Public Services (Social Enterprise and Social Value) Bill

Debate between Ben Gummer and Hazel Blears

Friday 19th November 2010 Commons Chamber

[Ben Gummer (Ipswich) (Con)]

We have enjoyed an interesting debate so far, and one that has on several occasions skirted around the general issues of interaction between the state, private enterprises, so-called social enterprises, charities and voluntary groups. It is a fascinating subject that deserves far greater discussion than even we have afforded it under this new coalition Government.

Given that we are having a general debate, and given the nature of the Bill, the figures outlined by my hon. Friend the Member for Warwick and Leamington (Chris White), and the number of people engaged in social enterprises and the voluntary sector throughout the country, it is sad that the Chamber is only this full. Although the debate is a good one with the right hon. Member for Salford and Eccles (Hazel Blears) representing many Labour Members, I wonder, if the Bill had been supported in some measure by the Public and Commercial Services Union, how many Opposition Members would have been here, given that we are talking about similar numbers of people. Perhaps it is a good thing that they are not here. I am not sure that many of them would like their views on socialism to be represented by the right hon. Lady. Her views are probably more enlightened than those of many hon. Members who often sit with her.

We have had a discussion on the general issues, but I wanted to speak in this debate to give a local case study to explain why elements of the Bill are so important. I have had several discussions with the Minister, whom I am delighted to see in his place. He has been most helpful with this local issue. This is not an egregious attempt to discuss various institutions in my constituency; I want to provide the House with an active case study of why the elements in the Bill are so important. I shall return to the elements with which I have difficulties, but some have much to commend them.

It is an unfortunate fact that many voluntary organisations spring up at moments of crisis, or from a deep or yearning concern about deprivation or social problems. That is certainly the case with one organisation in my constituency. Ipswich Housing Action Group was founded in 1976 by a group of local business men who were worried about the homeless, so they created a charity to deal with homelessness in Ipswich.

Many hon. Members may remember the horrendous serial murders in Ipswich in 2006. As a result of that, the community felt the need to deal immediately with the problems of prostitution and drug addiction in the town. That brought together not only local authorities, the police and other statutory bodies, but many social enterprises and charities locally. Prime among them was an extraordinary charity, the Iceni Project, which is a small micro-charity dealing with drug rehabilitation. It so happens that that charity is not just an extraordinary local charity; it is a very effective one. It has been delivering some of the very best drug rehabilitation programmes in the country. Indeed, it is regularly rated within the top three organisations in the country for providing drug rehabilitation. In 2008, it was awarded The Guardian prize for the best charity of the year for being so innovative yet so local.

In 2006, the town came together to deal with the problems that had afflicted those young ladies who were killed, and many around them consequently received the help and care that they should have received before that. Crisis and disaster forced on the community an immediate imperative to provide that. In that process, the Iceni Project gained a particular place in the hearts of many people in Ipswich, which is why the events of the past few weeks and months have been of considerable concern to many people throughout my constituency. The reason for that concern lies in the tendering of drug projects that has come about under a tender process initiated by the previous Administration. Perhaps the House will not mind me running through the basics of how that has happened, so that hon. Members understand why that is directly pertinent to the Bill.

The previous Administration spoke much about the third sector, especially towards the end of their tenure. Indeed, I believe that the Leader of Her Majesty’s Opposition was the Minister with responsibility for the third sector at one stage, and I know that the right hon. Member for Salford and Eccles did much to try to extend the role of the third sector in the delivery of services. But there is a problem in the way that much of that was structured, because the idea was effectively to outsource, and to get the third sector, whether charities, voluntary organisations or social enterprises, to take on the role of the state in various contracted terms. That is not what we should be striving for. We should not be trying not to replace one bureaucracy and one contractor with another, whether a state organisation run by a private enterprise or by a charity. We should encourage and fertilise the ecosystem of communities—small micro-organisations—and not over-engage with them, but allow them to provide the services and community assets that we all depend on.

There is a key distinction, and the case study provides an example of why things can go so badly wrong. Under the tender process set up by the previous Government and the Home Office—the right hon. Lady knows more than I do about the formulation of that policy—a quango, the drug and alcohol action team, was set up in every county and local authority to award the contracts for drug rehabilitation, and it does so according to Home Office guidelines. The Suffolk DAAT, which consists of procurement officers from the primary care trust, the county council and others, decided that it would let the contract on the basis that those applying for the tender could offer a service throughout Suffolk. That immediately excluded the Iceni Project because, by design, it operates only in Ipswich.

The issue is that the tender itself was following the guidelines laid down by the Home Office, and those guidelines were to look for best value on a purely monetary basis throughout the county. A second problem is that the people who sit on the DAAT are completely unaccountable to anyone else—county councillors, district councillors, Members of Parliament, and Parliament itself. They are a mixture of PCT procurement officials and county council procurement officials, but when the tender was going through the process, it became increasingly apparent that it was impossible to challenge not the decisions on the award of the tender, but the form it had taken.

