“Governments, led by the UK, embraced “social enterprise” as the “third way” – income-generating charities that did not depend wholly on public coffers but dealt with the increasing number of social problems that defied government solutions. My main concern about this viewpoint is that it stripped the notion of innovation and systems change – the essence of social entrepreneurial endeavour – right out of the approach. In the UK and those countries that have followed, social enterprises have become part of the ‘social enterprise industrial complex’, sub-contractors to government and feeding into a dysfunctional system.”
Pamela Hartigan, Director of the Skoll Centre for Social Entrepreneurship, announces herself as the Dwight Eisenhower of the social enterprise world in a recent blog for Oxfam. The next sentence is: “But that is for another blog” so we don’t yet know what the ‘social enterprise industrial complex’ actually is but, from what precedes it, the suggestion is that Hartigan may have some concerns about the role of social enterprise in UK public service outsourcing.
The service is brilliant because we’re brilliant and we’ve got the contract
She’s not the only one. July saw the publication of (at least) two papers looking at the changing relationship between the social sectors and the state. In ‘Failing the public?‘, a ‘provocation paper’ published by NPC, Fiona Sheil asks whether charities’ increasing focus on delivering contracts within existing public service systems inhibits their ability to innovate and advocate for change.
While acknowledging the value of specialist services funded by the state, Sheil questions the assumption (widely held by many in social enterprise) that the fact that a social organisation ends up delivering a public contract is a good thing in itself: “in more generic, universal provision, how much value does a charity add when under contract? Many charities argue strongly that service delivery by a mission-driven organisation with a beneficiary focus can produce better results, and that taking on contracts is the best way to prove this. However, studies show that in some cases contract terms and pricing is so tight that charities end up delivering services of no better quality than providers from other sectors.”
For Sheil, charities need to be able to provide better evidence of the kind of services that are needed. She explains: “Research work is often considered a nicety, not a necessity. Funding tends to be sporadic, and limited, and systems and skills for collecting evidence and demonstrating impact are often not planned or embedded. As a result, the charity sector is operating in a public service system that is itself deficient, because of its lack of commitment to evidenced based decisions, and the charity sector is doing too little to alter that.”
Even more important is the role of people who use services. While politicians of all parties have been ramping up the rhetoric about co-production, Sheil believes that it’s up to the charity sector to demonstrate the reality: “The charity sector itself is a demonstration of user and peer-led activity. Charities should be knocking down the doors of Whitehall to promote all methods of service and system structure that give users greater power and control.”
Ultimately, Sheil’s point is that charities need to focus on how they can best work with and influence public services to achieve a positive social impact rather than assume there’s a direct correlation between positive social change and growth in their own turnover: “The sector needs to identify where it adds specific value through the delivery of public services, and where delivery by any competent provider would achieve a similar result. If the system is well structured, and its principles and evidential basis sound, it matters less who delivers the actual service to people.”
The key difficultly with Sheil’s paper is that, primarily due to the fact that it’s a relatively short opinion piece, it’s easy to endorse many of sentiments without being clear how they’d translate into practice.
Your grants are lovely but your contracts are instruments of neo-liberal co-option
Equally sceptical about the voluntary sector’s role in public service outsourcing, albeit for slightly different reasons, is Glasgow Caledonian University academic and former MP, Les Huckfield. Huckfield’s paper, ‘The Rise and Influence of Social Enterprise, Social Investment and Public Service Mutuals‘ is part of the National Coalition for Independent Action(NCIA)’s ‘Inquiry into Voluntary Services‘.
The NCIA are a campaign group known for their robust, if not especially nuanced, arguments in favour of a voluntary sector that either campaigns for social change or delivers mostly small scale, grant-funded activities that fill the gaps left by the public sector. These organisations may also develop innovative approaches that could be adopted by the public sector in order to be rolled out on a larger scale.
In his paper, Huckfield starts from the assumption that the marketization of public service delivery is a very bad thing and provides a blow-by-blow examination and denunciation of the policies and organisations connected to it (some more directly than others). He claims that: “the landscape in which NCIA organisations operate has been completely transformed by New Labour and Coalition Government promotion of Social Enterprises and Social Investment, and by the Coalition Government’s introduction of Public Service Mutuals. ‘Social Enterprise’ has become a generic term for Third Sector organisations delivering public services.”
