No solutions, much confusion

JONATHAN TIMBERS searches for the soul of social enterprise but finds a rather worrying state of mind

This event was billed as ‘social enterprise solutions to 21st century challenges’. It was held in the upmarket Manchester International Convention Centre in late January 2005. I attended the conference in the hope that by the end I would be clearer about the nature of social enterprises and the political and economic uses that are being planned for them. If you don’t want to read on, let me just add, I wasn’t any wiser about the first point, but I was about the second. And the truth isn’t for the faint-hearted.

That social enterprise is being taken very seriously indeed was clear from the numbers attending (between 700 and 800), the presence of members of the government who spoke, and the professionalism apparent throughout the conference itself.

The venue, for instance, was very new and corporate, and included a huge conference hall, an exhibition hall and numerous discretely lit, carpeted rooms. All the doors closed softly, nothing banged or made a loud noise. Animated plasma screens informed delegates of the day’s events and there were many smartly-dressed guides and helpers on-hand to assist if necessary.

On arrival, delegates were handed a coarsely-woven blue jute bag full of brochures, a CD Rom, a Nat West/Royal Bank of Scotland DVD and a glossy conference agenda before they were herded onto an ascending escalator and up towards the exhibition hall where coffee was being served.

Most of the delegates were wearing dark suits, although a significant minority defied convention and went tie-less into the conference chamber. Others wore light coloured casual jackets and a few, a very few, were in jeans or cords.

‘Beautiful diversity’

Once in the main conference hall, delegates who were unsure about the definition and benefits of social enterprise were treated to a video which explained matters further. Social enterprises, we were told:

  1. were not ashamed of profits
  2. distributed those profits in the community by contributing to and investing in people
  3. but were sometimes non-profit making, maximising surpluses for investing in the community
  4. were not always applicable (to every commercial situation)
  5. but were generally applicable for social regeneration projects
  6. sometimes had different governance structures at local neighbourhood level
  7. created jobs, helped children and the disabled, provided rewarding careers, and
  8. were ‘beautiful in their diversity‘.

Well, I was no wiser after the video than before, except I had a general warm impression that social enterprises were well intentioned in a way that private enterprise by implication was not. In fact, as one brochure which I had looked at in the exhibition hall succinctly put it, ‘social enterprise is a state of mind’. However, I can’t say whether it provided any more objective test for social enterprise because I replaced the brochure on its pile when I saw that it cost £15.00.

After the video Baroness Glenys Thornton, chair of the Social Enterprise Coalition, spoke. She began by asking a very important question: How do we combine social entrepreneurship and democratic control? Unfortunately, she didn’t answer the question; instead she introduced Nigel Griffiths, who is the government minister for social enterprise.

He said that social enterprises now constituted ‘a very extensive sector’. I was encouraged to hear from him that social enterprises now existed ‘in every economic sector’ (not just regeneration then!) and that his hope was to ‘replace selfish enterprise with social enterprise, to develop existing alternatives … by building on co-operative and successful social enterprise foundations’. He indicated that the government was having problems in delivering on its agenda for social inclusion because ‘high pricing is endemic’ and that the ‘social enterprise model can help us’, presumably by providing more financial accountability.

Those who suspect that the government’s enthusiasm for social enterprise may be related to problems experienced with PFIs would not have had their fears allayed by this speech.

Businesses first

Bryan Gray, chair of the Northwest Development Agency and deputy chairman of Baxi Group Limited, one of Europe’s leading heating companies, said that primarily social enterprises were businesses. The public sector, he believes, could make itself more accessible to social enterprises and small businesses. He was thanked by the chair for being one of the more far-sighted heads of a regional development agency.

Next came Hilary Brown, director of the Social Enterprise Unit, who used phrases like ‘sustainable growth’, and ‘social impact’, leaving the star slot open to Alan Milburn. He stood up and came to the rostrum. His first comments addressed the problem of definition. He said that social enterprise was defined by its diversity but had these components in common:

  • improving quality of life
  • providing greater control over our own  lives
  • a commitment to social objectives
  • reinvesting to achieve those aims.

As a set of criteriaI I found these unsatisfactory. Arguably, any decently run business hoping to provide public services would be defined by three out of the four criteria. The sole exception, ‘providing greater control over our own lives’, may be a feature of the governance of many social enterprises but it does not appear to be a feature of all of them. In Milburn’s speech the phrase suggested an outcome rather than a process. And of course it could just mean ‘choice’.

