Public Services (Social Enterprise and Social Value) Bill

Jon Trickett Excerpts

Friday 19th November 2010 Commons Chamber

[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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[Jon Trickett (Hemsworth) (Lab)]

It is a pleasure to hear such an interesting and, at times, erudite debate. The Conservative party used to appear to be a fairly homogeneous and monolithic block, so listening to Conservative Members revealing the various trends within the party has been a fascinating and instructive experience.

I congratulate the hon. Member for Warwick and Leamington (Chris White) on introducing the Bill and allowing this debate to take place. Let me say at the outset that Labour Members want to see the further development of social enterprises, and we are happy for the Bill to receive a Second Reading and then go into Committee.

There have been, I think, nine contributions to the debate other than that of the hon. Member for Warwick and Leamington, and a range of different experiences have been brought to it. The hon. Gentleman indicated very strongly a communitarian tendency running through the history of the Conservative party. He certainly nailed his colours to the mast in terms of his own views about society and how it should be organised. However, he slightly stretched the credulity of the House when he tried to embrace Baroness Thatcher within that, since it was she who famously said that there is no such thing as society; there are individuals and their families.

[Steve Baker]

rose—

[Jon Trickett]

I am not going to take interventions straight away, but I may in due course.

It has frequently been said that the Conservatives, historically, knew the price of everything and the value of nothing. It is therefore interesting to hear so many Conservative Members talking about judging tenders not merely on price but on what has been described in the Bill as social value, whereby one should not necessarily go for the lowest tender. That is at variance with my own experience as a leader of local government in the years when Baroness Thatcher was Prime Minister and simply wanted the lowest possible tenders. Nicholas Ridley said that local authorities should meet once a year in a tent to let contracts and then go away again.

[Mr Chope]

indicated assent.

[Jon Trickett]

I see that at least one hon. Gentleman remembers that as well as I do, and with approval by the look of it.

Several Members made strong references to local experiences in their constituencies. That reminds us of how important it is that Members of Parliament have a constituency base. Whatever form of electoral system we use, it is important to retain the constituency link. The hon. Members for West Worcestershire (Harriett Baldwin), for Congleton (Fiona Bruce), for Castle Point (Rebecca Harris), for East Surrey (Mr Gyimah) and others referred to local experiences, as well as to experiences that they had prior to coming to the House.

There was some tension, though, between the various tendencies that were expressed, which was most striking in the hon. Member for Ipswich (Ben Gummer), who gave the impression that he was a libertarian, but he actually said—he may be horrified when he reads it in Hansard—that he quite liked compulsion in relation to local authorities. The power of the state compelling local authorities was an extraordinary vision for him to evince. On the other hand, the hon. Member for Wycombe (Steve Baker) gave us a disquisition on liberty, saying that every action of the state is an infringement of liberty and is coercive. That was an interesting philosophical diversion.

[Ben Gummer]

To clarify my point, my concern was that many procurement officials are compelled in only one direction, which is to follow a national strategy, and the purpose of the Bill is to compel them to look at a whole series of different things. As I am sure the hon. Gentleman will have experienced when buying something from, say, John Lewis, one does not just look at price but at a whole series of things, such as whether one would like it in one’s flat or whether it is the right colour. All we are doing is saying, “Look at a wide range of things, not just a national strategy as laid down by Whitehall.”

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[Jon Trickett]

We on this side of the Chamber feel perfectly comfortable in our own skin in advocating precisely such an approach to the role of Government. I am not sure whether some of the hon. Gentleman’s colleagues share the same comfort.

We want social enterprise to develop further, so the Bill deserves a Second Reading. As Members will see as I proceed with my speech, it will consolidate in statutory form initiatives that we introduced when we were in government. Equally, as I have just remarked, it points out the intellectual fissures at the core of the coalition’s confused approach to public policy. The Government say they are in favour of a big society, but they do not always will the means. There is a contradiction between their professed communitarianism and their neo-liberal objective of cutting the costs of caring services.

There is also a contradiction between the Conservatives’ approach to the market and free competition, with price as the key indicator on which tenders should be judged, and the social commitments in the Bill. Another contradiction is between their alleged commitment to localism and some Conservative Members’ central ideological imperative of giving the market free rein.

[Steve Baker]

If the hon. Gentleman uses the word “ideological” to accuse me of having thought about how society works and what the law ought to be, of course I plead guilty.

