Stripping away the spin about Big Society Capital

Finally, after numerous announcements and fanfares, the Big Society bank, or Big Society Capital as it is now called, was launched today by the Prime Minister. The story the government would like people to hear is that this is wonderful news for charities, social enterprises and the public at large. As charities Minister Nick Hurd tweeted £600 million to back social entrepreneurs and encourage more social investment. At no cost to taxpayer.”

*Sigh* if only that were even close to the truth.

Civil servants have been working on this for many years. Firstly there was the legislation – <a href="http://www.legislation.gov.uk/ukpga/2008/31/contents&quot; title="Click to open www.legislation.gov.uk/ukpga/2008/31/contents” target=”_blank”>The Dormant Bank and Building Society Accounts Act 2008 – passed four years ago. Legislation does not happen for free. It’s expensive. And that’s just the legislation that was required in order to use dormant accounts and to set up the vehicle for delivering the money.

Then there’s all the work which has been done since then – including the inevitable review of policy when the government changed. I dread to think how much time was spent (and how much public money therefore expended) on changing the name from New Labour’s ‘Social Investment Wholesale Bank’ to the Big Society Bank and then Big Society Capital.

The bulk of the £600m invested in Big Society Capital (and it’s worth pointing out that it’s ‘up to £600m’ – Big Society Capital’s website states that “Capital transfers from dormant accounts could total up to £400m”) comes from dormant accounts. Whilst it’s true to say that this is not ‘public money’ it is money that, as a result of the Dormant Accounts legislation, is earmarked for spending on social purposes. It may not be public money insofar as it’s not raised by taxation, but it is public in the sense that it’s supposed to be used for public benefit.

Perhaps spending £400m on building the market for social investment is a good idea. But we don’t need to blithely accept that this is the only way this money could be used. It could have been used to support the thousands (hundreds of thousdands?) of charities and community groups that have seen their funding cut as a result of spending cuts, or even (as @damehilaryblume has suggested) to help pay off the national debt.

The other aspect of the Big Society Capital spin that infuriates me (and has done since the PM first announced that he had ‘taken the money from the banks’) is the details of the £200m that the big four high street banks have invested. As part of the Merlin agreement between the banks and the government Barclays, HSBC, Lloyds Banking Group and RBS have each agreed to invest £50m in Big Society Capital. This was originally announced as being ‘on commercial terms’ – with the banks seemingly seeking to profit from the deal. Since then there does appear to have been some movement with Big Society Capital’s website suggesting this is a permanent equity investment. But that does not mean that they won’t be expecting a return on their investment.

If Big Society Capital makes money then it can provide a dividend to investors – which will include the Banks at a rate which is proportionate to their investment. I’m told (by my social investment guru, Faisel Rahman) that the Chair of Big Society Capital, Sir Ronald Cohen suggested that the expected returns would be somewhere in the region of 4-5%.

Since the whole point of Project Merlin was supposed to be how the banks were going to increase their positive contribution to society, that’s not a bad return in my view. But there’s more….

As part of the deal the banks have also negotiated a few other things, such as a veto over any changes to what Big Society Capital does that they have a ‘material interest in’, So although each bank only has a maximum stake of 10%, they can veto any changes they don’t like. And they get a seat on the board of Big Society Capital. And they have a “right of preference”, which means that if things go badly wrong (and I’m sure they won’t), then the banks are the first ones to get their money back.

So, if there’s a profit to be had the banks get their slice of it. But if there’s a loss, then they are the last ones to be exposed. Sounds like quite a good deal to me!

I’m getting déjà vu here. When the banks win, they win. When they lose, we lose. Hmmmm…sounds familiar. Isn’t that what happened in 2008-09 with the bailout? Isn’t it time we stopped subsidising the banks?

The final myth that appears to need busting is the idea that Big Society Capital is going to fund social enterprises and charities. It isn’t – at least not directly. It’s a wholesale investor. Big Society Capital will be putting money into community finance providers – community development finance institutions (CDFIs) – who then lend money on to social enterprises and charities. CDFIs don’t cover all parts of the country and of course there’s no knowing which CDFIs will apply to Big Society Capital for investment. The reality is a long way from being ‘available for social enterprises’ whatever the government might say.