To me, it also suggests a further phrase, ‘smoke and mirrors’, particularly as it was later linked to a quote from Keir Hardie, an authority who is only cited these days to justify policies that would make him turn in his grave, namely, ‘socialism is … the people themselves through their own organisations … regulating their own affairs’. If by this Milburn meant that social enterprises will arise and be controlled by the communities which they serve then, in my view, that is all well and good. But somehow I wasn’t convinced.

However, whatever ‘control’ now means in the new Labour lexicon, Milburn’s assertion that social enterprise would play ‘a big role in reforming our public services’ was clear enough. Social enterprise, we were told, would allow local ownership of local services by local people (the Royston Vasey option).

Eventually, through the mists of the speech, there loomed the figure of foundation hospitals, and the former health minister became increasingly self-referential and self-justifying. Worryingly, his gestures also became more and more like Tony Blair’s, the hands clutching the edges of the podium suddenly opened imploringly, like Christ showing the stigmata. Even Milburn’s voice appeared at times to be doing an impression of Rory Bremner doing an impression of the PM. What he said, however, had little relevance to the matter in hand.

After this we went off to our seminar groups – sorry, ‘breakout session‘. Mine was on ‘creating quality employment opportunities’. It was hosted by councillor Richard Kemp, Liberal Democrat leader of Liverpool City Council.

At the beginning of the session, I was treated to a speech about how wonderful the speaker’s city was and, as a result, how awful it was to be in Manchester. However, in comparison to a similar speech I was subjected to later on in the day by the leader of Newcastle City Council, Cllr Kemp’s contribution was a masterpiece of wit and good taste.

At least he made it clear that he saw social enterprises as a way of providing good services at a better price to constituents. In all, he estimated that Liverpool City Council has £30-£40 million of contracts which he wanted to outsource. In his view, the private sector would charge the council more to run the service not particularly well. In contrast, he believed that social enterprises could replace the equity capital that communities needing regeneration did not have.

His interest in social enterprises was, therefore, ‘not charitable‘. He was ‘not in the business of giving out long term grants, the council only gave out long-term contracts‘. And if social enterprises thought they would get support from the council by way of grants they would lose out in the bidding process to private enterprise. His enthusiasm for outsourcing services might also show the way to other public organisations in the city with even larger budgets, such as Primary Care Trusts (or GP practices).

It struck me how one of the most prominent Liberal Democrats at the conference was the most Blairite. In fact, if anything, he was more aggressive about the need to outsource in the public sector than Alan Milburn (those who feel some creeping sympathy for the Lib Dems, please note).

Next up was Jack Harrison, deputy chief executive of Eaga Partnership Limited, an employee-owned national plumbing and sustainable energy company. My hackles were raised from the first, however, by the speaker’s delivery, which was both highly-strung and over-bearing.

Using a PowerPoint slide, he went through the governing structure of the organisation. Ultimately, all decision-makers are answerable to a staff council. In the middle of his slide were the directors, who may be sacked by the council. As he explained ‘we see ourselves as the heart of the organisation, and not the head’. He then stopped for a second, apparently choked with emotion, before continuing to say that Eaga Partnership jobs are ‘better jobs’, meaning, I presume, better than regular jobs – although the hours are longer and the pay is worse, and recently they had to make 50 redundancies.

Eaga Partnerships is a profit-sharing organisation, he explained, although some surplus monies are reinvested into a charitable trust which conducts research. In 2004, no employees received bonuses because of lack of profit.

The right people

The company’s business plan is collectively agreed ‘so everyone knows where they are and if they don’t do their job, they let people down’. He stressed that the company only employs people it believes will fit into its ethos and quite a number of new recruits leave in the first six weeks. He told us that Eaga Partnership was ‘quite ruthless’ in ensuring that only the right people with the right attitudes remained in employment and accordingly a lot of energy went into induction, probation and performance reviews. The kind of person they wanted was someone who saw ‘employment as a lifestyle’.

To my mind what he described was the least attractive aspect of mutual organisations: their exclusive nature, moral coercion and strong-arm HR procedures. Clearly, the kind of business organisation which he belongs to would not suit everybody; in fact, I don’t think it would suit anyone with a hedonistic lifestyle or whose loved ones were at least as important to them as their work. So that cuts out most young people and people with young families.

