Public Services (Social Enterprise and Social Value) Bill

– in the House of Commons at 9:34 am on 19th November 2010.

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Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset

On a point of order, Mr Speaker, I beg to move that the House sit in private.

Question put forthwith (Standing Order No. 163), and negatived.

Photo of Chris White Chris White Conservative, Warwick and Leamington 9:36 am, 19th November 2010

I beg to move, That the Bill be now read a Second time.

I am proud to be able to stand here this morning and put this Bill before the House. Becoming the Member of Parliament for Warwick and Leamington has been a deeply humbling experience, and this Bill has brought home to me once again the responsibility that we in this Chamber all carry. I am honoured to be part of this process, and it is something that will stay with me for, I hope, a few years yet.

I take this opportunity to thank all the voluntary organisations, charities, social enterprises, representative bodies, officials and individuals who have helped me in the drafting of the Bill. I single out the Social Enterprise Coalition for its help and especially for its powerful advocacy for the legislation. I also thank Hazel Blears, for her encouragement and support.

It would be best to start by setting out the rationale behind the Bill. At this year's general election, I, like many others, even on the other side of the House, ran on bringing positive change to our country and our society. The big society is an idea that I believe in, not only because it offers an optimistic vision for the future, but because it is common sense. It is one of the strongest ideals of recent times: every political party has attempted to embrace its principles and it has been espoused by many former Prime Ministers and Leaders of the Opposition. We should bear in mind, though, that the big society is nothing new in itself.

My right hon. Friend Mr Cameron, although a most passionate and effective advocate, did not create the concept of the big society. Let us not forget that before my right hon. Friend, a former Member for Sedgefield, Tony Blair, in 1999 told his party conference that Labour needed to revive civic society, based on fairness, equality and responsibility.

"We are citizens proud to say there is such a thing as society" he said, but even before him, there was Baroness Thatcher, who in 1986 said that the

"responsible society is one in which people do not leave it to the person next door to do the job. It is one in which people help each other. Where parents put their children first. Friends look out for the neighbours, families for their elderly members. That is the starting point for care and support-the unsung efforts of millions of individuals, the selfless work of thousands upon thousands of volunteers. It is their spirit that helps to bind our society.... Caring isn't measured by what you say: it's expressed by what you do."

That sounds remarkably familiar. In the 1950s and '60s, Jo Grimond, leader of the Liberal party, articulated the vision of the big society when he talked about the need to revive the spirit of association that had once bound our nation together. The idea of a big society, a responsible society, or a civic society, is timeless. It has inspired politicians from all political parties for centuries. I believe that it encapsulates the idea that people can truly flourish only if they feel part of an organic, evolving and strong society. It recognises that we are not merely economic units to be put into certain boxes and cut off from others, but human beings who wish to belong and to feel actively involved in a wider society.

That is a powerful philosophy, and it has been the strong motivation behind my Bill. However, although it is easy merely to say what one believes, it is much more difficult to put forward concrete proposals that can help to realise those beliefs. This Bill is my attempt to do such a thing. In order to realise a stronger society and to build on those bonds within communities, we need to empower and champion civil society. We need to create the conditions for civil society to flourish. We need to create the opportunity for voluntary organisations, social enterprise, charities and socially responsible businesses to thrive. That will not happen by itself.

Although it is easy to look back on the past, perhaps even to the Victorian era, when many organisations sprang up with little Government intervention and philanthropy was fashionable, we are not in the same position today. Unfortunately, many years of centralisation from Governments of all colours have stifled the natural creativity of our communities and, given the difficult economic times we now face, it will be a challenge to stimulate the kind of movement necessary to realise the big society. Of course, Government cannot, and should not, see it as a duty forcibly to create this society-that would defeat the point and merely see one centralising structure replace another. Forcing communities to depend on the direction of central Government would undermine a stronger society and would not lead to any change to the status quo. That said, the Government do have a role to play in being the catalyst for the development of civil society and giving organisations and individuals who wish to reach out and build stronger social networks the chance to do so.

The elephant in the room, however, is money. Organisations across the country agree that civil society should be able to do more to provide services, and that there is fantastic potential for innovation and improvement in getting civil society more involved, but they ask the very valid question how they are going to be able to do all this. Civil society cannot function in a financial vacuum. Obviously, a great deal of work that civil society does is based on people volunteering time and money, but it would be foolish to pretend that that, in itself, will be enough. Capacity has to be built. People need to be trained-professionals who understand that many of the complex technical, legal and administrative issues that organisations face need to be paid for. Rents and equipment are not free, either. The financial pinch is already affecting civil society, and if we do not act, the development of the big society could be smothered by our economic problems before it has had an opportunity to flourish.

We must therefore be very careful that, in our zeal, we do not try to support these vital sectors of our economy on the cheap. We have a moral, as well as a political, obligation to ensure that we support this section of our economy during this difficult time. We simply cannot allow these organisations to fail. If we do not take the opportunity with which we have been presented to put into practice the principles and ideals that many of us campaigned on, it will be extremely difficult to do so in future. It will demoralise VCSEs-voluntary, community and social enterprises-and politicians will further lose public confidence. That is not acceptable.

The window that we have in which to catalyse this change within our society is not large-perhaps a few years at most. So how can we achieve this? The Bill marks a way in which it could be done. The UK taxpayer spends nearly £200 billion a year on procuring and commissioning goods and services, and while that funding will fall over the next four years, it will remain a significant amount. I believe that we should be using this funding, which we need in order to provide the services that people want, to leverage and galvanise VSCEs. If we want long-term growth and a general strengthening of civil society, we will need some stability in the funding that it receives. We cannot merely allow Government to throw funds at these organisations when they are flavour of the month, only to cut them when the newspaper headlines diminish. We need a situation whereby they can plan for the future, craft niches and roles for themselves, and know that what they are providing is good and that, as long as they serve their communities well, and innovate and create, they can survive and grow.

To quote a recent think-tank report, the UK is a "service hungry nation". This is not going to change over the coming four years. If the past few hundred years have taught us anything, it is that people have an insatiable appetite for services, and we can never predict what they will be demanding in future. However, we can see that there is a definite trend towards services that are more local, more personalised, and more responsive to our community needs. Civil society has a great opportunity to provide these services if it is given the chance to do so, and, once that has happened, to build on them.

Let me take the example of Sandwell Community Caring Trust, which started by taking over adult social care homes in the black country. It took over the failing homes, reformed the institutional structures, remotivated staff and reinvested in buildings and equipment. It has driven down the cost of adult social care and kept people in the local community in work, and it has now won a contract to provide NHS and social services in Torbay. It is an excellent employer that is well supported by the communities it serves. In short, it is a fantastic example of what this sector can achieve, and it throws down a gauntlet to the rest of the country, even areas close to home, to follow its example.

A report in 2003 by the Association of Chief Executives of Voluntary Organisations called "Replacing the State?" made it clear that there are also powerful reasons of quality for this approach, highlighting five reasons why civil society is better placed to provide services than traditional providers. First, such organisations are more local and have a stronger focus on users than on providers. As every Member here will be aware, those who set them up are, more often than not, motivated by a sense of concern for their communities rather than a passion for profit. Secondly, civil society is far more co-ordinated than is usually the case in the public sector. Because of the natural interdependence that exists between these groups and the community-wide focus that they have, they can provide a far more holistic approach to delivering services, which is exactly what we need at this time.

Thirdly, at a time when the public are ever more distrustful of politicians, in particular, these bodies have a high level of public trust. It is not surprising that people are more willing to trust services provided by neighbours and well-meaning public-spirited individuals and organisations than by traditional top-down public bodies.

Fourthly, as I have mentioned previously in the House, civil society is one of the most innovative parts of our economy, and it has often radically changed the delivery of services, for the better. Civil society organisations can engage where others cannot. They can reach out to communities and localities where traditional public service providers cannot. As they are formed from communities, they are better at engaging with them, and we should recognise and utilise that.

The Bill is not just about trying to help one set of providers at the expense of others, but also about getting higher quality provision, which I am sure all Members would support. It will not replace or undermine the concept of value for money, and I know that we must focus on that concept now more than ever. It is intended to make commissioners more enlightened in their approach, and to send a strong message to all areas of the public sector that what is currently seen as good practice should become normal practice.

We should not allow voluntary and civil sector enterprises to become dependent on the state for funding. That would not only damage civil society but completely undermine the empowerment of communities, which I am sure hon. Members of all parties are trying to achieve. However, I do not believe that that will be the case. Organisations across the country have consistently shown that far from wishing to become dependent on the state, they want to be able to compete on their own terms. They want to use such contracts as a base on which they can innovate and expand their activities, using their funding to further build their capacity and strengthen their community base. It is important to stress that we are not just trying to create new services and contracts in order to support civil sector organisations, but trying to open up existing contracts so that they can access them.

That flows into another matter about which my party often spoke in opposition and has continued to do so in government: the need for diverse providers of public services. There is already a growing public services industry in this country based on contracts from the Government. It is made up of a diverse range of organisations both large and small, from the private and VCSE sectors. It had a turnover of some £79 billion in 2007-08 and generated some £45 billion in value added. That rises to more than £88 billion if indirect impacts are included. It keeps 1.2 million people employed, rising to 2.3 million including indirect impacts. It is already a significant part of our economy-bigger than our communications and utilities industries-so the question is not whether we wish to create an industry for public services but what kind of industry can be created.

Of course, if we allow things to continue as they are, there is potential for a "supermarketisation" of our public services. Already, large private sector organisations are beginning to dominate the industry, and they are crowding out smaller and local competitors. I refuse to believe that that is the only option available to us. What I believe in is a future in which our public services are run by communities and the organisations close to them that have a sense of social responsibility and put people ahead of profit. We need a future in which public services see greater mutualisation, empowering clinicians, teachers and other public servants to take over the running of their services and deliver high quality and good value for money. We need to do more to get micro-businesses and small businesses working together to deliver better goods and services and build more sustainable supply chains.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

My hon. Friend will be aware, as a number of us are, of the concerns of the Federation of Small Businesses about his Bill-not about its avowed intentions, but about the possibility that it will have effects that are unintended but very damaging to the ability of small businesses to compete.

