Social Economy

Nick Hurd 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.

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

As I speak, phones will be ringing in garages across Salford with anxious Volvo drivers seeking reassurance that their cars were not serviced by the right hon. Member for Salford and Eccles (Hazel Blears). I do not know how good a mechanic she is, but she is a brilliant politician. I congratulate her on securing a debate on a subject about which we are both passionate, on her track record of supporting social enterprise for many years, on keeping my feet to the fire when I was a Minister and on sending a strong signal to the builders of the social economy that there was strong cross-party support and interest in sustaining the work.

For me, the debate is about two important things. First, how do we find better solutions to the social challenges that undermine this country and carry unacceptable costs—both financial and, more importantly, human? Secondly, as the right hon. Lady herself asked, how do we help British business to sharpen its competitive edge in the modern world, to build trust—a crucial but fragile ingredient of value creation—and to generate social value? Those two opportunities come together within the social economy.

I want to make three brief points to complement what the right hon. Lady said. First, there is a substantial global movement here. We must seize the moment. We spend a lot of time in this place observing the waves on the surface of the ocean, which means that we sometimes miss or are slow to pick up on some of the substantial shifts in the current beneath the surface. What we are discussing today is such a shift in terms of how we think about the economy and its future. I see stars realigning across the three pillars of our society in a way that I have not seen in my lifetime, which suggests that people are now prepared to think and work in different ways—above all, critically, in government.

Government has to change. Across the world, Governments in developed nations face the same challenges of economic recovery—not only getting economies going, but ensuring the fairness of the recovery and its sustainability. There are also the issues of how we shape the competitive future of our countries and, as the right hon. Lady mentioned, how on earth we meet the public’s demand for better public services when we have substantially less public money. We are only halfway through the cuts, whoever wins the next election—let us be clear about that.

As John Micklethwait and Adrian Wooldridge said in their excellent latest book “The Fourth Revolution”, countries in the developed world face the same challenges in the global race to redesign government. The greatest political challenge over the next decade is fixing government. In this country, government has to work in different ways; gradually, that penny is beginning to drop, at the central Government level and at the local authority level, but it is hard, because we operate in a risk-averse environment. Doors and minds are open to doing things in different ways, however, and that has simply not been the case for the previous 25 years.

Furthermore, as the right hon. Lady said so powerfully, social attitudes to business are changing at the same time. In a transparently connected world, values matter much more to business. How businesses behave matters much more, and that will arguably be a source of competitive advantage in future. More and more of us are choosy as consumers about who we do business with; more and more of us, as savers and investors, are choosy about whom we invest in.

To correct the right hon. Lady, I should say that there are social ISAs at the moment, in response to that trend, and the socially responsible investment market is worth trillions of dollars now that savers are becoming more discerning. Employees in a tight labour market are clearly much more discerning, too, and want to feel prouder of where they work. We hope that commissioners, people spending public money, will also be sending strong signals to the market about the competitive advantage potential of being able to demonstrate social value.

No more powerful sign of social change is evident than in the surveys of young people and the generation coming through at the moment. Survey after survey tells us the same thing: coming through now is one of the most socially responsible, entrepreneurial generations that this country has ever seen, with different attitudes to the workplace, to businesses and to what their place in society is. The young generation will underpin the social economy.

The right hon. Lady talked about one in three start-ups in Europe being social; in this country, 15% of SMEs are social enterprises—15% and growing. There is not only change in government and in social attitudes to businesses, to which business is responding, but the social sector is having to change its attitudes as it is buffeted by change on all sides, which carries both risk and opportunity. Now, minds are much more open to working in partnership with different types of organisation and to seeking different funding models, such as social investment.

I see the stars realigning in a way that gives a fantastic engine to the move towards a more social economy and more collaborative models, which must be part of the future.

[Mr Sheerman]

The hon. Gentleman is making an excellent speech and I am absolutely rapt. As he was speaking, it came back to me that we are sometimes a little precious—not him personally, but those in the social economy. A lot of entrepreneurs have come to life through social enterprise. They may stay with social enterprise, but they get their training and become successful private entrepreneurs. There is a big move between the two.

