Public Services (Social Value) Bill

Richard Fuller Excerpts

Friday 25th November 2011 Commons Chamber

[Mr Thomas]

I have not, but the explanatory notes prepared by the hon. Member for Warwick and Leamington for Second Reading contained an assessment of the cost, which, if I remember rightly, was approximately £41,000.

Many social enterprises clearly have a strong trading and enterprise ethos, but most have required start-up finance or transitional funds, or funds for specialist advice. For voluntary sector organisations wishing to become social enterprises, strong grant income can help to provide a cushion allowing a business model to be properly developed. If there is no clear, thought-through process to make appropriate funding available, the huge cuts in Government funding for the third sector may not only put at risk the services provided by voluntary and civil society groups on which so many of our constituents rely, but hold back the growth of the social enterprise sector.

It is, I would gently suggest, not enough for the Government to talk about a strategy for social investment. I do not doubt the Minister’s commitment to growing the market for social finance, and the Government’s interest in social impact bonds and support for the big society bank—both Labour ideas—are welcome, but when those initiatives are set against the scale of the cuts in direct funding from national Government and, as a result, local government, there seems to be little hope that the social finance market will have grown sufficiently robust to replace the estimated £3.2 billion—possibly as much as £5.1 billion—of direct funding that will be lost. That estimate of the potentially huge loss to the third sector over the coming comprehensive spending review period was provided by the independent analysts New Philanthropy Capital.

[Richard Fuller (Bedford) (Con)]

I am listening to the hon. Gentleman’s speech with great interest. He is making a point not only about the need for a strategy, but about the impact of cuts in the near term. Does he agree that, in essence, the Bill in its present form retains the opportunity to support social enterprises, and that the Social Enterprise Coalition and other leaders of social enterprises support it?

[Mr Thomas]

The hon. Gentleman makes a valid point when he says that the Bill, although its scope is substantially restricted, offers some opportunity for progress to be made in support of social enterprises. The Opposition welcome and support that, but, as my right hon. Friend said, this Bill provided the Government with an opportunity to be far more ambitious in scope, and it is a tragedy that the Minister has not been able to persuade his colleagues in Government to support the more far-reaching measures.

New Philanthropy Capital has assessed the funding situation facing the voluntary sector in the coming years. It noted how the scale of the cuts would be far too big for public foundations or other forms of philanthropy to be able to compensate for, and also noted that charities funded by local authorities, which will bear particularly heavy cuts, are at great risk. The Minister will not, I suspect, be surprised by these difficulties facing the third sector, especially those resulting from the Government’s cuts on local authorities. This is yet another example of their cutting public spending too far, too fast. I am sure the Minister will know about the cuts at Hillingdon Community Transport, Hillingdon Law Centre, Hillingdon Arts Association and Hillingdon Women’s Centre. Those are just a few examples of local organisations that are being affected by the coalition’s economic strategy.

Social enterprises that trade directly with the public are all too aware of the extremely difficult trading environment on the high street. The latest news, which came out today, is that Sir Philip Green is having to axe a whole series of shops. That proves the error of the Government’s economic strategy, and if his business is facing such difficulties, it is unsurprising that social enterprises that trade with the public are also experiencing falling incomes. The crisis facing the economy, and therefore the circumstances facing social enterprises trading with the public, are yet another reason why the Chancellor should consider introducing a temporary cut in VAT and adopting the plan B proposed by the shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls).

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[Richard Fuller]

The right hon. Lady has a lot of support for the work she has done in her career to support social enterprise. Will she add to her point about urgency and immediacy the fact that social enterprises provide one of the most exceptional ways to enhance productivity in public sector areas? As we are looking for the opportunity to grow our economy, it would be beholden on the Government to make every effort to look at ways in which social enterprises can enhance the productivity in that sector of the economy.

[Hazel Blears]

I absolutely share the hon. Gentleman’s point. The economy is difficult, there is less money around and public authorities have less resource to spend, so we must ensure that we get as much value as possible out of every pound we spend. The social enterprise sector is often very innovative and comes up with new ways of working and doing business, and that has been one of its particular advantages. There is good innovation in the public sector, but small organisations that have a complete passion for something will often take the system apart, look at how things are currently done, and get more value and productivity.

--- Later in debate ---

[Richard Fuller]

I wholeheartedly support the Bill promoted by my hon. Friend the Member for Warwick and Leamington (Chris White), as it enhances both supply and demand in a very important part of our economy: social enterprise. I think that this Bill can achieve more than my hon. Friend the Member for Bury North (Mr Nuttall) has said can already be done. I encourage my hon. Friend the Member for Warwick and Leamington to continue his efforts and, indeed, to continue to challenge the Minister to do more.

The aspects of the Bill that I find most intriguing and to which I give most support concern its role in enhancing our country's ability to meet the challenge of our economic situation. We hear every day about the demands for growth, the challenge of deficits and the overhang of debt, and we look for the remedies that we may have to overcome all those great challenges. We look at our televisions screens and see elderly people in many of our social services lacking in the care that they need and being denied the dignity that they deserve, and we ask why such things happen in our country.

The solution to those challenges lies not in some technological innovation or substantial additional contribution of funds, but in understanding and enhancing the entrepreneurship of every man and woman in this country. I often struggle to understand all the reasons and rationales for people wanting to become entrepreneurs, because it is not simple; it is not straightforward. We have heard many examples from both sides of the House today of people who started social enterprises and businesses. Underpinning all that is the fact that the individual wanted to step up. He or she felt motivated to step forward and do something that was different and innovative. Their motivation could be the desire to make money; it could be that they want to do something for their community or their country; or they could be motivated by some spiritual values at the core of their heart. This Bill takes us a step forward in saying to those whose motivation is to help the community that this Government believe in them, want them to step forward and want them to achieve things on behalf of our country.

The right hon. Member for Salford and Eccles (Hazel Blears) made a pertinent point about the social value rather than the organisation. Social value is what we are looking to achieve—not to define some particular circumspect or corporate identity—and it is at the core of my hon. Friend's Bill.

For people who have the motivation to step up, the Bill creates a market and demand. Members on both sides of the House have raised concerns about whether the provisions should cover services alone, or if goods should be included too. That is a fair point. We have heard that, perhaps, we are not pushing boldly enough for a strategy, and therefore condemning ourselves to dealing with just two or three local authorities rather than the country as a whole. That is a fair point, too. What we are doing is creating a market. We are creating an opportunity for people now to say to local authorities across the country, “What are you doing to promote what I see in my heart and what motivates me to do better in my community?” The Bill does not define a document; it creates that space for these entrepreneurs, and it could not come at a more opportune time to meet the challenges that our country faces.

I commend the Minister for his support for the Bill. We understand the scale of the challenges that we face, we support all the initiatives outlined today, we understand that there must be caution in financing initiatives, and we understand that there are limitations on what the public purse can support, but he needs to understand that the group of people who sit behind him—those individuals who want to step up and do better in their community—are looking to him to see this Bill not as the ending point of a particular piece of work, but as the start of what we hope will be a radical Administration in this area. I thoroughly and wholeheartedly support the initiative of my hon. Friend the Member for Warwick and Leamington and encourage the House to support the Bill.