Photo of Chris White Chris White Conservative, Warwick and Leamington

I am glad that my hon. Friend brings up the FSB, which wrote to us only this week to state that it supports the Bill in principle. I hope that we can pass an exact copy of the letter to his office to ensure that we can discuss the matter come Committee stage-I hope-and that any input the FSB has can be put into the mix.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

May I assure my hon. Friend that only this morning I was talking to the deputy policy director of the FSB, who expressed her concern on behalf of the federation that he had not yet answered a lot of its concerns?

Photo of Chris White Chris White Conservative, Warwick and Leamington

I do not know whether the deputy policy director has had the opportunity to discuss the Bill with the rest of her organisation, but all I can say is that we have had a clear statement of intent from the FSB that it supports the Bill in principle.

The Bill is intended to create the right future for our public services. Across Government, Ministers are talking about engaging VCSEs in delivering public services. They want to mutualise and localise. I welcome that, as I am sure many Members do, but it will not be achieved through mere rhetoric. Those providers have been bidding for contracts for years, yet many still fail to break into public service delivery. Why is that? It is partly a question of cost. The cost of bidding for public services contracts in this country is far higher than that of bidding for contracts in the private sector. A report by the think-tank ResPublica highlighted the fact that the average cost of bidding for a public sector contract was double that of bidding for a private sector contract. The cost puts civil society organisations off, and if we want them to be more involved in delivery, we have to reduce that cost.

The failure to break into public service delivery is also partly due to the complicated nature of bidding. Many organisations simply do not know how to bid for contracts, and even if they do, they often feel that they lack the necessary expertise to bid successfully. Given the prohibitively high average costs, they are worried about failure. The Bill does not address those points directly, although I hope they will be considered in good time. However, it is important that they be raised, and I believe that we need to do much more to remove those barriers.

What would be best is a widening of the concept of value. At present, "value" is a word that is often purely associated with financial cost. If one buys a box of eggs from one supermarket for 20p less than the price at a competitor supermarket, one is deemed to have got value for money. It has often worked that way in public service delivery. Sadly, the means of delivery and the potential benefits to communities are all too often ignored when it comes to considering the word "value". I know that many colleagues feel that that is as it should be; after all, if it is cheaper to use one provider than another, why should the taxpayer pay for something that, on the face of it, appears more expensive? However, by focusing purely on short-term cost, we ignore the potential long-term benefits that other organisations could deliver, particularly VCSEs.

Let us take the example of a local authority seeking to hire an organisation to renovate some social housing. There are two bidders. One will simply renovate the social housing, but another will not only do that but take on long-term unemployed people and teach them skills in the construction sector. It will go out to local schools and provide hands-on training so that children learn about the sector. Yet provided that it costs less, the first bidder will often get the contract. That is simply narrow-minded. If we take people who are long-term unemployed off benefits and put them into work so that they can learn valuable skills, and if we teach young people how the sector works, and maybe inspire some to develop related trades, we will bring not only environmental but economic benefits to the wider community. Surely that is better value for the community and better value for money.

In the long term, that is far more valuable than merely paying to renovate a few houses, it is more cost-effective for the taxpayer and it is more beneficial to our communities. In short, it is a better deal, but to get that better deal, we must be willing to consider all the aspects of value, not merely a narrow few. Of course, some bodies and organisations have noticed that. It would be unfair to mention merely one or two at the expense of others, but forward-thinking commissioners across local authorities and the public sector have been considering the wider social, economic and environmental benefits that such contracting attitudes and approaches can generate, which is a big step forward in realising truly intelligent commissioning.

Photo of Steven Baker Steven Baker Conservative, Wycombe

I am glad that my hon. Friend draws a distinction between values and price and that he recognises that great tapestry of rich value that comprises our lives. Does he agree, however, that a scale of values is absolutely intrinsic to individuals and that each of us values different aspects of our lives differently? With that in mind, why is it necessary to encode such scales of values in not only legislation, but central and local plans?

Photo of Chris White Chris White Conservative, Warwick and Leamington

I thank my hon. Friend for that. He has talked about two separate issues: the values of individuals and the values of our authorities and the commissioners in them. I think we would agree that those are different types of values; one involves people's personal interests, while the other involves the interests of the taxpayer and wider society. The second is where the Bill will come in to make sure that the taxpayer gets best value for money and that the community is more involved. Social enterprises, in particular, have a great opportunity to bid for public services and to provide that better value for money.

Commissioning that takes a more holistic view and reduces demand on future services, commissioning that engages with, rather than dictates to, communities and commissioning that drives standards upwards-that is the method of delivery that VCSEs are best at providing. When given the opportunity to do extra, to engage with communities, to work with local businesses and to generate true value for those communities, VCSEs do so and thrive in the localities in which they operate.

Photo of Andrew Bridgen Andrew Bridgen Conservative, North West Leicestershire

Does my hon. Friend agree that whatever the state decides to take responsibility for and control of, individuals and the voluntary sector immediately withdraw from? As he said, the Government did not invent the big society, which has always been with us, but we will, I hope, give it room to thrive.

Photo of Chris White Chris White Conservative, Warwick and Leamington

I hope that the Bill will give us the opportunity to discuss these issues in a wider forum. We have a real opportunity to put some of these issues on the table. If the Bill passes through this stage, we will, I hope, be able to discuss further in Committee some of the issues that my hon. Friend raises.

Hon. Members on both sides of the House have spoken about how we need to generate more for less. By using social value, we can help to achieve the holy grail of generating more for less. By using the £150 billion the taxpayer already spends on services, by maximising what we get for those pounds and by using community groups, mutuals, co-operatives, charities and social enterprises to deliver services, we can achieve far better value and a far better deal for our communities. During these difficult economic times, we should not put blinkers on and adopt a mindset that says that reductions in public funding must necessarily lead to reductions in the quality and quantity of our services. We should think bigger, and civil society is key to that.

Now that I have had the opportunity to lay the groundwork for the Bill and to give an outline of why it is important for hon. Members to look at these proposals, I want to focus on the Bill's specifics. The Bill can be divided into three parts, and I have already described the rationale behind the third part, which is the most important and concerns social value in public sector contracting. The first two parts deal with strategies concerning social enterprises, which are a rapidly growing part of our economy. The work of the Social Enterprise Coalition, the social enterprise mark and the various regional social enterprise organisations are playing an ever-increasing part in our economic and social development.

In recognition of the sector's potential, various Departments, from the Cabinet Office to the Department for Communities and Local Government, have created their own strategies and come up with ideas about how to help the VCSE sector. The Bill asks the appropriate Secretary of State to create one national strategy to look at the promotion of social enterprise. I hope that that would lead to the consolidation of all strategies across the Government into one clear, joined-up piece of work, so that we do not have a hotch-potch of strategies, which ultimately confuses and frustrates many in the sector.

I recognise that strategies and the like often cause many Members a nervous twitch, so I have done my best to find an estimate of how much such a strategy might cost in terms of manpower and consultation. According to the figures that I have been given, it is estimated that it would cost about £41,000. That is about £63 per constituency, under the current boundaries, or one tenth of a penny per elector.

Photo of Chris White Chris White Conservative, Warwick and Leamington

I would like to make some progress.

I recognise that we face difficult challenges, but the proposals are something for which we can and should pay. A clearer set of proposals from central Government and a more strategic outlook will do a lot to help this emerging sector.

In the second part of the Bill, I have tried to ensure that when locally generated sustainable community strategies are created, they consider social enterprises in their area. It is important that communities are given the chance to engage in the creation of sustainable community strategies, but there is a role for organisations such as social enterprises, which often emerge as responses to sustainability issues in communities. By considering such strategies and promoting engagement with them, we can help to generate more community-led and community-based solutions, empowering communities by promoting the vehicles that they can use to deliver solutions.

I hope that that is within the spirit of the legislation proposed by my hon. Friend Mr Hurd, who is now Parliamentary Secretary, Cabinet Office and whom I am pleased to see on the Government Benches today. I hope that organisations set up with the purpose of helping communities across the country will take part in such strategies and engage better with their communities. That said, we should consider the proposals within the framework of the present burdens on local authorities and be prepared to amend them accordingly should they be proved unnecessary or too costly a burden.

I hope that I have justified at some length the third and final part of the Bill, which relates to social value. The Bill asks all organisations that are currently publicly contracting authorities under the Public Contract Regulations 2006 to consider how they might promote wider economic, social and environmental well-being in a contract and how they commission such contracts accordingly. Although considering that wider social value during the contracting process is only a small technical change, it would bring significant benefits for our public services in terms of the quality of contracting. It would also benefit communities, social enterprises, voluntary groups and small businesses, which generate considerable social value.

I am honoured to be able to present the Bill on behalf of a large coalition of supporters from VCSEs, local authorities and small and socially responsible private businesses. The Bill comes at a time when people are seriously asking questions about the future of our public services and about how we deliver a stronger economy in a way that reflects the values of people and the communities in which we live.

Although rhetoric is important so that we can inspire people to join in the project and articulate a vision for the country that all can share, we must also be conscious of the need to take a definite course. I believe that the Bill is a practical step forward, which I hope representatives from across the political spectrum can support. By working together constructively, we can achieve a stronger future for our communities and a stronger financial footing for our VCSEs. The onus is on us to think radically and, more important, to act boldly. I hope that the Bill can make a small contribution to a wider effort to boost our civil society, sustain the civil economy and make our public services better than ever. I therefore urge my colleagues to support the Bill.

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles 10:10 am, 19th November 2010

I congratulate Chris White on two counts: on being successful in the ballot at his first attempt, and on deciding to pursue such a course. At first sight, the measure appears relatively modest, but I genuinely believe that it is a small Bill with a big intent. He introduced the Bill with characteristic quiet determination. As it goes through its various stages, some of that quiet determination will doubtless be needed.

I broadly welcome the Bill. The hon. Gentleman generously acknowledged that the idea of extending social enterprise and involving communities in helping to run, manage and govern services is not new. It dates back many years, and a range of community groups throughout the country have pursued such work in their communities for decades, making a difference and ensuring that voluntary organisations are well supported. The Bill tries to formalise that position and use the power of public procurement to ensure that community groups, which are often fragile and lack sustainable resources, can have a sustainable future. That is at the heart of the Bill.

If the hon. Gentleman succeeds in ensuring that we use the power of public procurement at national Government and local government level to give people some stability so that voluntary organisations and social enterprises can plan for the medium and long term, he will do a great service to many of our groups, which unfortunately currently spend the majority of their time going round with a begging bowl and living a hand-to-mouth existence looking for temporary grant funding instead of getting on with the job they are there to do-serving the community. If he can provide that sustainability, it will be a welcome step forward.

