When the financial crisis came, people talked excitedly about the opportunity for a new economics. But nothing really happened. No new ideas emerged. All we seem to have is an argument about cuts.
“Cuts!” “No, fewer cuts!” “OK, slightly fewer cuts!” (Oh, and a few people agreeing that social and mutual ownership and helping the environment are good things. But not really doing anything about it.)
This is boring, predictable and unhelpful. And it’s certainly not new. So hey, why not have a crack at a new economics?
BUSINESS IMPROVEMENT DISTRICTS 2.0
Most people have never heard of Business Improvement Districts (BIDs). Most probably don’t want to. Yet BIDs are one of the key policy tools we have for improving the towns and cities where we live, shop and work. A BID is an area within which local businesses, in partnership with the local authority, agree to a joint plan to improve the area, funded by an increase in business rates, agreed by a ballot and paid by all businesses in the area.
On the whole, BIDs seem to work OK. But they are unlikely to “transform the face of urban England.” Why not? What are their limitations?
On the whole, BIDs seem to work OK. But they are unlikely to “transform the face of urban England.” Why not? What are their limitations?
SOMETHING IS WRONG WITH SOCIAL INVESTMENT
As a civil servant by trade (and an Englishman!) I am uncomfortable with sharing my personal view in public on what’s right and wrong, morals and politics, how things should be and what would make the world a better place. Rather, I prefer to apply myself to diligently picking patterns out of noise, illuminating dark corners, challenging fuzzy logic, recognising vested interests, highlighting contradictions and digging out details which others may have missed.
So when I conclude that something is wrong in the social investment world, I don’t mean that I disagree with the way the market is headed. What I want to see is immaterial. But the evidence does seem to suggest that an unspoken, unresolved and problematic tension could be about to tear at the heart of the market. I fear that if this nagging tension isn’t resolved then the credibility, strength and potential of an industry which many people want to see thrive could be tragically undermined.
So what’s wrong?
So when I conclude that something is wrong in the social investment world, I don’t mean that I disagree with the way the market is headed. What I want to see is immaterial. But the evidence does seem to suggest that an unspoken, unresolved and problematic tension could be about to tear at the heart of the market. I fear that if this nagging tension isn’t resolved then the credibility, strength and potential of an industry which many people want to see thrive could be tragically undermined.
So what’s wrong?
THE POINT IS TO CHANGE IT
In contrast to communist regimes, liberal democracies pride themselves on the role of a strong civil society existing independently of the ruling state ideology. Civil society under communism, to the extent it would exist at all, would be regulated, funded and governed in a way that was dominated by the state apparatus. Civil society groups would be a) restricted from political activities; b) significantly reliant on state funding; and c) not truly independent, with the state directly influencing decision making and governance.
Of course this is a far cry from the UK today. Isn't it?
Of course this is a far cry from the UK today. Isn't it?
WHY EVERYTHING YOU KNOW ABOUT SOCIAL ENTERPRISE IS WRONG
We know that social enterprises particularly struggle to access finance, right? That social enterprises are more fragile and grow more slowly than ‘normal’ commercial businesses. We know from experience that social enterprises are relatively misunderstood by mainstream business support providers. And everyone knows that there are no tax breaks for investment in social enterprise.
Wrong.
Wrong.
WHOSE FINANCE IS IT ANYWAY?
This article first was first published at www.clearlyso.com
Politicians and policymakers have three primary levers they can push and pull in the pursuit of a policy objective: spending, tax and regulation. Until recently, the 'go-to' lever for those looking to help civil society and social enterprises access finance has been spending (sometimes as investment - or at least advertised as such).
The creation of Big Society Capital may be the last great heave of this lever. Increasingly, the focus is turning to tax and regulation to help grow the so-called social investment market. This makes a lot of sense, particularly in a much harsher fiscal climate, by setting the rules for the market to then work sustainably for itself rather than relying on sporadic support and subsidy from a benevolent government.
HOW THE FRENCH HAVE SAVED THE NHS
Take a typical UK social enterprise conference. What might you expect to learn? Isn’t that Liam Black a funny man? What a passionate speech from Nigel Kershaw! What an inspirational PowerPoint presentation from that young man from Peckham...
A few years ago, I travelled to Paris to a French conference on the role of non-profits in public service delivery. There were no gags, no inspirational speakers and it was all pretty dull stuff. What did I see and learn? How can we argue for a wider definition of Part B Services of General Economic Interest ? To what extent does EU law demand an open competition for compensation for clearly defined services in the public interest? What is the definition of an economic undertaking? Blah Blah Blah.
A few years ago, I travelled to Paris to a French conference on the role of non-profits in public service delivery. There were no gags, no inspirational speakers and it was all pretty dull stuff. What did I see and learn? How can we argue for a wider definition of Part B Services of General Economic Interest ? To what extent does EU law demand an open competition for compensation for clearly defined services in the public interest? What is the definition of an economic undertaking? Blah Blah Blah.
