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We urgently need to set up the social investment bank, using the estimated the £2 billion worth of unclaimed assets, of which banks are being asked to stump up a mere £400 million. At this moment, the Government have unprecedented leverage with major banks, but they must not allow the cries from banks about their own travails, which were largely self-made, to overshadow or delay social enterprise access to capital at the moment that it is most needed and in the areas where it is most
needed. Right now, we need to grow social enterprise, maximise the triple bottom line effect and promote effectively our wish to see a diversity of public service delivery that is most appropriate.
Mr. Nick Hurd (Ruislip-Northwood) (Con): I congratulate the hon. Lady on securing an important debate at a very important time. She talked about the need for a social investment bank, and I also welcome the initiative to encourage banks to look at dormant bank accounts and transfer capital from them to the voluntary sector and social enterprises. However, does she share my understanding that that is going to be a voluntary initiative on the part of the banks and, if that is the case, does she also share my view that there should be regular reviews in this place of the effectiveness of those proceedings and the voluntary arrangement?
Margaret Moran: I certainly agree with that. However, my argument is rather stronger, in the sense that I think that the Government should be using their leverage in the current economic climate to ensure that the arrangement is more than voluntary and they should not allow themselves to be swayed by arguments to the contrary.
The advantage of providing capital funding through a social investment bank is that most of the capital and most of the investment will come in the form of loans, so that we would be effectively recycling money to get maximum value. In a very sustainable way, therefore, such a bank will be able to grow the social enterprise sector and create new businesses in a continuous loop.
I also believe that the Government need to use their leverage, particularly as they bring forward large-scale investment, as an opportunity to conduct smarter tendering and procurement, ensuring that social enterprises genuinely have a level playing field in tendering for contracts. Furthermore, I believe that the Government also have the opportunity to work with private enterprise, through corporate social responsibility schemes or whatever people like to call them, to demonstrate community gain via social enterprises as part of any public sector contract that has been tendered and won. For me, that would be the Government using smart leverage at a time when we are proud to say that the Government will step in to help when times get tough, so that we can demonstrate to ordinary folk in areas that need our help most that we are not just bailing out the big boys at the expense of the rest.
Another area that needs to be addressed is employment. Social enterprises delivering employment services have contracts where payments are made according to results, which are defined as getting people into full-time paid employment. That model assumes a number of vacancies in the labour market that, frankly, is unlikely to be sustained in the current economic situation. The Government recognise the value of different activities, from volunteering right the way through to paid employment, and they recognise that volunteering both develops skills for jobseekers and benefits the community. However, volunteering is specifically not seen as an alternative to full-time paid employment. Social enterprises can effectively tackle unemployment, but they can also reinvest any surplus within the communities that they work in, which is the local multiplier effect that I referred to earlier. They can also create jobs for those people who are furthest from the labour market. Employee
ownership can keep local business functioning and maintain levels of employment, but a narrow policy of addressing employment by delivering placements will not deliver the necessary job creation during this economic downturn. We therefore need the Government to review the employment service contracts definitions of results to include constructively engaged employment that benefits the community, such as volunteering.
Will the Government develop a wider employment policy that recognises and includes job creation, investment in communities and employee ownership? Will the Government ensure that that includes all relevant Departmentsthe Department for Business, Enterprise and Regulatory Reform, the Department for Work and Pensions, the Department for Communities and Local Government and Her Majestys Treasury? And why should we not use our employment budgets more imaginatively, for example, by giving folk the equivalent of six or so months benefit up front to set up social enterprises with support? It could be the fastest and smartest way to get people back into work and to create new jobs, and it has been done elsewhere: some aspects of the co-operative movement in Spain are an imaginative way of creating and maintaining jobs in difficult economic circumstances.
The Department for Work and Pensions has taken a more innovative approach to bidding for employment contracts, and the recent announcement of the introduction of the right to bid looks at ways in which we can develop more innovation in job creation, rather than what I would call the usual bums-on-seats approach of most employment schemes. As chair of EURIM, we are working with DWP civil servants to do a Dragons Den to ensure that social enterprises bring forward the best ideas to enable us to innovate in the way that we look at employment contracts and job creation. Working with Futurebuilders will also help us to spot good investment opportunities. The Government could be more imaginative and inventive across the board and encourage enterprise in such waysparticularly enterprise that brings multiple benefits to those communities that the Government have done most to support.
My final plea is to ensure that we look at what regional development agencies are doing in times of constrained budgets. In some areas, the support for social enterprise is, frankly, patchy, and we need a map of the gaps to show where social enterprise is not in good health or not being well developed. The resources to support social enterprise networks are distinctly patchy, and the Minister would be well advised to ask the regional Ministers to ensure that they give greater priority to the support of social enterprises. If we are serious about the agenda, particularly at the moment, we must recognise that social enterprise is identified as a significant business model that plays a major role in the UK economy. It is estimated that social enterprises contribute 1 per cent. to UK gross domestic product, which is not large, but it could be much greater. If we are really committed to the social enterprise agenda and to recognising the contribution to our communities and to employment, let us have a target whereby social enterprises contribute up to 5 per cent. of GDP. It is, I think, a modest aspiration.