The hon. Gentleman recognises that the agenda is not new-Governments of all shades have tried to pursue such issues. I had a White Paper in 2008, "Communities in control", which tried to take much of the agenda forward and suggested a national social enterprise strategy. I appreciate that strategies are not terribly popular, but something that applies across Government and affects every Department needs joined-up policy making. I ask some Conservative Members not to be quite so sceptical of planning and ensuring an integrated approach to the agenda, because that is the key to success.

The third aspect of the Bill is the most important-not the strategies, which are a means of delivering, but the commissioning for social value. It is radical, and I urge the hon. Gentleman not to limit that to the social enterprise sector. It is key that commissioning for social value applies to the public sector and the private sector when it provides public services, as well as the third sector. There is always a danger in this area of policy making that commissioning for social value becomes a nice thing to do for voluntary organisations, charities and the third sector, but we are considering mainstream procurement and commissioning and changing the value set of commissioning to ensure that from the public money that we spend we gain the maximum impact in social value. That is quite a new field.

How do we measure social value? What do we mean by it? A great deal of academic research is being done on it and there is no settled view. The hon. Gentleman gave one example: creating local supply chains. Evidence already exists to show that if we use our public money to support local businesses in a neighbourhood, we get a much larger multiplier effect-approximately £7 for every pound of public money spent-to sustain that local economy, support jobs and enable poorer communities in particular to thrive and develop. That work is still at a fairly formative stage and I hope that, in Committee, we can debate what is-and, indeed, what is not-social value.

Photo of Steven Baker Steven Baker Conservative, Wycombe

Listening to the right hon. Lady's remarks, I am reminded of a book on social value that was written in the 1920s. Much as I would associate myself with almost everything that my hon. Friend Chris White said, it seems that socialists have spent nearly 100 years trying, but failing, to define social value loosely. Socialists are no more likely to succeed today than they were in the 1920s. I ask the right hon. Lady to state in concrete terms how she would measure social value.

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

I have already said that there are many different views and that it is a developing subject. If the hon. Gentleman claims that the concept of social value is a socialist idea, perhaps he is inviting the hon. Member for Warwick and Leamington to cross the Floor.

Photo of Steven Baker Steven Baker Conservative, Wycombe

Of course, we all value society. The right hon. Lady may know of the Cobden society. We gleefully reproduce Cobden's words:

"Peace will come to earth when the people have more to do with one another and the government less."

That is precisely the point: when the people have more to do with one another and the Government less. I fear that we are here today to discuss how the Government can have more to do with creating a strategy for that most delicate system of relationships-human social co-operation. Of course, we all value relationships and society, but we differ-it is a fine point, but probably the one about which we have argued most sincerely for more than 100 years-about the extent to which state power should be used to intervene in the dynamic process that is social co-operation. It seems to me that we have moved on-

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

I am grateful, Mr Speaker. I fundamentally disagree with Steve Baker. If his idea of building a strong and vibrant society is leaving people on their own to get on with it and sink or swim, I entirely reject that. I genuinely believe that the best society is a partnership between active and enabling government-nationally and locally-and the ideas, innovation and passion that local people bring. When a commitment to support people from government and the passion and entrepreneurial spirit of local people are brought together, something really special is created. If they are divided, and we say, "Government must do this in a monolithic way" while local people are left on their own, unsupported and unsustained, we do not get the synergy that makes a difference to our communities. I therefore fundamentally reject the hon. Gentleman's comments.

Photo of Steven Baker Steven Baker Conservative, Wycombe

I shall be very brief. The right hon. Lady paints a dreary picture of society as being entirely dependent on the state. I agree with much that she has said, but not with the key point that the state must act.

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

I am rarely accused of being dreary. I am usually accused of the opposite. If the hon. Gentleman will listen to my further remarks, perhaps he will revise his view.

Photo of Andrew Bridgen Andrew Bridgen Conservative, North West Leicestershire

I will bear in the mind the guidance on interventions that the Speaker has just given us. Will the right hon. Lady bear in mind that socialism does not and never will have a monopoly on social conscience?

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

I would never try to make such a point. In our country, we live in a vibrant and much admired democracy, with different political views, and people of all parties support civic organisations and community groups. I would never claim to have a monopoly on the good things in society. However, I genuinely believe that the best way to achieve our aim is through a partnership, with state action supporting local people and freeing them to make that difference. That seems to be a fundamental difference between me and some Conservative Members. However, I do not believe that that applies to the hon. Member for Warwick and Leamington.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office)

My right hon. Friend is making a strong case and she does not need my help. Does not the Bill suggest that the state, through its procurement policies and through strategy, should intervene precisely to build what Conservative Members call the big society? Is not it curious that Conservative Members, who seem to support the Bill, are trying to form a philosophical divide between my right hon. Friend and them?

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

I am beginning to feel quite protective of the Bill, but I do not want to create any further divisions between the hon. Member for Warwick and Leamington and his hon. Friends.

I want to give a couple of examples from my constituency of groups that have been social enterprises for a considerable period, because considering what happens in real life, on the ground, will benefit the debate. Unlimited Potential, has been going for about seven or eight years. It has a turnover of £1.5 million and employs 30 staff, 90% of whom live within a couple of miles of the business. It provides health trainers and expert patients and is commissioned by the primary care trust. This year, for the first time, it became totally independent for its funding and no longer relies on grant funding. It is an extremely successful social enterprise.

My second example is B4Box, a construction company and social enterprise. It is led by an inspirational woman, Aileen McDonnell, which is rare in construction, and it has been going for a number of years. She does building contracts to refurbish the properties of registered social landlords as well as construction projects. She takes on young men and those in their late 20s or early 30s with histories of drug abuse, alcohol problems and homelessness, and gets them through to national vocational level 2 and sometimes to level 3, and transforms their lives. At the same time, she ensures that properties are refurbished and that they are fit for people to move into. I cannot think of a better example of using practical work and skills on the ground and changing the lives of young people. I had the pleasure of presenting the NVQ certificates to some of those young men-the staff also included a young woman plumber, who was the best plumber I have ever met. Their stories are inspirational. Aileen McDonnell's latest project is the building of a centre for homeless people. During the procurement process, five of the homeless people who lived in the previous centre were employed and got their NVQs. She discovered the best painter and decorator in the homeless person's centre that anyone can imagine.

The creative commissioning in which my local authority and Salix Homes have been willing to engage costs slightly more than other commissioning, but they have considered more than the bottom line and what comes at the cheapest price. They recognise that training people and transforming their lives is valuable. Aileen McDonnell has proposed an amendment to the legal framework of Joint Contracts Tribunal contracts so that both performance, quality and price, and training and the transformation of people's lives, are considered during the procurement process. A similar legal framework in other areas would be extremely useful.

My third example is a social enterprise in the health service. The hon. Member for Warwick and Leamington will know that the previous Labour Government introduced the right to request for organisations in our public services that wished to become social enterprises. The Angel Healthy Living centre in Salford is in the process of becoming a fully fledged social enterprise within the health service as part of round 2 of the right to request. It provides a range of well-being services in the community and works with a range of charities and voluntary organisations. It too has an inspirational leader, Scott Darraugh, who runs the centre. It has been going for 12 years, so it has been a long journey.

People involved in social enterprises have succeeded almost despite the system and they have faced many hurdles. The benefit of the Bill is that it seeks to re-engineer the system so that it positively encourages people to come forward. If the hon. Member for Warwick and Leamington succeeds in lifting that huge burden and cutting through the fantastic amount of frustration that people feel because the system stands in the way, he will have achieved a great thing.

I will sound a few notes of caution on the Bill. First, there must be no sense that social enterprise can be a transition to privatisation. If the Bill was a stopping point on a fast track to converting public services to private services, that would damage the sector enormously. The whole sector would be concerned about that.

Secondly, the Bill's definition of social enterprise is insufficient. The Bill also contains no asset lock for assets brought from the public services into social enterprises. The hon. Gentleman must consider that; otherwise-I do not believe that this is his intention-public services could move to social enterprises and to the private sector in a very short time, which will negate the social value of which he spoke.

I would much prefer a co-operative, mutual model that has democratic governance built into its legal framework. The Labour manifesto mentions extending

"the right of public-sector workers to request that they deliver...services through a social enterprise", but it also talks about

"greater community involvement in their governance."

The hon. Gentleman must think seriously about ensuring greater community involvement. It is not just about the social enterprise itself, but about introducing a democratic element to give some form of accountability. If fragmented social enterprises deliver public sector projects, we will not have the accountability, standards and quality that the public will demand. Public money is spent on public services, and the public want quality, standards and accountability.

My other note of caution is about social enterprise staff. Again, this is not what the hon. Gentleman intends, but the Bill must not be used as a means of providing public services on the cheap at the expense of the terms and conditions and wages of public sector workers, and of their ability to do their jobs. It is important to have a grown-up, mature discussion to allay the concerns in some parts of the trade union movement. Unlimited Potential recently signed a union recognition agreement with Unison. That conversation needs to happen, because we need reassurance that moving to a social enterprise model is not simply about doing things on the cheap and driving down wages. He talked about doing more for less, but that is a different concept.

My other big concern is funding, which the hon. Gentleman talked about. The £100 million transition fund recognises some of the challenges that charities and social enterprises face in this difficult economic climate, but it is a drop in the ocean. The New Economics Foundation and the New Philanthropy Capital think-tank have estimated the gap in funding for charities, social enterprises and voluntary groups that will result from local government cuts at between £3.2 billion and £5 billion. That is a massive black hole in funding. The £100 million transition fund is welcome, but it is nowhere near enough to sustain those organisations in the years to come. He may well change the system and the other good things in his Bill, but he might find that many social enterprises have fallen by the wayside, because their funding has been cut and local government can no longer provide funding. The Government need to do much more in that respect. The big society bank may next year have £60 million roughly, but there is a desperate need to ensure that funding is in place so that those organisations have a sustainable future.