[Mr Hurd]

The hon. Gentleman anticipates exactly my next point. What is so exciting is the signal that we can send about supporting social entrepreneurship across the sectors. He mentioned the private sector, but one of the things that excited me most in office was the evidence of the entrepreneurship within the public sector, unlocked by the opportunity to spin out and run mutuals inside the public sector. There are fantastic examples in the constituency of the right hon. Member for Salford and Eccles. It is amazing what happens when we give people the freedom to pursue their dreams as what I define as social entrepreneurs—people who run their own businesses spun out of the public sector. Those values and instincts and that creativity exist across all the sectors of society and need to be nourished.

This is a big idea whose time has come, with the opportunity for collaboration to unlock the spirit of innovation and social entrepreneurship in the country. This country is built on our success in innovating in the process of wealth creation and in the building of our cultural heritage. That is less evident in the area of social innovation, but this is the time to unlock that potential.

Secondly, to reinforce the point made by the right hon. Lady, we lead the world in this area. One of the things that struck me most in office was how many visits I got from representatives from a bizarre range of countries, from Canada to the country that I still call Burma, who said, “We notice what you are doing. We are interested in social enterprise and social investment, and for us the place to come and learn is Britain.” We must not surrender that lead, because if we are right about the movement, it will be a source of competitive advantage for this country as we think about how we shape the future.

My third and final point is to reinforce the right hon. Lady’s message to our Front Benchers—both individuals have earned a great deal of respect and admiration. Let us seize the moment and not lose momentum. I am conscious that for the two gentlemen who aspire to be the next Prime Minister of this country the agenda is full and cluttered, which is daunting, but let those of us who believe in this continue to make noise, saying, “This matters. We have something very valuable and important growing in this country. We must nourish it.”

The right hon. Lady is quite right. We had to compromise to take the Public Services (Social Value) Act 2012 through Parliament. Respectable voices inside Government were saying, “Be careful here, because we are trying to make the procurement process leaner and more efficient, so what are we doing cluttering it up?”, so we compromised. No voices in the procurement business now say that the Act gets in the way.

Now is the time to look seriously at whether we extend the scope. Such a review needs to happen, but in parallel with a fundamental approach to raise the quality of commissioning throughout the public sector and a modest investment in the kind of learning networks that bring people together and make them ask, “How can we make best use of this?” That is how the system can be helpful. Things such as the Commissioning Academy, which is low cost and high value, are very important.

I also support the right hon. Lady’s comments about the pursuit of other dormant assets. So much time was spent in setting up Big Society Capital and making the system work with the reclaim fund, that we did not have the time to start conversations about pursuing other assets, in particular in the insurance industry. However, they are there, so let us go for them. Let us start those conversations now, because that is money sitting on the table.

I make a plea for cross-party support for the important public sector mutual movement. We must continue to send signals and say, “It is okay, we will support you in this process.”

On social impact bonds, let us be clear that we are at the bottom of the S-curve of the development of that instrument, which is so important because it creates space for social innovation in a system that is risk-averse. They are clunky, take too long and are too expensive to set up, and we have to change all that, but let us be clear that we have only just started and are at the bottom of the S-curve. We now need to find a different gear of ambition to make many more of those things in the marketplace, so that we can test whether the instrument is as valuable an influence as we think it is.

My appeal is fundamental: let us keep the level of ambition, because through that agenda we have the potential to improve so many more lives and to find better solutions to problems that impose unacceptable cost—both financial and human—on this country.

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[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.

[Mr Hurd]

I support that point on accessibility. The right hon. Member for Salford and Eccles (Hazel Blears) is right: if I stopped people in Ruislip high street and asked what they knew about local social enterprises, I would get even more blank expressions than usual. Would my hon. Friend join me in supporting quite simple initiatives, such as the Buy Social Directory and the imminent Social Saturday initiative? They are designed to give people more information about the social enterprises on their doorstep. Giving them access to what is going on in their area seems to be a simple step we can take and support.

[Chris White]

I thank my hon. Friend for his intervention. Days such as Social Saturday will create great momentum. It is something we should consider having yearly. I still maintain that we have work to do. As suggested, one piece of work is to put these issues strongly and firmly in our manifestos, so that these organisations can feel confident that they will continue to have the support and investment they need, whoever forms the next Government.