This article was first published by Charity Times.
The FT says the Government have been discussing the nationalisation of one of our biggest banks. Meanwhile, Serco are currently tying up the details of a £140 million contract to deliver NHS services in Suffolk, taking on 1000 public sector staff. Just a few weeks ago the creation of the new Canal and River Trust transferred the ownership of our national waterways away from the state and into the hands of an independent charity.
In this context, there seems to be no consistent rationale for who owns and controls the goods, services and assets that serve UK citizens. Who should own our railways, ports, forests, broadband network, hospitals and utilities? Arguably, there are three options. Some of our assets and services are managed by private businesses, some are controlled by government and some are held by charities, trusts, associations, social enterprises and co-operatives.
Each sector surely has its place. Markets have existed since the dawn of man; to compete is in our blood. But so too is helping each other and caring informally, with co-operation also part of our DNA. And a role for the state is surely uncontested, with regard to national security, for example. What is the place for each, however, is less clear. We also waste a lot of effort and money when these three different parts of the economy work destructively and inefficiently: pitted against each other,undermining each other or feeding off each other. Taxes can hinder enterprise, banks can almost bankrupt the state, businesses can destroy communities, the state can crowd out social action.
In this light, ResPublica and the Canary Wharf Group recently published ‘Financing for Growth: a new model to unlock infrastructure investment’. The report argues that for too long, infrastructure finance has been an antagonistic tussle between the public and private sectors. Complex negotiated agreements between public and private “partners” are drawn up in an attempt to mitigate the risks which follow the assumption that the state is useless and business is out to make a quick buck. Meanwhile, the social or community sector, local businesses and citizens are ignored.
So the report proposes‘ Community Infrastructure Bonds' to attract investment by local citizens and businesses, among others, into a kind of large-scale regeneration trust. Such bonds could help finance transport, energy, technology and civic infrastructure at a local level, issued by a vehicle with a social purpose working across rigid public sector boundaries and beyond the influence of short-term politics. It could have an asset lock, a dividend cap and surpluses principally reinvested in the community it has been created to serve.
Ironically, social enterprises and cooperatives have been outperforming their more red-blooded counterparts over the past few years in economic terms. The staggering commercial performance of community-owned shops, for example, demonstrates how aligning incentives between investors, enterprises, customers and community can create a virtuous circle and more socially and financially successful business models.
Currently, ownership of our infrastructure is too often removed through layers of anonymous intermediaries (public or private) which put a distance between people and the physical assets around them. Engaging communities, citizens and local businesses more directly in financing, control and governance can deliver better value for money, more popular and longer-term models of infrastructure finance.
At a time when trust in politicians and financial services is shot, charities, social enterprises, co-operatives and mutuals can offer inspiration. The much-ridiculed Big Society at least reminds us that there are other ways to support each other beyond the gates of the state. Disgust with the banking industry demonstrates our hunger for more socially responsible business models. The social enterprise Eden Project, the not-for-profit Network Rail, the mutually owned Welsh Water, and the ambition of the people of Dover to create a ‘People’s Port’ show that there are alternative large-scale models beyond either public or private.
Most local civil society organisations are head down right now, trying to cope with economic pressures and living at the beck and call of public or private interests. But maybe we can somehow look up to develop models of ownership which offer an alternative to the flawed and competing public and private models we currently rely upon, and which don’t seem to be doing us a lot of good.