Social Economy

Hazel Blears Excerpts

Tuesday 2nd September 2014 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Havard, in slightly altered circumstances than would normally be the case in Westminster Hall. I hope that this debate will be a cross-party event with a lot of different perspectives offered on the subject and, although it will not be entirely consensual, I am sure that many points will unite us when speaking about the social economy. I hope that the fairly adversarial nature of the seating will not condition our behaviour and that the debate will be consensual.

First, I welcome the Minister to his post. This is my first opportunity, and the first opportunity for a number of colleagues, to debate with him. I am sure that he is already finding that the areas of his responsibility are surrounded by people of great good will, innovation and creativity. It is an exciting, dynamic area of policy and I know that he will enjoy it and that he will guide and shape it.

Secondly, but equally importantly, I pay tribute to the former Minister for Civil Society at the Cabinet Office, the hon. Member for—

[Mr Nick Hurd (Ruislip, Northwood and Pinner) (Con)]

Ruislip, Northwood and Pinner.

[Mr Dai Havard (in the Chair)]

Whatever he just said.

[Hazel Blears]

Absolutely. My knowledge of the geography of the south is not as good as my knowledge of the north.

I pay serious tribute to the former Minister, because for the past two years we have been working quite closely together on a range of areas, including social enterprise, social value and social investment. He has brought great vision, clarity, leadership and energy to this area of policy and without his drive and personal commitment I do not think that such progress would have been made over the past few years. I place on the record my thanks and appreciation for the work that he has done.

I also thank my Front-Bench spokesperson, my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah), the hon. Member for Warwick and Leamington (Chris White) and my hon. Friend the Member for Huddersfield (Mr Sheerman). Perhaps other hon. Members will join us. Each hon. Member present has a distinctive, important contribution to make; perhaps I will mention that later.

[Mr Dai Havard (in the Chair)]

They are all on my list of speakers.

--- Later in debate ---

[Hazel Blears]

Very good.

At one point I would not have thought that we would be having a debate on the social economy, because it is a fairly new idea that has emerged from some quite longstanding ideas. The idea of the social economy is beginning to develop as a way of bringing together sections of the existing economy—it is an exciting development—and about working out what a new economy might look like. One of the main drivers for me has been the financial crisis—the crash—and the resulting lack of trust in a range of organisations, including, unfortunately, some in our financial sector and some big businesses, which has led to the emergence of ideas about what a more responsible capitalism would look like. Although a lot of speeches have been made, there has been too little detail mentioned, and too little thought and analysis, about real, practical measures we could take to make capitalism more responsible and to have more of a social mission, and for us to feel that—as well as making money and creating jobs, which are really important in our economy—businesses can embrace a social dimension that allows them not just to do good in the community, but to be more successful.

One of the exciting things about a responsible capitalism is that it is not simply about altruism or philanthropy, but about saying that a business that recognises, at its heart and in its mission, the impact it can make in communities is likely to be a much more longstanding, successful and competitive business in the marketplace. Bringing those two things together is an exciting concept.

I came to this issue originally 20 or 30 years ago, supporting social enterprise, so it is not new in those terms. When I was a Minister I did the first cross-Government social enterprise strategy, to see how the whole of Government could help make social enterprise flourish, become more mainstream and move out of its niche position and into providing mainstream services. We have seen a step change, partly because of the financial crash and the move to responsible capitalism, and partly because of a recognition in the social sector that it needs to have confidence and big ideas—to move, perhaps, from the margins to the centre of our economy. I am seeing in many social enterprises now a new-found dynamism and confidence, which is moving them to the centre.

All the players on the board were at one time playing separately and individually, in their own small area, but I now see the private, public and voluntary sectors, including co-ops, mutuals and social enterprises, in a massive burgeoning of many different organisations playing a part in the mainstream economy in Europe and indeed globally. If that is not an exciting idea, I do not know what is, so I am pleased that we have secured this debate.