The launch of Big Society Capital is not bad news…but it’s nothing like the good news you’d be forgiven for thinking it was if you listen to the government’s spin.


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Whitehall Watch

A look at what’s happening in Whitehall as 2011 draws to a close…

Over at DCLG they must be breathing a sigh of relief as the Localism Act finally made it onto the statue book. This huge Bill took the best part of a year to make it through Parliament, but will now be implemented in April 2012. Despite some fierce lobbying in the Lords (particularly from the Countryside Landowners Association) the majority of the Bill’s provisions made it through intact, with the exception of proposals to allow local people to trigger a referendum on any issue. Although the referendum result would not have been legally binding, overwhelming public opinion might have been hard for any local authority to ignore. The question of who paid for this requirement was ultimately felt to be difficult to sort out and so the provision was dropped in the Bill’s final stages. The all important next step for the Act will be the Guidance (or Secondary Legislation) that will set out more details over how things like the Community Rights will be implemented, which is expected to be published some time before April. Given the government’s preference for light touch regulation, don’t expect too much prescription or detail, but hopefully we’ll get something that communities and councils can make sense of and use.

 

The Office for Civil Society must also be pleased to see a number of key programmes begin to see the light of day, after considerable gestation periods. The Community Organisers programme is now fully underway, along with Community First, the Social Action Fund and the Innovation in Giving Fund. Despite the Coalition’s keenness to distinguish itself from the last government’s predilection for initiatives, there seem to be an awful lot of new programmes happening….though perhaps we ought to be pleased there’s something happening to support the sector.

Civil Society Minister, Nick Hurd, and his boss Francis Maude came in for criticism from the Public Administration Select Committee’s (PASC) report on the inquiry into Big Society. The PASC said Cabinet Office Ministers had failed to realise that people didn’t understand what Big Society was and more needed to be done to explain the idea behind the PM’s big idea. Perhaps they ought to have looked at our Big Society Essential Facts. Another of the PASC’s big ideas was that there ought to be a Big Society Minister. Quite why we need another Minister at a time when public spending is being cut is baffling. Surely, with all this devolution and localism going on, we could save a few quid by getting rid of a few, not having more? And anyway…isn’t the PM our Big Society Minister-in-Chief?

There was an outbreak of bi-partisanship in the Commons recently, in no small part due to the efforts of civil society lobbying, particularly by Social Enterprise UK. Shadow Civil Society Minister, Gareth Thomas, withdrew his amendments to (Conservative MP), Chris White’s Social Value Private Members Bill, that had jeopardized the Bill’s chance of being introduced. The Bill has now passed to the Lords where (just to reinforce the cross-party love in) Lib-Dem Peer, Lord Newby, will be taking it on through there.

DECC displayed a shocking (or perhaps illuminating) lack of understanding of how consultation is supposed to work with its handling of changes to the Feed In Tariffs (for small scale renewable energy production). Worried about the growth in this industry and the incentives the scheme offered to people adopting more sustainable energy supply, the Department launched a public consultation on plans to reduce the price offered to households selling their surplus energy. The consultation deadline? 23rd December. Date for implementing the new plans? 12th December. Hardly surprising the High Court ruled yesterday that the plans were, errm, flawed. Who’d have guessed?

 

The People’s Budget – an antidote to meaningless consultation

Big Society, we are told, is all about placing power in the hands of citizens – giving ‘ordinary people’ a say over what happens in their communities. Forget the brand (which some suggest is now so toxic that it is being quietly dropped from the Prime Minister’s lexicon), that’s somewhat irrelevant, as there is now a great deal of consensus between Parties over the principle of handing over power to local people. Of course the quid pro quo for devolving this power is that people will be expected to do more for themselves; stepping in to meet local needs that may previously have been provided by the state. For the foreseeable future, these ideas are going nowhere – whether or not they are called Big Society.

As the Prime Minister and his colleagues scrabble around for ideas to bring their ambition to life, you might have expected to hear far more about Participatory Budgeting (PB) than we have done. PB is a proven method for giving citizens real power – taking decisions over how public money is spent. If the government wanted to propel the Big Society discourse to an immediately tangible level, what better way to do so than by giving citizens control of the public purse strings? Despite the obvious links, there has been little championing of PB by Coalition Ministers. Something we now want to change.

