Recently I posted 5 Big Society questions which I felt needed answering if I could endorse the project wholeheartedly. Yesterday the Times ran a front-page story about how the movement is in crisis because of lack of definition and popular and third sector support, and I’m afraid I now agree with Matthew Taylor’s analysis here that “If the Big Society debate doesn’t get more substantive and granular quickly, it will feel like the only credible thing to do is knock the whole idea.”
I think this would be a great shame, since the Big Society project is creating a powerful space for new thinking to emerge and giving local government in particular a mandate for positive change and greater community engagement, all of which are good things. But to echo Matthew’s sentiments, there is far to much unsupported assertion going on and not enough evidence or testable hypotheses, and I am further troubled by the regular dismissal of issues and counter-evidence as “naysaying” or “negativity”, which is stifling debate in this area as many participants (including myself) try to act positive in the hope of being on the right side of funding decisions in the future.
I agree that we must be positive and collaborative about coming up with the answers together. I also agree that most if not all of the new infrastructure to run the Big Society must come from entrepreneurial solutions rather than government (such as this interesting new crowdfunding platform). But when I hear people who are not social entrepreneurs telling me how the social enterprise sector works, or politicians making bold claims about how the obstacles which currently exist will magically disappear without any explanation of how this will happen or acknowledgement of the value in the existing systems, then I can’t help feel we’re heading for a political trainwreck.
Last night I attended the RSA lecture with the generally impressive Sir Ronald Cohen, and asked him how we can ensure social enterprises can compete with commercial interests for lucrative government contracts, rather than picking up only the non-viable markets. His answer was hopeful rather than evidenced. He believes that social enterprises will win tenders because they are culturally better suited and have greater connections with their communities – but there is no evidence of this happening now, nor of a plan to shift the structure and culture of government procurement to make this more likely in the future. It’s a nice story, but there was no acknowledgement the lack of capacity for social enterprises to deliver critical national services, the bureaucracy of government procurement which favours those with the money to spend on navigating the process, the innate conservatism and risk-aversion of the public sector, and most of all the difficulty of scaling the kind of community and cultural factors which supposedly give social enterprise the edge. The reality, I’m afraid, is of large organisations bidding for large contracts which small community groups cannot feasibly deliver, social entrepreneurs spending months in negotiations for money which then disappears, commercial, academic and charitable interests mining smaller projects for their ideas, a lack of core funding or capital investment to enable social enterprises to scale up to meet these challenges, and a continual persistence of the attitude that the main advantage of the social sector is that we’re really, really cheap. All soluble problems, but what are we going to do about them?
Nick Hurd has issued a 12-page call for ideas from MPs and activists on how to make the Big Society work (or so the Times tells me: I can’t actually find it online). So with that in mind, here are five ideas that I believe are needed in order to create a thriving and meaningful “big society”:
- Fix government procurement
Government currently awards large contracts to large corporations on the basis of efficient delivery of often dated and ineffective solutions designed in advance by bureaucrats who are not directly connected to the problem they are trying to solve. Social impact bonds point the way to a public procurement model that is based on outcomes and allows innovative providers to pocket some of the cost-savings for game-changing innovations, and if it works it could be mainlined into all government procurement. But the only way we will create a sustainable social sector is if social organisations are given preferential treatment in procurement, either by forcing all bidders to have a voluntary element to their bid (forcing the Capitas and PWCs of this world immediately into partnership with voluntary groups), or by giving preference in contract awards to recipients of Big Society Bank investments.
- Build better corporate structures
Current vehicles for social enterprise are not fit for purpose: they don’t provide enough rigor to allow the charities commission to provide tax breaks, but also don’t provide the equity return for either capital investors or social entrepreneurs. We need a new model which sits in the for-profit sector but with certain conditions, for example a restriction on what proportion of profits can be given as dividends or when they can be withdrawn, a cap on salary distance between best-paid and worst-paid staff, or incorporation of charitable objectives in the responsibilities of Directors. Currently, social enterprises need a non-profit vehicle to own the assets and protect the mission (and in the case of Mindapples, to give proper ownership and accountability to the community), a charity to get the tax-breaks, and a trading arm to offer a return to founders and investors. It’s time to create a new integrated social enterprise vehicle that is fit for purpose, and for the government to offer hard financial incentives to philanthropists and investors to put money into the social enterprise sector.
