Public Services (Social Enterprise and Social Value) Bill

Sam Gyimah Excerpts

Friday 19th November 2010 Commons Chamber

[Fiona Bruce (Congleton) (Con)]

It gives me great pleasure to support my hon. Friend the Member for Warwick and Leamington (Chris White) and his Bill. One of the main features of the debate has been the contribution of social enterprises to our local communities. We must interpret as broadly as possible the organisations that can fall within the ambit of the Bill. My hon. Friend mentioned more socially responsible businesses, and in that regard my view runs counter to that of my hon. Friend the Member for Ipswich (Ben Gummer), who suggested that we should substitute “charity” for “social enterprise”. I suggest the opposite, because far more local businesses are contributing to our communities than has been recognised, certainly by the previous Administration. This is a wonderful opportunity for us to highlight the contribution that those businesses make.

As my hon. Friend the Member for Bedford (Richard Fuller) said, many people are in business not just to make a profit but to contribute to their local communities. Walking down our local high street, we would be hard pressed to find a retailer who was not contributing to the community in one way or another. For example, in my constituency, there is a traditional menswear outfitter called Davenport’s. Members might wonder how Davenport’s could make a social contribution, but it is Davenport’s that donates props and clothing to the Daneside community theatre, which in turn makes a wonderful contribution to community life in Congleton. During the school holidays, dozens if not hundreds of young people who might otherwise be at a loose end spend their time creating theatre shows for the town. That is an excellent example of one small business contributing to the community as a whole and making a positive difference.

It would be wonderful if our town council, with its small budget, had the freedom to place high on its agenda a recognition of the contribution made by businesses such as Davenport’s to our community well-being when it is awarding the relatively modest contracts that can nevertheless make a real difference to the welfare of small businesses, especially at a challenging time on the high street.

I understand the point about the concerns that the Federation of Small Businesses might have about the proposals. Speaking as someone who has run a small business for well over 20 years, I, too, was concerned when I initially looked at the Bill, because I knew that many small businesses operated on the margins—on tiny margins, as I experienced when I set up my business. I declare an interest as someone involved in running a socially responsible business. It took many years before my business made any real profit, but if I had been able to consider even small opportunities for contracts with our local authority, it might have made a difference.

[Mr Sam Gyimah (East Surrey) (Con)]

Given that the purpose is not to subsidise for-profit enterprises that are operating at the margins, but to encourage businesses or organisations that operate as a business—they may have a turnover and may have a surplus—surely the primary objective should be contribution to the community rather than to the shareholders.

[Fiona Bruce]

I believe that “community” comprises many different factors, one of which is having flourishing businesses. If the awarding of public contracts can make a difference to flourishing businesses, large or small, that should count as social or public value. It is not, as many people mistakenly claim, about offering public service on the cheap; rather, it is about adding value to our communities.

Like many of my colleagues, I will have knocked on thousands of doors on a political journey. One key theme that came across to me again and again, particularly when I campaigned in a large town during a previous general election campaign, was a yearning for community life. I am fortunate that I now represent a constituency comprising mainly smaller towns where such community life still continues. Government support to businesses that, in turn, contribute to the maintenance and, indeed, the strength of community life will be valuable.

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[Mr Sam Gyimah (East Surrey) (Con)]

Specifically in the context of the current debate, I will definitely not be repeating “lower taxes” after my hon. Friend the Member for Wycombe (Steve Baker).

I did not intend to speak today, but having listened to the debate so far, I would like to offer a few words. The first point that has arisen is about our values. I remember the Prime Minister saying when he started out as the Leader of the Opposition that we Conservatives believe that there is such a thing as society, but that it is not the same thing as the state. If this Bill tries to achieve anything, it is to address the reality that there are many organisations that fulfil functions that are of social value. They do not replace the state, but their role must be recognised and promoted as we seek to transform the nature and role of the state in this country. As I think that is a worthy aim, I support the Bill.

I do not wish to follow the lead of some of the previous speeches by playing philosophical ping-pong, but we can all point to examples in our constituencies of social enterprises that are doing a great job. That needs to be recognised, and such enterprises must be promoted. In debating the Bill, we also need to think about the likely transformative effects that can be achieved by new organisations delivering services that we currently think the state ought to deliver. The Minister for Further Education, Skills and Lifelong Learning has recently walked into the Chamber. A lot is happening within higher education to enable people to understand the differences between universities so they can make informed decisions. What are the employment statistics for graduates of different universities? What are the staff contact ratios? What is the nature of the student experience? Traditionally, we would think that some state organisation should provide all of that information to prospective students. The Bill, however, would enable that data to be provided to social enterprises, so that an organisation could be created that delivers the information, without the state having to build it from scratch, which is often costly and does not always work.

An organisation called the New Philanthropy Capital has done that for the charity sector. It recognised that a lot of people did not understand on what the money they donate to charity was spent, so it built an organisation. It is a not-for-profit company that is servicing the charity sector in that way. As we consider the Bill, it is right that we champion such organisations in our constituencies that are doing a great job. There are a lot of them in my constituency of East Surrey, many of which operate under the auspices of Tandridge Voluntary Service Council. We must think about how such organisations can transform the way Government do business.

