Gareth Thomas
Main Page: Gareth Thomas (Labour (Co-op) - Harrow West)Department Debates - View all Gareth Thomas's debates with the Cabinet Office
(12 years, 11 months ago)
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Mr Gareth Thomas (Harrow West) (Lab/Co-op)
I beg to move, That the clause be read a Second time.
Mr Speaker
With this it will be convenient to discuss the following:
New clause 2—Local authority strategies—
'(1) Section 4 of the Local Government Act 2000 (strategies for promoting wellbeing) is amended as follows.
(2) After subsection (1) insert—
“(lA) A local authority’s sustainable community strategy must include—
(a) their proposals in connection with promoting engagement in social enterprise in their area; and
(b) a statement of measures proposed for enabling persons or bodies engaged in social enterprise in their area and such other persons as they consider appropriate to participate in the implementation of the proposals referred to in paragraph (a).”.
(3) After subsection (4) insert—
“(4A) For the purposes of this section a person or body is engaged in social enterprise if—
(a) the person or body is carrying on a business;
(b) the business’s activities are being carried on primarily for a purpose that promotes or improves the social or environmental wellbeing of the United Kingdom, whether the purpose is pursued in relation to all or any part of the United Kingdom or all or any of the persons resident or present in it; and
(c) the greater part of any profits for distribution is applied for such a purpose.’”.
New clause 3—Annual report to parliament—
'(1) The Secretary of State must prepare and publish an annual report on the operation of the Government’s strategy for social enterprises in the preceding year and must lay a copy of the report before Parliament.
(2) The Secretary of State must, during the preparation of each report, consult—
(a) the National Audit Office;
(b) the Charity Commission;
(c) Co-ops UK;
(d) the National Council for Voluntary Organisations;
(e) Social Enterprise UK;
(f) the Association for Chief Executives in Voluntary Organisations;
(g) the Office for National Statistics; and
(h) such other organisations or persons as the Secretary of State considers appropriate.
(3) Each report must include statistics on the performance of social enterprises.’.
Amendment 1, in clause 1, page 1, line 3 after first ‘of’, insert ‘goods and’.
Amendment 2, in clause 4, page 3, line 36, after ‘Services (’, insert ‘Social Enterprise and’.
Amendment 3, in title, line 1, at beginning insert—
‘To require the Secretary of State and local authorities to publish strategies in connection with promoting social enterprise; to enable communities to participate in the formulation and implementation of those strategies;’.
Amendment 4, in title, line 1, leave out from ‘Require’ to ‘and’ in line 2 and insert
‘that public sector contracts include provisions relating to social outcomes and social value;’.
Mr Thomas
I congratulate the hon. Member for Warwick and Leamington (Chris White) not only on his choice of subject but on the way in which he has steered the Bill through the House thus far.
The Opposition want a comprehensive change programme to boost social enterprise further. I hope to set out this morning a more ambitious approach to the Bill than the Government and the Minister, sadly, have been willing to countenance so far, but before I do so let me explain how my amendments seek to build on some of the issues raised in Committee.
In new clause 1, I have sought to respond to the appetite shown in Committee for more certainty about the definition of social enterprises, and in particular how an asset lock might be worked into the Bill. In new clause 3, I have sought to provide a clear means of encouraging the Government to be accountable for their work in social enterprises. Amendment 1 offers the Minister an opportunity to clarify the arguments that he used in Committee to justify the limited scope of the Bill in relation to commissioning.
In Committee, we had an interesting discussion about the merits or otherwise of a national strategy for social enterprise. I fear that the absence of a clear requirement for such a strategy poses the risk of a loss of momentum behind the sector when ministerial attention is diverted, as it inevitably will be. An example is the point of order on which you ruled earlier, Mr Speaker. No doubt ministerial attention has been diverted, quite rightly, to youth unemployment and the return of the future jobs fund in another guise. There is a risk that other issues might also divert Ministers’ attention from their commitments to social enterprises in the future, and a clear strategy would help to avoid any such loss of focus and interest.
I fear that things that could and should be done by other Whitehall Departments to help social enterprises cannot be done without a requirement for a cross-Whitehall strategy. I fear, too, that some parts of the country will miss out, and that many communities that could and should benefit from what social enterprise can offer will not be able do so because of the absence of a clear strategy framework for Whitehall’s work.
The Minister claimed in Committee that there was a strategy for social enterprise, and cited social investment as one part of that strategy. I must point out gently to him that he did not seem to be willing to give many more such examples. He did, however, go on to say that the Cabinet Office was working with the Department for Business, Innovation and Skills, suggesting that that somehow proved that the whole of Whitehall was united behind work for social enterprises.
