Public Services (Social Value) Bill

David Nuttall Excerpts

Friday 25th November 2011 Commons Chamber

[Mr Thomas]

My right hon. Friend makes an important point. The Bill represents a huge missed opportunity for the Government to embrace the other elements of the Bill. This is a Government who made much of their commitment to the big society, yet here is, arguably, a big society Bill that they have—as my right hon. Friend rightly says—gutted. The absence today of Conservative Members who might have been present to defend and advocate this big society Bill is, I fear, further testimony to the lack of support for it in practice.

Let me now deal with some of the issues relating to access to money that might constitute part of a national strategy.

[Mr David Nuttall (Bury North) (Con)]

On the subject of money, may I ask whether the hon. Gentleman has assessed the possible cost of producing a national strategy?

[Mr Thomas]

I have not, but the explanatory notes prepared by the hon. Member for Warwick and Leamington for Second Reading contained an assessment of the cost, which, if I remember rightly, was approximately £41,000.

Many social enterprises clearly have a strong trading and enterprise ethos, but most have required start-up finance or transitional funds, or funds for specialist advice. For voluntary sector organisations wishing to become social enterprises, strong grant income can help to provide a cushion allowing a business model to be properly developed. If there is no clear, thought-through process to make appropriate funding available, the huge cuts in Government funding for the third sector may not only put at risk the services provided by voluntary and civil society groups on which so many of our constituents rely, but hold back the growth of the social enterprise sector.

It is, I would gently suggest, not enough for the Government to talk about a strategy for social investment. I do not doubt the Minister’s commitment to growing the market for social finance, and the Government’s interest in social impact bonds and support for the big society bank—both Labour ideas—are welcome, but when those initiatives are set against the scale of the cuts in direct funding from national Government and, as a result, local government, there seems to be little hope that the social finance market will have grown sufficiently robust to replace the estimated £3.2 billion—possibly as much as £5.1 billion—of direct funding that will be lost. That estimate of the potentially huge loss to the third sector over the coming comprehensive spending review period was provided by the independent analysts New Philanthropy Capital.

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[Hazel Blears]

I absolutely share the hon. Gentleman’s point. The economy is difficult, there is less money around and public authorities have less resource to spend, so we must ensure that we get as much value as possible out of every pound we spend. The social enterprise sector is often very innovative and comes up with new ways of working and doing business, and that has been one of its particular advantages. There is good innovation in the public sector, but small organisations that have a complete passion for something will often take the system apart, look at how things are currently done, and get more value and productivity.

[Mr Nuttall]

I entirely agree that there are many instances of innovation in some public sector organisations and in social enterprises, but does the right hon. Lady agree that there are also thousands of examples of innovation in the private sector?

[Hazel Blears]

I entirely agree. I was about to say that this is not just about the social enterprise sector. One of the good things about the Bill is that it is about social value wherever the commissioning take place, whether in the public sector, the private sector or the voluntary and community sector. There was perhaps a tendency in the past to limit social value to a particular niche in the market for the voluntary and community sector. That sector does fantastic work, but not exclusively. If we can get social value into some of the big private sector organisations, we will see more productivity and a greater impact. A range of large corporate organisations are recognising that doing good is good business. Getting that combination of people using their existing business model to achieve social action and social change is a big movement in this country. We have heard talk about responsible capitalism. There are moments when something happens in society, and I think that we are at one of those moments. Many big organisations have recognised that for their own sustainability—not for charitable purposes, but to do good business—using their procurement, supply chains, product development and investment for social action in communities will be very beneficial. I think that there will be a move from the traditional concept of corporate social responsibility of doing some charitable work once a year to embedding a social action model at the heart of business, small and large, in this country. It is a development that I welcome hugely.

I want to make a few comments about that change. The amendments that my hon. Friend the Member for Harrow West has tabled refer to the definition of social enterprise, which is important, and I hope that the Minister will address it, but I also think that the system currently has barriers to big corporations taking the agenda forward. If we are to have commissioning in the private sector that focuses on social value, we need to think about that. A social enterprise called Create opened its doors in my constituency only a week ago. It provides work opportunities for young people and older people who have been homeless. It brings them through a production kitchen to gain catering skills and provides outside catering services. It is a business that describes itself as being “for more than profit”, which I think is an interesting description. It started in Leeds and also operates in Doncaster, Liverpool and, now, Salford. In Leeds it now runs a five-star, top-class restaurant—a little like Jamie Oliver’s Fifteen—which teaches homeless people catering skills. It has a relationship with Morrisons supermarket, and if the people it trains do not go into catering, they are often job-ready and can go into the world of work. That fabulous partnership works for everyone involved and, increasingly, big companies want to work in that way.

