Tag Archives: chris white mp

Some confusion over needs of social enterprise(s)

I went to parliament yesterday for GlobalNet21’s event on Social Enterprise and Equality. Although, one of the speakers, Third Sector Research Centre‘s Simon Teasdale, did talk about current research into equalities issues in social enterprise, perhaps inevitably the bulk of the discussion from the other speakers and the questions from the (large) audience focused on the ability of social enterprises to grow and thrive in the current economic climate.

Of the other two speakers, Chris White, the Conservative MP who introduced the private members bill that became the Public Services (Social Value) Act – which obliges public sector commissioners to consider wider social value when commissioning public services – lived up to his billing as a hero of the social enterprise movement. There’s no shortage of politicians offering trite homilies about social enterprise but White really knows his stuff. He made clear that the passing of the Act was closer to the start of the battle to for wider social value in commissioning then the end of it. And that he was now doing his best to get the message out to commissioners and local councillors around the country.

On the temptation to commission services from large outsourcing specialists who offer short-term cost savings he said: “We need to make sure our elected officials understand that in the long term getting the quick buck is not the best for their communities.

Equally impressively, despite his clear enthusiasm White also showed himself to be successfully inoculated against social enterprise bullsh!t. When one speaker from the floor asserted his organisation’s right to receive government contracts on the basis that “the difference is people like us because we offer a personal service”, he politely responded with “yes, but what does that mean?”

The other invited speaker, Miia Chambers, formerly of P3 and now working for Holy Cross Centre Trust, talked about her experiences of commissioning both from the social enterprise side and in a previous role working on the previous government’s on the Invest to Save programme. She emphasised that it was possible for commissioners to focus on social outcomes – rather than a narrow set of outputs – but that it was currently pretty rare.

The many contributions from the floor – mostly from people running social enterprises – had variety of starting points but most of them ended up with a view on what social enterprises and/or the government needed to do to enable social enterprises to get more business. The views ranged from claims that social enterprises deserved the government’s business on a moral basis, to the views that the most important thing is to be able to demonstrate social impact and that we need to educate the public about social enterprise, to the assertion that “only about 10% of my customers care that I’m a social enterprise“.

Chris White responded to the final point by saying: “The whole point of this mission is that you’re wrong. I fundamentally believe that people do care.” As members of the social enterprise movement we have to hope that he’s right in a broad sense but there’s no reason to doubt that the lady making the ‘only 10% care’ point was correct about the  situation for her organisation.

The reality is that there’s not necessarily any direct connection between the needs of and challenges faced by an individual social enterprise and those faced by the social enterprise movement as a whole. Any more than there’s a direct connection between the needs of your local chip shop and ‘the business community’.

Unlike, ‘the business community’ most of us in the social enterprise movement have both an individual and a collective position. We want to see the growth of successful social enterprises doing more business because we believe this will make the world a better place but our primary concern is keeping our business growing (or, in many cases, going).

In some cases that means there’s a direct conflict in terms of what the government can do to help us. It suits (relatively) large social enterprises for public sector agencies to offer relatively large contracts with an emphasis on measuring social impact using mechanisms such as SROI. In the case of small, local social enterprises, they’re far better off competing for grants and small contracts based on a relatively simple set of outputs. Social enterprises that sell goods and services in open markets may have no interest at all in who gets contracts to deliver public services but may be very keen on the idea of social enterprises receiving tax breaks.

It’s not always a question of right or wrong – people and organisations quite legitimately have different interests – but as we strive to make both the publically-funded service sector, and the wider economy, more social enterprising, we need to recognise that there will continue to be a wide range of understandings of what that actually means.

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Legislating for social value

The Public Services (Social Value) Bill was passed by the House of Lords yesterday. This follows its earlier passage through the House of Commons and it will now become law. This is big news for social enterprises and for the social enterprise movement.

The operative part of the Bill, introduced by Conservative MP Chris White with support from MPs of all parties, is subsection 1 (3) which stipulates that when public sector bodies in England are commissioning public services:

“(3) The authority must consider—
(a) how what is proposed to be procured might improve the economic, social and environmental well-being of the relevant area, and
(b) how, in conducting the process of procurement, it might act with a view to securing that improvement.

As discussed previously, the Bill was originally known as the Public Services (Social Enterprise and Social Value) Bill and included a definition of ‘a social enterprise’ as a vehicle for delivering social value. Specific references to social enterprise and social enterprises were removed from the Bill as a condition of government support – without which it had no chance of becoming law. Despite that disappointment, the fact this Bill has made it through parliament is a triumph for the social enterprise lobby and they’re justifiably very happy about it.

The Bill won’t, in itself, transform the landscape of public sector commissioning and procurement in England. Commissioners can and will interpret the obligation to consider how they might improve economic, social and environmental wellbeing in a wide variety of ways. What the Bill does do is both provide a starting point important for questions to be asked of commissioners – it’s no longer acceptable to simply ignore the wider social impact of commissioning and just  seek the cheapest options – and also provide clear backing for those commissioners who have be keen to prioritise wider social value but have been scared of being criticised for doing so (particularly if that meant spending slightly more).

