Public Services (Social Enterprise and Social Value) Bill

Hazel Blears Excerpts

Friday 19th November 2010 Commons Chamber

[Hazel Blears (Salford and Eccles) (Lab)]

I congratulate the hon. Member for Warwick and Leamington (Chris White) on two counts: on being successful in the ballot at his first attempt, and on deciding to pursue such a course. At first sight, the measure appears relatively modest, but I genuinely believe that it is a small Bill with a big intent. He introduced the Bill with characteristic quiet determination. As it goes through its various stages, some of that quiet determination will doubtless be needed.

I broadly welcome the Bill. The hon. Gentleman generously acknowledged that the idea of extending social enterprise and involving communities in helping to run, manage and govern services is not new. It dates back many years, and a range of community groups throughout the country have pursued such work in their communities for decades, making a difference and ensuring that voluntary organisations are well supported. The Bill tries to formalise that position and use the power of public procurement to ensure that community groups, which are often fragile and lack sustainable resources, can have a sustainable future. That is at the heart of the Bill.

If the hon. Gentleman succeeds in ensuring that we use the power of public procurement at national Government and local government level to give people some stability so that voluntary organisations and social enterprises can plan for the medium and long term, he will do a great service to many of our groups, which unfortunately currently spend the majority of their time going round with a begging bowl and living a hand-to-mouth existence looking for temporary grant funding instead of getting on with the job they are there to do—serving the community. If he can provide that sustainability, it will be a welcome step forward.

The hon. Gentleman recognises that the agenda is not new—Governments of all shades have tried to pursue such issues. I had a White Paper in 2008, “Communities in control”, which tried to take much of the agenda forward and suggested a national social enterprise strategy. I appreciate that strategies are not terribly popular, but something that applies across Government and affects every Department needs joined-up policy making. I ask some Conservative Members not to be quite so sceptical of planning and ensuring an integrated approach to the agenda, because that is the key to success.

The third aspect of the Bill is the most important—not the strategies, which are a means of delivering, but the commissioning for social value. It is radical, and I urge the hon. Gentleman not to limit that to the social enterprise sector. It is key that commissioning for social value applies to the public sector and the private sector when it provides public services, as well as the third sector. There is always a danger in this area of policy making that commissioning for social value becomes a nice thing to do for voluntary organisations, charities and the third sector, but we are considering mainstream procurement and commissioning and changing the value set of commissioning to ensure that from the public money that we spend we gain the maximum impact in social value. That is quite a new field.

How do we measure social value? What do we mean by it? A great deal of academic research is being done on it and there is no settled view. The hon. Gentleman gave one example: creating local supply chains. Evidence already exists to show that if we use our public money to support local businesses in a neighbourhood, we get a much larger multiplier effect—approximately £7 for every pound of public money spent—to sustain that local economy, support jobs and enable poorer communities in particular to thrive and develop. That work is still at a fairly formative stage and I hope that, in Committee, we can debate what is—and, indeed, what is not—social value.

[Steve Baker]

Listening to the right hon. Lady’s remarks, I am reminded of a book on social value that was written in the 1920s. Much as I would associate myself with almost everything that my hon. Friend the Member for Warwick and Leamington (Chris White) said, it seems that socialists have spent nearly 100 years trying, but failing, to define social value loosely. Socialists are no more likely to succeed today than they were in the 1920s. I ask the right hon. Lady to state in concrete terms how she would measure social value.

[Hazel Blears]

I have already said that there are many different views and that it is a developing subject. If the hon. Gentleman claims that the concept of social value is a socialist idea, perhaps he is inviting the hon. Member for Warwick and Leamington to cross the Floor.

[Steve Baker]

Of course, we all value society. The right hon. Lady may know of the Cobden society. We gleefully reproduce Cobden’s words:

“Peace will come to earth when the people have more to do with one another and the government less.”

That is precisely the point: when the people have more to do with one another and the Government less. I fear that we are here today to discuss how the Government can have more to do with creating a strategy for that most delicate system of relationships—human social co-operation. Of course, we all value relationships and society, but we differ—it is a fine point, but probably the one about which we have argued most sincerely for more than 100 years—about the extent to which state power should be used to intervene in the dynamic process that is social co-operation. It seems to me that we have moved on—

[Mr Speaker]

Order. May I gently say to the hon. Gentleman that interventions, even when they constitute a kind of philosophical musing, must be brief?