ONE LAW FOR THE SOPHISTICATED
Can it be true that in a modern liberal Western democracy we have one set of laws for the "sophisticated" amongst us and one for those of us who aren’t?
ERROR MESSAGES
- The financial system has encountered an unknown
error and is not responding. Try closing all the banks and opening them up
again.
OTHER MODELS OF CAPITALISM ARE AVAILABLE
Inspired by the recent Co-operatives UK campaign wares, here are some social enterprise related t-shirts...
SCANDAL! PERVERSE BEHAVIOUR, CENSORSHIP, FETISHES AND PAGE 3
One screamingly obvious way to save public money and to deliver greater value with the money we do spend would be to sort out the incredibly unsexy issue of end year flexibility. This so-called ‘annuality’ issue - where money cannot be carried over from one year to the next – often leads to the wasteful splashing of cash at the end of each financial year. We could quite easily spend less and spend better.
2012 AND BEYOND: BLACK AND BLUE AND RED ALL OVER?
The following article was first published at www.respublica.org.uk
As 2011’s bewildering firework display of headlines, events and moments of crisis fades into the darkness, do any underlying patterns shine on to illuminate our journey through 2012?
As 2011’s bewildering firework display of headlines, events and moments of crisis fades into the darkness, do any underlying patterns shine on to illuminate our journey through 2012?
FARMING TODAY, SHOPPING TOMORROW
The following article was first published at www.respublica.org.uk
This is an era when the interests of private capital, seeking ever more efficient commercial models and supported by the Government’s commitment to improvement and modernisation, led to a move from smaller town centre units to bigger out-of-town sites. The imperative for ever greater productivity and growth led, for the first time in England’s history, to a physical separation of these units from our towns and villages; bringing back into use previously disused and discarded wasteland on the edge of residential areas. The disparity between big and small units grew ever larger and we saw the slow death of small units in our towns and villages. This was accompanied by the collapse of the profession that perhaps characterises Englishness more than any other and the marginalisation of the surviving traditional community. Workers were forced to look elsewhere, to new industries and the sole trader was becoming a thing of the past.
This is an era when the interests of private capital, seeking ever more efficient commercial models and supported by the Government’s commitment to improvement and modernisation, led to a move from smaller town centre units to bigger out-of-town sites. The imperative for ever greater productivity and growth led, for the first time in England’s history, to a physical separation of these units from our towns and villages; bringing back into use previously disused and discarded wasteland on the edge of residential areas. The disparity between big and small units grew ever larger and we saw the slow death of small units in our towns and villages. This was accompanied by the collapse of the profession that perhaps characterises Englishness more than any other and the marginalisation of the surviving traditional community. Workers were forced to look elsewhere, to new industries and the sole trader was becoming a thing of the past.
FROM THE DUSTBIN OF HISTORY - BREAKOUT 89!
In the late 1980s many East Germans began to put forward an alternative to the view that “there is no alternative” to the way their economy and society was structured. The first country wide independent political movement, New Forum, announced themselves with a few words – called “Aufbruch 89”.
Rather tragically, New Forum now represents a lost moment, a glimmer of a chink of light to illuminate a genuine alternative to (rather than a synthetic and compromised ‘third way’ between) socialism and capitalism as we know it. The lid quickly slammed shut as the West swallowed up and assimilated the eastern Länder and New Forum were consigned to the dustbin of history.
Rather tragically, New Forum now represents a lost moment, a glimmer of a chink of light to illuminate a genuine alternative to (rather than a synthetic and compromised ‘third way’ between) socialism and capitalism as we know it. The lid quickly slammed shut as the West swallowed up and assimilated the eastern Länder and New Forum were consigned to the dustbin of history.
THE FUTURE FOBS FUND 2.0 AND THE “ECONOMICALLY USELESS”.
The last administration's Future Jobs Fund cost £1 billion. It was intended to create 150,000 jobs (although an independent evaluation says it created 105,220).
DWP's own "customer experience" report on the programme concluded that "almost all participants reported a significant increase in their skills... perceived sense of employability". And the independent evaluation says it “moved people off long-term benefits…engaged employers…benefited communities” and even “improved people’s health and reduced criminal behaviour.”
So there doesn't seem to be any doubt that this fund was "socially useful" (to borrow a term). But...
DWP's own "customer experience" report on the programme concluded that "almost all participants reported a significant increase in their skills... perceived sense of employability". And the independent evaluation says it “moved people off long-term benefits…engaged employers…benefited communities” and even “improved people’s health and reduced criminal behaviour.”
So there doesn't seem to be any doubt that this fund was "socially useful" (to borrow a term). But...