[Jon Trickett]

I, too, have a very strong ideological vision, and in no way should the hon. Gentleman apologise for having an ideology. It is the contents of his ideology that give me some concern.

The contradictions and intellectual fissures that have been exemplified this morning go right to the heart of the Bill. That explains the rumour—I wonder whether the Minister could confirm it—of a fundamental disagreement over the Bill between the Secretary of State for Communities and Local Government and the Minister for the Cabinet Office.

Throughout the debate we have heard many examples of the positive impact that social enterprises can have on our neighbourhoods, communities, towns and villages. I recently visited Cream Catering in my constituency, which is doing innovative work. It is a social enterprise that employs people who have been out of the labour market for many years, and it provides high-quality catering in a variety of institutional contexts. It is an exciting enterprise, and it was created through the intervention of the then Government, who identified a procurement problem and an instrument that might deal with it. I am sure that is the kind of thing that the hon. Member for Warwick and Leamington would like to see if the Bill became law.

In fact, there are 55,000 social enterprises across the country. It is said that they add £8 billion a year to our gross domestic product, but their true value cannot be measured purely in numbers. They enable the hardest to reach and often most socially excluded people to return to economic activity. They contribute to improving the environment, both physical and social, and they enhance prosperity and deliver social justice in equal measure.

The values encompassed in the work of social enterprises are vital ingredients in the creation of a good society. If we are to succeed in the future, both as a sustainable economy and as a society with strong bonds of mutuality and reciprocity, we need to accept that markets needs morals. Labour has no problem in accepting that, and in government it led us to invest in social enterprises. We invested unprecedented resources in encouraging social enterprises, which contributed to the significant expansion of the sector and brought us to the position that we are in today. That provides a background to the Bill.

Many of the Bill’s intentions will build on the progress that we made in the past 10 years, and, to be fair, the progress that was made under previous Administrations as well. Back in 2002, we launched the first Government strategy for social enterprise. In 2006, we produced a social enterprise action plan, and in 2009 we held a social enterprise summit. We also created new instruments called community interest companies, of which there are 4,000 across the country. Labour gave £125 million to the Futurebuilders fund, which the hon. Member for West Worcestershire (Harriett Baldwin) mentioned, to build third sector capacity. We also ensured that thousands of public sector procurement officers were trained in how best to engage with the third sector. We can therefore conclude that initiatives and plans—even those that are put into statutory form—are only one side of the equation.

The other side of the equation is that there must be appropriate investment. It is therefore a concern that the Government’s spending cuts might put at risk the activity of social enterprises. How can it help to scrap the future jobs fund, which was partly designed to help social enterprises create up to 15,000 jobs? Mention has been made of the New Philanthropy Capital think-tank, which has said that the cuts look like removing between £3 billion and £5 billion a year from social enterprises and the third sector generally.

Clause 1 would result in a national social enterprise strategy that allowed Departments to promote engagement in social enterprise across England. That proposal is almost identical in some ways to the social enterprise action plan that Labour introduced four years ago. It is difficult to see how this national strategy, which would be created in law, differs from the action plan that we introduced without the need for a statutory framework. A case must be made to explain why a new Bill is required given that Labour was able to do things without new statutory powers. Why do the Conservatives, and the coalition more generally, find it necessary to create a new piece of legislation, which the hon. Member for East Surrey no doubt thinks is coercive.

[Mr Gyimah]

The hon. Gentleman is describing every pet project that Labour came up with in its 13 years in power as some sort of social enterprise, but that is not what the Bill is about. We are trying to enable non-profit organisations to deliver public services that the state would otherwise deliver. That is not the same as expanding the state, which is what the hon. Gentleman’s policies would lead to.

[Jon Trickett]

I am sorry I gave way to the hon. Gentleman, because he clearly has not listened to much of what I have said. Without such legislation, the previous Government helped to create the environment in which 55,000 social enterprises came into existence. A case has to be made to explain why all the Government Members present are prepared to introduce new legislation, more red tape and more intervention in the market, when Labour showed that we could build the so-called big society—the good society—with no such statist intervention. [Interruption.] I see that at least one Government Member—the hon. Member for Wycombe—feels really quite embarrassed that these proposals come from the Government Benches. It is absolutely unnecessary to bring this legislation into being.