I want to talk about social enterprise, social value and social investment, which I see as the three building blocks of a social economy. I will start with social enterprise, because it has been around for a long time. As I said, many of us have supported the growth of social enterprise for 20, 30 or 40 years. I am delighted that there are now some 75,000 social enterprises in this country that employ more than 1 million people. They make a huge contribution to our GDP and include some of the most innovative, creative and far-sighted individuals and organisations that I have ever had the pleasure of meeting. That is partly because they sit slightly outside the mainstream, so they have the space and flexibility to come up with solutions to some of the most pressing social problems that we face.

Social enterprise increasingly offers a range of solutions to some of our most pressing social problems. Certainly, the Government have begun to explore some of these areas, such as the rehabilitation of offenders, getting long-term unemployed people back to work and health and social care issues. There are programmes to tackle the most troubled families in our communities, including a programme that started seven or eight years ago, when I was in the Home Office, that this Government have taken forward. Increasingly, social enterprises rather than conventional organisations are able to provide innovative solutions to some of our most pressing problems because they have the freedom to think differently and the ability to do so.

It is interesting that the recruitment organisation of choice for many teachers now is Teach First, which has a fabulous reputation and is not a conventional organisation. It takes the brightest and the best to work in some of our most difficult and challenged schools, to give our youngsters the chance of a decent education.

Place2Be is a social enterprise that works in Salford in my constituency and nationally. It works with children whose families are some of the most troubled—with drug and alcohol or mental health problems—and operates six primary schools in Salford. Against all the odds, with the support of Place2Be and through counselling and support in their schools, children of the most troubled parents are progressing at the same rate as children who are progressing at the average rate in the rest of the school. That, for me, is almost a miracle. That social enterprise, which is now being funded by social investment as well, is making a massive difference on the ground. I know that all colleagues will have examples of similar organisations operating in their own areas.

Bounce Back is a social enterprise that trains people who are ex-offenders. It costs some £95,000 to keep someone in prison, but about £3,000 to go through the Bounce Back programme, get ready for work and take up an opportunity in the future. Bounce Back and Blue Sky, which are similar organisations, say, “The only qualification you need to come and work with us is that you must have been to jail.” It would be quite interesting to see that in a job advert; I do not see many such adverts.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Is this in the financial services sector?

[Hazel Blears]

Not yet. They tend to do grounds maintenance or logistics, but who knows?

That work is refreshing. In conventional job recruitment, it is difficult if someone has been to prison and has a criminal record. It can be so hard for them to get a job, but all the evidence is that the one thing that can keep someone out of jail is if they have a job, a home and some relationships with their family.

Emerging organisations, such as Bounce Back and Blue Sky, are doing an absolutely fabulous job. We also have SMaRT garages, which operate in four or five different places across the country, including in my constituency. They provide help to people with serious mental health problems, but they do not do it through social workers and psychiatrists; they do it by getting people hands on, servicing cars, doing MOTs and doing practical work. The only way someone is judged in that organisation is on whether they turn up, whether they do a good job and whether they are polite. They are learning social skills, as well as practical skills, which will stand them in good stead. I went to the SMaRT garage in Salford, and they let me—I am not sure I did the whole thing—help service a Volvo. I did worry about the man or woman who would drive it afterwards, but they kept a close eye on me.

[Mr Sheerman]

May I say what a relief it is to some of us who have a long-term interest in transport safety, and road safety in particular, to hear my right hon. Friend talk about a safe vehicle, rather than the motorbikes she is usually associated with?

[Hazel Blears]

Everyone has to have a bit of fun now and again. I am sure they kept a close eye on me when I helped to service the Volvo. I did not realise until afterwards that the young man who helped me had very serious mental health problems. He had been detained at Broadmoor for a significant period of time, yet that organisation, because it was prepared to take risks and believe in people, was able to do something that virtually no other organisation could. Ronnie Wilson, who runs that organisation, does a fabulous job.

Having said all that—those organisations are brilliant—there is much more that the Government can do to bring social enterprises to the mainstream. On each of my three issues, I will go through a couple of specific points, for the Minister and for my Front Bench team, with whom I have had the opportunity to discuss some of this. At the next election, the manifestos of all political parties need to have some specific and concrete offers to social enterprise, social value and social investment, if we are to build the social economy we want to see.

