Public Services (Social Enterprise and Social Value) Bill

Chris White Excerpts

Friday 19th November 2010 Commons Chamber

[Chris White (Warwick and Leamington) (Con)]

I beg to move, That the Bill be now read a Second time.

I am proud to be able to stand here this morning and put this Bill before the House. Becoming the Member of Parliament for Warwick and Leamington has been a deeply humbling experience, and this Bill has brought home to me once again the responsibility that we in this Chamber all carry. I am honoured to be part of this process, and it is something that will stay with me for, I hope, a few years yet.

I take this opportunity to thank all the voluntary organisations, charities, social enterprises, representative bodies, officials and individuals who have helped me in the drafting of the Bill. I single out the Social Enterprise Coalition for its help and especially for its powerful advocacy for the legislation. I also thank the right hon. Member for Salford and Eccles (Hazel Blears) for her encouragement and support.

It would be best to start by setting out the rationale behind the Bill. At this year’s general election, I, like many others, even on the other side of the House, ran on bringing positive change to our country and our society. The big society is an idea that I believe in, not only because it offers an optimistic vision for the future, but because it is common sense. It is one of the strongest ideals of recent times: every political party has attempted to embrace its principles and it has been espoused by many former Prime Ministers and Leaders of the Opposition. We should bear in mind, though, that the big society is nothing new in itself.

My right hon. Friend the Member for Witney (Mr Cameron), although a most passionate and effective advocate, did not create the concept of the big society. Let us not forget that before my right hon. Friend, a former Member for Sedgefield, Tony Blair, told his party conference in 1999 that Labour needed to revive civic society, based on fairness, equality and responsibility.

“We are citizens proud to say there is such a thing as society”

he said, but even before him, there was Baroness Thatcher, who in 1986 said that the

“responsible society is one in which people do not leave it to the person next door to do the job. It is one in which people help each other. Where parents put their children first. Friends look out for the neighbours, families for their elderly members. That is the starting point for care and support—the unsung efforts of millions of individuals, the selfless work of thousands upon thousands of volunteers. It is their spirit that helps to bind our society…. Caring isn't measured by what you say: it's expressed by what you do.”

That sounds remarkably familiar. In the 1950s and ’60s, Jo Grimond, leader of the Liberal party, articulated the vision of the big society when he talked about the need to revive the spirit of association that had once bound our nation together. The idea of a big society, a responsible society, or a civic society, is timeless. It has inspired politicians from all political parties for centuries. I believe that it encapsulates the idea that people can truly flourish only if they feel part of an organic, evolving and strong society. It recognises that we are not merely economic units to be put into certain boxes and cut off from others, but human beings who wish to belong and to feel actively involved in a wider society.

That is a powerful philosophy, and it has been the strong motivation behind my Bill. However, although it is easy merely to say what one believes, it is much more difficult to put forward concrete proposals that can help to realise those beliefs. This Bill is my attempt to do such a thing. In order to realise a stronger society and to build on those bonds within communities, we need to empower and champion civil society. We need to create the conditions for civil society to flourish. We need to create the opportunity for voluntary organisations, social enterprise, charities and socially responsible businesses to thrive. That will not happen by itself.

Although it is easy to look back on the past, perhaps even to the Victorian era, when many organisations sprang up with little Government intervention and philanthropy was fashionable, we are not in the same position today. Unfortunately, many years of centralisation from Governments of all colours have stifled the natural creativity of our communities and, given the difficult economic times we now face, it will be a challenge to stimulate the kind of movement necessary to realise the big society. Of course, Government cannot, and should not, see it as a duty forcibly to create this society—that would defeat the point and merely see one centralising structure replace another. Forcing communities to depend on the direction of central Government would undermine a stronger society and would not lead to any change to the status quo. That said, the Government do have a role to play in being the catalyst for the development of civil society and giving organisations and individuals who wish to reach out and build stronger social networks the chance to do so.

The elephant in the room, however, is money. Organisations across the country agree that civil society should be able to do more to provide services, and that there is fantastic potential for innovation and improvement in getting civil society more involved, but they ask the very valid question how they are going to be able to do all this. Civil society cannot function in a financial vacuum. Obviously, a great deal of work that civil society does is based on people volunteering time and money, but it would be foolish to pretend that that, in itself, will be enough. Capacity has to be built. People need to be trained—professionals who understand that many of the complex technical, legal and administrative issues that organisations face need to be paid for. Rents and equipment are not free, either. The financial pinch is already affecting civil society, and if we do not act, the development of the big society could be smothered by our economic problems before it has had an opportunity to flourish.

