Social Enterprise

Baroness Scott of Needham Market Excerpts

Thursday 6th October 2011 Lords Chamber

[Baroness Scott of Needham Market]

The noble Baroness, Lady Andrews, has done the House a great service by tabling this debate today, which has demonstrated that huge disagreement is not needed for an interesting debate. We by and large agree, but nevertheless there have been lots of different and interesting points. It is perhaps not surprising that we agree because one thing which unites us, wherever we sit, is a sense of public service. That is why we are active in your Lordships’ House. It is also why we do what we do outside this House. As we go around the country, the ideal of public service is absolutely alive and well. Everywhere there are people who, in some way or another, devote their life to service to the public.

Until fairly recently, I regarded public service and the public sector as synonymous. I was wrong and I admit it. I was also wrong to believe—as I did until 1997—that all that was wrong with our public services was a lack of funding. I am sure that privately if not publicly even Members opposite would accept that the large amounts of money put into public services in the last 10 or 15 years have not delivered the outcomes for many of our citizens that we would have hoped. I am not going to theorise why, although I strongly feel that the blame, if you want to call it that, does not usually lie with individual workers. Personally, I deplore the demonisation of people who choose to work in the public sector.

However, if we are looking for solutions and ways to improve public services, the solutions very often lie with the people who are working within our public services. They are the key to reform and making services more flexible, responsible to individual need and circumstances, locally focused and cost-effective. Last year, I met a former youth worker in Suffolk who had left the county council and set up, almost by accident, a social enterprise. She is doing great things with young people with multiple problems. Local social services had to admit that they had virtually given up on those young people, but that lady has been able to deal with it.

Earlier in the summer, I met Dai Powell, who runs Hackney Community Transport. Founded in 1982 from very modest beginnings, it now operates across the country and last year provided more than 12 million passenger journeys. Government need to be sure that they know where these existing, very successful models of social enterprise are. Something like Hackney Community Transport should be used as a benchmark for service delivery, because it is not only cost-effective and efficient but also ethical and locally responsive. It would make a change for government to benchmark against that rather than conventional service delivery.

In this current economic climate, as we have heard, there is a great incentive for this sector to grow, but the danger is that it is seen as some way of getting public services on the cheap, which it certainly is not. Nor will this growth somehow happen all by itself. Some will of course, but if we are to see the step change that the Government seek, then the Government have to get serious about it.

How do they do that? First, they have to play their part in creating a culture in which social enterprise is seen as a serious career option for people leaving education and for those looking for work, and not as some sort of last resort of employment. In this regard, Ministers’ attitudes are crucial both in terms of saying the right thing and ensuring that social enterprise is seen as an intrinsic part of service delivery and not bolted on as an afterthought. It needs to be mainstreamed into all policy and legislative decisions.

Secondly, the sector needs support. I recently spent a very enjoyable day with the School for Social Entrepreneurs in Ipswich, where I met a variety of people seeking to set up social enterprises. Their dedication and enthusiasm will carry them a very long way, but professional support in finance and business planning, legal frameworks and so on is key, and this is where the school comes in. The Ipswich school is great, but we need more of this sort of thing right across the country. We also need social enterprises which themselves help other social enterprises. My colleague in Suffolk, Craig Dearden-Phillips, does this very well through his business, Stepping Out. Social enterprises need help not only in being established but in scaling up, as my noble friend Lord Newby, said, although not every social enterprise wants to get bigger—that is precisely the point.

If services are to be divested from local authorities or health trusts, it is senior managers from those bodies who are likely to head the social enterprises. If they are to make the transition from senior manager to chief executive, they will need help in doing so. Social enterprises continually cite public procurement policies as a major obstacle to growth. The Government need urgently to address that.

For many years now, local authorities have been encouraged to join together to create purchasing consortia to benefit from economies of scale from larger contracts, but this simply has the effect of freezing out new providers who are smaller and in the long run generates higher costs by driving diversity and competition out of the market.

Traditional procurement and commissioning tend to focus on hard financial data and lose sight of those rather harder-to-measure aspects such as advocacy, support and accessibility—those things which make social enterprise so attractive.

The Government have to give serious thought not to giving a handout to this sector but to giving it a step up, perhaps by thinking about quotas for the transfer of services or, as my noble friend Lord Newby said, about speeding up the process, which is so protracted that it stymies local initiative. Starting a new social enterprise is a huge risk for the individuals concerned. They need assurances over length of contracts and the future of the pensions that they have built up while working in the public sector.

The other major problem, which a number of noble Lords have addressed, is finance, both in terms of availability and affordability. A policy of credit easing—or whatever we call it— needs to be extended to mutuals and social enterprise.

Social enterprise has so much to offer us in terms of value for money, flexibility and genuinely responsive public services. The track record of such organisations in some of the poorest and most deprived parts of our country is already impressive, but we can do so much more to unlock the energy and enthusiasm of all these people who are genuinely committed to public service.