HealthWatch goes private

It’s probably an understatement to say that the Health and Social Care Act 2012 (the Act), finally passed in March this year, left a great many of the details about how state-funded health and social care in the UK will be scrutinized and delivered open to local interpretation.

An interesting early example of a local interpretation that some may find perplexing is the decision of Lancashire County Council to award the contract to run HealthWatch – the new body which will be responsible for representing and communicating the views of patients and other local people about health and social care services – in their area to a private company, Parkwood Healthcare.

Local HealthWatch organisations are the Act’s replacement for Local Involvement Networks (LINks). It’s perhaps not surprising that Though Cowards Flinch, a left-wing blog, is concerned that the service in Lancashire is being taken on by a private company but they rightly point out that this raises an interesting question about the government’s understanding of ‘social enterprise’.

They note that, according the Act, HealthWatch services should be contracted out to a corporate body that:

(a) is a social enterprise, and

(b) satisfies such criteria as may be prescribed by regulations made by the Secretary of State

And that, based on a late amendment passed in the House of Lords, the definition of a social enterprises is as follows:

For the purposes of this section, a body is a social enterprise if—

(a) a person might reasonably consider that it acts for the benefit of the community in England, and

(b) it satisfies such criteria as may be prescribed by regulations made by the Secretary of State.”

There’s never any shortage of awards being dished out in the world of social enterprise but, as far as I know, there’s not yet one ‘woolliest definition of social enterprise by a public body’. If and when it’s launched, this definition should be enough to ensure that the Department of Health has an annual addition to its trophy cabinet for many years to come.

Unusually for anything connected to the Act, this is not a cock-up. Neither is it a conspiracy. In the absence of any evidence to the contrary, it’s health secretary, Andrew Lansley’s policy on social enterprise. When he pledged, in July 2010, at the beginning of his battle to reform the NHS, that he was going to create ‘the largest social enterprise sector in the world’, he wanted to create an open market in NHS funded services which would be likely to lead to the NHS contracting out lots more services to companies that delivered health care.

HealthWatch is considerably less prominent in the public and political consciousness than actual NHS-funded service delivery so – although there was lots of discussion of its role as the Act made it’s way through parliament – the question of who delivers it didn’t get subjected to the same level of scrutiny.

In the case of the Lancashire contract there’s several important points.

One is that the company that won the contract, Parkwood Healthcare, is not a social enterprise in any sense that the term is currently used in the UK. In terms of what ‘a person might reasonably consider’, I as a person consider that Parkwood, as a PLC, acts primarily for the benefit of its shareholders because it’s legally obliged to do so. The only thing it’s obliged to do for ‘the community’ is obey the law. On the other hand, another person might consider that the organisation – by virtue of the fact that it delivers public contracts – acts for the benefit of the community. If so, Parkwood is a social enterprise but then so is BAE Systems.

The second important point, though, is that Parkwood Healthcare clearly does have relevant experience in delivering the kind of work it’s been contracted to deliver. It already manages LINks – the predecessor to HealthWatch – in four local areas. Is there any reason why the fact that it’s a PLC means that it won’t do a good job of supporting the people of Lancashire to scrutinise health and social care services?

The LINks contracts were awarded under previous legislation and, as As Though Cowards Flinch suggests, there is a potentially interesting legal question about the actions of Lancashire Council in awarding this contract under the Act. Whether it’s a question that gets examined will depend on whether any local people or social enterprises are concerned enough to take it up.

Either way, this suggests that the social enterprise movement is entering a phase where the eternal debate about what a social enterprise is, is going to move from the theoretically fascinating (to some more than others) to the practical relevant. There are a range of possible responses:

(a) We demand that the government defines clearly and unambiguously – across all departments – what it believes a social enterprise is and isn’t.

(b) The social enterprise movement joins with trading charities and community groups to agreed a broad and widely recognised social trading charter that tens of thousands of socially enteprising organisations could and would sign up to.

(c) We forget about definition entirely and attempt to win contracts like the Lancashire HealthWatch contract against all comers purely on the basis of the goods or services we can provide – and the price we can provide them for.

I think (b) might be worth considering. We could try all of them at the same time.

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10 Comments

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10 responses to “HealthWatch goes private

  1. The Act is also ambiguous in stating that an entity ‘acts for the benefit of the community in England’ – i.e. does a social enterprise have to benefit ALL of the people in this one homogenous community that is England?!

    I’ve often argued for the need for an agreed definition of social enterprise but perhaps what’s more interesting is where this definition should come from. The definition that all the UK intermediaries have used as the basis for their purpose and membership came from the UK Government Department of Trade and Industry in 2002 – in the 10 years since then it is a shame that we have not progressed coherently enough as a movement to define exactly what it is that we stand for.