[Hazel Blears]

I am grateful, Mr Speaker. I fundamentally disagree with the hon. Member for Wycombe (Steve Baker). If his idea of building a strong and vibrant society is leaving people on their own to get on with it and sink or swim, I entirely reject that. I genuinely believe that the best society is a partnership between active and enabling government—nationally and locally—and the ideas, innovation and passion that local people bring. When a commitment to support people from government and the passion and entrepreneurial spirit of local people are brought together, something really special is created. If they are divided, and we say, “Government must do this in a monolithic way” while local people are left on their own, unsupported and unsustained, we do not get the synergy that makes a difference to our communities. I therefore fundamentally reject the hon. Gentleman’s comments.

[Steve Baker]

I shall be very brief. The right hon. Lady paints a dreary picture of society as being entirely dependent on the state. I agree with much that she has said, but not with the key point that the state must act.

[Hazel Blears]

I am rarely accused of being dreary. I am usually accused of the opposite. If the hon. Gentleman will listen to my further remarks, perhaps he will revise his view.

[Andrew Bridgen]

I will bear in the mind the guidance on interventions that the Speaker has just given us. Will the right hon. Lady bear in mind that socialism does not and never will have a monopoly on social conscience?

[Hazel Blears]

I would never try to make such a point. In our country, we live in a vibrant and much admired democracy, with different political views, and people of all parties support civic organisations and community groups. I would never claim to have a monopoly on the good things in society. However, I genuinely believe that the best way to achieve our aim is through a partnership, with state action supporting local people and freeing them to make that difference. That seems to be a fundamental difference between me and some Conservative Members. However, I do not believe that that applies to the hon. Member for Warwick and Leamington.

[Jon Trickett (Hemsworth) (Lab)]

My right hon. Friend is making a strong case and she does not need my help. Does not the Bill suggest that the state, through its procurement policies and through strategy, should intervene precisely to build what Conservative Members call the big society? Is not it curious that Conservative Members, who seem to support the Bill, are trying to form a philosophical divide between my right hon. Friend and them?

[Hazel Blears]

I am beginning to feel quite protective of the Bill, but I do not want to create any further divisions between the hon. Member for Warwick and Leamington and his hon. Friends.

I want to give a couple of examples from my constituency of groups that have been social enterprises for a considerable period, because considering what happens in real life, on the ground, will benefit the debate. Unlimited Potential has been going for about seven or eight years. It has a turnover of £1.5 million and employs 30 staff, 90% of whom live within a couple of miles of the business. It provides health trainers and expert patients and is commissioned by the primary care trust. This year, for the first time, it became totally independent for its funding and no longer relies on grant funding. It is an extremely successful social enterprise.

My second example is B4Box, a construction company and social enterprise. It is led by an inspirational woman, Aileen McDonnell, which is rare in construction, and it has been going for a number of years. She does building contracts to refurbish the properties of registered social landlords as well as construction projects. She takes on young men and those in their late 20s or early 30s with histories of drug abuse, alcohol problems and homelessness, and gets them through to national vocational level 2 and sometimes to level 3, and transforms their lives. At the same time, she ensures that properties are refurbished and that they are fit for people to move into. I cannot think of a better example of using practical work and skills on the ground and changing the lives of young people. I had the pleasure of presenting the NVQ certificates to some of those young men—the staff also included a young woman plumber, who was the best plumber I have ever met. Their stories are inspirational. Aileen McDonnell’s latest project is the building of a centre for homeless people. During the procurement process, five of the homeless people who lived in the previous centre were employed and got their NVQs. She discovered the best painter and decorator in the homeless person’s centre that anyone can imagine.

The creative commissioning in which my local authority and Salix Homes have been willing to engage costs slightly more than other commissioning, but they have considered more than the bottom line and what comes at the cheapest price. They recognise that training people and transforming their lives is valuable. Aileen McDonnell has proposed an amendment to the legal framework of Joint Contracts Tribunal contracts so that both performance, quality and price, and training and the transformation of people’s lives, are considered during the procurement process. A similar legal framework in other areas would be extremely useful.