On social enterprises, I want to see the social sector established with a clear corporate identity. I want it to have respect and to be seen as the place to go to for creative, innovative solutions. That is the first point. The Government say, “There are lots of problems that we cannot solve. We need you to come into this space and begin to help us do that.” That is starting to happen, and it needs to happen more clearly.

[David Simpson (Upper Bann) (DUP)]

On a point of clarification on social enterprises in the right hon. Lady’s constituency, are there any links between further education colleges or educational institutions and young people who have difficulties?

[Hazel Blears]

The hon. Gentleman raises an extremely good point. We have some links. We certainly have some enterprise models in some of our schools, academies and FE colleges. In the past, that would have simply been a small business option, but a social enterprise option is increasingly coming through. I find—I am sure we all see this—that more and more young people want values. They want to go home at the end of the day and be proud of what they have done and who they work for. That is why one in three start-ups across Europe is a social business. Young people with the best talent want to work in those organisations. That brings me back to my first point, which is that there is a business case for social enterprise. If a business wants the best talent, it has to have a social mission at its heart, so that young people are proud of what they have done at work.

First, we need a real recognition that social enterprise is a corporate form that can solve problems. Secondly, we need to look at financial incentives that can help to grow social enterprises—such as tax reliefs or looking at business rates again—so that we can incubate and grow the kind of organisations that can help us. Thirdly, we need to work with the European Union and look at state aid issues. An exemption for social enterprises and charities would make a huge difference and lift the burden of reporting requirements from this sector, which often cannot cope with some of the bureaucracy that bigger businesses can cope with. I will come to Europe in a minute, because Europe is doing great things in this arena, but the exemption is one more thing that we could do.

Moving on to social value—I am conscious of time—I pay tribute to the hon. Member for Warwick and Leamington. He has done an absolutely superb job in taking through the social value legislation in the House. The legislation will be game-changing. It will last and be hugely influential. We will look back in 10 years’ time and say, “Why did we not do it 30 years’ ago?” It is a market leader for many other countries across Europe and the world, which are now talking about doing similar things. I went to the Isle of Man to talk to some people about social value. Their Parliament does not half work quickly. I went to a Saturday conference and a Saturday night dinner, where I made a speech. On Monday morning, one of the Members of the Tynwald came up to me with a draft four-clause Bill. He said, “Would you like to come with me to Parliament, and we will present it?” It was amazing. I hope the Isle of Man will get a social value Act as well.

I was pleased to be associated with the legislation, which is incredibly important, but there is more we can do. I held a round table this year with people from the private sector, local authorities, social enterprises and the voluntary sector. We presented the then Minister for Civil Society, the hon. Member for Ruislip, Northwood and Pinner, with a lengthy report on the issues that had been highlighted. I am more than happy to talk to the new Minister for Civil Society, the hon. Member for Braintree (Mr Newmark) about that round table and some of the practical things we can do. I am delighted that more and more local authorities are putting social value clauses in their contracts and their procurement. That always used to be completely forbidden under European Union law. The EU has done a 360° turn and is now saying that not only can these social clauses be put in, but that they should be put in. That is amazing. I went to a procurement conference in Brussels with 1,000 procurement officials from across the European Union—it shows my dedication to duty that I went to a Brussels procurement conference—and to see those officials enthused by the possibility of being able to do good in how they use procurement was heart-warming and amazing.

In the European Union, Commissioner Andor has been hugely instrumental, as has President Barroso, and the whole agenda has been embraced. Commissioner Andor is coming to Salford on 22 September, where we are organising a round table for him to look at what more can be done in Europe to take forward the social value provisions on procurement and the social investment agenda. We are running with the grain, but there is more that we can do on social value.

One of the big issues is measurement and data, because everyone is doing the social economy now, but there are 57 varieties in how it might be measured. While there is inconsistency and uncertainty, it is difficult for people to get on a level playing field. I am not in favour of rigidity or one-size-fits-all. Part of the beauty of the agenda is that things develop and grow, but we need some core agreement on consistent principles for measuring social impact and social value, so that those who are tendering know exactly what they have to put in and so that those who reply to those tenders and provide services know how they can shape those services to have the best chance of winning a tender. This is a plea to the Minister: we have to have consistent principles and grounds for the measurement of value.

