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Archive for July, 2011

There was something quite delicious in seeing a social enterprise newspaper (for me the Guardian with its ownership sitting with the Scott Trust is a social enterprise, however they describe themselves!) be value led, tenacious, committed, and ultimately seek to protect democracy and ensure that the laws of the land are applied to all, no matter what their position in our society.

I know the rolling news can become repetitive and as a result a wee bit tiresome, but let us never forget just how serious this piece of news is. It’s not about celebrities’ right to privacy being infringed. It’s not even about the appalling and unbelievable decisions made to invade the lives of families affected by dreadful crimes. It’s about a private company having vast influence, verging on control of our democracy, having been exposed.  Well done to The Guardian, Chris Bryant MP, Norman Fowler MP and Tom Watson MP – all of whom were under all sorts of pressure to back down and go away.

But whilst the story keeps unravelling, other pieces of news have been almost entirely lost. The ‘opening public services’ white paper emerged yesterday with more of a whimper than a bang. We were all mightily frustrated. We worked hard to make the voice of social enterprise be heard; we were even lined up be on Radio 4 Today, then the PM programme, but the story was dropped at the last minute as more News International revelations emerged. One might say a good day to bury bad news.

The white paper (though actually positive in parts) poses as serious a threat to our public services and to the vision of a more plural economy in which social enterprises can grow their contribution to economic and social recovery – and demonstrate that Big Society isn’t just about volunteering.

I’m concerned that these proposed reforms will create an unequal playing field in which social enterprises are unable to compete with large private sector providers for public sector contracts.  In too many instances we still struggle to find the capital required or do not have the scale to compete with big private businesses in public sector markets, where the commissioning process favours the big – and by design excludes the small and the medium.

The frustration of government that a public sector monopoly stifles efficiency, innovation and value will not be resolved by replacing a public sector monopoly with a private sector oligopoly. It hasn’t worked in transport deregulation or the introduction of competition following the privatisation of our utilities.  And the risks of getting it wrong in other parts of the public sector are very, very serious.

Yes reform is necessary, but these plans must protect our shared interests in public services, not put them at risk.  Without the necessary safeguards, these proposals will allow big private providers to dominate public sector markets.  Taxpayers’ money will flow into profit seeking organisations that exist only to satisfy the needs of their shareholders.  Public services must operate for the communities and people they serve, nobody else.

The Government’s plans to extend Payment by results will put private sector organisations at an automatic advantage.  They’ll simply use their stronger balance sheets and ability to attract private investment to win contracts.

We only have to look to the Department for Work and Pensions Work Programme to see that when markets open up, large private sector providers move in and squeeze out smaller organisations.  A tiny proportion of the contracts went to social enterprises despite it being hailed by Government as a boost for the Big Society. What happened to the WISE group in Scotland was scandalous and had their whole value been considered within their tender they would surely have romped home to victory.  Their smaller size and access to capital was their downfall, NOT the quality, design or track record in delivery – all of which I know were outstanding.

A You Gov poll carried out for us shows that people do not want the private sector to run public services.  Our research was carried out before the Southern Cross debacle and there’ll be even more cynicism now about big corporations and their involvement in our national treasures.  It is encouraging that the majority of those surveyed said they wanted public services to be run by social enterprises.  We hope the politicians are taking note of this public opinion.

The important question now is how serious is the Government’s want for social enterprises and mutuals to play a bigger role in public service delivery.  The country’s policy makers need to lever in investment and infrastructure to ensure that there are enough of them in the marketplace able to deliver.  But the £10million support programme announced by ministers last year to do just that, has not yet materialised.  It’s an anxious waiting game.

I am aware that social enterprises out there delivering public services share my fears. A few glimpses of the trends emerging from the forthcoming state of social enterprise survey – due early August – say they are.  We are all becoming increasingly uneasy if the opportunities promised by Government will materialise:

  • Social enterprises trading mainly with the public sector anticipate they will make half of all the likely redundancies within the social enterprise business community over the next 12 months.
  • Social enterprises doing most of their business with the public sector view the coming years with gloom, with markedly lower business confidence than their social enterprise peers trading with consumers and private businesses.
  • Of the social enterprises trading mainly with the public sector, two-thirds anticipate that their growth will come from diversifying away from working with the public sector (64%).

These are sombre findings in tough times.  But we won’t give up the fight.

Till next time.

Peter

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