Perhaps the Bill can do something to say to the private sector, “Commissioning for social value is good business for you.” John Lewis and the Co-op have done that for decades, but I want us to be able to have a range of different examples that are big in retail, manufacturing and the important sectors of our economy that use the power of their businesses, whether employing former offenders and people who have had difficulties in their lives. That is why I pressed the Minister on whether we can have goods and services, because I think the artificial distinction that this is just about services could limit the ability of the big corporate sector to come into this field. That is something that he might think about remedying if there are legislative opportunities in future.

When I pressed the Minister in Committee on whether there ought to be a definition of social enterprise, I was grateful for his answer:

“The right hon. Lady’s fundamental point is right...there is a spectrum, from pure charitable activity to social businesses. Some blurring of lines might not have mattered until now. She may be right that we have reached the point at which some definition in law is needed.”––[Official Report, Public Services (Social Enterprise and Social Value) Public Bill Committee, 19 October 2011; c. 16.]

He indicated that, in the review of charity law, there were perhaps two legislative opportunities for that.

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I hope that the Minister will be able to deal with those points. I support the Bill, and I congratulate my hon. Friend the Member for Warwick and Leamington (Chris White) on introducing it.

[Mr Nuttall]

It is, as always, a great pleasure to follow my hon. Friend the Member for Finchley and Golders Green (Mike Freer), who brings his experience in local government to this debate.

I rise to oppose new clauses 1, 2 and 3 and amendments 1, 2, 3 and 4. That is primarily because, while I appreciate that there is sometimes a time and a place for strategies, and that it is sometimes a good thing to have a strategy, I agree with what the Minister said in this House on Second Reading:

“I believe that, particularly in this context, strategies should be governed by the need of the moment, and should be driven by conviction rather than by a requirement to comply with some bureaucratic process. I do not want the process of drawing up strategies to be bureaucratic. I do not want it to be simply an exercise in producing more glossy brochures that fill up the bookshelves in our offices, which are not read and which do not have real traction.”—[Official Report, 19 November 2010; Vol. 518, c. 1217.]

I could not agree more. There is a real danger that the new clauses will have the effect of introducing a level of bureaucracy to this procedure that will not add anything to the overall aim of the Bill.

I congratulate my hon. Friend the Member for Warwick and Leamington (Chris White) on his perseverance and determination in piloting the Bill through to this stage. He should be commended for that. Although it has been over a year since Second Reading, and some might think that that is slow progress, it has been positively sprightly when compared with the glacial progress made by the Bill promoted by my hon. Friend the Member for Castle Point (Rebecca Harris), who I see in her place—the Daylight Saving Bill, which, after a year, has yet to reach its Committee stage.

On the cost of these strategies, when I intervened on the hon. Member for Harrow West (Mr Thomas) he referred back to the cost of £41,000, which was cited by my hon. Friend the Member for Warwick and Leamington on Second Reading. I was not present on that occasion, but when I read the record of the debate shortly afterwards, I thought that estimate slightly optimistic, if my experience of the costs of achieving anything in government are anything to go by. I am still of that opinion today. In fact, I think that the figure is wholly unrealistic.

The costs are compounded by the solution that is given to the question of how one comes up with a mechanism to ensure that the strategies are actually carried out, provided in new clause 3, which is to produce an annual report—yet another cost and yet another obligation on the Secretary of State. The Secretary of State would have not only to produce a report, but consult several bodies including the National Audit Office, the Charity Commission, Social Enterprise UK, the Office for National Statistics and many others. I do not think that that would help to achieve the overall aims of the Bill.

I am often concerned when a Bill has cross-party support. I notice that there were no Divisions on Second Reading or in Committee.

[Mr Thomas]

Yes there were.

[Mr Nuttall]

Oh, there were Divisions in Committee.

This Bill plays a large part in the big society agenda. Once or twice today, anybody listening to this debate would have thought that it was a Government Bill. Of course, it is actually a private Member’s Bill. I am sure that even in its slimmed-down form, thousands of social enterprises across the country will welcome the progress that it has made. Having said that, there seems to be little in the Bill that could not take place regardless of whether the Bill makes progress and without the passage of new legislation. What is needed by those involved in the commissioning and procurement of public sector services is the will to secure diversity of provision. Users of public services are not concerned about whether the services are provided by the public sector, the private sector, the third sector, voluntary organisations, charities or social enterprises; what matters is the quality of the service they receive.