Next was Kevin Robbie, of Forth Sector, who impressed me more than any other speaker that day. Forth Sector is based in Edinburgh and provides employment opportunities to people with ‘severe and enduring’ mental health problems. It runs laundry, catering and web-design businesses, generating 60-80 per cent of its income via commercial sales (depending which part of the business you’re talking about).

Employing people with mental health problems requires a flexible approach from the employer and ‘some service level agreement for employment support’, which I take to mean some sort of arrangement with mental health support services. The result is that the disabled people who benefit from Forth Sector ‘redefine themselves as employees, not mental health users’.

Robbie criticised the attitude of local councils towards Forth Sector, saying they viewed the organisation’s commercial activities as a way of providing mental health services on the cheap rather than as adding quality to the experience of disabled people.

Level playing fields

The last speaker, from Green Apprentices, made the point that councils were often wary of awarding contracts to social enterprises and that what was required was a ‘level playing field’. This theme was repeated throughout the day: councils are more comfortable, he said, awarding contracts to commercially well-established companies which are likely to be large and solely profit-motivated, and they are unwilling to consider awarding contracts to more than one provider.

I understand this complaint because a friend of mine began a social business in Calderdale, where I live. The business employed people with learning difficulties and recycled waste. A few years ago my friend went to the then Labour council and offered the services of the business at a very reasonable rate. Suspicious of local business people, the councillors declined and allowed the officers to go on contracting with a large multi-national waste removal company. Eventually, government targets were introduced for recycling and the large multi-national had problems adapting its services to meet those targets.

The council approached my friend’s business (although he had by then moved on and was backpacking around the world). His business, under new management, agreed and was sub-contracted to do the work. The council was still paying large amounts to the multi-national and the multi-national was paying out much smaller amounts to the social enterprise to undertake the recycling part of the contract. Ultimately, the social enterprise got into financial difficulties but was saved at the last minute by grants from other public bodies. The large multi-national was laughing, but neither the tax payer nor the social enterprise were getting the best deal.

This lack of a ‘level playing field’ was a theme which was frequently repeated during the day, and in particular by the speaker at this event from Green Apprentices, who said that he asked ‘them‘ (whoever ’them’ is) ‘to put [creating a level playing field] in the Labour Party manifesto’. However, on the basis of what I saw that day, I think councils are beginning to sense a change in the direction of government policy and are now eager to explore the possibilities of contracting with social enterprises.

As for the session itself, it all seemed strangely detached from exploring the issue of creating quality employment. Evidently, however, some social enterprises provide opportunities to people who might otherwise be considered unemployable; others provide opportunities for highly-skilled and committed employees to become involved in approving the decisions of the business. I cannot honestly say, though, that anything I heard appeared to be related to any programme for changing society by altering its economic base.

However, before scepticism finally swallowed me whole, hunger took over. Lunchtime had arrived and I went to the exhibition room once more where I was handed another jute bag full of goodies. This included a packet of crisps – ‘sundried tomato and basil’ flavour – on the back of which were drawings of three placards saying: ‘Natural ingredients only’, ‘Say NO to GMO’ and ‘Vote Gluten Free’. The brand name of the crisps was ‘Jonathan Crisp’ and the strap-line was ‘crisps for snobs’. There was also a tasty smoked salmon and cream cheese bagel and a large bar of FairTrade chocolate.

Trade fair

By now, I felt I had entered the realms of a political philosophy defined more by its packaging than by any statement of beliefs. It was also beginning to dawn on me that I was attending a cross between a trade fair and a political conference. In fact, I discovered at the next event I attended, this was where part of the Labour Party manifesto was being written. You can forget your seaside conferences and policy reviews, ‘Voice 05’ was the shape of things to come. I started repeating ‘pessimism of the intellect, optimism of the will’ over and over to myself like a mantra.

The next event was called ‘The Community Right to Buy’ and concerned a campaign the Development Trust Association (DTA) is running to see something like the Land Reform Act (Scotland) 2003 enacted south of the border. This may sound very dry, but it could be significant in places like my home town where public buildings are being sold off left, right and centre by the (now Tory-run) council to cash in on the boom in commercial property prices. The result is more expensive flats, or more commercial enterprises, but fewer places for the community to meet – fewer places, in fact, where people without much money are welcome. This has resulted in a wave of local but short-lived occupations, and the erosion of spaces where people can interact without exchanging money.