Guy Battle, who used to work for Deloitte and now has the Sustainable Business Partnership, has done some great work in setting up a social value portal, looking at measurement, metrics and developing the whole agenda. I think that he is someone who the Minister would want to meet and consult. The manifesto asks for social value including trying to ensure that we have some consistent principles and standardised measurement. Secondly, can we look at ensuring that social value clauses are included and given equal consideration to other criteria, or at least some clear weighting? People are saying to me, “We do not know whether the weighting is five points, 10 points or 15 points. We are very unsure about how to design our contracts.” The third ask—this is perhaps slightly more radical, but I believe it is essential—is to extend the Public Services (Social Value) Act 2012 from services to goods and infrastructure. The big spend in the next 15 to 20 years will not be on revenue, because we all know that money is tight; the big spend will be on big infrastructure projects, such as High Speed 2 and a new airport, wherever that might be, whether it is in the estuary or not. It is about the big rail developments and all those big infrastructure projects. If we can include social value clauses about local labour, using local supply chains and having a social impact in all those big infrastructure projects, imagine the prize that awaits. Now that Europe says that we can do it, we should extend social value legislation to include infrastructure and goods.

My final points are on social investment and I draw attention to my unpaid interest that is in the Register of Members’ Financial Interests with regard to Big Society Capital. Social investment is an exciting area of development. We had a G8 forum this year on social investment and Britain is clearly a global leader. We have more social investment than anywhere else with 15 in operation and 50 in development. The US and Australia have five each only. It is fantastic to be a global leader and to be better than America for once, much of which is down to the former Minister.

Social investment is exciting because it is new, but I recognise that money will be tight for whoever is in government after the next election. There will not be much public money around, so if we are to continue to reform, transform and improve public services, as well as the private sector, we will have to find new sources of finance to facilitate some of that transformation. I want to give one quick example. I do a lot of work on dementia and I have an idea that we could get social investment into dementia care to support community-based interventions to keep more people at home, so that they do not end up in the acute sector, which is the worst possible place for them. Dementia sufferers stay twice as long in the acute sector as people without dementia, they get readmitted twice as often and they die more often, all of which costs the NHS a fortune. If we can get social investment in and keep people well in the community, their lives will be better, their families’ and carers’ lives will be better and the acute sector will save money. The reason why that does not happen is because the money of clinical commissioning groups is all tied up in the acute sector. If we can get social investment, which would allow some headroom for double-running, community interventions, such as gardening, singing, befriending and buddying, can be scaled up. There is an emerging evidence base that such activities are effective and can lead to a virtuous circle.

I am meeting the Minister of State, Department of Health, the right hon. Member for North Norfolk (Norman Lamb) next Tuesday with Big Society Capital and the Social Investment Business and I hope that we can do something here. It will require courage and determination from the whole system, but the prize is worth having. We had a G8 forum on social investment and we had a G8 forum on dementia, which is the biggest global health challenge. It would be amazing if we could use this new global finance to tackle that challenge. We must cross our fingers and watch this space and see how far we get with that. It is exciting and is an illustration of what we could do.

I have some more manifesto asks. I have discussed them with my Front-Bench team and I am more than happy to send the Minister some detailed analysis. On social investment, we could look at charitable trustees’ investment decisions and give them the confidence that they can perfectly properly take social considerations into account when investing money. It is ludicrous that charities are not allowed to consider social impacts. We could make it clear that pension funds can also consider social reasons for investment rather than always having to get the best price and the most money. If we start to motivate charitable foundations and pension funds, the amounts of money could be massive, but we are not utilising them to their fullest extent. We could have a social investor exemption from the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, so that retail people can learn about social investment. When we get a social investment ISA, we will have broken through all the bureaucracy and it will be an everyday thing. I want such an ISA because I want my investment to do good as well. That is where we need to be. On tax incentives, we have the social investment tax relief, which is a great step from the Government, but let us ensure that it is broad enough to enable collaborative funding and new structures, such as social investment bonds and funds. We could also simplify the community investment tax relief to ensure that intermediaries can quickly get money and get it out to those who need it.