We must therefore be very careful that, in our zeal, we do not try to support these vital sectors of our economy on the cheap. We have a moral, as well as a political, obligation to ensure that we support this section of our economy during this difficult time. We simply cannot allow these organisations to fail. If we do not take the opportunity with which we have been presented to put into practice the principles and ideals that many of us campaigned on, it will be extremely difficult to do so in future. It will demoralise VCSEs—voluntary, community and social enterprises—and politicians will further lose public confidence. That is not acceptable.

The window that we have in which to catalyse this change within our society is not large—perhaps a few years at most. So how can we achieve this? The Bill marks a way in which it could be done. The UK taxpayer spends nearly £200 billion a year on procuring and commissioning goods and services, and while that funding will fall over the next four years, it will remain a significant amount. I believe that we should be using this funding, which we need in order to provide the services that people want, to leverage and galvanise VSCEs. If we want long-term growth and a general strengthening of civil society, we will need some stability in the funding that it receives. We cannot merely allow Government to throw funds at these organisations when they are flavour of the month, only to cut them when the newspaper headlines diminish. We need a situation whereby they can plan for the future, craft niches and roles for themselves, and know that what they are providing is good and that, as long as they serve their communities well, and innovate and create, they can survive and grow.

To quote a recent think-tank report, the UK is a “service hungry nation”. This is not going to change over the coming four years. If the past few hundred years have taught us anything, it is that people have an insatiable appetite for services, and we can never predict what they will be demanding in future. However, we can see that there is a definite trend towards services that are more local, more personalised, and more responsive to our community needs. Civil society has a great opportunity to provide these services if it is given the chance to do so, and, once that has happened, to build on them.

Let me take the example of Sandwell Community Caring Trust, which started by taking over adult social care homes in the black country. It took over the failing homes, reformed the institutional structures, remotivated staff and reinvested in buildings and equipment. It has driven down the cost of adult social care and kept people in the local community in work, and it has now won a contract to provide NHS and social services in Torbay. It is an excellent employer that is well supported by the communities it serves. In short, it is a fantastic example of what this sector can achieve, and it throws down a gauntlet to the rest of the country, even areas close to home, to follow its example.

A report in 2003 by the Association of Chief Executives of Voluntary Organisations called “Replacing the State?” made it clear that there are also powerful reasons of quality for this approach, highlighting five reasons why civil society is better placed to provide services than traditional providers. First, such organisations are more local and have a stronger focus on users than on providers. As every Member here will be aware, those who set them up are, more often than not, motivated by a sense of concern for their communities rather than a passion for profit. Secondly, civil society is far more co-ordinated than is usually the case in the public sector. Because of the natural interdependence that exists between these groups and the community-wide focus that they have, they can provide a far more holistic approach to delivering services, which is exactly what we need at this time.

Thirdly, at a time when the public are ever more distrustful of politicians, in particular, these bodies have a high level of public trust. It is not surprising that people are more willing to trust services provided by neighbours and well-meaning public-spirited individuals and organisations than by traditional top-down public bodies.

Fourthly, as I have mentioned previously in the House, civil society is one of the most innovative parts of our economy, and it has often radically changed the delivery of services for the better. Civil society organisations can engage where others cannot. They can reach out to communities and localities where traditional public service providers cannot. As they are formed from communities, they are better at engaging with them, and we should recognise and utilise that.

The Bill is not just about trying to help one set of providers at the expense of others, but also about getting higher quality provision, which I am sure all Members would support. It will not replace or undermine the concept of value for money, and I know that we must focus on that concept now more than ever. It is intended to make commissioners more enlightened in their approach, and to send a strong message to all areas of the public sector that what is currently seen as good practice should become normal practice.

We should not allow voluntary and civil sector enterprises to become dependent on the state for funding. That would not only damage civil society but completely undermine the empowerment of communities, which I am sure hon. Members of all parties are trying to achieve. However, I do not believe that that will be the case. Organisations across the country have consistently shown that far from wishing to become dependent on the state, they want to be able to compete on their own terms. They want to use such contracts as a base on which they can innovate and expand their activities, using their funding to further build their capacity and strengthen their community base. It is important to stress that we are not just trying to create new services and contracts in order to support civil sector organisations, but trying to open up existing contracts so that they can access them.