I believe that a strategy for social enterprise should touch on a series of issues. Access to finance is clearly a key issue, as are access to commissioning opportunities and the role that social enterprises can play in assisting the process of modernising our public services, making them more flexible and personal. Access to advice and support for fledgling or “wannabe” social enterprises is clearly a further aspect of such a strategy. Ongoing support and representation from—ghastly phrase—infrastructure organisations to help social enterprises to share best practice, to solve legal problems that they may face, or to tackle difficult human resource issues would also be worthy of inclusion.
A strategy could explore the scope for more work with, or indeed instead of, the private sector. It could also consider issues relating to coverage: which communities are likely to need more help to enable more social enterprises to emerge, and what should that help look like in practice? It could outline the role not only of other Whitehall Departments but non-Whitehall players in developing the Government’s endeavours to help social enterprise.
Hazel Blears (Salford and Eccles) (Lab)
Does my hon. Friend share my regret that the original Bill, which was genuinely about social enterprise, has been reduced—as a result of, I believe, arguments within the Government—to a Bill that simply talks about the very minimal bit of social value that is left, rather than giving what could have been a really good boost to the social enterprise sector?
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.
Richard Fuller (Bedford) (Con)
I am listening to the hon. Gentleman’s speech with great interest. He is making a point not only about the need for a strategy, but about the impact of cuts in the near term. Does he agree that, in essence, the Bill in its present form retains the opportunity to support social enterprises, and that the Social Enterprise Coalition and other leaders of social enterprises support it?
Mr Thomas
The hon. Gentleman makes a valid point when he says that the Bill, although its scope is substantially restricted, offers some opportunity for progress to be made in support of social enterprises. The Opposition welcome and support that, but, as my right hon. Friend said, this Bill provided the Government with an opportunity to be far more ambitious in scope, and it is a tragedy that the Minister has not been able to persuade his colleagues in Government to support the more far-reaching measures.
New Philanthropy Capital has assessed the funding situation facing the voluntary sector in the coming years. It noted how the scale of the cuts would be far too big for public foundations or other forms of philanthropy to be able to compensate for, and also noted that charities funded by local authorities, which will bear particularly heavy cuts, are at great risk. The Minister will not, I suspect, be surprised by these difficulties facing the third sector, especially those resulting from the Government’s cuts on local authorities. This is yet another example of their cutting public spending too far, too fast. I am sure the Minister will know about the cuts at Hillingdon Community Transport, Hillingdon Law Centre, Hillingdon Arts Association and Hillingdon Women’s Centre. Those are just a few examples of local organisations that are being affected by the coalition’s economic strategy.
Social enterprises that trade directly with the public are all too aware of the extremely difficult trading environment on the high street. The latest news, which came out today, is that Sir Philip Green is having to axe a whole series of shops. That proves the error of the Government’s economic strategy, and if his business is facing such difficulties, it is unsurprising that social enterprises that trade with the public are also experiencing falling incomes. The crisis facing the economy, and therefore the circumstances facing social enterprises trading with the public, are yet another reason why the Chancellor should consider introducing a temporary cut in VAT and adopting the plan B proposed by the shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls).
Hazel Blears
I wonder whether my hon. Friend shares the following concerns, particularly in respect of the national health service. If it is truly to become the biggest social enterprise in the world, as the Secretary of State for Health has said, there needs to be a lock on public sector assets that have been paid for by taxpayers, so that they are not transitioned into the private sector. That has already happened in some instances. I have made that point to the Minister on several occasions, and I am very concerned that public assets will be transferred to private companies, making private profit for people in the private sector.
Mr Thomas
I entirely agree with my right hon. Friend. It is precisely because of the concern she has raised on this issue—and the support she received, including from Members of the coalition parties, in Committee—that I propose a revised definition of social enterprise in this new clause. It seeks to provide in legislation the asset lock facility. Central Surrey Health is owned by the nurses and managers who work in it, and it was the first employee-owned spin-out from the national health service—that occurred back in 2006, under the Labour Government. It is a classic employee mutual. The Cabinet Office has confirmed that Central Surrey Health has delivered substantial improvements in quality and efficiency in the services provided. However, it would appear that quality counted for far less in the tendering exercise than the ability to raise capital.
The chief executive of Social Enterprise UK, Peter Holbrook, put it as follows:
“If Central Surrey Health, the government’s flagship mutual social enterprise, which has demonstrated considerable success in transforming health services, reducing waiting times and increasing productivity can’t win”—
in a commissioning contract process—
“what does this say for the future of the mutuals agenda?”
He went on to say:
“Public sector workers will be understandably anxious about spinning out from the NHS and setting up a social enterprise on the back of this news. The government needs to take action to reassure them that they will not be operating in markets weighted against them.”