The previous Labour Government started a plan, which has been carried on by the coalition, to use money in dormant bank accounts. There are other funds to which we could extend that idea, such as insurance, long-term investments and unclaimed gambling winnings. There is a lot more money out there that we could bring in. Instead of lying dormant and being wasted, it could be used to tackle some of our biggest social problems, so I ask the Minister and my Front-Bench team to consider that.

Finally on social investment, I want to discuss local impact funds. The Social Investment Business has been developing local funds to enable relatively small amounts of money to go to local organisations. The money that comes from social investment can sometimes involve big numbers, but there are many small organisations that need small grants. The first local impact fund was launched in Liverpool some two months ago, and of the 39 local enterprise partnerships, 11 have already said that they want local impact funds. This is a fabulous opportunity. The next round of European Union structural funds is coming with the proviso that 20% must be spent on social impact. Wow! What an opportunity to use EU funds to do good. That would rehabilitate the European Union in many people’s minds and even some of our not-very-pro-EU colleagues may think it a fabulous thing to do.

I am conscious that I have spoken for a long time, but I say to the Minister that I am delighted that he is in his role. He has a fabulous job. I have no doubt that he is raring to go and I am willing to give whatever help I can and the whole sector is willing to do the same. There are excellent companies out there in the marketplace. This is no fluffy public sector agenda; Fujitsu is examining its whole supply chain in terms of social impact and Interserve has recently invested in a social investment bond to fund a social innovation centre, which is amazing. Chief executives and chairmen really get this. The synergy of public, private, voluntary and mutual social enterprise is a powerful and irresistible idea. I ask the Minister to go with the grain and make his name—his mark—on this agenda.

[Several hon. Members]

rose—

--- Later in debate ---

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

Having listened to the past three speakers, I think this is probably more of an annual general meeting than a debate. I pay tribute to the right hon. Member for Salford and Eccles (Hazel Blears), not least because she will leave the House, come what may, next May. It sticks a bit to say it will be disappointing to lose a Labour Member, but it will be disappointing to lose her expertise. The support she gave me with the Public Services (Social Value) Act 2012 was singular in making it progress through the House and ensuring it had the cross-party support necessary for any Bill to achieve success.

I will break with convention slightly and say how disappointed I am to see so few Members in the Chamber. I can only assume that they got lost on their way here. Those who understand what social value and the social economy are about will realise that these are some very radical, new and revolutionary ideas, but, as the right hon. Lady mentioned, some long-standing ideas have also newly re-emerged. As the author of the Act, I recognise that this is not day one: a lot of knowledge and work has been put into this field already. However, as Members have discussed, we have found a new period of momentum to do some great work.

To comment on what the former Minister, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), said, when the Act started on the Floor of the House, there was a certain nervousness as to what its repercussions would be and what burdens it would place on businesses. I think this initial anxiety has been replaced by a level of confidence. Local authorities have become better and more successful at ensuring there is consideration of the wider benefits that their services can provide. The right hon. Lady mentioned Liverpool as one of the great examples. It was one of the first places I visited in my former role as the social value ambassador. I still hold a great memory of the Furniture Resource Centre. Rehabilitation, as the right hon. Lady mentioned, is an area where we can make the biggest difference through such work.

I am pleased with the role the Government have played. Obviously all Members who have got a private Member’s Bill through will know it is not possible to do so without the support of all Departments. Departments have made great strides in service commissioning and procurement. However, as the right hon. Lady said, there is potentially time for review. I think that 18 months is a long time—we dream of the Isle of Man—but it is still long enough that we can look at what has been achieved and whether these initiatives can be extended. Not only are the nation, its local authorities and Government Departments, adopting the initiative, but the world sees us a leader in the concept.