We need the process of bidding for public sector contracts to be made a great deal easier, not just for social enterprises, charities and voluntary organisations, but for small and medium-sized enterprises in the private sector. In that regard, I associate myself with the remarks made by my hon. Friend the Member for Congleton (Fiona Bruce). Smaller organisations, whether in the third sector or the private sector, often need a helping hand to guide them through what can seem to be a burdensome, complex and bureaucratic procedure. One thing that we need to do, as a Government and as a society, is to make that whole process much easier.

I hope that the Bill will encourage more social enterprises to develop and to take over, where feasible, areas of service from the public sector. From my point of view—I appreciate that this will not be welcome in all parts of the House—I would not worry if this was seen as a stepping-stone towards services being provided by the private sector. Of course when assets leave the public sector, the true and full price must be paid. Provided that that is done, there should be no loss to the public sector. We need dynamism in the procurement of public services, with contracts moving. Sometimes contracts might be kept in-house, sometimes they might go to the—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I have given the hon. Gentleman quite a lot of latitude, as I have with other Members, but we are not on Third Reading or Second Reading; we are discussing new clauses and amendments. Perhaps the hon. Gentleman could anchor his remarks in the debate that we are currently having, not the one that we have not started.

[Mr Nuttall]

I am obliged to you, Madam Deputy Speaker. In fact, I was just making my final point, so if I may, I will complete that sentence and finish my remarks there.

I was saying that we would see contracts going from the public sector into the private sector, on to the third sector and then back again. There would be dynamism in the sector, which would mean that sometimes contracts would be lost by social enterprises and go back into the public sector or the private sector, and then be regained again. With that, I will not seek to catch the Chair’s eye on Third Reading, which I am sure you will be pleased about, Madam Deputy Speaker.

[The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)]

May I start by adding my voice to those who have congratulated my hon. Friend the Member for Warwick and Leamington (Chris White) on the way in which he has led this Bill? I have said that on every occasion and I mean it. I thank him in particular for reminding the House, in what was a statesmanlike response to the shadow Minister, of the importance of the cross-party support that has built up over some years behind this agenda. That is essential if we are to make further progress.

I was delighted by the contribution of the right hon. Member for Salford and Eccles (Hazel Blears). She may have been described as unhinged in the past, but she was perfectly hinged today in her comments. She made it clear that, whatever her frustrations with the Bill, she recognises that it is a start and is happy for it to progress.

The hon. Member for Harrow West (Mr Thomas), my Harrow neighbour, is entirely right that we must not lose momentum. This agenda is more important than ever. We have a highly risk averse public sector system and a traditional business sector that is too stagnant in many areas. They must take this opportunity to create space for the change makers and the people who have the vision to stand up and say, “We see what you are doing. It can be done better.” This is exactly the time to do that. I have a lot of sympathy for the thrust of the hon. Gentleman’s remarks, which was about encouraging the system to go further. What he neglected to mention, in complaining about the playing field not being level, was who has tended the playing field for the past 13 years.

The hon. Gentleman also forgot to mention that it was a Labour Secretary of State for Health who reversed policy and made it clear that the NHS was to be the supplier of choice—a statement that sent shockwaves through the social enterprise and charity sector. I am glad that we are back on track and giving new momentum to the message that we must diversify our base of public sector delivery partners and that we must create more space for the change makers who are prepared to challenge the system.

That message is being recognised in some bizarre places. I wish that the hon. Gentleman had been with me this time last week in Brussels—I could have done with the company. I was at a conference where 800 people gathered from all over Europe, summoned by President Barroso and Commissioner Barnier for the launch of their social business initiative. Here we are in the middle of the greatest crisis facing the eurozone and the Commission is taking time, with leadership from the top, to state the importance of the whole area of social enterprise and social entrepreneurship. Speaker after speaker came to the podium to congratulate Britain on its leadership in Europe on this agenda. We must not lose sight of the big picture. We have the opportunity and the need to keep the momentum going.

I differ from the hon. Member for Harrow West on his view that simply legislating to require the Government to produce a statutory document will be transformational. We had a good debate on this matter in Committee, so I will not labour the point. However, I am extremely grateful to my hon. Friend the Member for Bury North (Mr Nuttall) for quoting what I said on Second Reading. I agreed with every word of it—I was on good form that day—and I stick to it. My hon. Friend the Member for Warwick and Leamington usefully reminded the House that we have had action plans before, and it is about not the publication of a plan but delivery and action.

The hon. Member for Harrow West bemoaned the lack of a strategic framework, but I would argue that in fact the coalition Government set a strong lead and set out a very strong framework in the agreement for government, which contains an explicit statement about our commitment to support the creation of mutuals and social enterprises and encourage them to play a bigger role in public service delivery. From that, a flow of action is increasingly evident in various areas, which I will summarise briefly.