Social Entrepreneurs

Oral Answers to Questions — Duchy of Lancaster – in the House of Commons at 11:30 am on 25th February 2009.

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Photo of Barry Gardiner Barry Gardiner Labour, Brent North 11:30 am, 25th February 2009

What steps he is taking to increase the number of social entrepreneurs.

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Photo of David Kidney David Kidney Labour, Stafford

What steps he is taking to increase the number of social entrepreneurs.

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Photo of Liam Byrne Liam Byrne Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster

I associate myself strongly with the words of the Parliamentary Secretary, Cabinet Office, my hon. Friend Kevin Brennan, who has spoken for all of us.

The social enterprise sector goes into 2009 with unprecedented strength, but we believe that it could be stronger still. That is why we are ensuring that social enterprises have access to the help that my noble Friend Lord Mandelson is providing for the business community, and why social enterprises will benefit from the help for the third sector that was announced by the Prime Minister a week or two ago. It is also why I have set an objective for our policy of growing the social enterprise work force by 25,000 over the next couple of years.

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Photo of Barry Gardiner Barry Gardiner Labour, Brent North

I am grateful to my right hon. Friend for that response. I certainly agree that small businesses that are social enterprises are one way of using the skills of those who are being made redundant in the work force, and of getting them back in order to lead the recovery. Will he tell the House what funds the Government are putting in to meet the targets that he has identified?

[This section has been corrected on 3 March 2009, column 5MC — read correction]

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Photo of Liam Byrne Liam Byrne Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster

I thank my hon. Friend for the work that he does to champion this agenda. The number of those in the social enterprise work force has grown by some 25 per cent. over the past 10 years, and that has not happened by accident. It has happened because we have doubled the public income going into the third sector—into social enterprises, voluntary groups and charities—up to £11 billion over the past 10 or 11 years.

If we want to grow the social enterprise work force still further over the years to come, however, we shall have to back that commitment with investment, rather than cuts. That is why we are providing £250 million-worth of investment through Futurebuilders, and why the Department of Health will provide £100 million-worth of investment funding through its social enterprise fund. It is also why the Department for Children, Schools and Families will route money through social enterprises into organisations working with young people, and why my right hon. Friend the Secretary of State for Communities and Local Government has announced her intention to set up an organisation to champion the social enterprise agenda. We believe that social enterprises can grow, but not on their own. The Government must do their bit to help.

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Photo of David Kidney David Kidney Labour, Stafford

When I talk to people about setting up new social enterprises, I also ask them about the use of a community interest company as a suitable legal vehicle for their business. I am surprised by how few people still are aware of their existence and suitability. I know that company law is another Department's responsibility, but will my right hon. Friend commit to ensuring that advice is available on the existence of community interest companies, and on how to set them up?

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Photo of Liam Byrne Liam Byrne Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster

My hon. Friend is absolutely right that community interest companies are a very effective way of getting social enterprise work up and running in communities up and down the country. They are quick and easy to set up and inexpensive, because standard memorandums are available. The legislation that underpins community interest companies was brought into effect in 2005. Already there are about 2,500 of them up and down the country. Three years into the policy, it is a good time to see whether we can make it easier still to set up such companies, so my noble Friend Lord Mandelson will shortly commence a review of the regulations to consider whether the caps on equity and dividends are right. We can then guarantee that we are making it as easy as possible to get these companies set up. We will do everything that we can to promote them.

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Photo of Gary Streeter Gary Streeter Conservative, South West Devon

We all support social entrepreneurs, and I commend the Government for the extra resources that they are putting in at this difficult time, but has the Minister noticed, as I have in my area, that there can be a lack of co-ordination and collaboration between different organisations in the third sector, sometimes leading to duplication and waste? Does he ever challenge social entrepreneurs on this issue, and if he does, does he think that they are getting any better?

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Photo of Liam Byrne Liam Byrne Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster

There can be challenges of co-ordination between public agencies, but there can also be such challenges between social enterprises and other voluntary groups. That is partly the inspiration for the £16 million of funding that we announced in our third sector action plan a week or two ago, which will make it easier for charities and voluntary sector organisations to get the advice that they need in order to come together. May I say, though, that it is important for local authorities to play their part. A survey a week or two ago provided quite a lot of feedback about the track record of different authorities and how well they are doing to support social enterprises. One of the conclusions was that local authorities in some parts of the country could do a great deal more. I am sure that that is a shared political agenda between us.