Peoplesbudget

The People’s Budget is a new campaign supported by the PB Unit, Church Action on Poverty, New Start http://www.cles.org.uk/newstart/, Joseph Rowntree Charitable Trust and Urban Forum. We want to see people up and down the country having a real say over how money is spent in their communities and we think PB is a great way to do this. We are taking the Prime Minister at his word and we’re offering him a fantastic solution to achieve his aims!

Wouldn’t you like to have real control over how money is spent where you live? Participatory Budget is a fantastic antidote to the constant trickle of consultation over policy matters that have little relevance to people’s lives. It’s real, practical and meaningful. It gives people a say without requiring them to take over a service just to have a say over how it’s delivered.

Just a few years ago PB seemed to have come of age. Propelled into the mainstream public policy by the then Secretary for Communities and Local Government, Hazel Blears, local authorities across the country ran PB exercises of their own. The government even published a national PB strategy setting out its ambition of PB being used in every local authority in the land by 2012. Whilst central government may have gone sadly quiet on this, we think it’s an aim worth hanging on to! [Why is it that on the rare occasions when government produces something that is ambitious and meaningful it is too quickly forgotten and abandoned? Remember Firm Foundations?]

As local authorities grabble with the incredible pressures of budget cuts and increased demand, what better way to ensure that public money is responsive to local priorities? We have around 14 months till the end of 2012….surely there’s still time to help the government achieve its long forgotten ambition to bring PB to every community in the country?

Join the People’s Budget today!

 

Power to the People…but for what purpose?

A friend of mine works for a large multinational City firm, where some employees take home six-figure salaries and bonuses that are even bigger. They are, by all accounts, a decent enough firm with a pretty good reputation for Corporate Social Responsibility and a good company to work for. Each year they select a charity to support, which they do so in a range of ways – from employee payroll giving and corporate donations, to fundraising events and employee volunteering. Fairly standard stuff these days for any firm worth their CSR salt.

The centrepiece of their annual fundraising effort is a hike up and down mountains (though it could equally be substituted for a bike ride, a walk, a parachute jump or trekking in the Himalayas!). Staff are invited to raise money for charity by being sponsored for their efforts…

The firm stumps up around £300 for each member of staff who wants to take part and everyone has to raise £600 in sponsorship (though this is topped up by a central fundraising effort). So around £1,000 is raised per person in a good cause. But of course the lucky charity doesn’t get to see this amount. The costs of the trip (not including the time off given to staff) are over £400 per person. This money is paid to a private company who organise the trip – who no doubt make a healthy profit on the venture.

Meanwhile well intentioned employees try to raise money from friends and family to support a good cause. Their sponsorship forms don’t even include a provisio in smallprint that only 60% of your donation actually goes to support the charity in question.

Of course many people will argue that the event costs money to put on and this has to be met by someone one and that without this type of initiative people would not be doing it and so the charity would be worse off. The Market provides the opportunity and people pay what the service is worth to them. I don’t really have a problem with this type of initiative – though I think it would be good to see some not-for-profit organisations offering this sort of service – but I do think it highlights how limited our current ambitions are in relation to corporate social responsibility.

My issue is really with the lack of integration of corporate social responsibility into businesses’ core strategy and activity. Supporting good causes is bolted on to how firms do business, not integrated into their standard ways of working. Environmental policies may seek to limit or mitigate against the negative impact of doing business, but how many firms have developed a business model that considers their impact from start to finish? Is spending power harming or helping society and the environment? Are resources deployed in ways that add value to the communities in which businesses are located? Of course maximising profits is required in the shareholder model for publicly listed companies…but with interest in ethical investment growing steadily, there’s surely a better balance between financial and social return to be had.

There are (arguably) a handful of firms that have embedded social responsibility into their corporate strategy and business model….but only (at best) a few.

Much of the focus – at least within the not-for-profit sector and to some extent within government – is on charities and social enterprises delivering goods and services. But this type of activity is dwarfed by the scale of private sector activity which has the potential to be a force for good or a ‘societal destroyer’.