    Regarding option b) the social enterprise ‘sector’ already encompasses trading charities and community groups which is why there is so much confusion from within the movement, the Government and the public at large – a charter that attempts to combine business and charity will not be constructive.

    In 2012 surely we should just be focussing on option c) – social impact and not on what structure or rhetoric is being used? And therefore perhaps we should stop using the term social enterprise altogether.

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  2. Beanbags admin

    Well, I agree with you to the extent that I think stopping using the term ‘social enterprise’ altogether would be a more honest and coherent position for the government to take than its current position. Unfortunately, the ambiguity around social enterprise is the main quality that makes it so politically useful (to politicians of all parties).

    I don’t think we do need an agreed definition of social enterprise but I think there are some things that need to be defined in some situations. Whether an organisation takes responsibility for a democratic scrutiny function such as a HealthWatch is one of those situations. If the government want to allow these services to be contracted out to the private sector then they should say so – not use a woolly definition of social enterprise to fudge the issue.

    More broadly, what I’m arguing for in terms of the charter idea is a badge for trading organisations that are legally committed to a social purpose rather than a purely commercial one – this would include charities and community groups that don’t describe themselves as social enterprises.

    The point wouldn’t be to attempt to decide which organisations could and couldn’t call themselves social enterprises – for me, that should always be based on self-definition and I don’t see any value in actively excluding purely commercially structured business from the broader social enterprise movement – but to give public sector commissioners and members of the public some clear, basic information about the organisations they’re buying from.

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  3. Hmmm. There is a reason why ill defined terms like “social enterprise” and “mutual” appeal to some people and some governments. It is because they are ill defined.

    People who like them (often on both sides of contracts i.e. contracting and contracted) don’t want to be tied by the perfectly good definitions (and ways of doing things) already in circulation.

    Hardwired definitions like charity (as opposed to social enterprise) and co-operative (as opposed to mutual) mean that people and organisations have to write charitable benefit / values & principles etc into their corporate DNA and then behave accordingly, otherwise the relevant systems and procedures have the capacity to hold them to account and make them comply with their constitutions / legal status.

    Local Healthwatch services could be contracted (or grant aided as has already been done in North Somerset) to charities or community benefit societies (not for profit Industrial & Provident Society co-operative with a small C model).

    When I stumble across cases like this where someone or some organisation has wilfully avoided contracting corporate entities that enshrine community or charitable benefit into their DNA by using the fudge “social enterprise” I find myself questioning the motives of the contracting authority, rather than the relevance of charitable or community benefit models…

    After all, once you remove registered charities (about 170,000 of them?) and co-operatives (about £25 billion annual turnover?) from the much vaunted “social economy”, what’s left?

    Governments (like politically convenient fudge friendly terminology) come and governments go. Co-operatives have been around for 150+ years. Charities have been around even longer

    Both will still be around and still be helping people long after this governemnt has gone, so I would advise against wasting (in my personal view) a lot of time and energy on defining something that doesn’t need defining and that even those people / organisations who use it don’t REALLY want defined.

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    • jeffmowatt

      Jim, It was you, I remember that described the Community Benefit Society as “a cooperative for the greater good”. It was this model we chose in 2004, as best match to our social business approach, which reasoned for the embedding of social purpose in a seminal paper from 1996.

      Given both my own experience of ‘wilful avoidance’ by Gloucestershire NHS (in the supply chain rather than in care services) , I tend to agree about the need to examine the motives of the contracting authority who in this case were preparing to contract out wholesale to an organisation set of as a CIC out of nowhere. We’d already seen a local SET set up as a CIC and cream of more than 200k of public funds without ever trading. The money went to a consultant , a former director of Atos Healthcare, who had no footprint in social enterprise.

      As the people at Barton Street told me, the CIC model is only a set of guidelines.

      Now I have to say this about the coop movement , who essentially dismissed what we approached them with in 2004, as did many of the SE support bodies. In David’s preceding article I relate how one of these support orgs ignored our attempts to connect for several years, blocking out the self-sustaining approach we’d developed and pioneered.

      Cooperatives UK, with their recent embrace of economist Noreena Hertz have come to similar conclusions as P-CED had in 1996 and now seems set to follow the same path. if you do, I hope this time around to see some collaboration, perhaps attribution to someone whose integrity was beyond reproach or the scope of any badge:

      http://economics4humanity.wordpress.com/2012/06/29/capitalism-with-collaboration/

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      • Jeff, that’s interesting but equally bemusing I’m afraid! I can’t really fathom what you’re trying to say to me (and I’m off on holiday until August now, so don’t panic to get back to me).