I have long believed that the closer to the community a service is, the better it is. Localism is key to this. It is a broad principle, based on the belief that we should devolve power to the lowest possible level. How we deliver everything, from our services to our local plans, should be considered by speaking to our constituents. We should ask our communities what they want, but what they really want perhaps is to be able to take on more authority. That is one of our greatest challenges. There are few Members present, but as people who believe in this concept, our task is to ensure our communities better understand what the social economy, social investment and social value are all about. These are simple ideas that we have managed to make quite complex.

[Hazel Blears]

The hon. Gentleman is making an extremely good speech. He has really hit a nerve on that point. We talk glibly about social enterprise and the social economy, but these words mean very little to ordinary people. The work he has done to make this come alive has been really impressive. Would he agree that one of the things the Social Economy Alliance—a whole range of organisations, ably led by Peter Holbrook of Social Enterprise UK—can do, working with hon. Members, is try to make those terms come alive to ordinary people? It is about getting people back to work, keeping them out of jail and those kinds of things. That is one of the biggest hurdles we need to get over.

[Chris White]

I thank the right hon. Lady for her intervention. Peter Holbrook, amazingly enough, has the one signed copy of my Act. What he has done with it goodness only knows. I agree that there are many players in this area, because of the alliance, Social Enterprise UK, and all the charitable bodies and their umbrellas. Our local political representatives are key players and do fantastic work on the ground supporting their constituents. I believe we should make these things more accessible to them. I would not denigrate anything they do, and certainly not as a former councillor myself, but we are coming towards local elections. Whatever party people support, they should be able to put in their manifestos what they are doing to help local community organisations.

--- Later in debate ---

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Havard—particularly in this debate. I congratulate and thank my right hon. Friend the Member for Salford and Eccles (Hazel Blears) who secured this important debate and has worked hard to push the agenda forward so constructively.

The debate has indeed been constructive so far, and there have been passionate speeches on both sides, from the former Minister, the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd), the hon. Member for Warwick and Leamington (Chris White), my hon. Friend the Member for Huddersfield (Mr Sheerman) and my right hon. Friend the Member for Salford and Eccles. I shall try to maintain that constructive manner, but I do not guarantee that I shall succeed as well as my right hon. Friend did.

We recently witnessed one of the biggest crises of capitalism that the world has seen. Many ordinary people are still coping with its consequences, particularly for the cost of living. Yet with any crisis comes an opportunity, and in this case it is the opportunity to rebuild the economy into one that is more focused on long-termism and value creation, with social enterprise and social value at its heart. Some in the Government may be keen to get back to a business-as-usual approach to the economy, but the Labour party wants social enterprise and a social economy to be at the heart of things. Social enterprises help to build and sustain communities, and their hearts beat to the same pulse as that of the Labour movement’s founders—namely voluntarism and collective action, as my hon. Friend the Member for Huddersfield eloquently described.

We in the Labour party believe that genuine social enterprises can offer examples and incentives to both the private and public sectors. They can offer improvements in the delivery of some public services. Unlike some large contractors such as Serco and G4S, social enterprises are embedded in the heart of their communities, and as small organisations they can pilot and test small-scale incremental innovations in service delivery while developing new skills in the communities where they are based. By being strongly rooted in communities, enterprising and properly regulated, social enterprises can identify new and more socially effective ways of delivering public services, thus providing an example to Government. Indeed, they can be the innovative front line of the public sector.

The leader of the Labour party, my right hon. Friend the Member for Doncaster North (Edward Miliband), was, in government, the Third Sector Minister. He championed the transformative potential of social enterprises and began putting in place the infrastructure to enable them to thrive. That included the legislation for the foundation of Big Society Capital. I am pleased that the present Government have carried some of that work forward, although not surprisingly they are not doing so with the same scope and ambition that I would hope for.

Building and supporting the social economy is not something we can do overnight. It takes hard work. I thank all the organisations that have been involved in generating ideas and pushing them forward to Parliament and the public. We all know how much work that takes, including talking to different people and groups—the social economy is a broad church—to develop positive and constructive ideas. Indeed, we are going through that process now, and I welcome the input being given.