My third example is a social enterprise in the health service. The hon. Member for Warwick and Leamington will know that the previous Labour Government introduced the right to request for organisations in our public services that wished to become social enterprises. The Angel Healthy Living centre in Salford is in the process of becoming a fully fledged social enterprise within the health service as part of round 2 of the right to request. It provides a range of well-being services in the community and works with a range of charities and voluntary organisations. It too has an inspirational leader, Scott Darraugh, who runs the centre. It has been going for 12 years, so it has been a long journey.

People involved in social enterprises have succeeded almost despite the system and they have faced many hurdles. The benefit of the Bill is that it seeks to re-engineer the system so that it positively encourages people to come forward. If the hon. Member for Warwick and Leamington succeeds in lifting that huge burden and cutting through the fantastic amount of frustration that people feel because the system stands in the way, he will have achieved a great thing.

I will sound a few notes of caution on the Bill. First, there must be no sense that social enterprise can be a transition to privatisation. If the Bill was a stopping point on a fast track to converting public services to private services, that would damage the sector enormously. The whole sector would be concerned about that.

Secondly, the Bill’s definition of social enterprise is insufficient. The Bill also contains no asset lock for assets brought from the public services into social enterprises. The hon. Gentleman must consider that; otherwise—I do not believe that this is his intention—public services could move to social enterprises and to the private sector in a very short time, which will negate the social value of which he spoke.

I would much prefer a co-operative, mutual model that has democratic governance built into its legal framework. The Labour manifesto mentions extending

“the right of public-sector workers to request that they deliver…services through a social enterprise”,

but it also talks about

“greater community involvement in their governance.”

The hon. Gentleman must think seriously about ensuring greater community involvement. It is not just about the social enterprise itself, but about introducing a democratic element to give some form of accountability. If fragmented social enterprises deliver public sector projects, we will not have the accountability, standards and quality that the public will demand. Public money is spent on public services, and the public want quality, standards and accountability.

My other note of caution is about social enterprise staff. Again, this is not what the hon. Gentleman intends, but the Bill must not be used as a means of providing public services on the cheap at the expense of the terms and conditions and wages of public sector workers, and of their ability to do their jobs. It is important to have a grown-up, mature discussion to allay the concerns in some parts of the trade union movement. Unlimited Potential recently signed a union recognition agreement with Unison. That conversation needs to happen, because we need reassurance that moving to a social enterprise model is not simply about doing things on the cheap and driving down wages. He talked about doing more for less, but that is a different concept.

My other big concern is funding, which the hon. Gentleman talked about. The £100 million transition fund recognises some of the challenges that charities and social enterprises face in this difficult economic climate, but it is a drop in the ocean. The New Economics Foundation and the New Philanthropy Capital think-tank have estimated the gap in funding for charities, social enterprises and voluntary groups that will result from local government cuts at between £3.2 billion and £5 billion. That is a massive black hole in funding. The £100 million transition fund is welcome, but it is nowhere near enough to sustain those organisations in the years to come. He may well change the system and the other good things in his Bill, but he might find that many social enterprises have fallen by the wayside, because their funding has been cut and local government can no longer provide funding. The Government need to do much more in that respect. The big society bank may next year have £60 million roughly, but there is a desperate need to ensure that funding is in place so that those organisations have a sustainable future.

Finally, the hon. Gentleman should consider the integration of services. If we are to be more efficient and provide more personalised services, joining up services, whether in health, education, housing or regeneration, is essential. If social enterprises simply spin off from each other and if there is a plethora of different providers that are not joined up, we will lose the benefits of a holistic service. If that happens, we would be unable to bring provision together, for example, for an ex-offender who needs a home, drug treatment, a job and an opportunity. As we take this Bill forward, and build on the work of the Total Place schemes in communities and local government—and community budgeting—the idea of providing integrated services is very powerful. We all know that in our communities it is often a small minority of the most troubled individuals and families who cost public services the most. If we are able to integrate services better, we will achieve efficiencies and better outcomes. The best example is the family intervention projects, which we introduced to deal with antisocial behaviour. Before, those families were costing the taxpayer about £250,000 each through a series of public sector interventions, which did not change their behaviour. When we integrated services, and provided a personalised approach, it probably cost £50,000, but in 80% of the families behaviour improved dramatically. There is good, solid evidence that integration works, and I urge the hon. Gentleman to take that into account during the Bill’s progress.