Those of us who are politically ambivalent about public service marketisation often ignore the work of the NCIA on the basis that they’re more focused on (re)stating an honourable position than suggesting ways that charities and social enterprise might respond to the everyday challenges of keeping going within the modern economy. In some areas of public service delivery (such as residential care) rejecting marketization, rather than campaigning for different types of markets, is practically irrelevant. In others (such as supporting independent living) it’s simply wrong.
It would be a mistake, though, for social sector pragmatists to ignore this paper entirely. Partly because while bemoaning the raft of initiatives aimed at ‘the transformation of voluntary services providers into quasi-businesses‘, Huckfield also does a good job of explained just how unsuccessful many of them have been.
Social investment is a particular area where successive governments have been so keen on the idea in principle that they’ve been broadly indifferent to the practical realities. Huckfield gives a concise of overview of how the UK social investment market arrived at its current predicament before concluding: “All these evaluations above show that ChangeUp, Futurebuilders and the Social Enterprise Investment Fund [SEIF]– all of which sought to fashion more of the Third Sector within the Government’s procurement agenda and to become vehicles for Social Investment – have not been very successful.”
If anything, the assessment of SEIF as not being very successful is, as reported previously, unduly generous. Huckfield is right to point out the gap between the huge coverage given to initiatives such as Social Impact Bonds and the reality of the emerging social investment market: “As a proportion of all Social Investment, the [GHK] Report shows that 90% was for secured loans, mostly through social banks, and only 1% for Social Impact Bonds, These Reports shows that despite considerable Cabinet Office funding and continuing publicity hype by Big Society Capital and SIFIs, the concept of Social Investment is making only slow progress.”
The problem is that Huckfield is so successful in demonstrating the failings of attempts to entice the voluntary sector in public service markets, he struggles to make a convincing argument for why those attempts must be defeated.
Brolly bad show
The other reason for reading paper, though, is to enjoy Huckfield’s charge sheet directed at umbrella organisations who have, as he sees it, functioned as ‘The Government’s ‘Little Helpers” in supporting an increased role for the voluntary sector in contracted public service delivery. The guilty parties include: Social Enterprise UK, Locality, ACEVO and NCVO.
Some of the charges levied at these umbrellas seem more relevant than others. For example, Social Enterprise UK is criticised for allowing private sector businesses to become supporter members and for being: ‘equivocal on the crucial issue of the role and power of equity and shareholding in social enterprises’.
We’re also told that: “Alongside Social Enterprise UK and ACEVO, NCVO forms a national triumvirate of Third Sector organisations which have underpinned Government policy on contracted and outsourced delivery of public services and has consistently argued for a ‘level playing field’ to allow voluntary agencies to compete with the
private sector for outsourced public services.”
It’s not clear whether Huckfield believes these organisations should instead argue for their members to be discriminated against in commissioning processes, whether they should argue for a sloping playing field (perhaps with commissioners changing ends at half time) or whether they should just argue less consistently.
On the other hand, Huckfield is surprisingly matter of fact about ACEVO chief executive, Sir Stephen Bubb, and other voluntary sector leaders placing themselves at the heart of Andrew Lansley’s controversial Health and Social Care Act 2012. In Bubb’s case, by chairing the “Choice and Competition: Delivering Real Choice” Panel for the NHS Future Forum.
Huckfield notes that, while in that role, Bubb reiterated his support for: ‘the principles set out in the White Paper – the principles of diversity, of choice, of transparency, of free competition‘ but there’s no wider consideration of the extent to which the workings of Pamela Hartigan’s ‘social enterprise industrial complex’ may have been partially responsible for the legislative dog’s dinner that emerged at the end of the process.
Huckfield successfully proves leading umbrella bodies entirely guilty of following their publicly stated policies, policies which he and (presumably) NCIA members disagree with. He doesn’t prove that in doing so they’ve misled anyone, let down their members or made the world a worse place as a result. Nor does he suggest how charities and social enterprises, their members or the people who use their services, would be any better off if they followed the NCIA’s rejectionist line.
Ultimately, though, what Huckfield, Fiona Sheil and Pamela Hartigan all remind us of, in very different ways, is that charities and social enterprises don’t exist in a political vacuum. If a social organisation takes on a public contract, it isn’t just taking on a contract, it’s engaging with the system that produced that contract and the political assumptions and decisions that underpin it.