Despite the time at my disposal, I cannot respond in detail to every point made by my right hon. Friend the Member for Salford and Eccles; many ideas are currently being considered as part of our policy review. However, I shall touch on as many as I can. My right hon. Friend spoke of establishing a social sector with a clear corporate identity. I share that aim. One of the things that has surprised me about the sector is the way it has been able to defy definition for so long. If we want to promote the role of social enterprises—and that will be a key aim of the next Labour Government—we need to understand what they are, and ensure that they have the skills to take up their role in a new economy, which they champion.

For example, we must not allow what I would call para-third sector organisations to brand themselves as social enterprises to win more contracts or qualify for incentives. It is unfortunate that the Government have so far been seen to load the procurement playing field very much against genuine social enterprises in favour of private sector companies that often parade as social enterprises.

We have heard about social value in procurement, reporting and standards, and the Public Services (Social Value) Act 2012. I echo the tribute paid by my right hon. Friend the Member for Salford and Eccles to the hon. Member for Warwick and Leamington for his work on that important measure. The 2012 Act builds on many achievements of the previous Government and, in fairness, earlier Administrations. It is a real and symbolic step forward, and an important one, despite the fact that many worthy provisions were removed from it. We would have gone further with it; we tabled amendments to improve it. Both the former Minister, the hon. Member for Ruislip, Northwood and Pinner, and the hon. Member for Warwick and Leamington have spoken about the compromises necessary to get a private Member’s Bill passed. We would look to build on and extend the Act.

At £86.8 billion a year, the public sector’s overall procurement spending power rivals its legislative power. The Labour party recognises the power of Government spending and procurement in creating and sustaining social value. We have already announced that we will require suppliers to offer apprenticeship opportunities on all public contracts of more than £1 million. We have also said that private companies that win public sector contracts will have to be more transparent.

[Hazel Blears]

I am hanging on my hon. Friend’s every word; no doubt many social organisations want to know where we will be going with our manifestos, as that is the period we are in. She has talked about extending the 2012 Act, and that is welcome. I want to ask about extending it to infrastructure and goods. There are now many housing organisations—such as City West in Salford—that are renewing their whole housing stock and want to put social clauses into their infrastructure expenditure. City West has created social enterprises such as Gardening Guerrillas and Pirate Painters and a handyman service, and it is running sweat equity programmes. It is incredibly innovative, and housing associations throughout the country are doing similar things. Is my hon. Friend saying that we will extend the Act to goods and infrastructure as well as services?

[Chi Onwurah]

I thank my right hon. Friend for that intervention and the examples of the many ways in which social enterprises can contribute to their communities. I will have to disappoint her as I am not in a position to give manifesto commitments in this debate, but we are looking closely at the measures taken out of the Public Services (Social Value) Act 2012, as it made its way through Parliament, for ways to ensure that social enterprises can contribute to local communities more extensively than is currently allowed. I am afraid that she will have to be content with that limited answer.

Across central and local government, contracts are often offered on a scale that squeezes out social enterprises and charity providers, which means that, effectively, only established, vested interests can bid. That may drive down costs in the short term, but, in the long term, the number of providers dwindles, as value is extracted from communities and new burdens on the taxpayer are created elsewhere.

Government needs to be working as a whole towards delivering social good through public services and not simply shifting burdens around by cost-cutting in one area while creating new needs in another. Successive Governments have sought to support social enterprise in public service delivery, yet public procurement remains a significant and growing concern. At the round tables and meetings I have held throughout the country on social enterprise, access to public procurement has remained the No. 1 concern.

Many public service sectors are now dominated by what I would call private sector oligopolies: often large multinational corporations that are well versed in winning public sector contracts. They have become so large and complex that, like the big banks before them, the Government cannot afford to let them fail. In my city of Newcastle, the council is supporting local businesses and small and medium-sized enterprises by awarding contracts tendered below a certain threshold to local businesses. In nearby Sunderland—our arch-rivals in some respects, but here we are working to the same aim—the council has a similar system and, as a result, north-east businesses account for 68% of such third party spend overall.