That flows into another matter about which my party often spoke in opposition and has continued to do so in government: the need for diverse providers of public services. There is already a growing public services industry in this country based on contracts from the Government. It is made up of a diverse range of organisations both large and small, from the private and VCSE sectors. It had a turnover of some £79 billion in 2007-08 and generated some £45 billion in value added. That rises to more than £88 billion if indirect impacts are included. It keeps 1.2 million people employed, rising to 2.3 million including indirect impacts. It is already a significant part of our economy—bigger than our communications and utilities industries—so the question is not whether we wish to create an industry for public services but what kind of industry can be created.

Of course, if we allow things to continue as they are, there is potential for a “supermarketisation” of our public services. Already, large private sector organisations are beginning to dominate the industry, and they are crowding out smaller and local competitors. I refuse to believe that that is the only option available to us. What I believe in is a future in which our public services are run by communities and the organisations close to them that have a sense of social responsibility and put people ahead of profit. We need a future in which public services see greater mutualisation, empowering clinicians, teachers and other public servants to take over the running of their services and deliver high quality and good value for money. We need to do more to get micro-businesses and small businesses working together to deliver better goods and services and build more sustainable supply chains.

[Mr Christopher Chope (Christchurch) (Con)]

My hon. Friend will be aware, as a number of us are, of the concerns of the Federation of Small Businesses about his Bill—not about its avowed intentions, but about the possibility that it will have effects that are unintended but very damaging to the ability of small businesses to compete.

[Chris White]

I am glad that my hon. Friend brings up the FSB, which wrote to us only this week to state that it supports the Bill in principle. I hope that we can pass an exact copy of the letter to his office to ensure that we can discuss the matter come Committee stage—I hope—and that any input the FSB has can be put into the mix.

[Mr Chope]

May I assure my hon. Friend that only this morning I was talking to the deputy policy director of the FSB, who expressed her concern on behalf of the federation that he had not yet answered a lot of its concerns?

[Chris White]

I do not know whether the deputy policy director has had the opportunity to discuss the Bill with the rest of her organisation, but all I can say is that we have had a clear statement of intent from the FSB that it supports the Bill in principle.

The Bill is intended to create the right future for our public services. Across Government, Ministers are talking about engaging VCSEs in delivering public services. They want to mutualise and localise. I welcome that, as I am sure many Members do, but it will not be achieved through mere rhetoric. Those providers have been bidding for contracts for years, yet many still fail to break into public service delivery. Why is that? It is partly a question of cost. The cost of bidding for public services contracts in this country is far higher than that of bidding for contracts in the private sector. A report by the think-tank ResPublica highlighted the fact that the average cost of bidding for a public sector contract was double that of bidding for a private sector contract. The cost puts civil society organisations off, and if we want them to be more involved in delivery, we have to reduce that cost.

The failure to break into public service delivery is also partly due to the complicated nature of bidding. Many organisations simply do not know how to bid for contracts, and even if they do, they often feel that they lack the necessary expertise to bid successfully. Given the prohibitively high average costs, they are worried about failure. The Bill does not address those points directly, although I hope they will be considered in good time. However, it is important that they be raised, and I believe that we need to do much more to remove those barriers.

What would be best is a widening of the concept of value. At present, “value” is a word that is often purely associated with financial cost. If one buys a box of eggs from one supermarket for 20p less than the price at a competitor supermarket, one is deemed to have got value for money. It has often worked that way in public service delivery. Sadly, the means of delivery and the potential benefits to communities are all too often ignored when it comes to considering the word “value”. I know that many colleagues feel that that is as it should be; after all, if it is cheaper to use one provider than another, why should the taxpayer pay for something that, on the face of it, appears more expensive? However, by focusing purely on short-term cost, we ignore the potential long-term benefits that other organisations could deliver, particularly VCSEs.

Let us take the example of a local authority seeking to hire an organisation to renovate some social housing. There are two bidders. One will simply renovate the social housing, but another will not only do that but take on long-term unemployed people and teach them skills in the construction sector. It will go out to local schools and provide hands-on training so that children learn about the sector. Yet provided that it costs less, the first bidder will often get the contract. That is simply narrow-minded. If we take people who are long-term unemployed off benefits and put them into work so that they can learn valuable skills, and if we teach young people how the sector works, and maybe inspire some to develop related trades, we will bring not only environmental but economic benefits to the wider community. Surely that is better value for the community and better value for money.