The thought, consultation and preparation required in a proper strategic review of how to support social enterprises might begin to give those public sector workers the confidence they need to be part of employee spin-outs.
The sense that nobody has a proper joined-up grip of how to transform commissioning has perhaps left many public sector workers sadly sceptical about being part of creating an employee mutual. The Minister for the Cabinet Office and Paymaster General has bravely pledged that by 2015 the country will have 1 million more public sector workers in mutuals. I have tabled parliamentary questions asking each Department how many applications Ministers have received from employees to run services for which their Department is directly responsible. Sadly, the overwhelming majority of Departments had received absolutely none.
A strategy for social enterprises could also explore where and how social enterprises can get the advice, the support and even the training that they need in commissioning, and in the legal and human resources issues that they would face, for example, in respect of TUPE. Where do social enterprises go for that support now? Clearly they can go to the excellent Social Enterprise UK or Co-operatives UK, but are they well enough funded for the scale of the Government’s future ambitions? I pose that question in the context of Rise, the south-west social enterprise agency, having decided to close its doors because of a lack of income. As a result, there is understandable concern that Ministers have not thought through the external support required to grow the social enterprise sector. Social Enterprise UK has suggested that there should be more social enterprise hubs offering a combination of business support, shared work space and peer support to support the growth of the sector. That is a very interesting idea, and if there were to be a proper strategy, the Government could explore it in more detail.
What thought have the Government given to encouraging the growth of social enterprises to take on tasks that have traditionally been the preserve of the private sector, for example, in the areas of finance or energy? The Government want social enterprises to help them to roll back the state, but have they thought through the opportunities for social enterprises to do more in those traditional private sector areas? Let me give one example. Access to loans and the level of personal debt have been issues of huge concern across the House. Social enterprises that do not need to fund profits for shareholders could offer cheaper loans and could do so in areas where traditional businesses might not operate. Credit unions are a powerful example of the potential in that area. The London Mutual Credit Union, which I believe operates in Southwark and Lambeth, wants to offer a cheaper payday loan in competition with similar private sector products and it would charge far less than the very high rates of interest that private sector payday lenders currently offer.
Mike Freer (Finchley and Golders Green) (Con)
Before we move off new clause 1, may I draw the House’s attention to subsection 5(b), which contains a definition of “social enterprise”? As I read it, Barratt Homes would qualify here, because one could argue that by building houses it is improving social infrastructure; the provision of affordable homes meets the criteria. Section 106 agreements, which provide affordable homes for rent, housing facilities and health facilities, all meet those criteria. In addition, the definition could exclude those seeking to provide fair trade services, because they do not provide or improve social or environmental well-being in the United Kingdom. Will the hon. Gentleman clarify how that provision would actually be applied? Would it not, in fact, open the door to every business?
Mr Thomas
The hon. Gentleman makes an interesting point about Barrett Homes. I draw his attention to subsection 5(d) of new clause 1, which refers to the business being
“majority-owned and controlled in the interests of improving the social or environmental well-being of the United Kingdom.”
Given that Barrett Homes has a substantial shareholder base, it would be difficult to justify in any court of law that it met that definition.
The hon. Gentleman's interesting point relates to Fairtrade, too, and if the Government accept the new clause, a small amendment in the other place could help to ensure that Fairtrade organisations were not excluded. I am open to the idea that his suggestion might work and I gently suggest that it would require the Minister to have a slightly more open mind than he demonstrated in Committee. Perhaps the hon. Gentleman will have more luck in encouraging the Minister behind the scenes than I did in Committee.
New clause 2 highlights the key role that local authorities will play in helping to grow the social enterprise sector. Indeed, many of the representations I have received about the Bill stress the importance of local authority commissioners for social enterprises. A requirement for a proper strategic look at the needs of social enterprises in each local authority area would mean that Conservative councils, desperate simply to privatise services, would have to at least to consider the merits of the social enterprise sector. They would do well to look at the example of the many Labour-run co-op councils around the country that are already doing much to encourage social enterprises to develop.
In Committee, a number of Members noted the danger of strategy documents gathering dust and achieving little, which none of us in the House of Commons would want to see. I accept that that is a risk, and new clause 3 is designed to help minimise that risk. I have been struck by the enthusiasm of many of the organisations included for consultation on new clause 3. New clause 3 requires an annual report to be laid before Parliament with the clear involvement through consultation of a diverse range of representative bodies from the sector and others, such as the National Audit Office, which, if it wanted to do so, could comment effectively on the success or otherwise of the commissioning for social value part of the Bill. The Charity Commission would be able to provide a view on the effectiveness of the Government’s strategy to encourage further charities that are social enterprises, while the Office for National Statistics clearly needs to be encouraged to develop statistics to enable the sector’s strength and performance to be properly understood.