We want to draw on the benefits and innovation of social enterprises in public services, which is why last month I announced that a Labour Government in 2015 will enable Departments and local authorities to offer some contracts exclusively to social enterprises and organisations with a public service mission. The social enterprises will have to demonstrate how they can add value and display the management skills in innovation that we expect from the private sector, so, to that end, we will explore the establishment of a centre of excellence to support social enterprises as contractors. The infrastructure necessary to support social enterprises is probably the second biggest issue I come across in my conversations with social enterprises: skills, governance, back-office, computing and IT all need further support.

I turn briefly to social investment. My hon. Friend the Member for Huddersfield set out eloquently the potential for crowd sourcing as well as the importance of the social investment sector and how the UK leads the world in social innovation. We are looking at ways in which we can further support social investment. We want to see a comprehensive change in the social enterprise landscape, with services being less transactional, more focused on individuals and delivered at the most local level possible. We are looking to social enterprises to support that aim.

Social enterprise has the potential to be the innovative front line of both market competition and public service delivery, delivering social value and adapting to a world in which there is more emphasis on social value creation and retention. We look forward to working with social enterprises to enable that and, as part of that, I look forward to the first Social Saturday.

--- Later in debate ---

[Mr Newmark]

The hon. Lady represents Newcastle, which is the home of my football team, so she can do little wrong in terms of representing that exciting city—it is second only to Braintree, of course.

I also pay tribute to the right hon. Member for Salford and Eccles for her support of Big Society Capital through her role on its advisory board and her regular public appearances, as well as for her support for mutuals. Such contributions have been invaluable to a growing economy that includes organisations, entrepreneurs, innovators and investors who are committed to supporting positive social change.

I am grateful for the bipartisan approach to this issue and to the right hon. Lady for regularly reminding us how this work transcends party differences. It is about supporting those charities and enterprises who work tirelessly to improve people’s lives and communities. Members of all parties have the same agenda: we want to improve people’s lives, and the voluntary and charitable sector leads on that objective.

I think the right hon. Lady said that medium-sized social enterprises employ more than 1 million people; in fact, they employ 2 million people and contribute more than £55 billion to the UK economy each year—an enormous amount. The UK already has one of the most developed social investment sectors in the world and it is growing all the time. A few weeks ago, I visited the Repair Academy in Wiltshire, which transforms unwanted household goods into marketable, new products: upcycling as well us recycling. It is not only doing that to make a quick buck; it is equipping the young people who work for it with the skills they need for the world of work and working to change public attitudes to waste and recycling.

So yes, there is a business mentality, but it is also about public and social good. Too often, we think of those things as being mutually exclusive; allied together, they can be a truly powerful force, strengthening communities and changing lives, developing new solutions to seemingly intractable social problems and transforming the way we deliver public services to this country.

The right hon. Lady also mentioned three other great examples, including Place2Be and—was it Born Back?

[Hazel Blears]

Bounce Back.

[Mr Newmark]

Bounce Back, which I thought was a great idea. The qualification is that someone goes to prison, but there are people there who want to change their lives and help them transform back into the community. Bounce Back seems a great example of that.

For all those reasons, the Government have made it our mission to help strengthen Britain’s social economy. Just like any other business, social businesses need access to long-term capital. For years, charities and social enterprises had been telling successive Governments how hard it was to find affordable and sustainable finance. We listened to them and helped establish Big Society Capital, the world’s first full-blown social investment institution. Much credit is due to my ministerial predecessor, my hon. Friend the Member for Ruislip, Northwood and Pinner. People had talked about a social investment bank for the best part of two decades, and his leadership in Government made it a reality in less than two years. He made an excellent point in mentioning the discussions on having a collaborative approach between business and government, in terms of developing the social economy to unlock social innovation.

[Hazel Blears]

A lot has been said about collaboration, and I agree entirely with the previous Minister, the hon. Member for Ruislip, Northwood and Pinner (Mr Hurd), that government needs to change. I suggested interdependent budgets for Cabinet Ministers when I was in the Cabinet and I believe that there is some interest in that issue now.

However, I should say to this Minister that I am seeing the Health Minister, the right hon. Member for North Norfolk (Norman Lamb) with my social enterprise, Social adVentures, on the issue of dementia care. Collaboration between Ministers is essential. Perhaps this Minister could add his weight to some of our proposals with his colleagues across Government.