        I think you’re trying to say (but don’t want to put words in your mouth) 2 things:

        1) legal structures (CIC / community benefit society / whatever) are not in and of themselves magic wand solutions. I agree. Co-operatives (both for profit and not for profit) are all about behaviour and there is no system so perfect that it does not require people to choose to be good.
        2) The Co-operative movement can be crap too. I agree with that too. Tell me about it! There is an old joke about the co-operative movement, which is only funny in as far as it is true: it’s not very co-operative and it doesn’t move much.

        For my part and with reference to your comment, “I hope this time around to see some collaboration, perhaps attribution to someone whose integrity was beyond reproach or the scope of any badge…”

        Wishing and hoping won’t do it. As I often bore the people with whom I work: we get the democracy we deserve.

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  4. Beanbags admin

    I agree entirely with the first half of your comment – and the end – I disgree with some of the bits in the middle.

    I disagree in terms of questioning of the motives of the contracting authority in this case. My opinion – the legal position may be different if the decision is challenged – is that Lancashire Council have made one of a range of legitimate interpretations of some bad legislation. And I’ve got no reason to doubt they’re motivated by anything other than getting the best deal for local people. I also disagree that there’s not much of the social economy beyond charities and co-ops. There are over 6000 Community Interest Companies in the UK. There’s also plenty of non-charity companies-limited-by-guaratee and unregisted community groups.

    Agree, though, that we don’t need to pursue some universal, uncontestable definition of social enterprise. My position is that the government should define the term properly if it’s going to use in legislation in relation to awarding of contracts. Or (as Richard Patey suggests) it could continue to operate mutliple definitions – and not use the term in legislation in relation to awarding of contracts. It can’t have its Fairtrade chocolate bar and eat it.

    The ‘social trading charter’ idea – which would obviously need a better brand than ‘social trading charter’ – is about providing customers (both commissioners and the public) with clear information about organisations they’re buying from. You wouldn’t have to call yourself a social enterprise to use it and it wouldn’t be appropriate for all organisations that describe themselves as social enterprises – or seek to define the entire social economy.

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    • Interesting.

      I’m in no position to question the contracting authority’s interpretation – or the legitimacy thereof – given that as you rightly point out, it’s a dreadfully written bit of legislation, which the subsequent guidance / regulations only seem to be making worse.

      I think we’ll just have to agree to disagree on their motivation, as I suspect we would on a definition of what the “best deal for local people” might mean.

      To my eyes they have contracted a private for profit company, which is in turn owned by a PLC, the purpose of which is to take some of the money meant to provide a public service for vulnerable people and hand it over as profit to speculative investors.

      I have never managed to square that being a good deal for local people, even when considering the “cost effective” argument used for it.

      The 6,000 community interest companies statistic is also somewhat of a red herring (also true with CLGs and unicorporated associations, one of which I am the Chairman of).

      Some CICs are co-operatives. Some CICs (a sizeable number) are wholly owned trading subsidiaries of registered charities. Some CICs are also CLGs.

      Just quoting the number of CIC incorporations without any understanding of what they are doing or how they are doing it is a bit like saying everybody in my town of 4,000 people that owns a car must be driving to the same place.

      On any given day only some of them will be using their cars and it’s most unlikely that they are all going to the same place. Although – just like following the rules of the road when driving – I accept that by registering a CIC or CLG you are signing up to a slightly restricted choice of routes when compared to a less restricted corporate form.

      However, I suggest that the introduction of CICs and unincorporated associations to the discussion supports my point about co-operatives and regsitered charities. These are organisations that are prepared to sign up to public scrutiny of the way that they behave in accord with a public commitment to behave in ways that do benefit their communities.

      Finally (you’ll be pleased to know… I’m starting to bore myself now), as for the scale of the “social economy” beyond charities and co-operatives, there’s no need to take my word for it.

      The Social Enterprise UK website says that for 2011, “The best government data (the Annual Survey of Small Businesses UK 2010) estimates that there are approximately 68,000 social enterprises in the UK contributing at least £24bn to the economy.” http://www.socialenterprise.org.uk/about/about-social-enterprise#what%20data

      Whereas the just published UK co-ops economy survey (all co-ops are social enterprises but not all social enterprises are co-ops) says, “more than 5,900 co-operative businesses in the UK contribute £35.6bn to the UK economy” http://www.uk.coop/node/12691

      And the latest Charity Commission data from 2012 describes income to registered charities as £57 billion, spread between 162,000 charities.

      Clearly the various numbers being quoted by here by the various interest groups are questionable but the figures do suggest that it is fair to say that although there are “social enterprises” that are neither co-operatives nor registered charities (and as I say I chair one), in purely ECONOMIC terms these “social enterprises” are of marginal significance when compared to charities and co-ops.

      …I’ll just get my coat.

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