Evidence-based policy making and proper evaluation of what has worked and what has happened so that one can learn from mistakes is surely always a sensible approach for Ministers and Parliament to encourage. The National Council for Voluntary Organisations, the Association of Chief Executives of Voluntary Organisations, Social Enterprise UK and Co-operatives UK are all strong, excellent bodies that could offer insightful comments to help Ministers and, crucially, Parliament, to assess the effectiveness of the Government’s policies for encouraging the sector to grow.
I was struck by the recent Public Administration Committee’s report “Change in Government: the agenda for leadership”, published in September. The Committee noted the Prime Minister’s promise on, among other things,
“re-empowering…communities as part of the ‘Big Society’”.
Two paragraphs on, it stated:
“The principal message of this report is that unless there is a comprehensive change programme for government, there will be little of the real change”
that the Conservative manifesto promised. There are three new clauses before the House today that all offer the chance of that comprehensive change programme for social enterprise to be embedded across Whitehall.
My final point on the three new clauses is to draw the House’s attention to the new suggested definition for the sector. In Committee and in her intervention today, my right hon. Friend the Member for Salford and Eccles (Hazel Blears) rightly raised the issue of an asset lock to protect taxpayers’ assets to stop them simply being transferred to the private sector. In Committee, my right hon. Friend received support for the principle of an asset lock from the hon. Member for Bedford (Richard Fuller) and even from the Minister.
As I said in response to the intervention from the hon. Member for Finchley and Golders Green (Mike Freer), subsection 5(d) of new clause 1 seeks to add a key description to the definition of social enterprise which locks in any public assets transfer to the social enterprise. That matters because the Opposition remember the bus privatisation scandal of the 1980s. The bus industry was transferred lock, stock and barrel from public ownership to employee mutuals. It was not that long before the employee mutuals handed themselves over to what had become big corporate bus businesses. Those businesses gained the assets on the cheap while the community and employees lost some of the social value implicit in those public assets, which were taken out as profits of those private businesses to reward their shareholders.
I do not criticise the entrepreneurs who set up and now run the bus industry, as the rules at the time allowed them to do what they did. I am certainly not against privatisation. It has its place, although that is not everywhere and not all the time. If that is the Government’s intention for an industry or a particular part of a sector, however, we should have proper, transparent debate about its merits.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I appreciate the point made by the right hon. Member for Salford and Eccles (Hazel Blears) about how some overage must be retained by the taxpayer when surpluses are gained later, but the hon. Gentleman is rewriting the history a little, I think, of the effect of bus privatisation. I remember that when I was a schoolgirl in Liverpool the introduction of choice and competition meant that we had better services, not worse, as a result of the privatisation.
Mr Thomas
My recollection is slightly different; we remember that in the 1980s there were substantial cuts in bus services after privatisation. Arguably, that is not the point. The key point is whether the assets should remain in the ownership of the public sector or, if not, in that of members of the public who are combining in a social enterprise. The asset lock clause seeks to achieve just that.
Ian Murray (Edinburgh South) (Lab)
I thank my hon. Friend for allowing me to make a small contribution on this point. The publicly owned bus company in Edinburgh, Lothian Buses, has won bus operator of the year for five of the past 10 years. It is 90% owned by the city of Edinburgh council and 10% owned by each of the surrounding authorities in the Greater Edinburgh area, including Midlothian, East Lothian and West Lothian. That investment in public buses has made it one of the best bus companies in Europe—holding fares down and being responsive to local communities. I wholeheartedly agree with what my hon. Friend has just said.
Mr Thomas
My hon. Friend makes the interesting point that public sector-run organisations can be extremely successful and often are extremely efficient. The key issue we focused on in Committee is that when assets are transferred out of the public sector we need to ensure that if they have been built up over the years as a result of taxpayer investment, there will be proper protection for the social value that the assets have generated. My revised definition of social enterprise seeks to achieve that objective.
The last amendment on which I want to focus is amendment 1, as the others are all consequential on the three new clauses. Amendment 1 would ensure that the one part of the original Bill to which we know the Government are committed is widened in scope. The Government want and the Opposition support further reforms to the public procurement process to encourage the Government in their various forms to take account of wider economic, social and environmental well-being in the commissioning process.
Hazel Blears
My hon. Friend will recall that in Committee I raised the example of B4Box, a construction social enterprise that refurbishes houses, does construction work and employs people who have a difficult and troubled employment history. The Minister was unable to satisfy me at that time—and I have heard nothing since—about how that amazing social enterprise could be covered under “social value”, because it deals with goods and services, and sometimes the goods might well exceed the services.