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Photo of Nicholas Winterton Nicholas Winterton Conservative, Macclesfield

In the north-west, there is an organisation called Wheels2Work, which assists young people in particular who live in remote rural areas who do not have their own transport and where there is no public transport to access training, employment and further education. Unfortunately, the Northwest Regional Development Agency is ending its generous grant to that organisation at the end of this financial year. That means that it will have to withdraw all those scooters from the young people who are able currently to get to work, training and so on. Will the Minister look at that and give some encouragement not only to me in seeking to help them, but to the Northwest Regional Development Agency to continue its funding?

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Photo of Liam Byrne Liam Byrne Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster

I will of course look at that and see what more can be done to help. We are very clear that the support provided to the business community should be available and must help social enterprises, just like any other business. I am sure that the hon. Gentleman would agree that it would therefore be a backward step to shut down RDAs, which are, of course, at the sharp end of delivering much of this help. I know that he, too, will welcome the commitment made by my right hon. Friend the Secretary of State for Work and Pensions to give social enterprises the right to bid where they show that they can deliver back-to-work programmes more effectively than the Government. That is surely the right thing for us to be doing.

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Photo of Andy Reed Andy Reed Labour, Loughborough

A group of students in my constituency have set up Vanilla Galleries as a way to exhibit their work after they have left college. That is a fine example of a social enterprise. Will the Minister tell us what success he is having with Departments across Government to mainstream social enterprise and co-operatives as a way of encouraging people to move into the workplace? Many examples of such enterprise need the Government to respond positively and see them as a solution, not as a last resort.

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Photo of Liam Byrne Liam Byrne Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster

That sounds like yet another example of where a social enterprise in one of our constituencies is making a real difference not only to the wider delivery of public policy, but to a large number of young people. We have to ensure that right across Government there is a shared commitment to increasing the number of people who work in the social enterprise sector. Crucially, however, we have to back that commitment to increase the sector's work force by 25,000 not with cuts but with real investment—investment that is routed through to social entrepreneurs right across Government.

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Photo of Francis Maude Francis Maude Shadow Minister (Cabinet Office)

The whole House will agree with the Minister about the importance of social enterprise and the huge contribution that it makes to addressing social problems. It is great that so many people want to commit their energy, skills and drive to this terrific cause. But is not the problem with the growth of social enterprise a lack of access to capital? When does the Minister expect the social investment bank envisaged in the Dormant Bank and Building Society Accounts Act 2008 to be set up, and how much capital does he expect it to be set up with?

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Photo of Liam Byrne Liam Byrne Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster

I welcome what appears to be a shared commitment. I do not consider that weaning social enterprises off public support should be an objective of public policy, because I think that public support is an important part of the mix, but I also think that it should be accompanied by increased help from the private sector. We now have the requisite legislation in place, but the conversations with banks are more complicated this year than they were last year, because there is a wider agenda for Government to advance. Regulations are now being discussed with the banks, however, and I hope that substantive progress will be made in getting the social investment bank up and running this year.

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Photo of Francis Maude Francis Maude Shadow Minister (Cabinet Office)

It is good to hear that there is some progress, but the Dormant Bank and Building Society Accounts Act gained Royal Assent in November last year, and people now expect to see at least the setting up of the framework. Given the effect of the recession on the most deprived areas, is not the answer to encourage more social enterprise by establishing social enterprise zones in those areas? Why do the Government not simply adopt our proposals?

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Photo of Liam Byrne Liam Byrne Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster

We continue to be open to any ideas that we think would help create a flourishing social enterprise sector, but that policy ambition must be backed by investment. I do not agree with the notion that we should somehow cut the Cabinet Office budget by £100 million, because that would close down 400,000 volunteering opportunities and about 2,500 small local charities across the country which rely on our support. As I have said, we have a complicated argument and a complicated agenda to present to the banks this year, but I am determined to ensure that our conversations about the creation of a social investment bank do not get lost in that wider set of ambitions.

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Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

What steps will the Government take to try to ensure that the importance of good terms and conditions for staff, and the importance of trade unions, are recognised by social entrepreneurs?

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Photo of Liam Byrne Liam Byrne Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster

We think that many of the 25,000 jobs that we want to be created in the social enterprise sector will come through spinning out the work of public servants from the public sector, but if that work is to be conducted effectively in the future, it is clearly vital for the terms and conditions enjoyed by staff working in the public sector to be preserved. My noble Friend Lord Darzai undertook a great deal of pioneering work, ensuring, for example, that NHS staff who wanted to take spin-outs could carry with them important benefits such as pension rights. Protection of that kind will be vital if we are to make this transition effective and good for all.

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