As Social Enterprise UK chief executive, Peter Holbrook, hints at, it also focuses attention on commissioning decisions taken at a high level within central government: “Without this legislation, the market would remain skewed in favour of larger private firms. We’ve seen this happen with the Work Programme, where few social enterprises and charities were commissioned despite them having a strong track record. We expect to see social enterprises delivering far more public sector contracts with this new Act in place.

While I partially buy the argument that commissioners within local councils and the bodies formerly known as PCTs might have been frightened to commission for social value rather than lowest cost, that clearly isn’t the reason why work and pensions secretary, Iain Duncan Smith, chose to set-up the Work Programme in the way that he did.

The model is primarily designed to save the government money (in the short term) but if Mr Duncan Smith had wanted to design it in a way that would have priortised positive social change, rather than delivering profits for rich individuals while temporary shifting costs of the government balance sheet, he could’ve done so. Even so, accepting that reality still means the Bill is valuable as a means of holding the government to account.

Particularly as the government strongly supports commissioning for social value in theory. Cabinet Office minister, Francis Maude, said last year: “We want services to be run and delivered by mutuals, social enterprises and small businesses; and we want the talented people who are enthusiastic about what they do to be freed up to deliver services in the way that they think is best.

The reality at the moment is that around 11% of spending on public services not delivered directly by the public sector goes to charities and social enterprises. Most major contracts go to large private sector businesses. Ensuring consideration of social value in commissioning doesn’t automatically mean more contracts for social enterprises – social enterprises should be under the same obligation as any other businesses to explain and demonstrate how they deliver social value – but it does at least decrease the likelihood that public contracts will just be dished out to the biggest and cheapest.

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Will social value be prioritised and, if so, what is it?

Today might be a great day for social enterprise. Today’s the day that Chris White MP’s Public Services (Social Value) Bill reaches its report stage in the House of Commons which – roughly speaking – means it’s almost completed its journey through the House of Commons, at which point it will move to the House of Lords.

The main aim of the Bill is to tackle the perceived failure – certainly perceived by social entrepreneurs – of public sector agencies to consider wider social value (beyond price and competence) when commissioning services from outside providers.

For those readers who haven’t been following the story so far, White’s original Bill had ‘social enterprise’ in the title and included a clear definition of what a social enterprise was. It also committed councils (and the government) to producing social enterprise strategies but these elements were removed during the committee stage in October as a condition of government support (which is more or less essential if a private members’ bill, introduced by a backbench MP, is going to have  a chance of becoming law).

In ‘Legislating for the Big Society? The Case of the Public Services (Social Enterprise and Social Value) Bill’* a paper presented at this year’s International Social Innovation Research Conference, Simon Teasdale, Pete Alcock and Graham Smith from the Third Sector Research Centre use the debates that have taken place during Bill’s journey through parliament to examine what they see as the paradox at the heart of the Conservative Party’s (and therefore the coalition government’s) Big Society project.

The underlying problem, Teasdale et al suggest, is that: “Government wants to promote the development of independent providers of welfare services, arising out of communities, voluntary action and social enterprise, at the same time reducing the role of the state and removing red tape and legislative interference” but without legislative interference there is no obvious way to enable that to happen so “There is a potential contradiction here between the desire for a Big Society (and a small state) and the need to level (or tilt) the playing field in order to achieve it.

So, if the Big Society is going to be anything other than whatever would have happened anyway, the state has to play a major role in shaping what it is.

Teasdale et al outline the debate within the Conservative Party between strong supporters of the Big Society and other MPs who they describe as ‘market liberals’. The key difference between the two views is that Big Society supporters, who include Chris White MP, believe in reducing the role of the state but also believe that more public services should be delivered by social enterprises (and voluntary sector organisations).  On the other hand, market liberals want fewer public services to be delivered by the state but don’t favour delivery by social enterprises over delivery by private sector organisations – and, in some cases, would prefer that many services were simply not funded by the state at all. The market liberals’ vision of the Big Society is effectively the creation of a space which may or may not be filled by voluntary or commercial activity.

The fact the Public Services (Social Value) Bill is now likely to become law might suggest that Big Society supporters have won the argument but the reality is that, on balance, the market liberals have come out on top. Teasdale et al note that when the Bill was originally introduced: “The aim, according to the Bill’s sponsor, Chris White was to help bring about the Big Society through legislation by ‘trying to help one set of providers at the expense of others’

The original Bill was an explicit attempt to tilt the playing field for public contracts in a direction that favoured social enterprises. The amended Bill, if and when it becomes law, will not do that. As Teasdale et al explain: “The original draft of the Bill contained a stricter definition of social enterprise than the loose definition favoured by the last Labour administration. This would have excluded any organisation which paid out more than half of distributed profits to external shareholders – as opposed to using them to achieve social purposes. In this case, Government support for the Bill became conditional on the clauses containing this condition being omitted.

They effect of this being: “As a result it simply becomes associated with the opening up of public services to any organisation that creates social value, however defined.”