What the DTA would like to see is the right in law for the community (possibly constituted as a legal person in the form of a Community Interest Company) to register an interest in land or buildings which are of significant use to the community, creating an option to buy at an open market price which pre-empts any other transfer for value. In the Scottish Act, there are various ballot procedures and ministers retain a wide discretion to reject applications for registration by the community. However, it was made clear that this potentially radical new right is under consideration by both the Labour Party and the Conservative Party and might feature in both parties’ election manifestos.

It became clear to me that I could have far more influence on the contents of the Labour Party’s manifesto if I was involved in some way with social enterprises than through being a member of the Labour Party itself. But you probably knew that already!

Embarrassing dad

The final session of the day was called ‘New Ways of Delivering Best Value Public Services’. It was introduced by the leader of Newcastle City Council, Cllr Peter Arnold, another Liberal Democrat. He plugged Newcastle as Cllr Kemp had plugged Liverpool, and generally seemed to be suffering from ‘embarrassing Dad syndrome’. This involves talking too much, talking over others, talking incessantly about yourself or your opinions, and trying to sort out technical glitches but constantly getting in the way.

This last symptom was part-icularly apparent when there were microphone problems at the stand. At one point he had to be shoo-ed away by Suzannah Jacoby, who is not yet 30 but already runs a highly successful fostering agency, when he started fiddling with her mic. She is undoubtedly a highly capable person (in 2004 she was the New Statesman’s Social Entrepreneur of the Year and was nominated for the Daily Mail’s Enterprising Brits award), and is perfectly capable of sorting out her own mic problems. She also has an understated and self-deprecating manner which no doubt concealed her fierce commitment and organisational skills.

The culture change on the ‘left’, if this was a ‘left’ event, was particularly evident to me when, in the space of a minute, she extolled the virtues of social enterprises, which ‘offer public sector benefits that no-one else is offering’, and informed her audience that it is a good idea to provide small presents to ‘key public sector personnel’ when touting for business. I think that it would be wrong to imagine that this juxtaposition was disingenuous. It just represents a different mind-set from anything usually encountered on the left. I leave you to evaluate the qualitative aspects of that mind-set.

Public value

She was followed by Dai Powell of Hackney Community Transport, who spoke with conviction about the need for a, you guessed it, level playing field in council procurement. Council contracts, he argued, should not demand unrealistic financial guarantees, they should be long-term, allow for plurality of provision, and provide a higher level of scrutiny of service quality. Indeed, there should be a public value test in the awarding of contracts. Of course, this is going beyond the level playing field concept towards changing the ground entirely so that social enterprises will be playing at home rather than away.

In any event, Powell flagged up something that may be worth noting when he said: ‘The reform of the public sector is going to happen … in two or three years hopefully… Social enterprises [therefore] need to be working across the silos to spot the opportunities.’

At the end of the session there was some more discussion about what a social enterprise was and someone came up with ‘a social enterprise aims to deliver a social benefit either to those who own or who are the recipients of its services‘. Cllr Arnold also helpfully canvassed the audience to see how many social entrepreneurs were there. The answer was very few. In fact, people came from local councils, no doubt looking for procurement ideas.

After this, I confess I couldn’t bear to go into the final plenary session and escaped from the hall with the awful feeling that I’d seen a preview of the politics of the future.

To confirm that view, the current edition of The Economist was running a special supplement on Corporate Social Responsibility (CSR). Its narrow Benthamite reaction to CSR was predictable, although clearly expressed and argued. ‘Externalities’ (ie. the social impact of business), it said, were the responsibility of government, not businesses, which should only be concerned with fulfilling their legal and shareholder obligations. More interesting than the argument was the fact that CSR seems to have spread quite pervasively throughout big business. Now there may be a whole set of reasons for this, including the genuine commitment of managers of large firms, but one fairly obvious one is that a company with a developed and effective CSR policy may be in a better position to deliver social benefits to those who work for, or who are the recipients of the services provided.

In a period when there is likely to be wholescale outsourcing of public contracts, possibly with a public value test of some sort, such a policy, if visibly implemented, could place the bidder in a strong position relative to its competitors in the procurement process.

But, I’m probably just cynical.

‘Voice 05, the UK conference for social enterprise’ was held at the Manchester International Convention Centre on 25 January 2005.