Banking is one obvious example of a sector that can send shockwaves through society when profit takes precedence over social impact, as we saw with the recent financial crisis. However, with the right regulatory framework (for example with a Community Reinvestment Act) banking could easily be more ‘socially useful’ whilst still returning a fair profit for its shareholders – by investing in local community finance institutions.

We need to be far more focussed on making our businesses more socially responsible – particularly the largest ones that have the potential to be hugely damaging or be forces for good.

To date the Big Society debate has focussed primarily on ways to encourage voluntary effort and support more social activity. Even the Giving White Paper that seeks to support the growth of philanthropy focuses principally on individual giving. Far too little attention has been given to making business more socially responsible.

The responsibility for this sort of change does not rest solely with government or even with the private sector. As citizens and consumers we get the goods and services we demand (or perhaps more accurately, if we don’t demand different things we get the same crap we’ve always had). If Big Society’s ambitions (and I’d suggest we forget the labels here, but focus on what it could mean) are to be realised, we need to channel civil action into demanding more social responsibility from the firms whose goods and services we consume.

That’s why organisations like FairPensions are so important, in helping to make the link between how a company acts and its share price. FairPensions calls on investors to “recognise their power and responsibility as shareholders to improve the behaviour of the companies in which they invest in order to bring about a better world and a more sustainable financial return for pension fund members.”

I realise that these comments are not particularly new and are advocated by numerous organisations working in social investment. However they tend to be too rarely present in mainstream debate, even within the VCS. Until we start making a noise, we are unlikely to see any great shift towards more socially responsible corporate practice.

The Prime Minister says Big Society should place power in the hands of ordinary people. What we do with that power is up to us.

Can we please have some grown up politics? part 2

Danny Kruger, who was giving evidence to the PASC alongside Lord Glasman, Polly Toynbee and Shaun Bailey, left a very interesting comment on my blog yesterday about the hearing. He suggests I have got the wrong end of the stick and provides some essential context to the comments that Maurice Glasman made about Locality.

I am certainly prepared to accept if I am wrong and have, as Danny says ‘got the wrong end of the stick’. I did reveal in my blog that I was not following the hearing, but rather picking up the reports on twitter from others who were. No one is disputing whether the comments I quoted were said, so the issue appears to be whether or not they were taken out of context. Or perhaps it simply highlights the importance of being aware of how social media is changing the way news travels and the way it is communicated.

Anyway, I wanted to respond to the points Danny makes and return to why I think the wider issues I raised are still valid….

There are four points of Danny’s that I want to address:

1) “The witnesses weren’t grandstanding, trying to hog headlines, or doing anything other than responding to questions – mostly pretty superficial – from MPs”

I wasn’t there and I’ve not watched the hearing, so I am prepared to accept I may have deduced too much from the comments I read coming out of the hearing. However, I would point out that my comments about grandstanding and point scoring were not confined to those giving evidence, but included the MPs on the committee too. You’ve acknowledged that the questions were superficial and that’s disappointing – though I do understand that the Inquiry was only just starting. My request was for some grown up politics and I don’t believe that, even if the witnesses weren’t trying to hog the headlines, there was anything to make me change my mind about this. Our political discourse (and to an extent the not for profit sector) is beset with polarised positioning and tribalism. I am not suggesting we should all move to a position of consensus, but I also think we do a disservice to our beneficiaries to act in such a self interested way. The same day as the PASC hearing, I was listening to Muhammad Yunus talk about opening up the ‘door to selflessness’. I sincerely hope our leaders heed his advice.


2) “Maurice Glasman’s remarks about Locality came at the end of a long and v interesting account of the history of community organising, in which he cast himself and London Citizens in the tradition of Alinsky against the Settlement Houses tradition…He sees Locaity in the Settlement House tradition.”

We obviously didn’t have the context of Maurice’s talk on twitter – though I have heard him use exactly that line before whilst speaking. I think his analysis of the origins of community organising in the US is extremely useful and insightful. However I think he was wrong to extend the criticism of the 1930s US settlement movement to Locality and its membership in 21st Century England. They are very very different – in context and practice. And if Maurice Glasman doesn’t know that, then in my view he should be very careful about making that sort of statement.