So, commissioners of public services will be expected to consider wider social value in the commissioning process but there is no agreed definition of social value and this gap has not been filled during the progress of this Bill, as Teasdale et al note: “Neither the Bill or its sponsor, nor any of the MPs debating its passage specify clearly what is meant by social value. Instead they offer examples of actions or organisations that create social value.”

The problem highlighted during the debate is that while Sam Gyimah MP – like Chris White, a Big Society leaning Tory – took this position: “I see the Bill as a way of encouraging organisations whose main purpose is to deliver services that could be delivered by the state for the community“, market liberals had very different interpretations including: “all enterprise is necessarily social because it seeks to create value for other people” (Steve Baker MP) and “one of the most successful companies in this country, Tesco, puts a lot of money back into the community every year by enabling people to get vouchers that are then used to buy IT equipment, and other equipment, for schools” (Christopher Chope MP).

Clearly the latter approaches to social value aren’t much help to social enterprises and charities hoping to benefit from social value-based commissioning. Despite these developments social Enterprise leaders, such as Social Enterprise UK chief executive, Peter Holbrook, have sensibly avoided over-reacting to the changes to the Bill.

This is sensible not because the amendments are good for social enterprise but because the principle – that commissioning based on social value rather than simply paying the lowest price is explicitly allowed and endorsed by central government – is more important that the specifics.

The passage of the Bill will primarily serve to make it easier for commissioners who had already been keen to commission services from social enterprises to do so without being seen to be taking an unacceptable risk or to be wasting public money. It won’t force commissioners who’ve never heard of social enterprise (or oppose it) to change their minds but the original Bill wouldn’t have done that either.

A likely additional result will be that private companies delivering public services – Capita, Serco etc. – will also look for ways to demonstrate that they provide additional value. For me, that’s a positive thing and could in itself provide opportunities for social enterprises.

There are plenty of other factors affecting the opportunities for social enterprises to deliver public services but this is hopefully a small step in the right direction. As Nadeem Zahawi MP said during the debate: “The procurement officers will not be compelled to do something from the top down, but will have the same choices before them as they always had. Rather, they will be asked to look imaginatively at those choices. We are talking about benevolent libertarianism and a nudge forward.

*In addition to direct quotes from the paper, quotes from MPs have been from quotes that appear in the report. These quotes are publicly available but Teasdale et al did the work to find them.

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Legislation, that’s what we need

Well, possibly. Aside from the joy expressed by the Social Enterprise Coalition(SEC)‘s Peter Holbrook, there seems to have been a fairly muted in the social enterprise world to the (initial) passage of Chris White MP’s private member’s bill ‘The Public Services (Social Enterprise and Social Value)’.

My guess is that this lack of celebration says less about the event itself and more about the fact that most of us – whether working for social enterprises or support organisations – are so busy scrabbling around trying to ensure our organisations make it to this promised land of social value that we haven’t had time to celebrate its creation.

This bill is a positive step. It’s too soon to say whether (if and when it ultimately becomes law) it will have a significant practical impact but the principle that commissioners of public services should “consider taking into account economic, social and environmental value, not just price, when buying goods and services” is a good one.

It’s easy to forget that large scale outsourcing of public services in the UK is a relatively new thing. The fact that we’ve now reached a point where all mainstream political parties officially agree that commissioning of services can be a vehicle for delivering positive social change beyond what’s delivered by the services themselves is a welcome development for the people of the UK.

Although I haven’t studied the Bill in detail, from the report’s on Peter Holbrook’s blog and on the Social Enterprise magazine website, I’m slightly less convinced by Holbrook’s claim about the bill that: “If successful it could become one of the most important pieces of legislation for social enterprise in a generation.”

I suppose this partly depends on how many important pieces of legislation there’s been for social enterprise in a generation but I’m dubious whether the legislative insistence that wider social value is considered in commissioning will, in itself, lead to the creation of lots more opportunities for organisations that currently describe themselves as social enterprises.

My doubt is not intended as a criticism of SEC and others in the lobby who have campaigned for this Bill. Regular readers will know I’m often, possibly usually, critical of SEC but, in this instance, they’ve done their bit very well. The worry for me is around whether there’s many currently existing social enterprises that will be able to offer convincing answers to commissioners’ questions about the greater economic, social and environmental value they might deliver, while also being to deliver the service itself at a fairly competitive price (if not the lowest price).

The Bill, if and when it completes its passage through parliament, will deliver two positive outcomes:

  • It will enshrine in law the fact that politicians want social enterprise to work.
  • It will encourage providers of outsourced services, whether they’re social enterprises, charities or private sector companies, to put social value at the heart of service delivery

The second one of these outcomes is a good in a general sense. The first is an important milestone but it’s the easy bit as far as social enterprise is concerned. In part, the possible success Holbrook mentions depends on the response of commissioners and level of enthusiasm with which government encourages them to respond positively but it also depends – at least equally if not more – on social enterprises proving they’re up to the job. SEC’s next big challenge is to provide the practical support that will help them do that.

 

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