Economic Growth

Hazel Blears Excerpts

Wednesday 15th May 2013 Commons Chamber

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

I am pleased to follow the hon. Member for Wyre and Preston North (Mr Wallace), but I can assure him that it is not our party that is obsessed with Europe. I think he needs to get his own house in order.

The last few years have been enormously difficult for families trying to make ends meet, working really hard and trying to give their young people a decent start in life. Arguments will rage about austerity cuts and the lack of investment—there are as many opinions as there are economists. I do not want to rehearse those arguments today, but to talk about something practical that I believe can help to address our economy’s problems that are causing such misery to thousands of families across the land.

There is sometimes a moment—in business, in politics and in communities—when an idea begins to take root, to gather support and to gain traction and momentum. I believe that the emergence of social value is one such moment. If it is pursued with energy and integrity, it could make a reality of the so far rather nebulous concept of responsible capitalism.

Eighteen months ago, I worked with the hon. Member for Warwick and Leamington (Chris White) to take the Public Services (Social Value) Act 2012 through this House, and I was delighted to do so. The duty to put social value at the heart of public procurement came in at the end of January. If implemented across government, across local government and in private sector supply chains, I believe it could make a huge difference to the number of apprenticeships, the amount of local labour, the building of small and medium-sized enterprises and the encouragement of innovation.

Over the last year, I brought some big companies together with social enterprises to see how they could collaborate to renew our economy. I have been heartened by the commitment from the private sector. Good companies know that this is not about philanthropy or altruism, because doing good is good business. Moving from traditional corporate social responsibility into a place where businesses are using their mainstream models to make a social impact in procurement, human relations, marketing and product development is helping to get social value into companies’ DNA. That is the way to get our economy moving.

Let me give a couple of examples. Sodexo, whose headquarters are in Salford, is working with one of my local social enterprises to take on ex-offenders to carry out grounds maintenance and facilities management. That is a fantastic partnership. Deloitte is helping 30 social enterprises to grow to scale under its social investment pioneers programme. CH2M HILL, which built the Olympics stadium and is working on High Speed 2, has values that extend to every level of the company when it comes to apprenticeships, training and social mobility. Trading for Good is a brand-new website where people can ask questions such as “Which is the company that takes apprentices? I want that company to redo my roof. Which is the company that is building local supply chains? I want to spend my money there.” It is a fantastic resource.

[Mr Sheerman]

Does my right hon. Friend agree that social value, if combined—as it can be, and will be—with crowdsourcing and crowdfunding, will bring a real democratic renewal and a modern capitalism to our country?

[Hazel Blears]

My hon. Friend is absolutely right. The combination of social value and the creation of social investment through crowdsourcing, peer-to-peer lending and the activities of the Big Society Capital bank, which was a Labour idea, will take us along precisely that track.

My final example is Interserve, which employs 50,000 people and has a turnover of £2 billion. Its chief executive, Adrian Ringrose, recently committed himself to reinvesting 3% of his profits in the communities where his companies operate. That is the kind of thing that good, decent companies can do, and it can make a big difference. Such companies want to rebuild trust and secure a better reputation for big business, which has suffered from a lack of trust because of the activities of the banks and others. There is also the fact that it is good business.

The challenge for the Government is to enable that activity to become mainstream, rather than a niche activity in which only a few people engage. I ask them to think seriously about extending the Public Services (Social Value) Act 2012 to cover goods and major infrastructure. Over the next five years, we shall spend £200 billion on the really important things that we need: energy, transport—including High Speed 2—and building broadband. Why should we not include social value clauses relating to local labour and local supply chains in all infrastructure contracts? Can we not imagine the difference that that could make?

When money is tight—and it would be tight for us if we were in government— we can make a real difference by gaining extra impact from procurement and by doing business differently. We need community reinvestment, and we need to provide incentives for companies such as Interserve to do the right thing. A year ago, when I presented a ten-minute rule Bill in the House, I suggested that bankers could voluntarily put some of their income into local social enterprises. That might even make bankers popular, for goodness’ sake, and it is a very practical thing that we could do.

The Government must also support the development of measurement and metrics for social impact. There is a lot of good work going on. The Connectives Limited in Manchester, which is run by two inspirational woman accountants, has done fabulous work on social audit and accounting, but if we are to make such activity mainstream, we need to ensure that the metrics are rigorous and substantial. I should like the Treasury to do some more work on that.

In the time that I have left, I want to mention the Big Society Capital bank. It was the bank’s first anniversary last week, and I went to an event to mark it in the City. There was standing room only because there was such a huge appetite for the creation of a social investment market. The leadership of Sir Ronald Cohen and Nick O’Donohoe is first class. They have some really good ideas about how to get products to market, and about new types of bond such as social impact bonds. They are trying to persuade foundations and pension funds to invest. I welcome the Government’s consultation on a tax relief for social investment; I think that that is a very good idea. It could release an extra half a billion pounds into the market.

Difficult economic times demand creativity, innovation and boldness. We must get behind that, and make it happen.