Finally, the hon. Gentleman should consider the integration of services. If we are to be more efficient and provide more personalised services, joining up services, whether in health, education, housing or regeneration, is essential. If social enterprises simply spin off from each other and if there is a plethora of different providers that are not joined up, we will lose the benefits of a holistic service. If that happens, we would be unable to bring provision together, for example, for an ex-offender who needs a home, drug treatment, a job and an opportunity. As we take this Bill forward, and build on the work of the Total Place schemes in communities and local government-and community budgeting-the idea of providing integrated services is very powerful. We all know that in our communities it is often a small minority of the most troubled individuals and families who cost public services the most. If we are able to integrate services better, we will achieve efficiencies and better outcomes. The best example is the family intervention projects, which we introduced to deal with antisocial behaviour. Before, those families were costing the taxpayer about £250,000 each through a series of public sector interventions, which did not change their behaviour. When we integrated services, and provided a personalised approach, it probably cost £50,000, but in 80% of the families behaviour improved dramatically. There is good, solid evidence that integration works, and I urge the hon. Gentleman to take that into account during the Bill's progress.

I have laid out my cautions and reservations, but I finally wish to reiterate my support, and my party's support, for this Bill. It is refreshing to find a degree of agreement across the House. That does not mean that we will not test each other rigorously and in detail as the Bill makes progress, but I congratulate the hon. Gentleman on the Bill and on the generous and inclusive way in which he introduced it today.

Photo of Harriett Baldwin Harriett Baldwin Conservative, West Worcestershire 10:31 am, 19th November 2010

I am grateful for the opportunity to speak on this interesting private Member's Bill, and it is an honour to follow Hazel Blears because she obviously knows such an enormous amount about this topic. I draw the House's attention to my entry in the Register of Members' Financial Interests. For the last couple of years, I have had the privilege of sitting on the board of the Social Investment Business-a social enterprise itself-which has been a fascinating place from which to observe some of the issues and challenges in the social enterprise sector.

The social enterprise sector is not widely known or acknowledged by the public. If we asked people in the street to define a social enterprise, I think that most people would look fairly blank, but the right hon. Lady gave us some excellent examples of social enterprises in her constituency, and most people will have heard of organisations such as Jamie Oliver's Fifteen. It is a restaurant that runs on a commercial basis, but it helps young people who are struggling to get into employment by training them as chefs. People have also heard of organisations such as Cafédirect and The Big Issue-the latter being a social enterprise in which the commercial magazine helps homeless people to earn an income. However, social enterprise still has some work to do in engendering public knowledge, understanding and acceptance of what it does.

From the perch that I have occupied for the last couple of years, it has been fascinating to observe some of the issues and challenges for the social enterprise sector. In particular, I have chaired the investment committee, which has disbursed the money from the Futurebuilders fund, which was almost £200 million of Government funding that was designed to be used in loans to completely unbankable social enterprise organisations. If social enterprises were trying to win contracts from public sector organisations, the Futurebuilders money was designed to be the last resort. If organisations had already been to the banks, applied for grants and pursued all the other sources of potential funding, but still needed that last little bit of funding to make the project viable-the unbankable funds-the Futurebuilders fund could help.

The fund has now been fully disbursed and, for the last five or six years, it has been a portfolio of loans. I wonder whether hon. Members wish to guess what the annual default rate has been-in this very tough financial period-on that series of unbankable loans to social enterprises.

Photo of Therese Coffey Therese Coffey Conservative, Suffolk Coastal

My guess is that it would be less than 1%.

Photo of Harriett Baldwin Harriett Baldwin Conservative, West Worcestershire

That is an extremely low rate, but in fact the annualised default rate has been just over 1%. The case has been proven that a portfolio approach can be taken to investment in such social enterprise organisations.

I am sorry that my hon. Friend Steve Baker is no longer in his place, because he and I have enjoyed many lively debates on many different topics and I would have pointed out to him that we do have an arrangement in this country whereby the Government spend money on behalf of taxpayers-and that is an accepted fact. This Bill would helpfully draw to the attention of the procurer who spends public money the existence of social enterprises, which might offer an attractive alternative to the state building its own apparatus or to a private sector provider.

Photo of Nadhim Zahawi Nadhim Zahawi Conservative, Stratford-on-Avon

I congratulate my hon. Friend Chris White on introducing this Bill. Two Fridays ago in Stratford-on-Avon we held a big society day. Local government attended and we had standing room only. Two things emerged. First, what Government can do is to provide-in business terms-the mission statement. Secondly, that mission statement then needs to be implemented locally in, perhaps, diverse ways. That is where the gap in the debate may occur.

Another point that emerged from the big society day was the overlap between social enterprises and voluntary providers. We need to send a message to them that in such cases it would be of benefit to both if they worked together more closely, which could make them more successful in bidding for some of this money.

Photo of Harriett Baldwin Harriett Baldwin Conservative, West Worcestershire

I thank my hon. Friend for that informative intervention. I, too, represent a constituency that has many shining examples of big society organisations. From my perch on the investment committee at the Social Investment Business, I have been able to see many different social enterprises across the land that are flourishing-from Salford to Stratford-and that would be helped by being brought to the attention of public service procurers in other areas. By outlining the need for a national strategy, my hon. Friend the Member for Warwick and Leamington has introduced a very helpful Bill.

As we all know, there is allegedly no money left, so it will probably not be as easy as it was to help the social enterprise sector. I am sure that the right hon. Member for Salford and Eccles would agree that even had her party been elected to government it would have found it difficult to provide similar amounts for funds such as the Futurebuilders fund as they did before. Therefore, we need to emphasis the role that foundations, philanthropists or people who would like to invest in an ethical ISA could play by providing a portfolio of funding to help to draw on the experience that Government money has developed over the years, as well as the low default rate and good rate of return.

Photo of Dan Byles Dan Byles Conservative, North Warwickshire

What I find most interesting about my hon. Friend's speech is that she is making the clear point that social enterprise is not the same as charity, and that it can be a financially and economically sustainable model.

Photo of Harriett Baldwin Harriett Baldwin Conservative, West Worcestershire

Indeed. I do not want to rule out the possibility that charities may want to use loan finance from time to time; obviously, they often do. My point is that, in this sector, we do not need to rely solely on help from Government procurement and funding. I want to put on record that if it is to continue to experience rapid growth, there is also a role for other providers of capital. We have had the fascinating example of the social impact bond. I believe that contract involved a charity, rather than a social enterprise, which was looking at a way of reducing reoffending rates. The rate of return that investors could earn on the social impact bond was a function of how successful the charity was in delivering on that contract. That is another creative and innovative way to find more money to help the social enterprise sector to grow.

With the Minister in his place on the Front Bench, I would like to take the opportunity to refer to a policy that the Conservative party was considering in opposition-the role of the social enterprise zone as a means of the Government helping social enterprises in particular areas to attract money from private investors through additional tax breaks.

This is potentially a very powerful and excellent Bill, and I am delighted to urge all my colleagues and all Opposition Members to support it.

Photo of Richard Fuller Richard Fuller Conservative, Bedford 10:42 am, 19th November 2010

It is my great pleasure to follow my hon. Friend Harriett Baldwin in supporting my hon. Friend Chris White and his Bill. I also pay tribute to Hazel Blears, who spoke about the Bill with her characteristic upbeat breeziness. She was absolutely right to do so.

The Bill has three merits. First, it is a recognition of the coming of age of an institutional form. Secondly, it is a celebration of entrepreneurship. Thirdly, we must understand that the Bill is an enabler of very positive things that can be done to promote the support and funding of our social goods. It is therefore an absolute pleasure to support my hon. Friend the Member for Warwick and Leamington.

On the point about the history of institutions, I shall avoid too much philosophical musing. [Interruption.] Well, I shall do a little. Each of us as an individual has motivations: things that inspire us and push us to achieve our goals and objectives in life. But most of us are very reliant on institutions to enable us to achieve our goals. That may be our local Church, a programme run by a local council, a trade union that is there to defend us and motivate us in a particular way, a small business that we work for or an entrepreneurial leader whom we follow in order to create our own business. Historically, we have had to give something up in return-our motivations have to be shaped by the motivations of that institutional form. In the military, people cannot make things up as they go along; they have to follow orders to achieve their objectives. Similarly, in corporations, there are certain guidelines intended to achieve shareholder value. I am quite doctrinaire about this. I think that it is important that institutions are clear on their purpose, which is why I welcome and celebrate the growth of social enterprises as a new institutional form.

Social enterprises overcome some of the concerns about trying to make for-profit companies adhere to non-commercial principles. I remember many years ago arguing with Professor Amitai Etzioni about the role of corporate and other organisations. I have not changed my opinion on that over the years. Subsequently we saw the growth of cause-related marketing and other factors that were trying to find a more creative way for for-profit companies to pursue their social objectives other than through traditional donations and sponsorships. Although those have their place, there has always been a gap for a new form of institution to play a role-one that social enterprises have come to play most forcefully over the last 20 or so years. That has helped in that our motivations can now have a different set of stabilisers rather than the straightforward ones of the past.

The Bill is important because it recognises that role. Those of us who were here in the debate about growth last week will remember listening to Caroline Lucas talking about how we can recognise different manifestations of growth and get beyond a pure statistic of GDP growth. That is another reason why these new forms are very important.

I said that this was a coming of age-kind of a 21st birthday-mainly because it was about 21 years ago that I was trying to understand what we could do after the changes wrought both in this country under a Conservative Government and in the United States under President Reagan's Administration which had identified, certainly for Conservatives, the weakness in government, as an institution, in providing the social goods that many of us as individuals want. I am a firm believer that each of us has a view of fairness, and that we aggregate those views to come up with a collective view of what is fair, or what fairness represents for us as a society. We saw in the 1980s that people had misgivings about the weaknesses of the state and government in delivering, effectively and efficiently, those social goods and services that we wanted.

For a period, for many of us there was a lack of balance. We were not enabling the provision of a sufficient number of social goods and services, not because we did not want them, but because we did not believe in the ability of the government structure to provide them on our behalf. That institutional failure has been addressed over the intervening 20 years, and I again pay tribute to the work of the last Labour Government in identifying that weakness and looking to stimulate alternative ways of providing those goods and services.

Entrepreneurship is, to me, one of the most wonderful motivations that someone can have in life: one has a vision, a mission and an idea, and one wants to create and do something for society. That is extremely important. I am a firm believer in small businesses. I know that in my own community of Bedford and Kempston we rely on small businesses to create prosperity and jobs for the future. But entrepreneurship does not have to come from a profit motive; it can come from a social motive. The inspiration for a doctor is not making a lot of money; it is making people better. The inspiration for many entrepreneurs may not be a desire to maximise their personal wealth; it may well be that they want to have an impact in their local community. For organisations such as the Federation of Small Businesses we need to embrace that sense of different motivations that enable people to say, "Here's my creativity. Here's my inspiration." I believe that the Bill will enable us to do that.