[Ben Gummer]

Let me just clarify something. In the example that I gave, I had hoped to show that outsourcing to third sector organisations does not necessarily help small local organisations. Our point is that the outsourcing perpetuated by the previous Government actually started to kill local charities. The Bill promotes the human capital of small non-profit organisations that specialise in working in local areas.

[Jon Trickett]

Of course it does, and I take the point, but the truth is that the Conservative party—the so-called champion of liberty against the state—is now taking the state’s powers through legislation to do something that is happening in any case. How does it help to have legislation when the key point is to ensure that public procurement officers in local and central Government are sensitive to the needs of local companies, whether social enterprises or not?

[Mr Chope]

Surely the logic of what the hon. Gentleman has just said is that he should vote against the Bill, thereby ensuring that the statute book is not littered with more unnecessary legislation.

[Jon Trickett]

I have said that the Bill raises interesting questions and deserves a Second Reading, enabling some of those matters to be debated further in Committee, which will perhaps further expose the differences on the coalition Benches.

What discussion of clause 2 has the hon. Member for Warwick and Leamington held with the Local Government Association about amending the requirements for local authorities’ sustainable community strategies? A briefing by the Conservative-led and dominated LGA states that there is

“no need for a piece of legislation which will create a top-down imposition on councils to promote such enterprises.”

There speaks the genuine voice of localism, of the Conservative party locally. Why do the Government believe that it is necessary to impose legislation on local authorities that do not want it? Local authorities are happy to proceed with such matters on their own.

The LGA continues:

“The thrust of this Bill is also fundamentally at odds with the Government’s expressed desire to remove centrally-imposed burdens and top-down targets for local government.”

It feels as if the world has turned slightly upside down. Labour in government proceeded happily with enabling the sector to develop without the necessity for new legislation. My right hon. Friend the Member for Salford and Eccles (Hazel Blears) has returned to the Chamber, and I more than congratulate her on her work. How can the Bill become a reality if local government, dominated by the Tories, so strongly opposes it?

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

The hon. Gentleman is making several assumptions about the Government’s position that may be proved wrong. I think he has lost sight of the fact that we are discussing a private Member’s Bill.

[Jon Trickett]

Will the Parliamentary Secretary deny that the Cabinet Office helped to draft the Bill? He will not. I understand that that is precisely what happened. I understand that the Bill showed its face in the House only 36 hours ago. Why? I was told that it was delayed until the last possible minute because the Cabinet Office was drafting it. Perhaps the Parliamentary Secretary will confirm that. If it is a private Member’s Bill, why was the Cabinet Office drafting it?

There have been tensions locally with not only local authorities but others about plans for how some social enterprises run services. Members on both sides have made the point that we want high-quality, properly resourced social enterprises, not those that are the victims of a cuts mentality. Labour Members do not want the option of social enterprise driven through on the back of a cut in the quality of service or a reduction in the quality of conditions at work for the people who are employed in the enterprise.

We have no objections to the Bill’s aims, but we are concerned about the manner of its introduction. More consultation before it came before the House would have been better—I have already said that it arrived here only 36 hours ago. We are all proud of the social enterprises in our constituencies throughout the nation. How can it be that they have had no opportunity to examine the Bill before Second Reading? How can it be that the small business and local government sectors are expressing different views about it? Perhaps it is because it was introduced so late. Does the hon. Member for Warwick and Leamington genuinely believe that he provided sufficient time for the House to consult?

We have also heard a lot about how the Bill fits into the Government’s idea of a big society, but until we know what the big society is, how can we assess the applicability of the measures? I am not the only one who does not fully understand what the big society is; many in the voluntary sector do not know what it is either. Famously, the Under-Secretary of State for Education, the hon. Member for East Worthing and Shoreham (Tim Loughton), also has no idea what the big society is. He said recently:

“The trouble is that most people don’t know what the Big Society really means”.

In what sounded slightly like a whinge, he added:

“least of all the unfortunate ministers who have to articulate it.”

[Ben Gummer]

I thank the hon. Gentleman for his indulgence. On the question of definitions, the Leader of Her Majesty’s Opposition has spoken of the “good society”, so will the hon. Gentleman explain what the good society is and the difference between it and the big society?

[Jon Trickett]

It is for the Minister and the Government to go first and describe their conception of the big society. We want a strong society—[Hon. Members: “Ah!”] We want strong bonds of mutuality and reciprocity to operate at every level of society, in every neighbourhood. The Bill might contribute to the development of that, but that does not mean that we should not ask difficult questions of its promoter and sponsors. That is precisely what I am doing.