Mr Thomas
My right hon. Friend made a very valid intervention in Committee on exactly this point, and I shall return to that issue in a moment.
The Minister also said in Committee that he wanted to
“strike a proper balance between our”—
the Government’s—
“objective to encourage more commissioners to think about wider values, such as social and environmental values, in their considerations, and our determination to try to streamline the process and to reduce the number of additional duties on commissioners.” ––[Official Report, Public Services (Social Enterprise and Social Value) Public Bill Committee, 19 October 2011; c. 19.]
However, he did not explain why it is reasonable to encourage commissioners to think about social value in the context of services but is unreasonable to ask the very same commissioners—as it is usually, although not always, the same commissioners—to think about social value when awarding contracts for work or, crucially, for goods. Will he clarify a little further how he arrived at the view that services could be covered but that contracts for work and for goods should not be covered? Was there a discussion across Government in which he lost out? Perhaps the Secretary of State for Communities and Local Government saw this as a step too far. I note that there was a huge gap between the Bill’s Second Reading and Committee, which suggests there was a fairly intense debate behind the scenes in Government—was it on this issue?
If there was not a political problem in Government about the inclusion of contracts for work or for goods, perhaps there was some research basis for suggesting that only contracts for services mattered in legislative terms for encouraging and embedding that concept of social value in commissioners’ thinking. If that is the case, will the Minister enlighten the House as to the research evidence in question? The whole House believes in transparency and I am sure that we all want to see clear, evidence-based policy making. Will he tell us with whom he discussed such research, if it exists? Was it with Social Enterprise UK or with Co-operatives UK, either of which would have been a logical choice? Was it with the Charity Commission or just with officials? It would be helpful to know the thought process he went through in deciding to omit contracts for work and contracts for goods from the scope of the Bill so that not only those of us in the House today but people in the third sector, particularly public sector commissioners, who consider our debate can better understand what is expected.
During our Committee discussions, my hon. Friend the Member for Stretford and Urmston highlighted the issue of books and publications, which are goods, and the fact that publications providing information about the social security system are arguably providing a service. She noted the potential dangers of confusion and difficulty for commissioners with contracts for goods being excluded from the Bill’s scope.
My right hon. Friend the Member for Salford and Eccles raised in Committee the issue of construction, as she has just done, and whether it would count as a service, a good or work. I gently point out to the Minister that he did not answer her question on that. Following our Committee discussions, I have received further representations suggesting that construction contracts could be outside the scope of the Bill. The organisation in question suggests that legal advice might be necessary, but surely the Minister, having had so much advance notice of the concerns of many Committee members on this issue, can clarify the situation today. I have also received representations that if the Bill covered the provision of food, furniture or plants, the civil society organisations bidding for contracts would be more likely to benefit from the socially and environmentally responsible manner in which those goods are or could be produced.
Similarly, I have received representations suggesting that statutory guidance and training are required on how and where social value can legitimately be considered and inserted into tender specifications. Does the Minister intend to bring forward such guidance for commissioners and for those third sector organisations, social enterprises and others that could benefit from this clause? The Bill could achieve so much more. My amendments seek to do justice to our debates in Committee and, above all, to the huge potential that social enterprise and social value offer.
Chris White (Warwick and Leamington) (Con)
I thank all those who have enabled the Bill to get to this stage today. It is a rare feat for a Bill to go this far and it is a credit to all the political parties and Members who have been involved in the process that so much has been achieved. I again thank the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd) and the hon. Member for Harrow West (Mr Thomas) for their continued support for the principles enshrined in the Bill.
It is wise, at this juncture, to take a step back and remember what has been achieved so far. During the Bill’s progress through Parliament there has been significant national debate on the way that public money is spent. Across the country, local authorities, public sector commissioners, charities, social enterprises, chambers of commerce, community groups and politicians have been seriously considering how we should commission the services we need. In addition, all the political parties have signed up to the principles of social value commissioning. That cross-party support has been one of the most distinctive features of our deliberations on the Bill.
We are very close to being in a position to send out a message to commissioners across the country that we want to do things differently and that although we consider value for money as being important, we mean “value” not in its narrow sense but in its true sense—recognising the importance of social, environmental and economic well-being across our communities and in our lives. This has been welcomed by organisations throughout the country. Only this week a letter from the chief executive of Social Enterprise UK in support of the passing of the Bill was signed by the Association of Chief Executives of Voluntary Organisations, Action with Communities in Rural England, CAN, Children England, Co-operatives UK, Community Matters, Locality, the National Association for Voluntary and Community Action, the National Council for Voluntary Organisations, the National Council for Voluntary Youth Services, the Race Equality Foundation, Urban Forum and Social Firms UK. That is just the tip of the iceberg.
