Voluntary Sector and Social Enterprise

Lord Low of Dalston Excerpts

Thursday 21st June 2012 Lords Chamber

[Lord Low of Dalston]

My Lords, a couple of years ago we had a couple of good debates about the role of the voluntary sector. The subjects for debate referred more to civil society than the voluntary sector but people seemed to take the view that we were free to talk about more or less whatever we liked. That was a couple of years ago, so the noble Baroness, Lady Scott, is to be greatly congratulated on bringing us back to the subject, especially considering the prominent place that the voluntary sector has assumed in the Government’s thinking about the direction of society. I am taking it that the subject for debate today gives us a similarly free hand as to what we talk about.

ACEVO, the Association of Chief Executives of Voluntary Organisations, says that a social enterprise is an organisation that trades for a social and/or environmental purpose and reinvests its profits in support of that social or environmental aim. As we have heard, a well known example is the Big Issue, the magazine that is sold for £1.25 to homeless vendors who then sell it for £2.50, achieving the social return of increased income and independence. The Annual Survey of Small Businesses UK 2010 estimated that there are approximately 68,000 social enterprises in the UK, which contribute at least £24 billion to the economy and employ an estimated 800,000 people. ACEVO would argue that it is unhelpful to draw a hard and fast distinction between charity and social enterprise. All charities need to be enterprising in their outlook, particularly in challenging economic times, and many pursue social enterprise models.

In a sense, social enterprise is something that an organisation does, rather than something that it is. For example, the charities Catch22 and Turning Point work with the private company Serco to deliver an anti-reoffending pilot at Doncaster prison on a payment-by-results basis, in which payment levels depend on the extent to which reoffending is reduced. This is replicating a social enterprise model in which investors are rewarded when a programme achieves targets. If this is what a social enterprise model is, I would have to flag up dangers. Just to be clear about my own position, institutional and ideological, I have 40 years’ experience of working in charities, great and small, ending up as a vice-president of RNIB, having been chair for nine years at the beginning of this century. I am also president of a number of others, declared in the register of interests, and have been president of others that I helped to found back in the 1970s but which have recently either merged or, sadly, folded.

I am thus a great believer in the big society, pace the noble Lord, Lord Giddens, as an expression of the voluntary effort that goes to make it up. The voluntary sector can add much in specific expertise and commitment to the comparatively blunt instruments that the state often has at its disposal, but it should not be contingent on a rolling-back of the state. We need them both; they are interdependent, as the noble Baroness, Lady Scott, made clear. We need the state to remedy the deficiencies of civil society in caring for the vulnerable and providing basic health, education and other services for the population at large. Some Ministers seem to base their view of what constitutes a healthy society—or a healthy economy anyway—on such a rolling-back. Thus the noble Lord, Lord Sassoon, said:

“As the Government, we have to continue to reduce the burden of the state. If we do that, the economy will flourish”.—[Official Report, 22/3/12; col. 1031.]

We have to be careful that the payment-by-results model does not turn into exploitation. Volunteering is a wonderful thing—but there is also exploitation, as the noble Lord, Lord Prescott, reminded us. It is the exploitation of organisations rather than individuals that I want to talk about. Small and medium-sized charities such as Action for Blind People or the Shaw Trust may have the specialist expertise that is crucial to get those farthest from the labour market into work, but they can find it hard to compete with large private-sector organisations with deep pockets that can bear the upfront costs and uncertainty of the final outcome for the length of time that it can often take to get such people into work. Prime contractors, whose aim is to maximise profit by cherry-picking those who are easiest to place, are also failing to refer to the more specialised organisations those who need the specialist support that is far beyond their capacity. For reasons such as these, the Work Programme—the noble Lord, Lord Shipley, also touched on this—by which the Government set such store to support for getting into work those whom they have thrown off benefit, is just not working, at least for those whose disabilities have placed them at a particularly severe competitive disadvantage.

During the spring, ACEVO held a series of round tables and spoke with over 100 charity chief executives to hear their thoughts and concerns about the future across the different sectors and beneficiary groups. Common themes emerging included the point that cuts are significantly affecting the vulnerable beneficiary groups that voluntary organisations serve. These cuts are being implemented in a climate of little or no public scrutiny and a local democratic deficit. The devolution of power to a local level is not accompanied by greater accountability. With the scrapping of scrutiny mechanisms such as comprehensive area assessments in the Audit Commission and low levels of public engagement with local politics, there is a lack of accountability for local spending decisions. Charities would love to act as the armchair auditors envisaged by Eric Pickles, scrutinising local decision-making on behalf of their beneficiaries, but local authorities do not make the necessary data and information available. For example, Rethink Mental Illness recently attempted to ask local authorities how much of their social care budgets were dedicated to mental health and received incomplete information, or none, which made it mostly impossible to determine what funding had been allocated to social care of different groups, what evidence lay behind funding decisions and whether, and how, funding had changed year on year. Fewer than 50% of local authorities contacted provided the budgetary information requested.

Consequently, there is the danger of a forgotten Britain developing—a marginalised and underprivileged section of society that will be increasingly affected by cuts but goes largely unnoticed by much of society. ACEVO argues that the scrutiny deficit must be plugged. The Government have undertaken to evaluate the impact of cuts as several of their Bills have passed through Parliament. Charities can help to fulfil that role, but it requires genuine co-operation and engagement from the public sector.