Photo of Steven Baker Steven Baker Conservative, Wycombe

I associate myself closely with my hon. Friend's comments, but I remain confused about why we need to encode this creative search to produce value for others in national and local plans.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

I will try to address my hon. Friend's point, which I heard earlier and think is a good one, but let us be clear that this is not a doctrinaire or Stalinist interpretation-"Thou shalt do this". Rather it would provide different measures that local authorities can take into account. There is a prevailing assumption that local authorities and others look only at least cost, but that partly works against what motivates Government Members, who want to promote entrepreneurship. It is not what we want to see. I will talk later about a couple of those things. I hope that he understands that this is not-I would not support such a thing-some fearful rolling forward of the state. It is a new and better way of providing social goods and services that will not rely on the state and is in part a rolling back of state bureaucracy.

My hon. Friend Steve Baker made a point about social value and profit. It is worth recognising one of the severe, if not unintended, consequences of current procurement processes-the focus on lowest cost. We should always try to do better for less, but as the right hon. Member for Salford and Eccles and others mentioned, that is not necessarily the same thing as the pursuit of lowest cost. As we know from our constituencies, local services matter to local people. It is quite hard always to motivate people on the issue of lowering their council tax, but we can motivate them if we decide to close a local service.

There is a boundary here. If we are honest and true to our constituents, we should wish for something more than price-only considerations in the procurement of our local services. That matters, because if we pursue, as we have done, a low-cost approach, the surplus in local communities will get exported, and we will see the growth of national organisations that will take that surplus, which could go to a local small business or local social enterprise, and export it to national shareholders. That is not necessarily a bad thing, but we need to get back some balance, and the Bill would do a good job in providing that balance to local commissioners in the procurement of local services.

The Bill is extremely timely. Many Members have mentioned some of the impacts of the reductions in public expenditure that are necessary in order to get it back in line with our ability to raise money. It is timely because there are a lot of good local services and local assets that could be transferred to social enterprises. All Members, on both sides of the House, have a vested interest in ensuring that we do that as rapidly as possible, and passage of the Bill today would assist in doing that.

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

The hon. Gentleman says that there are many assets that could be transferred to social enterprises. Does he agree, however, that it is important to protect those public assets, so that they do not simply end up on the fast track to private ownership as a result of this process?

Photo of Richard Fuller Richard Fuller Conservative, Bedford

The right hon. Lady makes a good point, although I would not be quite so averse to assets held in the public domain transferring to private sector companies. Part of the spirit of the Bill is to try to break down the hostility between the two. There are many examples of local services provided by for-profit companies that do a fantastic and excellent job. My concern is that as we try to balance our books, good services might get lost in the mix. In that mix, we need to have for-profit companies, good councils considering whether to continue with certain services as they make tough decisions, and funded social enterprises available to provide a third alternative for local services in the future.

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

Neither am I hostile to entrepreneurial companies, which make a tremendous contribution to our economy. However, when public assets are transferred to social enterprises, which might be the right thing to do, there ought to be some element of democratic governance to ensure, first, that local people can have a say and, secondly, that we have in place a mechanism that does not simply result in assets for which the public have paid being transferred directly to the private sector and being used to make private profits that are not then reinvested in our community services.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

The right hon. Lady is much more familiar with, and expert in, this area than me, but there is a difference between mechanism and consideration in local accountability. We have the mechanism. It consists of our local councils and our democratically elected councillors, who are there to make these judgments. However, we want to enable them-and the Bill would do this-to have consideration of the factors and features that she mentions, rather than the sole consideration of lowest cost, on which they often focus their efforts and attention, particularly at times of budget concerns.

Photo of Therese Coffey Therese Coffey Conservative, Suffolk Coastal

Following on from the intervention by Hazel Blears, one of the concerns expressed to me by some of my constituents is not so much that profits could be made out of public assets, but about how, if companies fail, which they sometimes do-it is one of the essences of the market-those assets will be recovered, so that services do not go away or get stripped. That needs some consideration in Committee.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

My hon. Friend makes a good point, and I agree that we want the opportunity to discuss these issues in Committee.

Where will the Bill lead? The right hon. Member for Salford and Eccles-I apologise for referring to her again-talked about this being a relatively modest-sounding Bill that could have significant consequences. From my short time looking at politics, that often seems to be the way. The Conservative Government in the 1980s, when they started with their approach to privatisation, were probably not aware of what a significant wave of change they were unleashing and that it would be a model around the world. In a different way, this Bill and the additional measures that I hope the Government will introduce, building on the work of previous Governments, could have the same significant impact.

To make that happen, however, we need a couple of additional efforts. First, we need to recognise that many social enterprises and charities are institutionally small and consist of few people-perhaps 10 or 20-a lot of whom might be volunteers. They might have a lot of spirit, but the procurement process will be quite complicated for them, so we need to enable them to come together to procure efficiently and compete effectively with the very efficient and knowledgeable for-profit procurement companies. I hope that the Minister will, either today or in the months ahead, come forward with suggestions for how that can be better enabled, so that the window opened by the Bill can be taken advantage of by these social enterprises.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

Does my hon. Friend agree that it is equally, if not more important that small for-profit businesses run by local entrepreneurs should be able to compete for these contracts? At the moment, only 16% of public contracts are taken by small businesses. Should we not be concentrating on that as well?

Photo of Richard Fuller Richard Fuller Conservative, Bedford

My hon. Friend makes an excellent point. One of the consequences of the Bill would be that local and national Government would have to start thinking more locally about where they procure services. I, for one, believe that a local business making a local profit that is retained in its local community is of enormous social value to its local community. At the moment, as I was saying earlier, some of that profit is being exported. The very fact of passing the Bill would assist social enterprise, but would also help local businesses that do so much in their local community. That is why I welcome it so much.

The Bill would also have an impact on the financing of our social enterprises. Many right hon. and hon. Members will be familiar with the social finance work and the initiative in Cambridge with the St Giles Trust looking at ways of constructing the support for financing social services and social goods in a way that is more oriented to successful outcomes and takes away from taxpayers the one-way, pay-it-whatever-the-outcome approach to social services and social goods. That is another step that we need to take. This Bill is an enabler down the path of providing a comprehensive and different way for each of us as individuals, with our motivations and our sense of fairness, to be able to rely on a different institutional form-the social enterprise-to achieve what we all believe would be in the best interests of our country and our people. I commend my hon. Friend the Member for Warwick and Leamington and the Bill.

Photo of Ben Gummer Ben Gummer Conservative, Ipswich 11:00 am, 19th November 2010

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 Chris White, and the number of people engaged in social enterprises and the voluntary sector throughout the country, it sad that the Chamber is only this full. Although the debate is a good one with 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 communities 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 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.

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

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.

Photo of Ben Gummer Ben Gummer Conservative, Ipswich

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.

Photo of Fiona Bruce Fiona Bruce Conservative, Congleton 11:16 am, 19th November 2010

It gives me great pleasure to support my hon. Friend Chris White and his Bill. One of the main features of the debate has been the contribution of social enterprises to our local communities. We must interpret as broadly as possible the organisations that can fall within the ambit of the Bill. My hon. Friend mentioned more socially responsible businesses, and in that regard my view runs counter to that of my hon. Friend Ben Gummer, who suggested that we should substitute "charity" for "social enterprise". I suggest the opposite, because far more local businesses are contributing to our communities than has been recognised, certainly by the previous Administration. This is a wonderful opportunity for us to highlight the contribution that those businesses make.

As my hon. Friend Richard Fuller said, many people are in business not just to make a profit but to contribute to their local communities. Walking down our local high street, we would be hard pressed to find a retailer who was not contributing to the community in one way or another. For example, in my constituency, there is a traditional menswear outfitter called Davenport's. Members might wonder how Davenport's could make a social contribution, but it is Davenport's that donates props and clothing to the Daneside community theatre, which in turn makes a wonderful contribution to community life in Congleton. During the school holidays, dozens if not hundreds of young people who might otherwise be at a loose end spend their time creating theatre shows for the town. That is an excellent example of one small business contributing to the community as a whole and making a positive difference.

It would be wonderful if our town council, with its small budget, had the freedom to place high on its agenda a recognition of the contribution made by businesses such as Davenport's to our community well-being when it is awarding the relatively modest contracts that can nevertheless make a real difference to the welfare of small businesses, especially at a challenging time on the high street.

I understand the point about the concerns that the Federation of Small Businesses might have about the proposals. Speaking as someone who has run a small business for well over 20 years, I, too, was concerned when I initially looked at the Bill, because I knew that many small businesses operated on the margins-on tiny margins, as I experienced when I set up my business. I declare an interest as someone involved in running a socially responsible business. It took many years before my business made any real profit, but if I had been able to consider even small opportunities for contracts with our local authority, it might have made a difference.

Photo of Sam Gyimah Sam Gyimah Conservative, East Surrey

Given that the purpose is not to subsidise for-profit enterprises that are operating at the margins, but to encourage businesses or organisations that operate as a business-they may have a turnover and may have a surplus-surely the primary objective should be contribution to the community rather than to the shareholders.

Photo of Fiona Bruce Fiona Bruce Conservative, Congleton

I believe that "community" comprises many different factors, one of which is having flourishing businesses. If the awarding of public contracts can make a difference to flourishing businesses, large or small, that should count as social or public value. It is not, as many people mistakenly claim, about offering public service on the cheap; rather, it is about adding value to our communities.

Like many of my colleagues, I will have knocked on thousands of doors on a political journey. One key theme that came across to me again and again, particularly when I campaigned in a large town during a previous general election campaign, was a yearning for community life. I am fortunate that I now represent a constituency comprising mainly smaller towns where such community life still continues. Government support to businesses that, in turn, contribute to the maintenance and, indeed, the strength of community life will be valuable.

Photo of Steven Baker Steven Baker Conservative, Wycombe

Does my hon. Friend agree that all enterprise is necessarily social because it seeks to create value for other people?

Photo of Fiona Bruce Fiona Bruce Conservative, Congleton

I thank my hon. Friend for that intervention, as that is exactly what I am saying. I think that we will find very few organisations that do not merit consideration under the Bill when public contracts are awarded. We should therefore think carefully before narrowing the definition of the enterprises that we want to include.