Across our communities, thousands of organisations are looking to us here today to give them a vote of confidence. Yes, we want to see those organisations able to deliver more of our public services. Yes, we want to support them doing the excellent work that they do. Yes, we appreciate the extra miles that they go to support our communities. The biggest show of support that we can give to these organisations is to pass the Bill today.
I appreciate that the hon. Member for Harrow West has only the best of intentions for the Bill. I am pleased that many hon. Members have taken the opportunity to engage seriously and considerately in the process leading up to today, and have sought to do what they can to help make the Bill a success. Every single Member of Parliament who has participated in discussion of the Bill should be proud of the role they have played in ensuring that we do something positive for charities, voluntary organisations, small businesses and social enterprises, but we cannot allow the best to become the enemy of the good.
I recognise that the shadow Minister is seeking to return to some of the clauses that were included in the original Bill, and I sympathise. Of course I want to see, and I believe we all want to see, a more strategic approach to supporting social enterprise in local and central Government. I believe, like him and like most of those in the Chamber, that social enterprise is the way forward and that social enterprise is good for our communities, but the best thing we can do for social enterprise is to focus not on reports or strategies, but on social value. Social enterprises, like other organisations, want more than words. They want concrete action, and the Bill has the potential to deliver that action.
In 2006, the then Parliamentary Secretary, the Cabinet Office, now the Leader of the Opposition, the right hon. Member for Doncaster North (Edward Miliband), produced a social enterprise action plan through the Office of the Third Sector. The action plan outlined 24 separate actions that it wanted to achieve, but nearly half of them were never acted on. That is not to say that we should not have strategies and plans, but strategies and plans by themselves do not necessarily lead to actions that benefit those whom they are meant to support. The social enterprise sector, like voluntary and community organisations up and down the country, see the Bill as a positive action that we can take today that will directly help them and potentially help thousands of others in the years ahead.
The social value aspect has always been the most important part of the Bill, and I am sure that all hon. Members recognise how imperative it is that the Bill goes through with that social value section intact. We should also remember that the Bill in no way prevents the Minister, his successors or local authorities from producing their own action plans and strategies to boost social enterprise, and if they were to do so, they would find in me one of their strongest supporters.
We should recognise that a great deal of the ideas generation that the sector needs comes from within it. The Social Enterprise Coalition, as it was before the last general election, produced an excellent manifesto for social enterprise which outlined a range of specific measures that could be taken to support the sector. We should take on board those ideas and encourage central and local government to work with organisations such as Social Enterprise UK and their regional bodies, to keep a constant dialogue going about how to boost the sector. However, if we are faced with the choice of having strategies within the Bill and it failing, or having strategies removed and it passing, I think we all know which is the more important. This is an opportunity that we simply cannot afford to miss.
Chris White
I thank the right hon. Lady for that intervention. I appreciate the tremendous work that she has put into getting the Bill to this stage. All the work that she does with social enterprises is well recognised. Do I feel a touch of disappointment? I am a practical and pragmatic person. I want to see something that works, something to build on. That is why I am making the remarks that I am.
Chris White
I am about to conclude.
I appreciate that we all have a duty to ensure that the best legislation gets through the House. It is true in this case that some legislation is better than no legislation. This is a chance for us to send a message that when it comes to these important issues, we can all work together, we can prevent politics from getting in the way of good policy and we can be trusted to do the right thing when the time comes. I hope that given the hon. Gentleman’s well-documented support for the principles of the Bill and for the social enterprise, voluntary and community sectors, he will withdraw the amendments today so that we can push forward with much-needed reform of procurement. This is a chance that we may not get again for some time, so let us take it and see the Bill through to the other place and from there, we hope, on to the statute book.
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 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—
Mr Hurd
I accept that point, and to some degree that is what we are doing today. We are moving forward on that. My hon. Friend mentions the concept of the right to challenge, which had not previously been mentioned in the debate. Again, we are moving forward on that, because we are moving into a world in which there will be much more information about what commissioners are doing and how public money is being spent. Through the Localism Act 2011, which I am delighted to say has completed its passage through Parliament, the right to challenge is now set in statute, with regulations to follow shortly to clarify how it will work. That is progress on the journey that I have described.
Mr Hurd
I have nothing to add to what I said in Committee. The Bill is reasonably clear about where it will apply.