I have laid out my cautions and reservations, but I finally wish to reiterate my support, and my party’s support, for this Bill. It is refreshing to find a degree of agreement across the House. That does not mean that we will not test each other rigorously and in detail as the Bill makes progress, but I congratulate the hon. Gentleman on the Bill and on the generous and inclusive way in which he introduced it today.

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[Richard Fuller]

I will try to address my hon. Friend’s point, which I heard earlier and think is a good one, but let us be clear that this is not a doctrinaire or Stalinist interpretation—“Thou shalt do this”. Rather it would provide different measures that local authorities can take into account. There is a prevailing assumption that local authorities and others look only at least cost, but that partly works against what motivates Government Members, who want to promote entrepreneurship. It is not what we want to see. I will talk later about a couple of those things. I hope that he understands that this is not—I would not support such a thing—some fearful rolling forward of the state. It is a new and better way of providing social goods and services that will not rely on the state and is in part a rolling back of state bureaucracy.

My hon. Friend the Member for Wycombe (Steve Baker) made a point about social value and profit. It is worth recognising one of the severe, if not unintended, consequences of current procurement processes—the focus on lowest cost. We should always try to do better for less, but as the right hon. Member for Salford and Eccles and others mentioned, that is not necessarily the same thing as the pursuit of lowest cost. As we know from our constituencies, local services matter to local people. It is quite hard always to motivate people on the issue of lowering their council tax, but we can motivate them if we decide to close a local service.

There is a boundary here. If we are honest and true to our constituents, we should wish for something more than price-only considerations in the procurement of our local services. That matters, because if we pursue, as we have done, a low-cost approach, the surplus in local communities will get exported, and we will see the growth of national organisations that will take that surplus, which could go to a local small business or local social enterprise, and export it to national shareholders. That is not necessarily a bad thing, but we need to get back some balance, and the Bill would do a good job in providing that balance to local commissioners in the procurement of local services.

The Bill is extremely timely. Many Members have mentioned some of the impacts of the reductions in public expenditure that are necessary in order to get it back in line with our ability to raise money. It is timely because there are a lot of good local services and local assets that could be transferred to social enterprises. All Members, on both sides of the House, have a vested interest in ensuring that we do that as rapidly as possible, and the passage of the Bill today would assist in doing that.

[Hazel Blears]

The hon. Gentleman says that there are many assets that could be transferred to social enterprises. Does he agree, however, that it is important to protect those public assets, so that they do not simply end up on the fast track to private ownership as a result of this process?

[Richard Fuller]

The right hon. Lady makes a good point, although I would not be quite so averse to assets held in the public domain transferring to private sector companies. Part of the spirit of the Bill is to try to break down the hostility between the two. There are many examples of local services provided by for-profit companies that do a fantastic and excellent job. My concern is that as we try to balance our books, good services might get lost in the mix. In that mix, we need to have for-profit companies, good councils considering whether to continue with certain services as they make tough decisions, and funded social enterprises available to provide a third alternative for local services in the future.

[Hazel Blears]

Neither am I hostile to entrepreneurial companies, which make a tremendous contribution to our economy. However, when public assets are transferred to social enterprises, which might be the right thing to do, there ought to be some element of democratic governance to ensure, first, that local people can have a say and, secondly, that we have in place a mechanism that does not simply result in assets for which the public have paid being transferred directly to the private sector and being used to make private profits that are not then reinvested in our community services.

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[Ben Gummer (Ipswich) (Con)]

We have enjoyed an interesting debate so far, and one that has on several occasions skirted around the general issues of interaction between the state, private enterprises, so-called social enterprises, charities and voluntary groups. It is a fascinating subject that deserves far greater discussion than even we have afforded it under this new coalition Government.