"IT IS NOT ONLY THE DEFENDANT WHO IS ON TRIAL HERE..."
For years, various politicians of all persuasions have toured the country, or at least the capital, trotting out some very ambitious words about a greater role for the voluntary sector and social enterprises in delivering public services. Yet on returning to Whitehall, they have found these words hollowed out as officials, lawyers and procurement people confront them with the mundane realities of public procurement.
WHY NOT TO HATE THE TREASURY, AND WHY YOU SHOULD
The Treasury is an oft maligned institution. Broadly, across the civil service and amongst lobbyists, HMT is perceived as an ‘orrible department. Above all, because it always says no. The classic HMT discussion with a needy spending department looks something like this…
SPIN-OUTS - HOW TO CHEAT PROCUREMENT?
Public sector staff considering ‘spinning out’ into a mutual or social enterprise are faced with almost endless hurdles to overcome: cultural, technical, practical, personal, legal, financial and more. But whilst there are lessons to learn, experiences to pass on and expertise to share from those who have lasted the course, one of the most significant outstanding issues for many groups is the question of an uncontested contract.
Under DH’s Right to Request, the department simply decided that a ‘dowry’ initial uncontested contract for new spin-outs was just fine and above board. As Sir Humphrey might say, this was a brave and courageous move. But it did the job. Now, and despite even more ambitious rhetoric from Ministers, we have no direction from the centre on when an open competition might be avoided. Without this clarity, the journey is far less inviting and the rhetoric sounds empty.
So can we try to fill the gap?
Under DH’s Right to Request, the department simply decided that a ‘dowry’ initial uncontested contract for new spin-outs was just fine and above board. As Sir Humphrey might say, this was a brave and courageous move. But it did the job. Now, and despite even more ambitious rhetoric from Ministers, we have no direction from the centre on when an open competition might be avoided. Without this clarity, the journey is far less inviting and the rhetoric sounds empty.
So can we try to fill the gap?
SOCIAL ENTERPRISE OF THE DAY: PRIMARK
If you want to know about football, then ask the Germans. The Chinese seem to hold the answers to modern industrial policy. And the Government remains the experts in bureaucracy and control. Perhaps these masters might give us clues to solve the tiresome riddle of what defines a social enterprise?
POLICY IS ACADEMIC
In a recent article for Chatham House, Philip Blond of ResPublica suggested that British academics rarely seem to make an impact on public policy. While the article met with a mixed reception, it does raises the question of whether academics who think about the social sector are having an impact on policy in this area.
From my experience, they aren’t. It’s not even clear that many people know what they are thinking. This is a real shame because academics can draw on perhaps a unique combination of expertise, resources, credibility, independence and freedom of expression - while think-tanks, membership bodies, officials, Ministers, press and individual citizens each fall short of this full house.
So what are social sector academics up to?
From my experience, they aren’t. It’s not even clear that many people know what they are thinking. This is a real shame because academics can draw on perhaps a unique combination of expertise, resources, credibility, independence and freedom of expression - while think-tanks, membership bodies, officials, Ministers, press and individual citizens each fall short of this full house.
So what are social sector academics up to?
CAROLINE NO
I have little time for the view that charities’ low administration costs are a guide to their effectiveness or that money spent on overheads or indirect costs is wasted. I applaud the efforts of New Philanthropy Capital, Caroline Fiennes, Martin Brookes and others who have worked to illuminate the false assumptions beneath this way of thinking.
DISSING INTERMEDIATION?
“Intermediation” means brokering or bringing people together. What a wonderful idea! In the financial world intermediaries borrow from those how have it and lend to those who don’t, sitting in the middle to manage the timing, information, risks and size of deals that individual players couldn’t cope with. Banks are intermediaries, for example.
THE WISDOM OF OUR FINANCIAL MASTERS
In the last few months I have stumbled across the following quotes hidden deep in policy, economic and academic papers:
- HM Treasury (at the tail end of the previous Government): “Building societies have a natural advantage to banks in being able to return a greater share of profits to their Core Tier 1 capital base than banks (as they have no implicit commercial responsibility to maximise dividends to shareholders)”
100 MUTUALS
This week, Francis Maude is celebrating the Cabinet Office success story of "100
public service mutuals" with a reception at Number 10. I am looking forward to it and I hope - but don't expect - Mr Maude to acknowledge that...
PEACE? DIVIDENDS?
This piece was originally published as a guest blog on the Third Sector website.
Recently, Craig Dearden-Phillips and Rob Greenland, two of our most respected social enterprise commentators, both wrote blogs that, taken together, shattered the illusion of a consensus on the definition of social enterprise.
Recently, Craig Dearden-Phillips and Rob Greenland, two of our most respected social enterprise commentators, both wrote blogs that, taken together, shattered the illusion of a consensus on the definition of social enterprise.
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