I would like to highlight some clear examples of where a social enterprise in my constituency has been less well served than it could have been under the current criteria for awarding public contracts. I mention an enterprise called Visyon. It is an excellent organisation in my community; it provides counselling and support for young people who need social or emotional help. Visyon has given me two excellent examples of where it believes it might have benefited if the Bill had been in force. First, it bid for a contract against a private tenderer, but the criteria for the tendering process included such elements as credit checks, the evidence of significant surplus of funds and high net asset value. Visyon says:

"If criteria had... included... social outcomes and values, we may... have... scored more highly based on such criteria."

It did not succeed in winning the contract. In another case, it bid for the provision of mental health advice and support in schools in the Cheshire region. It gave evidence that it could provide such advice at one third of the cost of its competitor for the tender, the educational psychology team, but it lost that one, too.

I am sorry that Hazel Blears is not in her place, because I wanted to pay tribute to the work that she and her local authority did in the north-west region. Salford council in particular worked closely with organisations such as B4Box. I met Aileen McDonnell and also pay tribute to her work. It is worth noting that through her organisation, people who have been unemployed for some time go into work and are sustainably employed. That is to her credit. I look forward to seeing B4Box's work growing and flourishing across the wider region.

I would also like to highlight the work of the Message Trust. I know that the right hon. Member for Salford and Eccles spent some years supporting it, as has Salford council and the police. It is important to remember that when we talk about awarding public contracts, we are not talking only about local councils. The Salford local authority and the police have supported the work of the Message Trust over many years, and it has proved extremely beneficial. I would like to spend a few moments to describe it to hon. Members.

The Eden project, which is run by the Message Trust, organises groups of 10 young people, perhaps in their 20s or 30s, who commit for a period of five years to living in a deprived area and to giving 25 hours a week of their time-most of these people are also working-on the streets, getting alongside young people who are suffering through fractured families, drug problems, lack of self-worth, joblessness and so forth. That helps such people to understand how to engage positively within their communities, perhaps initially through voluntary groups, and subsequently helps them into training and work. It has proved enormously successful over many years.

I endeavoured to engage with another local authority regarding this scheme. I took representatives from the Eden project to meet council officials and I had several meetings and obtained support from local volunteers. I was aware that a recent local authority report had expressed the concern that its youth work was not hitting the mark. Frustratingly, however, it was impossible for that local authority to commit to an Eden project of its own, despite the fact that providing 10 youth workers on the streets cost only about £40,000 a year. That is not much more than the salary of one youth worker-plus add-on costs, overhead and supervisory costs-employed by a local council.

Although some local authorities are connecting well with organisations such as the Eden project, others are still reluctant to alter their mindset and change from an approach that allows them greater control towards one involving more trust, albeit perhaps with an element of risk. The trust might have to associate with organisations with which it has not connected previously or not worked with previously. As I say, it might not have the same degree of control. None the less, if we do not move in this way, we might miss the opportunity to change so many of our particularly deprived communities or those with real need. I believe that the Bill will provide a greatly needed catalyst for a change in the mindset of the many authorities that need to start looking outward rather than inward in deciding how they will provide, contract and procure local services.

Photo of Steven Baker Steven Baker Conservative, Wycombe 11:30 am, 19th November 2010

I congratulate my hon. Friend Chris White on the way in which he introduced the Bill. I strongly agree with the spirit of his remarks. It is only on the margin that I find myself disagreeing either with my hon. Friends or with Hazel Blears, who is no longer in the Chamber. Where I am ambivalent is on a few philosophical points. Although I realise that philosophy may not be as fashionable in this place as it once was, I hope that Members will forgive me if I dwell on some of the philosophical aspects for a few moments.

As I said in an intervention earlier, it is my view that all enterprise is social. I believe that society is co-operation, and that in a society based on the division of labour, we necessarily cannot have a gift economy. We cannot have a planned economy. It is necessary for unhampered market prices to fall for us to discover people's revealed preferences. We talked about values earlier. Values are so important, and so unique to the individual. They are about more than money, and yet people reveal the intrinsic, inherent values that they hold in their minds only when they disperse their own money. I do not just mean when they buy fripperies for themselves; I mean when they give to charity, and when they buy gifts for others. There is nothing dishonourable about spending one's own money in line with one's own values.

For a long time Labour Members have been appealing to reason. They have believed that if only the state had enough power, or the right power, or this, that and the other-if only it had a national or local framework-and if only enough power were exercised in society, things would be rational and reasonable and stable and static, and they would become better. I put it to the House, however, that the experience of the last 100 years has been that that has not happened.

I am rather reminded of the scene in "The Lord of the Rings" in which Boromir, I believe, turns to Frodo and begs to be given the Ring of Power because he would use it for good. I am afraid that the limits to the use of this Ring of Power-state power-are highly circumscribed. They are circumscribed, because society is a dynamic process of information discovery. It is simply not possible for the state to obtain the information that it needs in order to co-ordinate society by decree, or indeed to intervene powerfully in society to produce good outcomes. It is impossible because the information that is necessary is dispersed in the minds of millions, indeed billions, of people; it is impossible because the information is tacit, it is practical, and it could not be transmitted even if it were accessible; it is impossible because society is a dynamic process, and information is therefore discovered through the changing process of social interaction; and it is impossible because the very act of the state's intervening to fulfil the whims of politicians and officials prevents information from being discovered.

Some people listening might recognise these as arguments advanced in the past under the heading of "The Fatal Conceit". I fear that in our benevolent intent, with our good will, and given all those great things that we have heard today about building a better society, we are in danger of holding on to that fatal conceit: the conceit that the state, if only it could obtain enough information, could co-ordinate society.

The right hon. Member for Salford and Eccles pointed out that the state is often in the way of the very social entrepreneurs whom she wishes to see succeed, and that she wishes to see the system change in order to get it out of people's way and get it behind them. But I ask the House how much longer we are to continue in the fallacious belief that if only, if only we could change the way in which the state coercively determines what people are to do with their own lives, things would become better.

The right hon. Lady mentioned charities and mutuals, and we could also discuss co-operatives and friendly societies. I would not disagree at all with her intent in respect of such organisations. I think that they are healthy, I think that they are honourable, and I think it is a great pity that the labour movement was key in stamping them out. We are bearing the cost of its follies in that regard. I have no objection whatever to mutuals or co-ops or, indeed, trade unions. What I have an objection to is the use of coercive power to organise society.

Provided that those traditionally leftist labour movements are organised to sustain themselves by making a surplus, and provided that they are not bailed out with taxpayer's money-we might well mention the banks, but perhaps that is for another day-I will support them. I will gladly support mutuality, co-operatives and, of course, charities. However, we have talked about the public ownership of capital goods. Labour Members have worried that capital goods might be-heaven forbid-privatised, but what is privatisation? Could it be that a mutual owning its own capital goods is private in some sense? Perhaps we need a new word, because to me "public" does not necessarily mean "state", and "society" does not necessarily mean "state".

I should be very happy indeed if assets-capital goods-currently owned by the state were put into the genuine ownership of mutuals. The question is not whether those assets should be put into genuine ownership outside the state; it is how ownership can be transferred in such a manner that justice is done. There is no doubt in my mind that many of those assets have been acquired by the state unjustly, but far be it from us to double the injustice by selling them in an inappropriate way, and then dispersing the capital gains by spending to live today.

In short, what concerns me is that we are lapsing into something which might best be described as communitarianism. It sounds so laudable. Oh, it does: it sounds so laudable-as did socialism, back when socialism meant Marxism. It always sounds so laudable. But the fact is, whether Labour Members like it or not-and I am afraid that the same applies even to some of my hon. Friends-in the end, when we come up with a national plan, a national social strategy, and local authority strategies for social enterprise, inevitably we must use the coercive power of the state in an attempt to direct society-a task that is impossible through the very nature of society itself.

Photo of Harriett Baldwin Harriett Baldwin Conservative, West Worcestershire

It is a pity that my hon. Friend was not present when I made some comments about his earlier interventions, but let me ask him now whether he takes his philosophical position so far that he does not believe that the state should spend any taxpayers' money. That seems to be the logical end point of his philosophical disquisition. Most of us would agree that we raise taxes coercively, and that we spend them; why should we not spend some of them on social enterprise?

Photo of Steven Baker Steven Baker Conservative, Wycombe

I am grateful to my hon. Friend for giving me the opportunity to say this. Given that I sit in this place as an elected politician, of course I believe that there is a role for democratic politics and for government. What I am expressing, however, is a deep scepticism based on solid theory, and indeed on the practice of the last 100 years, about any attempt to organise society using the state. I believe that such attempts are generally a mistake. That is not to say that the practice should be eliminated-far be it from any Member of the House of Commons to suggest that-but the fact is that it has not been a great success.

My hon. Friend is absolutely correct in saying that we are currently taxing and spending to an enormous degree, but we must make up our minds about whether that is healthy. It seems to me that the degree to which society has power is determined by the degree to which the state has power. The more power the state takes to itself, the less power society will have. I am afraid we must face up to the reality that, while the state is spending more than half of national income, human social co-operation is largely directed by the coercive power of the state.

My hon. Friend may well say that the logical conclusion is as she described, but I think that that was recognised by the old Liberals of the 19th century. Indeed, I wish that the new Liberals of the 21st century would pick up the same point. However, I do not suggest that we should go there immediately; I am referring to the direction of travel.

Photo of Ben Gummer Ben Gummer Conservative, Ipswich

While I would demur a little from every point my hon. Friend has made, may I draw attention to the key issue of this Bill, which is localism? When a private business makes decisions about spending money, that is really about the allocation of capital and therefore the location of the business makes little difference. We are talking about voluntary organisations however, and they depend on people giving their time, often for free, in local areas. We cannot import a new community, so we are trying to provide the means by which public tenderers can take account of that reality, of which private businesses do not have to take account in the same way.

Photo of Steven Baker Steven Baker Conservative, Wycombe

I fully agree with my hon. Friend's point.

In conclusion, my argument is as follows. If we are to have a healthy and productive society, and if we are to build a better society, we must embrace what has been agreed by Members on both sides of the House. We have all strongly agreed on much of what has been said today, but the key question is: what is the role of the coercive power of the state in building that better society? For me, there is a fundamental disagreement about that role today, as there has always been.

I do not intend to press the Bill to a Division at this stage, although I remain hugely sceptical about both the national social enterprise strategy and local strategies. It is my view that we should follow the advice of the man who gave me my reference point as I began on this process, a man who accepted the value of both business and charity. If we are to liberate society, and liberate individuals to create a better world, we must follow his advice, which was this: "Repeat after me-lower taxes."