In the long term, that is far more valuable than merely paying to renovate a few houses, it is more cost-effective for the taxpayer and it is more beneficial to our communities. In short, it is a better deal, but to get that better deal, we must be willing to consider all the aspects of value, not merely a narrow few. Of course, some bodies and organisations have noticed that. It would be unfair to mention merely one or two at the expense of others, but forward-thinking commissioners across local authorities and the public sector have been considering the wider social, economic and environmental benefits that such contracting attitudes and approaches can generate, which is a big step forward in realising truly intelligent commissioning.

[Steve Baker (Wycombe) (Con)]

I am glad that my hon. Friend draws a distinction between values and price and that he recognises that great tapestry of rich value that comprises our lives. Does he agree, however, that a scale of values is absolutely intrinsic to individuals and that each of us values different aspects of our lives differently? With that in mind, why is it necessary to encode such scales of values in not only legislation, but central and local plans?

[Chris White]

I thank my hon. Friend for that. He has talked about two separate issues: the values of individuals and the values of our authorities and the commissioners in them. I think we would agree that those are different types of values; one involves people’s personal interests, while the other involves the interests of the taxpayer and wider society. The second is where the Bill will come in to make sure that the taxpayer gets best value for money and that the community is more involved. Social enterprises, in particular, have a great opportunity to bid for public services and to provide that better value for money.

Commissioning that takes a more holistic view and reduces demand on future services, commissioning that engages with, rather than dictates to, communities and commissioning that drives standards upwards—that is the method of delivery that VCSEs are best at providing. When given the opportunity to do extra, to engage with communities, to work with local businesses and to generate true value for those communities, VCSEs do so and thrive in the localities in which they operate.

[Andrew Bridgen (North West Leicestershire) (Con)]

Does my hon. Friend agree that whatever the state decides to take responsibility for and control of, individuals and the voluntary sector immediately withdraw from? As he said, the Government did not invent the big society, which has always been with us, but we will, I hope, give it room to thrive.

[Chris White]

I hope that the Bill will give us the opportunity to discuss these issues in a wider forum. We have a real opportunity to put some of these issues on the table. If the Bill passes through this stage, we will, I hope, be able to discuss further in Committee some of the issues that my hon. Friend raises.

Hon. Members on both sides of the House have spoken about how we need to generate more for less. By using social value, we can help to achieve the holy grail of generating more for less. By using the £150 billion the taxpayer already spends on services, by maximising what we get for those pounds and by using community groups, mutuals, co-operatives, charities and social enterprises to deliver services, we can achieve far better value and a far better deal for our communities. During these difficult economic times, we should not put blinkers on and adopt a mindset that says that reductions in public funding must necessarily lead to reductions in the quality and quantity of our services. We should think bigger, and civil society is key to that.

Now that I have had the opportunity to lay the groundwork for the Bill and to give an outline of why it is important for hon. Members to look at these proposals, I want to focus on the Bill’s specifics. The Bill can be divided into three parts, and I have already described the rationale behind the third part, which is the most important and concerns social value in public sector contracting. The first two parts deal with strategies concerning social enterprises, which are a rapidly growing part of our economy. The work of the Social Enterprise Coalition, the social enterprise mark and the various regional social enterprise organisations are playing an ever-increasing part in our economic and social development.

In recognition of the sector’s potential, various Departments, from the Cabinet Office to the Department for Communities and Local Government, have created their own strategies and come up with ideas about how to help the VCSE sector. The Bill asks the appropriate Secretary of State to create one national strategy to look at the promotion of social enterprise. I hope that that would lead to the consolidation of all strategies across the Government into one clear, joined-up piece of work, so that we do not have a hotch-potch of strategies, which ultimately confuses and frustrates many in the sector.

I recognise that strategies and the like often cause many Members a nervous twitch, so I have done my best to find an estimate of how much such a strategy might cost in terms of manpower and consultation. According to the figures that I have been given, it is estimated that it would cost about £41,000. That is about £63 per constituency, under the current boundaries, or one tenth of a penny per elector.

[Mr Chope]

Will my hon. Friend give way?

[Chris White]

I would like to make some progress.

I recognise that we face difficult challenges, but the proposals are something for which we can and should pay. A clearer set of proposals from central Government and a more strategic outlook will do a lot to help this emerging sector.