I hope that this debate gives the Minister some food for thought and demonstrates some areas where Government action could support social enterprises
supporting them to support local economies, local employment and local job solutions at a time when, I believe, we need social enterprise most.
John Bercow (in the Chair): Order. I am sure that the hon. Member for Ruislip-Northwood (Mr. Hurd), in order to make his speech, has secured the agreement of both the Minister and the hon. Member for Luton, South (Margaret Moran).
John Bercow (in the Chair): We are in slightly uncharted territory. Can I simply advise the hon. Lady, because it was not possible for her to be aware of this while she was speaking, that the Minister is content for the hon. Gentleman to make a short speech? I simply ask her whether she is similarly content for him to make a short speech.
Mr. Nick Hurd (Ruislip-Northwood) (Con): Thank you, Mr. Bercow, for clarifying that. I do apologise to the hon. Member for Luton, South (Margaret Moran), for no discourtesy was intended; it was just ignorance of procedure. I certainly do not want to eat into the Ministers time; I just wanted to congratulate the hon. Lady on her speech, support her pressure on the Government and place on the record the Conservative partys strong support for social enterprise and the voluntary sector generally. There is a strong cross-party consensus about the need at the moment to strengthen and support themthe hugely valuable people who are helping us to cure and to tackle some of the most stubborn social problems in the country, while generating wealth that stays in the community. It is an enormously important section of society that we want to encourage, and in our green paper we have set out some ideas on exactly how to do so.
I wanted to support the hon. Lady in pressing the Minister on two matters. First, like most small businesses, the current primary concern of social enterprises is cash flow and liquidity, so will the Minister be explicit in responding to the hon. Lady and place on the record what the Government are doing in their conversations with the high street banks to encourage them to work with organisations such as the community development finance institutions and credit unions to extend liquidity to that sector?
Secondly, the hon. Lady was right to say that for social enterprises helping the Government get people back into work, payment by results, whereby results are defined as full-time employment opportunities, is now an extraordinarily difficult regime in which to
work. Are the Government rethinking that definition to provide some scope for social enterprises to help people into situations where they may do some public good and benefit the community through voluntary opportunities, or is their mind still closed on the definition of results?
The Parliamentary Secretary, Cabinet Office (Kevin Brennan): It is, as ever, a great pleasure to see you in the Chair, Mr. Bercow. I congratulate my hon. Friend the Member for Luton, South (Margaret Moran) on securing the debate, her commitment to the cause and her contribution to todays debate. I thought it appropriate to allow the hon. Member for Ruislip-Northwood (Mr. Hurd) to speak; we have not had a chance to cross swords or to joust properly in the House since he took his place on the Opposition Front Bench, and I congratulate him on his appointment. I shall make a few remarks at the outset, then try to deal with some of the points that my hon. Friend made. She made many points, and my time is limited, but I shall try to make some broader remarks, too.
Social enterprise is certainly not a new subject for me, and neither it is for the Government nor for the party that makes up the Government. When I left university, I began my career as a volunteer in a social enterprise. We did not call it that in those days; I think we called it a community business. Eventually, I gained paid employment with that community business, organising volunteers as part of a social enterprise that produced a community newspaper and ran a small publishing company, some projects for unemployed people and a small community printing business.
In the short time that I have been in this post, I have had the opportunity to meet several inspiring social entrepreneurs, which has taken me back to those early days. They have included Dai Powell at HCT, the Hackney community transport group, which, despite its name, is now a significant player in the bus industry, and Sam Conniff, at Livity in Brixton, where I had the opportunity to see his passion and energy for bringing young people into training and work experience, giving them the chance to produce their own magazine. So, I welcome the opportunity both to recognise the important contribution that social enterprises make to our society and economy, and to talk about why the Government value social enterprise and how we have supported and will continue to support it. First, however, I shall refer to some of the specific points that my hon. Friend made.
My hon. Friend asked about improving liquidity by using negotiations with high street lenders to encourage them to work with community development finance institutions and credit unions. We have already secured a commitment from the banks participating in the recapitalisation scheme to maintain the availability of lending and marketing at 2007 levels, and Government support for the banking system is tied to conditions. We have made it absolutely clear that there will need to be a strong focus on making available lending for small businesses, including social enterprises. Additionally, we have created a small business finance forum, again including social enterprises, to ensure that business and lenders meet regularly. We want to build on sustainable working between mainstream lenders and CDFIs.
My hon. Friend also asked about the Governments ensuring that the banks commitments in the financial inclusion action plan of 2007to support institutions that provide services to the most excluded, such as credit unionsare delivered soon. I can tell her that banks have committed to support third sector affordable credit, including through action to develop new provision in the 25 high-priority areas identified by the financial inclusion taskforce.