 

3) “Maurice spoke with gentleness throughout, and is surely allowed to complain about the Govt’s choice of provider if he wants to.”

Of course he is, and I would encourage debate and dissention in political discourse. However was he criticising the government for making, in his view, the wrong commissioning decision? Or was he criticising Locality? Lord Glasman of course has a vested interest in one of the unsuccessful bids. Sour grapes?

If you look on the PASC website, you see Lord Glasman listed as “Advisor to Ed Miliband and Senior Lecturer in Political Theory at London Metropolitan University”. I think that makes a difference as he is, in effect, speaking as an advisor to the Opposition (whether he wants to or not). I think it’s inappropriate. Maybe we disagree?

 

4) “The idea Maurice shouldn’t refer to ‘toffs’ when he’s a Lord (of about 5 minutes standing) – mocking his ermine – this is the son of Dame Hilary Blume talking, right? Doesn’t that make you an hon. or something? Since when did being honoured for services to the community mean you couldn’t attack elitism?”

Ooh, Danny, I know you said you were feeling bad about “having a bash” at me…was it for this one? Low blow! But I forgive you. 🙂 

Being a son of a DBE doesn’t afford me any title. Honourable is a title given to the son’s of hereditary peers – as an intelligent and well educated man such as you, surely knows.

I actually don’t have any problem with recognising services to the community – and the honours system (despite some problems) is a good way to do that. I am immensely proud of my mum’s honour for the work she has done for the charity sector. And, to be honest, I also recognise and admire the work that Maurice Glasman has done for the community over many many years.

However, for as long as we have an unelected House of Lords, still with around 100 hereditary peers, I consider it ‘fair game’. Come on, with respect to the many working peers (who have only been there since 1958!), it’s been the bastion of “toffishness” for centuries. And as for the ermine…to be honest I’m personally not a fan of fur. But I suspect that’s probably a minor point!

The main thrust of my blog yesterday was that there was too much pettiness and point scoring in politics and I would like to see more honesty and intelligent debate. I don’t lay the blame for that at Maurice Glasman or any individual, we must take responsibility as a society for this – we get the politicians we deserve. That sort of change may seem monumental and mean reforming Parliament, political parties, the media, education……But you have to start somewhere and in my experience, anywhere will do.

 

Can we please have some grown up politics?

News filtered out on twitter yesterday that Maurice Glasman – the recently ennobled Labour peer and academic, closely involved with Citizens UK – had launched a no-holds barred attack on Locality, the organisation awarded the contract to deliver the government’s community organisers programme. Third Sector magazine journalist Kaye Wiggins reported as Glasman described Locality as  toffs”, “paternalistic” and “well intentioned busybodies”.

 

I was hugely surprised by Maurice Glasman’s comments. He knows better than that….or at least he should. Locality’s Jess Steele, who manages the Community Organisers programme, responded robustly in her blog, pointing out that Locality’s 600 members throughout the UK may take exception to Glasman’s crude caricature. It’s certainly a bit rich for an enobled peer in an unelected House of Lords – resplendent in his ermin robes…okay so maybe he wasn’t wearing them when giving evidence, but still… – to call anyone ‘toffs’!

 

It’s worth adding a bit of context (and I’ll admit I’m still trying to understand his rationale)… Lord Glasman was speaking at the Public Administration Select Committee, giving evidence to their Inquiry into Big Society. Alongside Lord Glasman, also giving evidence, were Shaun Bailey (former Conservative parliamentary candidate who runs a charity…and I guess, with Nat Wei’s resignation, is now the leading Big Society flag bearer for the government?), Polly Toynbee (who is certainly not a Big Society flag bearer!) and Danny Kruger (who has worked for several Conservative party leaders, including David Cameron…and now runs a charity working with offenders).