Given that we are having a general debate, and given the nature of the Bill, the figures outlined by my hon. Friend the Member for Warwick and Leamington (Chris White), and the number of people engaged in social enterprises and the voluntary sector throughout the country, it is sad that the Chamber is only this full. Although the debate is a good one with the right hon. Member for Salford and Eccles (Hazel Blears) representing many Labour Members, I wonder, if the Bill had been supported in some measure by the Public and Commercial Services Union, how many Opposition Members would have been here, given that we are talking about similar numbers of people. Perhaps it is a good thing that they are not here. I am not sure that many of them would like their views on socialism to be represented by the right hon. Lady. Her views are probably more enlightened than those of many hon. Members who often sit with her.

We have had a discussion on the general issues, but I wanted to speak in this debate to give a local case study to explain why elements of the Bill are so important. I have had several discussions with the Minister, whom I am delighted to see in his place. He has been most helpful with this local issue. This is not an egregious attempt to discuss various institutions in my constituency; I want to provide the House with an active case study of why the elements in the Bill are so important. I shall return to the elements with which I have difficulties, but some have much to commend them.

It is an unfortunate fact that many voluntary organisations spring up at moments of crisis, or from a deep or yearning concern about deprivation or social problems. That is certainly the case with one organisation in my constituency. Ipswich Housing Action Group was founded in 1976 by a group of local business men who were worried about the homeless, so they created a charity to deal with homelessness in Ipswich.

Many hon. Members may remember the horrendous serial murders in Ipswich in 2006. As a result of that, the community felt the need to deal immediately with the problems of prostitution and drug addiction in the town. That brought together not only local authorities, the police and other statutory bodies, but many social enterprises and charities locally. Prime among them was an extraordinary charity, the Iceni Project, which is a small micro-charity dealing with drug rehabilitation. It so happens that that charity is not just an extraordinary local charity; it is a very effective one. It has been delivering some of the very best drug rehabilitation programmes in the country. Indeed, it is regularly rated within the top three organisations in the country for providing drug rehabilitation. In 2008, it was awarded The Guardian prize for the best charity of the year for being so innovative yet so local.

In 2006, the town came together to deal with the problems that had afflicted those young ladies who were killed, and many around them consequently received the help and care that they should have received before that. Crisis and disaster forced on the community an immediate imperative to provide that. In that process, the Iceni Project gained a particular place in the hearts of many people in Ipswich, which is why the events of the past few weeks and months have been of considerable concern to many people throughout my constituency. The reason for that concern lies in the tendering of drug projects that has come about under a tender process initiated by the previous Administration. Perhaps the House will not mind me running through the basics of how that has happened, so that hon. Members understand why that is directly pertinent to the Bill.

The previous Administration spoke much about the third sector, especially towards the end of their tenure. Indeed, I believe that the Leader of Her Majesty’s Opposition was the Minister with responsibility for the third sector at one stage, and I know that the right hon. Member for Salford and Eccles did much to try to extend the role of the third sector in the delivery of services. But there is a problem in the way that much of that was structured, because the idea was effectively to outsource, and to get the third sector, whether charities, voluntary organisations or social enterprises, to take on the role of the state in various contracted terms. That is not what we should be striving for. We should not be trying not to replace one bureaucracy and one contractor with another, whether a state organisation run by a private enterprise or by a charity. We should encourage and fertilise the ecosystem of communities—small micro-organisations—and not over-engage with them, but allow them to provide the services and community assets that we all depend on.

There is a key distinction, and the case study provides an example of why things can go so badly wrong. Under the tender process set up by the previous Government and the Home Office—the right hon. Lady knows more than I do about the formulation of that policy—a quango, the drug and alcohol action team, was set up in every county and local authority to award the contracts for drug rehabilitation, and it does so according to Home Office guidelines. The Suffolk DAAT, which consists of procurement officers from the primary care trust, the county council and others, decided that it would let the contract on the basis that those applying for the tender could offer a service throughout Suffolk. That immediately excluded the Iceni Project because, by design, it operates only in Ipswich.