My hon. Friend the Member for Ipswich (Ben Gummer) highlighted the issue of definition, which has so far been a grey area in the debate. It is not clear under clause 1(5)(b) whether someone setting up a private enterprise that is supposed to reward its shareholders can operate in this space and whether its function is the same as that of a business that is totally dedicated to social good. For me, a social enterprise should not be about profits; it should be purely about generating value for the community. Otherwise, we risk small businesses seeing that they can get subsidies—can get what is effectively equity capital—from the Government by servicing the Government. If we do that, we will miss the main purpose of the Bill. Its main purpose is not to provide equity capital for small businesses that want to sell some services back to the Government and then line the pockets of their shareholders. Its purpose is to get services delivered for communities.

[Richard Fuller]

My hon. Friend is making some very good points. However, does he accept that one consequence of the Bill is that local authorities will spend more time looking at local businesses, which will have the welcome knock-on effect of supporting local for-profit businesses? That might not be the direct intention of the Bill, but it is a very valuable secondary benefit that local small businesses will also come to benefit.

[Mr Gyimah]

I agree that there are local businesses that fulfil a social good, but we do not want people just to decide, “You know what, I want to set up a business, and because 20% of it is for servicing the local authority, I will be supported.” I strongly believe that we must draw a distinction between for-profit businesses whose main purpose is rewarding shareholders and businesses that are delivering social goods.

[Ben Gummer]

My hon. Friend is drawing two distinctions. One of them is between local and national, and the other is between for-profit and not-for-profit organisations. The latter are distinct, but in terms of the distinction between local and national, surely we should be looking to allow small businesses to win tenders for all Government contracts no matter where they come from? That involves making procurement decisions much easier for small businesses. Different issues are involved in allowing voluntary groups and those giving human capital for free an opportunity to tender for contracts. That is about enshrining localism within procurement contracts.

[Mr Gyimah]

I certainly think we should allow charitable enterprises to tender for contracts and deliver services, rather than see this as a way for for-profit businesses to service government.

[Dan Byles]

I am not entirely sure that I agree with my hon. Friend that there is such a clear distinction between for-profit businesses and organisations involved in social responsibility. Many private sector companies take their corporate social responsibility very seriously, and a number of private sector for-profit companies in my constituency are heavily involved with community groups, charities and social enterprise, because they feel it is the right thing to do for their corporate image and for the wider community.

[Mr Gyimah]

I do not suggest for a second that no private for-profit businesses have a social objective—a lot of for-profit companies do take that responsibility seriously—but I see the Bill as a way of encouraging organisations whose main purpose is to deliver services that could be delivered by the state for the community. To take the argument to an extreme, in my view it would be unusual—

[The Minister for Further Education, Skills and Lifelong Learning (Mr John Hayes)]

rose—

[Mr Gyimah]

I will be with you in a second. [Laughter.] It would be unusual to see such a business grow to the extent that it gets listed on the stock exchange and rewards its shareholders. I give way to the Minister.

[Mr Hayes]

I am immensely grateful to my hon. Friend; I did not want to interrupt his flow.

My hon. Friend will be conscious that, just this week, we announced our national skills strategy, and in that we have protected adult and community learning. Indeed, we understand, as I hope he does, that charitable, voluntary, community groups will play a key role in helping us to reform and deliver precisely that sort of learning, which is very much in tune with what he is describing. I put that on the record, because I am here and because I wanted once again to advertise that strategy, which is available in the Vote Office for Members who want to see it.

[Mr Gyimah]

I thank the Minister for his patience and congratulate him on advertising a strategy that I wholeheartedly endorse.

If the Bill is to go ahead, we need to clarify the definition, because it sounds as though there is a lot of confusion. All of us want to support some business in our community that is well known and has been helping the boy scouts, for example, but we have to draw a distinction between that sort of business and one whose sole purpose is to deliver social goods.

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[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.

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[Mr Chope]

I am grateful to my hon. Friend for that correction and I am sorry that I was concentrating just on the local authority side. Local authorities are independently accountable through their councillors to their electors for what they think and do, and that is localism, but I can understand that there is a stronger case for saying that unelected public authorities, such as hospital trusts or ambulance trusts, must consider something before they do it because there is a democratic deficit between the people and those organisations.

I only wish that the South Western Ambulance Service NHS Trust had given some consideration to how it might have improved

“the economic, social or environmental well-being”

of my constituency before deciding on the procurement process for the hospital car service. If ever there was an activity that is best kept local, where it is most flexible and offers the best value for money, it is the hospital car service. It was run by the ambulance trust, which stopped doing that. However, instead of being given to a range of local providers, it was given to one particular taxi firm, thereby squeezing out organisations with volunteer drivers and imposing significant extra costs on many of the people being taken to and from hospital. That is only one example. If that particular organisation had thought a bit more, perhaps in accordance with clause 3, things would have been different.

[Mr Gyimah]

Does my hon. Friend think that the new version of the Bill should cover the qualifications to do with contracting? It is all well and good having a strategy that states that small businesses and social enterprises need to be considered, but the lengthy forms that they have to fill in and the qualification criteria are just as difficult a hurdle for them as being recognised in the first place.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. When Members make interventions, could they please face the Chair because it is sometimes difficult for me to hear what is being said? It is not a private conversation between two Members; it needs to be recorded for Hansard.