[Hazel Blears]

I am sorry to interrupt the hon. Gentleman, but my point is important. If he is so concerned, as I am, about large national contracts that exclude small, innovative organisations from providing services, will he have a word with his right hon. Friend the Secretary of State for Work and Pensions, who is going through a process for the single Work programme? Many social enterprises have concerns about that, because it looks as if we are going to go down the route towards massive national contracts and national organisations. That will again make it difficult for small organisations to get into that Work programme, which is a key area for personalised services and innovation.

[Ben Gummer]

I think that the right hon. Lady will find that the Secretary of State for Work and Pensions heartily agrees with her. In a speech that he gave a few years ago, he warned precisely against the takeover by mega-charities of certain functions of the state. He is a man who does not change his opinions or his direction with great ease, and I would find it very surprising if he were to go back on that.

The county council procurement officers, working within the management structure, effectively deal with the money and procurement advice provided to the primary care trust. I should say that the primary care trust has shown itself to be perennially oblivious to the needs, aspirations and concerns of local people. Frankly, it was concerned only with its own upkeep and ingratiating itself with senior officials in the strategic health authority, but that is by the by. Those people coming together have now awarded a contract to two large outside charities, both of which I am sure provide good services in their area, but the result is that funding for drug rehabilitation work will now be taken for three years, or possibly five if the break clause in the contract is not invoked, from the Iceni Project and from three other micro-charities in Suffolk. All those micro-charities spring from local ground and are supported by local people, yet they will disappear or experience considerable cuts as a result of this.

What does that tell local people who have invested their time, effort and passion in such organisations? The message that they hear is, “ We don’t care about you any more. We’re going to give a contract to an outside organisation, and all the work that you have put in no longer matters. You might as well give up and go away.” The answer from the Suffolk DAAT was, “Don’t worry, we’ll be TUPE-ing the staff across.” As it happens, however, many of the staff do not want to work for anyone else. They came on board, following the tragic events that I described a few moments ago, because they loved the organisation and admired its leadership.

What could the Bill do to ensure that that did not happen again? I particularly like its proposal to place a compulsion on local authorities and public bodies to consider localism when letting contracts. If we are going to encourage the big society, we must ensure that the organisations are there to deliver the services. If we cut off every tendering period every three or five years, the small organisations that do not have the funds to enable them to tender will simply not be there, and we shall not see the growth of social entrepreneurism necessary to challenge the big providers. We shall not see the natural efflorescence that we see in the private economy, where new entrants to the market find new ways of doing things and continually improve their product offer.

That is what I particularly like about the Bill, but I have a few issues with it as well. I wonder whether, at some point, they might be addressed, although I am not sure who would address them in the circumstances. I would be interested to know whether the Minister has any views on them. I have a particular problem with strategies, and I wonder whether they provide the freedom that my hon. Friend the Member for Warwick and Leamington is seeking to achieve.

I agree with the right hon. Member for Salford and Eccles that there needs to be integration, but my experience is that integration between services happens as a result of the willing participation of providers—as happened, funnily enough, in Ipswich in 2006. Integration is not achieved by the state coming in and saying, “ You will do it like this” or “We suggest this format of working.” All too often, procurement officials faced with a strategy will follow it to the letter, rather than looking at the spirit of it and what it wants to achieve. I would hope that any strategy introduced under the terms of the Bill would involve a general motivation to encourage localism and to ensure that local providers are considered in the tendering process, rather than adopting the more prescriptive strategies that we have seen recently in the equalities legislation introduced by the previous Administration.

My second issue concerns the definition of a social enterprise. Clause 2(3) states that a person or body is engaged in social enterprise if

“(a) the person or body is carrying on a business;

(b) the business’s activities are being carried on primarily for a purpose that promotes or improves the social or environmental well-being of the United Kingdom, whether the purpose is pursued in relation to all or any part of the United Kingdom or all or any of the persons resident or present in it;

(c) the greater part of any profits for distribution is applied for such a purpose.”

I am sure that Members on both sides of the House would agree that that definition could equally apply to private enterprises that pay dividends to shareholders. I am not sure how this nails down the intention of the Bill towards social enterprises per se, and I wonder whether we need to elaborate on it, or whether we simply need to substitute the word “charity” for the words “social enterprise” and leave it at that.

I hope that I have made it clear through my case study why public tenderers need to start looking at the local impact of their decisions, and why the Bill is an important one. I do not want to get mixed up in the general philosophical discussions that we have been having, but Burke’s little platoons have to exist, and if we march over them with large brigades or regiments, they will not be there to take up the standard and advance on behalf of their communities. I hope that that is the intention behind the Bill and, notwithstanding the qualifications that I have outlined, I very much support my hon. Friend’s aims.