The issue is that the tender itself was following the guidelines laid down by the Home Office, and those guidelines were to look for best value on a purely monetary basis throughout the county. A second problem is that the people who sit on the DAAT are completely unaccountable to anyone else—county councillors, district councillors, Members of Parliament, and Parliament itself. They are a mixture of PCT procurement officials and county council procurement officials, but when the tender was going through the process, it became increasingly apparent that it was impossible to challenge not the decisions on the award of the tender, but the form it had taken.

[Hazel Blears]

I am sorry to interrupt the hon. Gentleman, but my point is important. If he is so concerned, as I am, about large national contracts that exclude small, innovative organisations from providing services, will he have a word with his right hon. Friend the Secretary of State for Work and Pensions, who is going through a process for the single Work programme? Many social enterprises have concerns about that, because it looks as if we are going to go down the route towards massive national contracts and national organisations. That will again make it difficult for small organisations to get into that Work programme, which is a key area for personalised services and innovation.

[Ben Gummer]

I think that the right hon. Lady will find that the Secretary of State for Work and Pensions heartily agrees with her. In a speech that he gave a few years ago, he warned precisely against the takeover by mega-charities of certain functions of the state. He is a man who does not change his opinions or his direction with great ease, and I would find it very surprising if he were to go back on that.

The county council procurement officers, working within the management structure, effectively deal with the money and procurement advice provided to the primary care trust. I should say that the primary care trust has shown itself to be perennially oblivious to the needs, aspirations and concerns of local people. Frankly, it was concerned only with its own upkeep and ingratiating itself with senior officials in the strategic health authority, but that is by the by. Those people coming together have now awarded a contract to two large outside charities, both of which I am sure provide good services in their area, but the result is that funding for drug rehabilitation work will now be taken for three years, or possibly five if the break clause in the contract is not invoked, from the Iceni Project and from three other micro-charities in Suffolk. All those micro-charities spring from local ground and are supported by local people, yet they will disappear or experience considerable cuts as a result of this.

What does that tell local people who have invested their time, effort and passion in such organisations? The message that they hear is, “ We don’t care about you any more. We’re going to give a contract to an outside organisation, and all the work that you have put in no longer matters. You might as well give up and go away.” The answer from the Suffolk DAAT was, “Don’t worry, we’ll be TUPE-ing the staff across.” As it happens, however, many of the staff do not want to work for anyone else. They came on board, following the tragic events that I described a few moments ago, because they loved the organisation and admired its leadership.

What could the Bill do to ensure that that did not happen again? I particularly like its proposal to place a compulsion on local authorities and public bodies to consider localism when letting contracts. If we are going to encourage the big society, we must ensure that the organisations are there to deliver the services. If we cut off every tendering period every three or five years, the small organisations that do not have the funds to enable them to tender will simply not be there, and we shall not see the growth of social entrepreneurism necessary to challenge the big providers. We shall not see the natural efflorescence that we see in the private economy, where new entrants to the market find new ways of doing things and continually improve their product offer.

That is what I particularly like about the Bill, but I have a few issues with it as well. I wonder whether, at some point, they might be addressed, although I am not sure who would address them in the circumstances. I would be interested to know whether the Minister has any views on them. I have a particular problem with strategies, and I wonder whether they provide the freedom that my hon. Friend the Member for Warwick and Leamington is seeking to achieve.

I agree with the right hon. Member for Salford and Eccles that there needs to be integration, but my experience is that integration between services happens as a result of the willing participation of providers—as happened, funnily enough, in Ipswich in 2006. Integration is not achieved by the state coming in and saying, “ You will do it like this” or “We suggest this format of working.” All too often, procurement officials faced with a strategy will follow it to the letter, rather than looking at the spirit of it and what it wants to achieve. I would hope that any strategy introduced under the terms of the Bill would involve a general motivation to encourage localism and to ensure that local providers are considered in the tendering process, rather than adopting the more prescriptive strategies that we have seen recently in the equalities legislation introduced by the previous Administration.

My second issue concerns the definition of a social enterprise. Clause 2(3) states that 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 well-being 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;

(c) the greater part of any profits for distribution is applied for such a purpose.”

I am sure that Members on both sides of the House would agree that that definition could equally apply to private enterprises that pay dividends to shareholders. I am not sure how this nails down the intention of the Bill towards social enterprises per se, and I wonder whether we need to elaborate on it, or whether we simply need to substitute the word “charity” for the words “social enterprise” and leave it at that.