Photo of Sam Gyimah Sam Gyimah Conservative, East Surrey 11:41 am, 19th November 2010

Specifically in the context of the current debate, I will definitely not be repeating "lower taxes" after my hon. Friend Steve Baker.

I did not intend to speak today, but having listened to the debate so far, I would like to offer a few words. The first point that has arisen today is about our values. I remember the Prime Minister saying when he started out as the Leader of the Opposition that we Conservatives believe that there is such a thing as society, but that it is not the same thing as the state. If this Bill tries to achieve anything, it is to address the reality that there are many organisations that fulfil functions that are of social value. They do not replace the state, but their role must be recognised and promoted as we seek to transform the nature and role of the state in this country. As I think that is a worthy aim, I support the Bill.

I do not wish to follow the lead of some of the previous speeches by playing philosophical ping-pong, but we can all point to examples in our constituencies of social enterprises that are doing a great job. That needs to be recognised, and such enterprises must be promoted. In debating the Bill, we also need to think about the likely transformative effects that can be achieved by new organisations delivering services that we currently think the state ought to deliver. The Minister for Further Education, Skills and Lifelong Learning has recently walked into the Chamber. A lot is happening within higher education to enable people to understand the differences between universities so they can make informed decisions. What are the employment statistics for graduates of different universities? What are the staff contact ratios? What is the nature of the student experience? Traditionally, we would think that some state organisation should provide all of that information to prospective students. The Bill, however, would enable that data to be provided to social enterprises, so that an organisation could be created that delivers the information, without the state having to build it from scratch, which is often costly and does not always work.

An organisation called the New Philanthropy Capital has done that for the charity sector. It recognised that a lot of people did not understand on what the money they donate to charity was spent, so it built an organisation. It is a not-for-profit company that is servicing the charity sector in that way. As we consider the Bill, it is right that we champion such organisations in our constituencies that are doing a great job. There are a lot of them in my constituency of East Surrey, many of which operate under the auspices of Tandridge Voluntary Service Council. We must think about how such organisations can transform the way Government do business.

My hon. Friend Ben Gummer highlighted the issue of definition, which has so far been a grey area in the debate. It is not clear under clause 1(5)(b) whether someone setting up a private enterprise that is supposed to reward its shareholders can operate in this space and whether its function is the same as that of a business that is totally dedicated to social good. For me, a social enterprise should not be about profits; it should be purely about generating value for the community. Otherwise, we risk small businesses seeing that they can get subsidies-can get what is effectively equity capital-from the Government by servicing the Government. If we do that, we will miss the main purpose of the Bill. Its main purpose is not to provide equity capital for small businesses that want to sell some services back to the Government and then line the pockets of their shareholders. Its purpose is to get services delivered for communities.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

My hon. Friend is making some very good points. However, does he accept that one consequence of the Bill is that local authorities will spend more time looking at local businesses, which will have the welcome knock-on effect of supporting local for-profit businesses? That might not be the direct intention of the Bill, but it is a very valuable secondary benefit that local small businesses will also come to benefit.

Photo of Sam Gyimah Sam Gyimah Conservative, East Surrey

I agree that there are local businesses that fulfil a social good, but we do not want people just to decide, "You know what, I want to set up a business, and because 20% of it is for servicing the local authority, I will be supported." I strongly believe that we must draw a distinction between for-profit businesses whose main purpose is rewarding shareholders and businesses that are delivering social goods.

Photo of Ben Gummer Ben Gummer Conservative, Ipswich

My hon. Friend is drawing two distinctions. One of them is between local and national, and the other is between for-profit and not-for-profit organisations. The latter are distinct, but in terms of the distinction between local and national, surely we should be looking to allow small businesses to win tenders for all Government contracts no matter where they come from? That involves making procurement decisions much easier for small businesses. Different issues are involved in allowing voluntary groups and those giving human capital for free an opportunity to tender for contracts. That is about enshrining localism within procurement contracts.

Photo of Sam Gyimah Sam Gyimah Conservative, East Surrey

I certainly think we should allow charitable enterprises to tender for contracts and deliver services, rather than see this as a way for for-profit businesses to service government.

Photo of Dan Byles Dan Byles Conservative, North Warwickshire

I am not entirely sure that I agree with my hon. Friend that there is such a clear distinction between for-profit businesses and organisations involved in social responsibility. Many private sector companies take their corporate social responsibility very seriously, and a number of private sector for-profit companies in my constituency are heavily involved with community groups, charities and social enterprise, because they feel it is the right thing to do for their corporate image and for the wider community.

Photo of Sam Gyimah Sam Gyimah Conservative, East Surrey

I do not suggest for a second that no private for-profit businesses have a social objective-a lot of for-profit companies do take that responsibility seriously-but I see the Bill as a way of encouraging organisations whose main purpose is to deliver services that could be delivered by the state for the community. To take the argument to an extreme, in my view it would be unusual-

Photo of Sam Gyimah Sam Gyimah Conservative, East Surrey

I will be with you in a second. [ Laughter . ] It would be unusual to see such a business grow to the extent that it gets listed on the stock exchange and rewards its shareholders. I give way to the Minister.

Photo of John Hayes John Hayes The Minister for Universities and Science, The Minister of State, Department for Business, Innovation and Skills

I am immensely grateful to my hon. Friend. I did not want to interrupt his flow.

My hon. Friend will be conscious that, just this week, we announced our national skills strategy, and in that we have protected adult and community learning. Indeed, we understand, as I hope he does, that charitable, voluntary, community groups will play a key role in helping us to reform and deliver precisely that sort of learning, which is very much in tune with what he is describing. I put that on the record, because I am here and because I wanted once again to advertise that strategy, which is available in the Vote Office for Members who want to see it.

Photo of Sam Gyimah Sam Gyimah Conservative, East Surrey

I thank the Minister for his patience and congratulate him on advertising a strategy that I wholeheartedly endorse.

If the Bill is to go ahead, we need to clarify the definition, because it sounds as though there is a lot of confusion. All of us want to support some business in our community that is well known and has been helping the boy scouts, for example, but we have to draw a distinction between that sort of business and one whose sole purpose is to deliver social goods.

Photo of Rebecca Harris Rebecca Harris Conservative, Castle Point 11:51 am, 19th November 2010

I thank my hon. Friend Chris White for producing this excellent Bill and allowing the issues it deals with to be discussed. I am delighted to see so many Members here on a Friday to support the measure. I hope in two weeks' time to see as many Members supporting my own private Member's Bill on daylight saving, although I have to confess that there are one or two familiar Friday faces who I hope will stay at home on that occasion. [ Laughter. ]

The Bill has the potential to do a lot of good for communities across the country by strengthening the social fabric. In my constituency there are many public, community and social enterprises that could benefit enormously from the measure, as my hon. Friend the Parliamentary Secretary, Cabinet Office knows, having visited Castle Point and met the local Association of Voluntary Services. Implementation of the proposals in the Bill is very necessary in these difficult economic times-it cannot happen soon enough, one might say. I do not share the concerns of my hon. Friend Mr Chope that the Bill contains measures that are necessarily anti-competitive or anti-business. In fact, it is quite the reverse. As my hon. Friend the Member for Warwick and Leamington said, the Bill will not discriminate against private businesses in bidding-indeed, it will help the more socially conscious firms.

I have an excellent example in my constituency: Thames Ambulance Service. A substantial local employer, it already delivers significant contracts with the NHS, providing ambulance services and training to Government Departments on health and patient care. It is also a company with a strong social conscience: it does a lot of work in the community on road safety training for young people, particularly motorcyclists, and in schools on first aid; it also takes on young people who are finding it difficult to get into employment or training. The Bill offers the opportunity to encourage those sorts of firms, which we want to see a lot more of in these difficult times.

At the same time, the Bill will help us to ensure that we get maximum value for money in the public sector. Its provisions do not run against the grain of the search for value for money; rather, they strengthen the principle. If we take a more holistic view of commissioning and aim to promote social as well as economic good, we can help to drive down demands on our public services, squeeze every possible benefit from public spending and improve standards in our public services. That can be seen in my local firm, Thames Ambulance Service, which offers an excellent service to the public but at a lower cost than is currently offered in the NHS. I believe that in some parts of the country that is already part of the commissioning process. However, with the very great strains on public finances, we now need to spread it across all our public services as quickly as possible, so that that best practice starts to become the norm. To get more intelligent commissioning, the wider social and environmental effects and people's well-being must be at the heart of the process and integrated into the structure at a very early stage. That is why the Bill is so welcome.

I am confident that these proposals are practical and have the potential to do a great deal of good, and I am very pleased to support them. I hope that my hon. Friend the Member for Warwick and Leamington will also be in the Chamber on 3 December.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office) 11:55 am, 19th November 2010

It is a pleasure to hear such an interesting and, at times, erudite debate. The Conservative party used to appear to be a fairly homogeneous and monolithic block, so listening to Conservative Members revealing the various trends within the party has been a fascinating and instructive experience.

I congratulate Chris White on introducing the Bill and allowing this debate to take place. Let me say at the outset that Labour Members want to see the further development of social enterprises, and we are happy for the Bill to receive a Second Reading and then go into Committee.

There have been, I think, nine contributions to the debate other than that of the hon. Member for Warwick and Leamington, and a range of different experiences have been brought to it. The hon. Gentleman indicated very strongly a communitarian tendency running through the history of the Conservative party. He certainly nailed his colours to the mast in terms of his own views about society and how it should be organised. However, he slightly stretched the credulity of the House when he tried to embrace Baroness Thatcher within that, since it was she who famously said that there is no such thing as society; there are individuals and their families.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office)

I am not going to take interventions straight away, but I may in due course.

It has frequently been said that the Conservatives, historically, knew the price of everything and the value of nothing. It is therefore interesting to hear so many Conservative Members talking about judging tenders not merely on price but on what has been described in the Bill as social value, whereby one should not necessarily go for the lowest tender. That is at variance with my own experience as a leader of local government in the years when Baroness Thatcher was Prime Minister and simply wanted the lowest possible tenders. Nicholas Ridley said that local authorities should meet once a year in a tent to let contracts and then go away again.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office)

I see that at least one hon. Gentleman remembers that as well as I do, and with approval by the look of it.

