by Social Investment, Social Impact Bonds and private funding.


Britain is now the world leader in exporting mechanisms, techniques and templates to fund and deliver public services ‘on the cheap’ – using private money and external contractors – with a babble of Social Enterprises and other organisations tripping round the world as global ambassadors in poverty and misery, with expenses paid by the UK Coalition Government and British Council


Social Investment and Social Impact Bonds


Social Investment is the provision and use of public or private repayable finance to generate social as well as financial returns. Social Investment takes a variety of forms such as loans, equity and bonds, including Social Impact Bonds. Social investors may not be able to get their money back in future with a return on their investment. Grants, donations and funds which will not be repaid by definition are not Social Investment.


A Social Impact Bond (SIB) means a multi-year contract in which central or local government or the commissioning agent agrees to pay a proportion of savings resulting from a positive social outcome from various private investments through ‘social sector’ organisations, including private companies. If the SIB programme is successful and delivers positive social outcomes, the demand for these services will drop and a proportion of the cost or “cashable” savings made may be paid to SIB investors. The best example is the UK Government’s Peterborough Social Impact Bond pilot, started by New Labour in 2010 for reducing reoffending. If a SIB is unsuccessful, the investor gets nothing back.


Private For Profit Delivery. A major feature of most Social Investment, Social Impact Bonds and Social Investment Financial Intermediary organisations is that most make no distinction between genuinely “social” structures and private for profit companies which distribute dividends to shareholders. So ‘Social Enterprises’ may be democratically constructed local groups or profit making companies.


All this means less certainty that public services will get funded or delivered. Inevitably it means that service quality usually deteriorates. But for central and local government, all this saves public money.


Rather than the UK Government fighting austerity and poverty, it has turned these techniques into a major export opportunity!


Outsourcing, Minimum Wage and Zero Hours Contracts


UK public services are being outsourced at a rapid rate. In her Public Services Industry Review 2008 Deanne Julius (previously a Director of Serco) wrote:


“The PSI (Public Services Industry) in the UK is the most developed in the world and is second in size only to that of the US. In 2007/8 its revenues totalled £79bn, gen-erating £45bn in value added and employing over 1.2mn people.” …In terms of value added the PSI is significantly larger than ‘Food, beverages and tobacco’ (£23bn in 2006), ‘Communication’ (£28bn), ‘Electricity, gas and water supply’ (£32bn) and ‘Hotels and restaurants’ (£36bn)”.


In Open Access: Delivering Quality and Value in our Public Services for the Confederation of British Industry in September 2012, Oxford Economics wrote:


“..not just in the un-open proportion of the markets researched but in the unopened proportion of the estimated £278bn of public services spending which could practicably be more opened up to independent provision”.


Added together, these projections mean that 60% of total UK public revenue expenditure may be outsourced, mostly to the private sector.


Once public service delivery is outsourced to the private and ‘third sector’ contractors, payment of the National Minimum Wage of £6.31 ($10.73) an hour and Zero Hours Contracts – so that 1.4mn UK employees have no guaranteed working hours – become the norm.


Huckfield is an active member of the Unite the Union Edinburgh Not for Profit Branch. Every branch meeting is dominated by members’ and their representatives’ ongoing battles to ensure that at least the Minimum Wage is paid and that terms and conditions of employment are maintained when services are contracted out.


Every UK major trade union is involved in countless struggles with these same issues following contracting out by central and local government, the National Health Service and private deliverers of public services.


This is the UK Government’s example to the world of how public services can be delivered on the cheap and bypassing trade unions. Sadly, as shown below, paid for by the British Government, many Social Enterprise and Third Sector organisations are lending support to all of this.


Neoliberalism is a Deliberate Construct


This is not the place to extend the academic or philosophical discourse on the meaning of neoliberalism. Suffice it to say here that neoliberalism is not the dismantling of the state. It is a deliberate construction of the state. In the Socio Economic Review 2011, Volume 9, Issue 1, Bruno Amable on Morals and Politics in the Ideology of Neoliberalism writes:


“This theme of social assistance in exchange for something from the individual has been revisited by the so-called “modern left” and led to a critique of the “passive welfare state” as well as an attempt to “justify” a certain degree of inequality in society. The “Third Way” critique of the social democratic conception of welfare policy by the various strands of the “modern left” (Anthony Giddens in Beyond Left and Right: The Future of Radical Politics in 1994) is not substantially different from the standard neoliberal critique and insists on the moral content of the “active” welfare state”


Laying the foundations for neoliberalism began in the United States. In the UK, New Labour and the Cameron Government have built on these foundations.


President Ronald Reagan in October 1981 set up a Taskforce on Private Sector Intiatives to report on:


“Methods of developing, supporting and promoting private sector leadership and responsibility for meeting public needs”


His call to “demand more of ourselves” connected logically to the politics of limited government – requiring a strong civil society. President George Bush’s Inauguration Speech on Friday 20 January 1989 continued in the same vein:


“I have spoken of a Thousand Points of Light, of all the community organizations that are spread like stars throughout the Nation, doing good. We will work hand in hand, encouraging, sometimes leading, sometimes being led, rewarding. We will work on this in the White House, in the Cabinet agencies. I will go to the people and the programs that are the brighter points of light, and I’ll ask every member of my government to become involved”.


From 1997 till 2010, Tony Blair’s and Gordon Brown’s New Labour Governments laid down more neoliberal foundations when they moved the delivery of public service away from the public sector. After less than a year in Office, influenced by Anthony Giddens’ “Third Way” Tony Blair’s Fabian pamphlet New Politics for the New Century in September 1998 set the seal on all of this:


“Whether in education, health, social work, crime prevention or the care of children, “enabling” government strengthens civil society rather than weakening it, and helps families and communities improve their own performance … the state, voluntary sector and individuals working together. New Labour’s task is to strengthen the range and quality of such partnerships”