My hon. Friend asked me about building a pool of social lenders, and Government support for that in relation to CDFIs and credit unions. The Government are working with the European Investment Bank to see how it can help other smaller lending institutions to access its funds. I am sure that I can provide her with more detail if she would like, in respect of her role as chair of the relevant all-party group. She also asked me about speeding up the review of credit unions that is going through the Treasury. We are making good progress with our proposals for legislative reform regarding credit unions, and the Treasury is collating and analysing the responses to the consultation. I am pleased to tell her that we hope it will be able to publish a summary, along with the implementing orders, next month, so I hope she will agree that there has been good progress.
My hon. Friend asked about payments from the Government. The Department that I shall call BERR, given that she did, is taking the lead on prompt payment across Government, including measures to address transparency and consistency of payment processes, as well as the issue of speed. We have been delighted by the response from businessagain, including social enterprisesto our commitment on prompt payment. Others have followed suit, including the Scottish Executive and regional development agencies.
I was also asked about ensuring that health checks will include specialist advice appropriate for social enterprises. I can confirm to my hon. Friend that they are available to all businesses, regardless of their size, including social enterprises. Health checks will be promoted to all business by local Business Link providers, and I will certainly ensure that that includes social enterprises. She also asked about the references to social enterprises in the Solutions for Businessfunded by Government package. I can confirm that all the business support products outlined in Solutions for Business are available to social enterprises, and I put that clearly on the record for her. In addition, the Office of the Third Sector and BERR are working together to improve advisers understanding of the needs of social enterprise, and we are investing £6 million over the next four years to support that.
My hon. Friend referred to the Social Investment Bank and the funding from the unclaimed assets Bill. The Commission on Unclaimed Assets recommended that a minimum of £250 million should be made available for social investment out of the unclaimed assets. We must ensure that there is no infringement of state aid in doing that, but once the Bill has passed, funds will be agreed. The role will be to act as a wholesaler to try to capitalise the entire third sector, including social enterprises.
Finally, my hon. Friend asked about regional development agencies. Some £6 million has been provided to RDAs for Business Link, specifically for social enterprise support, and £6 million has been provided to capacity builders, which is also available to social enterprises.
The Office of the Third Sector is visiting all regional development agencies to assess the impact of funding, which is strong in some areas, such as the north-east.
In the remaining time I would like to make a few more general remarks, perhaps leaving out some of the detail that I was going to refer to. We are facing tough times, economically and environmentally. I recognise that and I think that everybody in the country is aware of it. However, I believe that in the new age of responsibility that we are entering, people are looking for the assurance that businesses will act ethically, act in a sustainable fashion and be reliable and trustworthy. That makes social enterprise more relevant than ever. Social enterprises, like any other businesses, will face huge challenges in the current economic climate, but equally, there are real opportunities for them, as my hon. Friend indicated. People are increasingly looking to buy from and invest in businesses that have strong social and environmental values, and social enterprises are well placed to meet that demand. Those with strong business modelsthey are enterprises, after allwill be well placed to survive the current economic situation and may even be able to step in, as my hon. Friend said, if the private sector is unable to do so.
So why do the Government value social enterprise, particularly now? Why is it important? At its best, social enterprise can transform communities and improve peoples lives for the better. I have seen that in a practical way in my own city of Cardiff. The Pack-IT social enterprise, which has been in business for 20 years or more, does a wonderful job creating employment for the most disadvantaged. Last week, I gave out awards at Fyndoune community college, which was the winner of the socially enterprising schools award. I was proud to present it with that award. I was also able to present awards to the Wise Group, which, particularly in Glasgow, has for more than 25 years provided meaningful employment to people who would otherwise be excluded.
When I visited Hackney community transport, I met people such as Nadia, who has been trained as a bus driver, and all the other wonderful women who have been trained as bus drivers by that organisation. It is an inspiring example of social enterprise in action. I was delighted to be interviewed at Livity in Brixton by Bianca, who has been through the training programme there and is now working as a journalist. That is a result of the work being done by that wonderful social enterprise in Brixton.
Social enterprises can set high standards in ethical markets, and they can raise corporate social responsibility. In some ways, corporate social responsibility is the new bottom line in this age of responsibility. That is the special flavour that social enterprise brings to the debate.
There has been a step change in the past 10 years in the way that social enterprises are valued and understood.
This Government have led that change and will continue to do so because we have supported social enterprise for more than 100 years through our relationship with the co-operative movement. We need a robust evidence base of the impact of social enterprises, so we are starting work on a project to measure social value, and last week I was able to launch a third sector research centre at Birmingham university. It will have a distinct work stream on social enterprise.
Whenever I visit social enterprises, they reinforce my belief, which is shared powerfully by the Prime Minister
and the rest of the Government, that social enterprise can really help to make this a fairer country. For this Government, social enterprise is not a one-night stand but a long-term commitment. We will continue to promote and nurture social enterprise because the values that drive social entrepreneurs are our core values. Like them, we believe that economic prosperity and social justice are two sides of the same coin. Those values are more relevant than ever at this time of economic upheaval.