How does the hon. Member for Warwick and Leamington reconcile clause 3 with the Government’s motives? When the Minister for the Cabinet Office and Paymaster General was asked on the “Today” programme earlier in the week about his intentions in respect of mutuals, co-operatives and public service reform, he made it clear that companies tendering for outsourced services would have to make proposals that were

“significantly cheaper than the current provision”.

There we have it: the irreconcilable contradiction between communitarian aspirations and the neo-liberal drive to reduce the cost and extent of government. There lies the Government’s true motives.

Perhaps the Government will not support the Bill, but even if they do, they are more interested in lower cost services than in maximising social value. Having listened to his speech, I do not believe that the hon. Member for Warwick and Leamington wants that. Social enterprises should not be viewed as a cheaper option. They have a real contribution to make and can have a positive impact, as we have heard from Members on both sides of the House, but they should not be about enabling the Government suddenly to abdicate their responsibility to fund public services properly.

Social enterprises should—hopefully—ensure higher levels of democratic accountability.

[Steve Baker]

Will the hon. Gentleman give way?

[Jon Trickett]

I am about to wind up, although some might say that I have wound the hon. Gentleman up enough.

Central and local government and social entrepreneurs must work together to unleash the potential of social enterprises and the capacity of all of us to do good in our communities. Perhaps the House can agree on that. That should not be forgotten in the coalition’s eagerness to cut spending and sell off large swathes of the public services. The Opposition support the aims of the Bill and believe that it should receive a Second Reading. None the less, as I have indicated, if and when the Bill reaches Committee, we will probe the details and the broad principles underlying the proposals.

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[Chris White]

I thank my hon. Friend the Member for Christchurch (Mr Chope). He suggested that I might rest on my laurels, but I do not intend to do so if we reach the next stage of the process.

I thank all those hon. Members who have attended this debate on a Friday, who have contributed so well to it and who have made interventions—some helpful, some very helpful and some less so. I especially thank the right hon. Member for Salford and Eccles (Hazel Blears) and my hon. Friends the Members for West Worcestershire (Harriett Baldwin), for Bedford (Richard Fuller), for Wycombe (Steve Baker), for Ipswich (Ben Gummer), for Castle Point (Rebecca Harris), for Congleton (Fiona Bruce), for North East Somerset (Jacob Rees-Mogg), for Christchurch (Mr Chope) and for East Surrey (Mr Gyimah).

We can all agree on some things. There are nuances of ideology, but I am sure that we agree that we all enter politics for the same reason—to help our constituents and the communities that we serve and in which we live. Even if the Bill falls at this stage, this debate has given us the opportunity to discuss some of these very real issues about how we procure and commission services. At the very least, our commissioners will be provoked into thinking about a different way to do things and the need to include our social enterprises, small businesses and charities—we have all given examples of their work. We all agree that these are difficult financial times, and we need to look at new models and new directions to make our communities more successful and bind our neighbourhoods together. That is a very important task for this House.

It has been pointed out—and I thank my hon. Friend the Member for Christchurch—that I would be foolish not to agree with some of the suggestions made by my hon. Friend the Minister. I take his suggestions on board, but it is important for this Bill to reach the next stage, because we need to have those discussions in Committee. We can all put our ideas on the table and help to move forward. I thank everyone for their time today and I hope that their contributions to the next phase will be equally helpful, supportive and useful.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).

[Jon Trickett (Hemsworth) (Lab)]

On a point of order, Madam Deputy Speaker. Pursuant to the point of order made earlier today by my hon. Friend the Member for Ogmore (Huw Irranca-Davies), who, the House will recall, requested that a Minister be brought to the Dispatch Box immediately to explain the outrageous comments by the Prime Minister’s enterprise adviser, I understand that the adviser has been forced to resign or may even have been sacked. Can you ensure that a Minister appears at the Dispatch Box this afternoon to explain what has happened to the shambles of the Government’s enterprise policy, given what has happened today?

[Madam Deputy Speaker (Dawn Primarolo)]

As the hon. Gentleman knows, I have no power to compel a Minister to come to the Dispatch Box; nor have I received any notice of a statement. His point has been placed on the record. I am sure that those on the Treasury Bench have heard his comments. There is nothing further that I can do on that point.