- Make private enterprise accountable
Banks and other high-yield for-profit entities do not, by their very definition, act in the interests of the whole population, but of the few. Private companies (and I speak as a Director of one) are duty-bound to act in the commercial interests of their shareholders, to the exclusion of wider social considerations. The result is a twofold madness: firstly, businesses prioritise the financial interests of their staff and shareholders over the improvement of the society those individuals live in, making us all richer in a poorer world, insulated from growing social problems by our similarly growing bank balances. Secondly, the full financial impact of businesses do not need to be considered by those taking the key decisions. The wider social impact of business remains an externality to the business transactions, something to be picked up by the government and the social sector in the form of, for example, massive recyling bills for processing excessive supermarket packaging, or social issues caused by low wages and redundancies. We cannot persist with a social model in which the public and third sectors perform palliative care to minimise the social impact of the private sector’s actions, and must beg for corporate donations to do it. A gentle solution would be to legislate that all shareholders must vote and publish the social objectives for their organisation, and make Directors legally-bound to fulfil these obligations. This at least would force companies either to be bound by their supposed CSR commitments, or to come out publicly and say they are only interested in profit. A harder approach though is that if social impact bonds can be used to create positive incentives for social providers, they can also be used to create negative penalities for making problems worse. If every time Sainsbury’s cost the local council large recyling bills, they were forced to pay a social impact bond that went towards paying public and social sector providers to fix the problem, they would soon think twice about whether their scotch eggs really needed those little trays.
- Invest in infrastructure
We need to create the support structures and platforms to enable social enterprises to work and scale more effectively, which means we need a new fund (or a refocussing of existing resources) on infrastructure projects. If the government invested in infrastructure that the social sector could use, rather than trying to own systems and procure services not just for itself but for individual units of government, if you quickly give social and community groups the tools to reach considerable impact without needing investment. We need tools for organising volunteering activity, crowdfunding and donations, marketing and communications, accounting and payroll, recruitment, training and collaboration. We need spaces to work, better equipment, business advice, legal support, assistance with social impact (more on that below), CRB checks, accreditations, partnerships, access to capital and loan finance, tax incentives, support taking ideas abroad, and an array of other conditions and environmental factors for growth. All of these things cost money, but all of them are cheaper than the public sector’s current tendancy to buy the same services over and over again for itself and refuse to share. Let’s invest now in a shared infrastructure for public and voluntary sector partnership and start building this sector properly.
- Invest in evaluation and learning
Most social enterprises and community groups know they are doing good because their communities tell them so, but they lack the resources to conduct rigorous evaluation or put their learning into a format that government or funders understand. If the Big Society Bank and the public sector generally is looking to the social sector to solve its problems, it needs to support innovative companies to understand what they are good at and where they fit into the government’s priorities. It’s all very well creating a social impact bond around a set of outcomes (for example, patient health indicators), but many of the most community-led and innovative organisations will simply not be able to prove that they can deliver on these metrics without spending heavily on feasibility studies and evaluation reports. Instead, the public sector should treat the social sector as its R&D department, and invest its own money (perhaps as part of the support infrastructure of the Big Society Bank) in scanning the sector, identifying and evaluating possible innovations, and working with social sector partners to share the IP created and take the best elements to scale. If it is up to bidders to prove why they can deliver on social impact bonds, the people best placed to do that will be Capita, PWC and other major corporate players who have the resources to do their own R&D and invest heavily in their own growth. And you can bet they’ll be looking very closely at what they can learn from the social sector.
Most of all, what the Big Society needs is an accountable design process for the project, in which all of us can participate in the debate about what is needed, what can be done, and who is responsible for making it happen. There are many things the government can do to help make the Big Society happen, but they need to listen to all the people involved, both online and via local community networks, and work with us to solve these problems, either by taking action themselves or giving their backing to others to do what is needed. Unless we have an open, critical debate about the practical steps needed, facilitated by democratically-accountable institutions and conducted in a transparent and constructive way, the whole project is in danger of becoming nothing more than a small handful of people sat in closed rooms telling stories about how everything is getting better, while outside things go from bad to worse.