I hope that I have made it clear through my case study why public tenderers need to start looking at the local impact of their decisions, and why the Bill is an important one. I do not want to get mixed up in the general philosophical discussions that we have been having, but Burke’s little platoons have to exist, and if we march over them with large brigades or regiments, they will not be there to take up the standard and advance on behalf of their communities. I hope that that is the intention behind the Bill and, notwithstanding the qualifications that I have outlined, I very much support my hon. Friend’s aims.

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[Mr Hurd]

I do not think that the Opposition were confused in any way: I think that they knew exactly what they were trying to do. However, my hon. Friend is right. This is not a heavy-handed approach: it is a requirement to consider, where relevant and proportionate. My hon. Friend the Member for Congleton (Fiona Bruce) suggested that it was a catalyst—a good word—to try to open more minds to a better and more intelligent way to commission, which considers the opportunity to achieve multiple outcomes through the transaction.

The big society agenda is not a Government programme, but the Government have an enormously important role to play. The Prime Minister has been clear about the three strands of action that people can expect from the Government, one of which—a very important one—is public service reform. Early in the new year we will publish a White Paper on public service reform that will make it clear what we are trying to achieve and how we intend to achieve it. Our desire is that public services will be built on stronger relationships with the communities and citizens they serve, and that they will be, in the words of my hon. Friend the Member for Warwick and Leamington, more local, more personalised and more responsive. We want to devolve power to people on the front line who know how things can be done better, including extending the right to provide that was initiated by the previous Administration. We want to try to encourage and unlock that energy that sits inside the public services, which we feel has been constrained and stifled by a regime of overly oppressive targets and bureaucracy.

[Hazel Blears]

I have expressed to several hon. Members my concern about the process of transferring assets, possibly to social enterprises, which then swiftly progress to private, commercial organisations. Does the Minister agree that where public sector assets, purchased by the taxpayer, are to be transferred to other organisations there must be an asset lock to ensure the proper stewardship of the assets and democratic governance within the legal framework of those organisations?

[Mr Hurd]

I hear the right hon. Lady’s concern. She makes a valid point, and she used a very important word—“stewardship”. I totally agree that there is a duty of good stewardship. That contains two elements: a requirement to make sure that public assets are used most productively for the public, and a requirement to make sure that they are not misused in any way. In some ways that is a contracting issue. The right hon. Lady will know that social enterprises take many different organisational forms, and that there is a bespoke legal form for social enterprise called the community interest company, which specifically provides for an asset lock. However, that falls outside the immediate scope of the Bill.

I was talking about why we think the Bill is consistent with our ambitions and aspirations for public service reform. One of our aims is to encourage greater diversity of supply and provision. Here there may be some theological differences between us and the Opposition. We have a strong desire to try to incentivise and encourage much greater flexibility at a local level, such as providing opportunities to pool budgets and integrate services. She may be aware of some pilots that we are encouraging through the Cabinet Office on local integrated services, where the onus is much more on getting out there to find out what the community wants. All those aspirations will be backed up by action that will be reflected in the White Paper.

In the context of encouraging greater diversity of supply, on which the Bill touches, we have an explicit commitment in the programme for Government and the coalition agreement to support the creation and expansion of mutuals, co-operatives, charities and social enterprises, and enable those groups to have a much greater involvement in running public services.

[Mr Hurd]

I will come to clause 1, and I think that my remarks will give my hon. Friend some reassurance.

We are determined to try to open up the public services markets to a broader diversity of suppliers, and we have been specific about wanting to encourage social enterprises, charities and the voluntary sector to have a bigger role. Why? Most constituency MPs have a sense of the reason. Faced with some of the really stubborn and expensive social problems that this country faces—expensive in terms not only of money but of human cost—there is overwhelming evidence in certain cases, such as the hard job of getting people back into work or keeping people out of jail, that a social enterprise or community-based solution is often most effective in doing the really difficult work. We have to respond practically to the challenge—the right hon. Member for Salford and Eccles, as a former Secretary of State for Communities and Local Government, knows that it is a challenge—of opening up those public services markets to try to create more space for these organisations to participate and add value. It is not about trying to do things on the cheap, but about trying to deliver better solutions and to “do more with less”, to use the cliché of the moment. That requires a radical reform of commissioning and how the state buys, because, as the right hon. Member for Salford and Eccles said, there is a strong feeling out there, represented by the Social Enterprise Coalition and others, that the system is obstructive and gets in the way.