The right hon. Member for Salford and Eccles mentioned B4Box in her constituency. The position will be enhanced by the new best value guidance, and there is nothing to prevent the local authority from working on the basis that she described. I am grateful to her for bringing Aileen in to talk about the matter. Aileen is doing it. There is space in the system for her to do it. She and I would probably agree that we need to send a stronger signal that it is okay, but it is okay and people are doing it. The best value guidance from the Secretary of State moves things on further by sending a signal of permissiveness.
I have always made it clear that the Government have from the start supported the principle of the Bill because of the value that it adds to the process, and it goes with the grain of what the previous Administration were trying to achieve. The system, risk averse as it is, is getting a consistently stronger signal about the need to take account of wider social value considerations when spending taxpayers’ and constituents’ money and to be more alive to opportunities to commission intelligently. Lots of examples have been cited in our debates of fantastic organisations, such as Create, that are adding value to our communities. I cited that example in my Brussels speech because in many ways it embodies exactly what we are trying to encourage.
We can do more. The hon. Member for Harrow West goaded us to come up with more ideas to support social enterprises in this movement. I have talked about the need to open up new market opportunities to help these enterprises grow and to help more people, but the Government can do more to make life simpler for the social entrepreneur. I shall come later to the question of definition but these are businesses first and foremost, and the guidance and requirements that we place on people trying to run businesses in this country are ridiculously disproportionate. A rigorous process is under way. It cannot be undertaken lightly and it does not lend itself to soundbites. It is a rigorous process of going through each subsector of the economy to look at the regulatory burden and to discuss with the players in those sectors what we can remove and what is no longer proportionate or necessary. That process is well under way.
We can also help social enterprises with the increasingly important question of how to measure social impact. That is their currency. Many of us know that the money providers, whether private or public, are increasingly demanding that social enterprises, charities and, I hope, other organisations measure and communicate their social impact and social value, which is their unique selling point. Many of us are also aware that arguably there is too great a profusion of initiatives in this area and of the risk that this will only confuse the landscape. I want greater coherence and consistency not least so that we, as funders, and other stakeholders can agree on what is worth measuring and how it can be measured affordably by all organisations.
Mr Thomas
We have had an excellent debate on new clause 1 and its associated new clauses, with an excellent speech from my right hon. Friend the Member for Salford and Eccles (Hazel Blears) and similarly strong speeches from the Bill’s promoter, the hon. Member for Warwick and Leamington (Chris White), and the hon. Members for Congleton (Fiona Bruce), for Finchley and Golders Green (Mike Freer) and for Bury North (Mr Nuttall), as well as the Minister.
The hon. Member for Warwick and Leamington encouraged us in the view that he was a practical and pragmatic person; I hope that I, too, share those characteristics. I say gently to him and his hon. Friends who are not convinced of the merits of a strategy that if one is comfortable with unintended consequences or outcomes that one does not necessarily want, a strategy is certainly not required. However, if one has a clear vision and a sense of the possibilities for a sector, a strategy can help to unlock the incremental steps required to allow it to flourish. The hon. Gentleman mentioned the social enterprise plan, which my right hon. Friend the Leader of the Opposition developed when he held the position currently held by the Minister. The hon. Gentleman said that some parts of that strategy were not implemented, but that is often the case with strategies. Not everything is successful, but if one is trying to grow a sector strategically, one learns from the things that have not worked in order to enjoy even more success in future.
My right hon. Friend the Member for Salford and Eccles suggested that the Government were moving too slowly and not deeply enough on this agenda—a succinct and accurate summary of some of the problems that parts of the Government face in implementing it. She rightly talked about the potential benefit of the one bit of the Bill that the Government support, which is that on encouraging businesses in the private sector to continue the journey that many are already on and think about how best to use social enterprises in their supply chains. Many businesses recognise that CSR reports, corporate donations to charity and corporate philanthropy are important, but not enough on their own, and that building social enterprises into their supply chains—she gave the example of how Morrisons is working with social enterprises in her area—can make a genuine difference to the private sector and, similarly, help to grow social value.
The hon. Member for Congleton praised the social enterprises in her constituency and highlighted how the social value element of the Bill could help them to grow further.
The hon. Member for Finchley and Golders Green explored in his speech some of the issues that he raised in his intervention on me about the definition of a social enterprise. I was struck by the benefit that a proper strategic conversation on how to grow the social enterprise sector might have for one very interesting idea recently presented to me—the idea of developing the concept of a social enterprise limited liability partnership to help ease investment finance from the City into social enterprises.
The Minister began his remarks wishing I had been with him in Brussels. He is, as ever, charming and I would have found it hard to resist if he had indeed called me in time to accompany him. He is absolutely right that the Government have taken some positive steps on this agenda, but, sadly, there have also been negative steps backwards for the sector. I welcome the progress made on the big society bank, but even the £600 million with which the Minister hopes the bank will be capitalised will not plug the huge amount of grant income being taken out of the sector.