 

The reporting of their evidence session was full of soundbites, posturing and the occasional useful insight. I wonder whether there was a little bit of grandstanding and one-up-manship at play here too…egged on perhaps by their desire to grab the headlines? There was also a fair amount of party politics at play too – too much in my view. Of course Big Society is political – particularly as a ‘brand’ or badge – though it does divide opinion within as well as across parties. However one had hoped that the PASC (who after all are there to scrutinise government and hold them to account) would look beyond this to the important aims and objectives that underpin the label.

 

Sadly that seems not to be the case…with Shaun Bailey rather incredulously saying his priority was to ‘depoliticise Big Society’. And things appear to have quickly descended into a rather tired and unhelpful procession of political grandstanding. Danny Kruger (who I met when we appeared together on the Today Programme, and who I believe does ‘get it’) deserves an honourable mention for rising above the party politics to acknowledge that there “will be inequity” – something we have been saying throughout the emergence of the Big Society policy agenda.

 

Lord Glasman is a now a close advisor to Ed Miliband and the leading proponent of ‘Blue Labour’ – a response to Phillip Blond’s Red Tory idea and an attempt to reassert the Left’s ownership of key Big Society ideas like mutualism – makes his comments even more disturbing. If the Labour leadership’s idea of creating a ‘new politics’ is to attack national charities with a strong track record of supporting local community action and enterprise, then they are in an even bigger hole than the polls suggest. Ed Miliband would be well advised to distance himself from these comments and consider looking beyond the usual suspects for some progressive thinking.

 

Is it too much to wish for some adult politics rather than the incredibly boring point-scoring we see from our politicians?

Community Rights risk going wrong

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Urban Forum have welcomed the introduction of new Community Rights to give local people control over public services, local development and a greater say over buildings and land in their communities. The principle of community ownership, control and influence is something we strive to increase. So the Community Right to Buy, to Build and to Challenge within the Localism Bill should be cause for optimism. However, as so often with government initiatives, the implementation is crucial, and a good idea can soon be destroyed with poor implementation and detail.

 

The greatest concern I have about the introduction of the community rights, is also my biggest fear about the whole Big Society agenda….that government seems to have very little concern about how they are taken up by different groups. Despite Big Society’s strong language on ‘placing power in the hands of those who lack it’, there is little evidence to suggest that government wishes to actually do anything about this. If you accept that power is unequal and some groups are less powerful than others (as ‘those who lack it’ suggests), then surely you must take steps to ensure that specific effort is directed to the less powerful. I cannot believe that anyone with a modicum of intellectual capability can assume that this inequality will be addressed simply by giving everybody (the powerful and the non-powerful) the same opportunity and letting them get on with it. That is patently absurd as ‘any fule kno’ (as Molesworth would say), as the powerful are, by definition, better equipped to take advantage.

 

We know that particular communities and groups are more likely to lack power and to be excluded from decision making – and these characteristics are reflected in law, as the ‘Protected Characteristics’ in the Equality Act. Given that, you would expect to see government directing significant resources to supporting these excluded groups, in order to fulfil the ambition of addressing power inequality. So far, we’ve seen no evidence of this. In fact, there have been signs of things going in precisely the opposite direction with the withdrawal of funding from organisations like Voice4Change England and Women’s Resource Centre.

 

We should be under no illusion whatsoever…more affluent, ambitious and organised communities will be far better placed to take advantage of the new community rights than poor and excluded communities. Anyone who is concerned about social inequality (and the evidence presented in the Spirit Level demonstrates that it is bad for all of us) should be nervous about the knock-on effect of failing to support excluded groups and communities to take up these new rights.

 

Urban Forum is keen to ensure that we understand what the needs and ambition of VCS groups and deprived communities to use the community rights is and to help provide the support they require to use them. We have launched a brief survey seeking the views of not-for-profit groups so we can build an evidence base to really understand awareness, ambition and needs. Please complete it and encourage others to do so – it will really help (as not everyone believes evidence-based policy and practice has had its day!)

 

Unless we move quickly to support more marginalised communities to take advantage of the new Community Rights, the opportunity to use them as a means to strengthen and improve deprived areas will quickly evaporate.

 

Community Rights survey – http://www.urbanforum.org.uk/apply/view/Community-Rights-Made-Real/index

 

Toby Blume
Chief Executive
 
Urban Forum

 

Twitter: http://twitter.com/tobyblume/