That is why I and the Office for Civil Society are determined to get this right and are on the point of issuing a consultation document setting out what we need to change in state commissioning to fulfil the coalition Government commitment to create more space for social enterprises, charities, co-operatives and mutuals. The consultation document will ask the following main questions: in which public service areas could the Government create new opportunities for civil society organisations to deliver, and why? How can the Government make existing public service markets more accessible? How can commissioners use assessments of full social, environmental and economic value to inform their commissioning decisions? How can civil society organisations support greater citizen and community involvement in all stages of commissioning? And how we can reduce the amount of bureaucracy, form-filling and regulation that gets in the way of and infuriates and frustrates civil society organisations? The whole business of applying for and reporting public money is a bureaucratic nightmare for too many organisations and is often totally disproportionate to the sums of money involved. We are determined to do something about it.

In that context, the Bill’s core proposition—a requirement to consider social and environmental value where it is relevant and proportionate—is a useful complement to our own work of reform and commitment to making it easier for voluntary and community organisations and social enterprises to deliver public services. The Bill has the scope to ensure that commissioners consider the full effect of services on the people whom they serve and enable them to maximise the social, environmental and economic value of every penny they spend.

The Bill reinforces our commitment to value for money. In these tight economic times, it is particularly important that we achieve maximum value in our spend, but our observation is that currently some commissioners miss the opportunity to secure the best price and meet the wider social, economic and environmental needs of the community. Under procurement law, a contract must be awarded on the basis of the tender that is most economically advantaged or offers the lowest price. The Bill does not undermine or circumvent this requirement or otherwise undermine the Government’s value-for-money agenda and efficiency reform. On the contrary, it is anticipated that by taking full economic, social and environmental value into account, the quality and efficiency of public contracts can be improved.

I think that most hon. Members will see the potential for that just from their observations and visits. In my constituency, Hillingdon borough contracts a good proportion of public landscaping work with a company called Blue Sky. It is the only company in the country where someone has to have a criminal record to work. It does a brilliant job in offering employment opportunities to people coming out of jail—a critical milestone in proving to a future employer that they can be trusted. The people of Hillingdon are delighted with the service and the council are very satisfied with the price, and through this process we are making a huge impact on helping people to turn their lives around. I have spoken to some of the people working there. Some of them travel the length of the Central line every day to be on the course, because they see it as their way out.

That is intelligent commissioning at its best, and we want to encourage more of it. I remember visiting a social firm called Clarity that makes soap and liquids for cleaning hands. What differentiates this business is that, as I walked around the floor, I noticed that every single employee was disabled in some way—often in major ways. Again, this is an opportunity for them to build their own sense of worth and confidence, and to carve a different path that otherwise would have been shut to them. That is another opportunity for intelligent commissioning.

There are lots of other examples. In 2006, the London borough of Camden renewed its schools catering contract. At that point, there had been significant dissatisfaction with the quality and performance under the contract. There was a best-value service review prior to retendering, involving extensive consultation with parents, teachers, pupils and local social enterprise and voluntary and community stakeholders. The remit included consideration of wider social environmental and economic factors, and the new contract was shaped around the results of the review. As a result, the uptake of meals by children in primary and special schools rose by 10%, and teachers reported indirect benefits from the new contract. It has improved service and food quality without an increase in contractors’ margins. Again, that is intelligent commissioning.

[Hazel Blears]

The Minister will have heard me refer to the innovative construction company, B4Box, which has worked on a legal framework for JCT Contracts. Would the Minster be willing to meet me and Aileen McDonald of B4Box to discuss how that legal framework might be used as a basis for wider scaling up of such innovative construction projects?

[Mr Hurd]

I would be delighted to arrange that meeting. Aileen McDonald sounds wonderfully inspiring, and if she can help us to open doors to more intelligent commissioning, we should be all ears.