I was encouraged by the Minister’s recognition that the Work programme has not gone well for the sector. He said that he is listening, but I fear that his colleagues in the Department for Work and Pensions are, sadly, out of touch with just how badly things are going for many charities and social enterprises that had hoped to be part of the Work programme.
Let me leave the House with one further statistic about the failure to date of commissioning in this area. The London Voluntary Sector Consortium surveyed some 25 tier 2 providers, 23 of which had had no referrals from their prime contractors—hardly a ringing endorsement of the success of commissioning for social enterprises under this Government to date.
Lastly, the hon. Member for Bury North almost appeared to lament the cross-party support for the Bill. I thought he was encouraging me to press my amendments to the vote. I recognise that there are insufficient Members in the House today, which means that if a vote were called the Bill’s progress would be stalled. Although the Minister has made a slightly better fist, if I may say so, of answering the concerns of Labour Members about the Bill’s narrow scope, I would have been tempted to press some of my amendments. I want the Bill to make progress, however, so I beg to ask leave to withdraw the motion.
Clause, by leave, withdrawn.
Third Reading.
Mr Thomas
Let me again congratulate the hon. Member for Warwick and Leamington (Chris White). He has done a masterly job in nursing his Bill through the corridors of Whitehall, where I suspect that he has engaged in some particularly interesting conversations, and through its various stages in the House. He took his party’s leaders at their word and presented a big society Bill, and it is certainly not his fault that the Government have gutted it. What remains is nevertheless useful, and, as many Members have observed, could begin to make a difference in local communities as commissioners think a little more carefully about how to maximise social value.
Mr Philip Hollobone (Kettering) (Con)
The hon. Gentleman has correctly described this as a useful Bill. Will he give the House the assurance of his party that in the other place everything possible will be done to ensure that it is passed before the end of the current parliamentary Session?
Mr Thomas
I will certainly do all that I can to encourage its passage. I hope that I have demonstrated to the hon. Gentleman, as well as to the hon. Member for Warwick and Leamington, the spirit of co-operation that was needed for it to make progress today, and I sincerely hope that it is passed in the other place and becomes law.
A week or so ago, on social enterprise day, I visited Hackney Community Transport, a remarkable social enterprise. I met not only its chief executive, but some of the staff who have been selected as this year’s social enterprise champions for the organisation. It is a remarkable outfit. In the early 1980s, finding it increasingly hard to obtain the grants that it needed in order to continue to meet the demand for transport from pensioners’ clubs, community swimming groups and the local Guides and Scouts, it set out to try to win commercial transport contracts. Last year its turnover was some £28 million, and over the past five years it has sustained a 20% to 25% annual rate of growth. That is a remarkable success by any definition.
Hackney Community Transport creates social value by reinvesting the profits from its commercial contracts in transport services for community groups in its area, and by training the long-term unemployed to help them prepare for a return to work. In its small way, the Bill will reinforce the extra value that it creates in its local community. Let me point out gently to Conservative Members that Hackney council has been a supporter of that social enterprise, working with it and commissioning contracts in ways that give it a fair chance. Here is the state in action at its most innovative, working with the community to create real social value and community benefit.
The Bill has the potential to help two more excellent social enterprises, as well as, I am sure, many others. Greenwich Leisure is another part local government, part enterpreneurial employee-led social enterprise, born in response to John Major’s cuts in the early 1990s. Winning contracts from local authorities to provide leisure services, it has created many new jobs and offered a range of initiatives to persuade those who have previously been unable or unwilling to use leisure centres through its doors. I am delighted to say that my own council has a contract to run our leisure centre with that excellent social enterprise.
The superb Coin Street Community Builders, 10 minutes away from this great House, was formed as a result of a challenge from the private sector. Big hotel groups wanted to take over the frontage of the River Thames, not for the community’s benefit but purely in their own interests. The tenacity of the community—and, to be fair, the skill of the Greater London Council planners at that time—led to the site being protected. Through a mix of legal forms—a housing association, a co-operative, a company—the community gradually generated new social housing. It has also refurbished the striking Oxo tower, created new work spaces for businesses, and helped regenerate the surrounding area. That has created considerable community benefit, and real social value.
The Labour party champions social enterprise and social value, not because we want to roll back the state or provide cover for tax cuts for the few and huge cuts in services for the many, but because we believe in strong communities and we recognise that we need to allow the ideas and imagination of the brightest and the best in our communities to flourish. Social enterprise and social value, along with Government, have key roles to play in that regard, and we support the Bill on that basis.