In the second part of the Bill, I have tried to ensure that when locally generated sustainable community strategies are created, they consider social enterprises in their area. It is important that communities are given the chance to engage in the creation of sustainable community strategies, but there is a role for organisations such as social enterprises, which often emerge as responses to sustainability issues in communities. By considering such strategies and promoting engagement with them, we can help to generate more community-led and community-based solutions, empowering communities by promoting the vehicles that they can use to deliver solutions.

I hope that that is within the spirit of the legislation proposed by my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), who is now Parliamentary Secretary, Cabinet Office and whom I am pleased to see on the Government Benches today. I hope that organisations set up with the purpose of helping communities across the country will take part in such strategies and engage better with their communities. That said, we should consider the proposals within the framework of the present burdens on local authorities and be prepared to amend them accordingly should they be proved unnecessary or too costly a burden.

I hope that I have justified at some length the third and final part of the Bill, which relates to social value. The Bill asks all organisations that are currently publicly contracting authorities under the Public Contract Regulations 2006 to consider how they might promote wider economic, social and environmental well-being in a contract and how they commission such contracts accordingly. Although considering that wider social value during the contracting process is only a small technical change, it would bring significant benefits for our public services in terms of the quality of contracting. It would also benefit communities, social enterprises, voluntary groups and small businesses, which generate considerable social value.

I am honoured to be able to present the Bill on behalf of a large coalition of supporters from VCSEs, local authorities and small and socially responsible private businesses. The Bill comes at a time when people are seriously asking questions about the future of our public services and about how we deliver a stronger economy in a way that reflects the values of people and the communities in which we live.

Although rhetoric is important so that we can inspire people to join in the project and articulate a vision for the country that all can share, we must also be conscious of the need to take a definite course. I believe that the Bill is a practical step forward, which I hope representatives from across the political spectrum can support. By working together constructively, we can achieve a stronger future for our communities and a stronger financial footing for our VCSEs. The onus is on us to think radically and, more important, to act boldly. I hope that the Bill can make a small contribution to a wider effort to boost our civil society, sustain the civil economy and make our public services better than ever. I therefore urge my colleagues to support the Bill.

--- Later in debate ---

[Chris White]

I thank my hon. Friend the Member for Christchurch (Mr Chope). He suggested that I might rest on my laurels, but I do not intend to do so if we reach the next stage of the process.

I thank all those hon. Members who have attended this debate on a Friday, who have contributed so well to it and who have made interventions—some helpful, some very helpful and some less so. I especially thank the right hon. Member for Salford and Eccles (Hazel Blears) and my hon. Friends the Members for West Worcestershire (Harriett Baldwin), for Bedford (Richard Fuller), for Wycombe (Steve Baker), for Ipswich (Ben Gummer), for Castle Point (Rebecca Harris), for Congleton (Fiona Bruce), for North East Somerset (Jacob Rees-Mogg), for Christchurch (Mr Chope) and for East Surrey (Mr Gyimah).

We can all agree on some things. There are nuances of ideology, but I am sure that we agree that we all enter politics for the same reason—to help our constituents and the communities that we serve and in which we live. Even if the Bill falls at this stage, this debate has given us the opportunity to discuss some of these very real issues about how we procure and commission services. At the very least, our commissioners will be provoked into thinking about a different way to do things and the need to include our social enterprises, small businesses and charities—we have all given examples of their work. We all agree that these are difficult financial times, and we need to look at new models and new directions to make our communities more successful and bind our neighbourhoods together. That is a very important task for this House.

It has been pointed out—and I thank my hon. Friend the Member for Christchurch—that I would be foolish not to agree with some of the suggestions made by my hon. Friend the Minister. I take his suggestions on board, but it is important for this Bill to reach the next stage, because we need to have those discussions in Committee. We can all put our ideas on the table and help to move forward. I thank everyone for their time today and I hope that their contributions to the next phase will be equally helpful, supportive and useful.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).

[Jon Trickett (Hemsworth) (Lab)]

On a point of order, Madam Deputy Speaker. Pursuant to the point of order made earlier today by my hon. Friend the Member for Ogmore (Huw Irranca-Davies), who, the House will recall, requested that a Minister be brought to the Dispatch Box immediately to explain the outrageous comments by the Prime Minister’s enterprise adviser, I understand that the adviser has been forced to resign or may even have been sacked. Can you ensure that a Minister appears at the Dispatch Box this afternoon to explain what has happened to the shambles of the Government’s enterprise policy, given what has happened today?