Several Members made strong references to local experiences in their constituencies. That reminds us of how important it is that Members of Parliament have a constituency base. Whatever form of electoral system we use, it is important to retain the constituency link. The hon. Members for West Worcestershire (Harriett Baldwin), for Congleton (Fiona Bruce), for Castle Point (Rebecca Harris), for East Surrey (Mr Gyimah) and others referred to local experiences, as well as to experiences that they had prior to coming to the House.

There was some tension, though, between the various tendencies that were expressed, which was most striking in Ben Gummer, who gave the impression that he was a libertarian, but he actually said-he may be horrified when he reads it in Hansard-that he quite liked compulsion in relation to local authorities. The power of the state compelling local authorities was an extraordinary vision for him to evince. On the other hand, Steve Baker gave us a disquisition on liberty, saying that every action of the state is an infringement of liberty and is coercive. That was an interesting philosophical diversion.

Photo of Ben Gummer Ben Gummer Conservative, Ipswich

To clarify my point, my concern was that many procurement officials are compelled in only one direction, which is to follow a national strategy, and the purpose of the Bill is to compel them to look at a whole series of different things. As I am sure the hon. Gentleman will have experienced when buying something from, say, John Lewis, one does not just look at price but at a whole series of things, such as whether one would like it in one's flat or whether it is the right colour. All we are doing is saying, "Look at a wide range of things, not just a national strategy as laid down by Whitehall."

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office)

We on this side of the Chamber feel perfectly comfortable in our own skin in advocating precisely such an approach to the role of Government. I am not sure whether some of the hon. Gentleman's colleagues share the same comfort.

We want social enterprise to develop further, so the Bill deserves a Second Reading. As Members will see as I proceed with my speech, it will consolidate in statutory form initiatives that we introduced when we were in government. Equally, as I have just remarked, it points out the intellectual fissures at the core of the coalition's confused approach to public policy. The Government say they are in favour of a big society, but they do not always will the means. There is a contradiction between their professed communitarianism and their neo-liberal objective of cutting the costs of caring services.

There is also a contradiction between the Conservatives' approach to the market and free competition, with price as the key indicator on which tenders should be judged, and the social commitments in the Bill. Another contradiction is between their alleged commitment to localism and some Conservative Members' central ideological imperative of giving the market free rein.

Photo of Steven Baker Steven Baker Conservative, Wycombe

If the hon. Gentleman uses the word "ideological" to accuse me of having thought about how society works and what the law ought to be, of course I plead guilty.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office)

I, too, have a very strong ideological vision, and in no way should the hon. Gentleman apologise for having an ideology. It is the contents of his ideology that give me some concern.

The contradictions and intellectual fissures that have been exemplified this morning go right to the heart of the Bill. That explains the rumour-I wonder whether the Minister could confirm it-of a fundamental disagreement over the Bill between the Secretary of State for Communities and Local Government and the Minister for the Cabinet Office.

Throughout the debate we have heard many examples of the positive impact that social enterprises can have on our neighbourhoods, communities, towns and villages. I recently visited Cream Catering in my constituency, which is doing innovative work. It is a social enterprise that employs people who have been out of the labour market for many years, and it provides high-quality catering in a variety of institutional contexts. It is an exciting enterprise, and it was created through the intervention of the then Government, who identified a procurement problem and an instrument that might deal with it. I am sure that is the kind of thing that the hon. Member for Warwick and Leamington would like to see if the Bill became law.

In fact, there are 55,000 social enterprises across the country. It is said that they add £8 billion a year to our gross domestic product, but their true value cannot be measured purely in numbers. They enable the hardest to reach and often most socially excluded people to return to economic activity. They contribute to improving the environment, both physical and social, and they enhance prosperity and deliver social justice in equal measure.

The values encompassed in the work of social enterprises are vital ingredients in the creation of a good society. If we are to succeed in the future, both as a sustainable economy and as a society with strong bonds of mutuality and reciprocity, we need to accept that markets needs morals. Labour has no problem in accepting that, and in government it led us to invest in social enterprises. We invested unprecedented resources in encouraging social enterprises, which contributed to the significant expansion of the sector and brought us to the position that we are in today. That provides a background to the Bill.

Many of the Bill's intentions will build on the progress that we made in the past 10 years, and, to be fair, the progress that was made under previous Administrations as well. Back in 2002, we launched the first Government strategy for social enterprise. In 2006, we produced a social enterprise action plan, and in 2009 we held a social enterprise summit. We also created new instruments called community interest companies, of which there are 4,000 across the country. Labour gave £125 million to the Futurebuilders fund, which Harriett Baldwin mentioned, to build third sector capacity. We also ensured that thousands of public sector procurement officers were trained in how best to engage with the third sector. We can therefore conclude that initiatives and plans-even those that are put into statutory form-are only one side of the equation.

The other side of the equation is that there must be appropriate investment. It is therefore a concern that the Government's spending cuts might put at risk the activity of social enterprises. How can it help to scrap the future jobs fund, which was partly designed to help social enterprises create up to 15,000 jobs? Mention has been made of the New Philanthropy Capital think-tank, which has said that the cuts look like removing between £3 billion and £5 billion a year from social enterprises and the third sector generally.

Clause 1 would result in a national social enterprise strategy that allowed Departments to promote engagement in social enterprise across England. That proposal is almost identical in some ways to the social enterprise action plan that Labour introduced four years ago. It is difficult to see how this national strategy, which would be created in law, differs from the action plan that we introduced without the need for a statutory framework. A case must be made to explain why a new Bill is required given that Labour was able to do things without new statutory powers. Why do the Conservatives, and the coalition more generally, find it necessary to create a new piece of legislation, which the hon. Member for East Surrey no doubt thinks is coercive.

Photo of Sam Gyimah Sam Gyimah Conservative, East Surrey

The hon. Gentleman is describing every pet project that Labour came up with in its 13 years in power as some sort of social enterprise, but that is not what the Bill is about. We are trying to enable non-profit organisations to deliver public services that the state would otherwise deliver. That is not the same as expanding the state, which is what the hon. Gentleman's policies would lead to.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office)

I am sorry I gave way to the hon. Gentleman, because he clearly has not listened to much of what I have said. Without such legislation, the previous Government helped to create the environment in which 55,000 social enterprises came into existence. A case has to be made to explain why all the Government Members present are prepared to introduce new legislation, more red tape and more intervention in the market, when Labour showed that we could build the so-called big society-the good society-with no such statist intervention. [ Interruption. ] I see that at least one Government Member-the hon. Member for Wycombe-feels really quite embarrassed that these proposals come from the Government Benches. It is absolutely unnecessary to bring this legislation into being.

Photo of Ben Gummer Ben Gummer Conservative, Ipswich

Let me just clarify something. In the example that I gave, I had hoped to show that outsourcing to third sector organisations does not necessarily help small local organisations. Our point is that the outsourcing perpetuated by the previous Government actually started to kill local charities. The Bill promotes the human capital of small non-profit organisations that specialise in working in local areas.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office)

Of course it does, and I take the point, but the truth is that the Conservative party-the so-called champion of liberty against the state-is now taking the state's powers through legislation to do something that is happening in any case. How does it help to have legislation when the key point is to ensure that public procurement officers in local and central Government are sensitive to the needs of local companies, whether social enterprises or not?

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

Surely the logic of what the hon. Gentleman has just said is that he should vote against the Bill, thereby ensuring that the statute book is not littered with more unnecessary legislation.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office)

I have said that the Bill raises interesting questions and deserves a Second Reading, enabling some of those matters to be debated further in Committee, which will perhaps further expose the differences on the coalition Benches.

What discussion of clause 2 has the hon. Member for Warwick and Leamington held with the Local Government Association about amending the requirements for local authorities' sustainable community strategies? A briefing by the Conservative-led and dominated LGA states that there is

"no need for a piece of legislation which will create a top-down imposition on councils to promote such enterprises."

There speaks the genuine voice of localism, of the Conservative party locally. Why do the Government believe that it is necessary to impose legislation on local authorities that do not want it? Local authorities are happy to proceed with such matters on their own.

The LGA continues:

"The thrust of this Bill is also fundamentally at odds with the Government's expressed desire to remove centrally-imposed burdens and top-down targets for local government."

It feels as if the world has turned slightly upside down. Labour in government proceeded happily with enabling the sector to develop without the necessity for new legislation. My right hon. Friend Hazel Blears has returned to the Chamber, and I more than congratulate her on her work. How can the Bill become a reality if local government, dominated by the Tories, so strongly opposes it?

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

The hon. Gentleman is making several assumptions about the Government's position that may be proved wrong. I think he has lost sight of the fact that we are discussing a private Member's Bill.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office)

Will the Parliamentary Secretary deny that the Cabinet Office helped to draft the Bill? He will not. I understand that that is precisely what happened. I understand that the Bill showed its face in the House only 36 hours ago. Why? I was told that it was delayed until the last possible minute because the Cabinet Office was drafting it. Perhaps the Parliamentary Secretary will confirm that. If it is a private Member's Bill, why was the Cabinet Office drafting it?

There have been tensions locally with not only local authorities but others about plans for how some social enterprises run services. Members on both sides have made the point that we want high quality, properly resourced social enterprises, not those that are the victims of a cuts mentality. Labour Members do not want the option of social enterprise driven through on the back of a cut in the quality of service or a reduction in the quality of conditions at work for the people who are employed in the enterprise.

We have no objections to the Bill's aims, but we are concerned about the manner of its introduction. More consultation before it came before the House would have been better-I have already said that it arrived here only 36 hours ago. We are all proud of the social enterprises in our constituencies throughout the nation. How can it be that they have had no opportunity to examine the Bill before Second Reading? How can it be that the small business and local government sectors are expressing different views about it? Perhaps it is because it was introduced so late. Does the hon. Member for Warwick and Leamington genuinely believe that he provided sufficient time for the House to consult?

We have also heard a lot about how the Bill fits into the Government's idea of a big society, but until we know what the big society is, how can we assess the applicability of the measures? I am not the only one who does not fully understand what the big society is; many in the voluntary sector do not know what it is either. Famously, the Under-Secretary of State for Education, Tim Loughton, also has no idea what the big society is. He said recently:

"The trouble is that most people don't know what the Big Society really means".

In what sounded slightly like a whinge, he added:

"least of all the unfortunate ministers who have to articulate it."

Photo of Ben Gummer Ben Gummer Conservative, Ipswich

I thank the hon. Gentleman for his indulgence. On the question of definitions, the Leader of Her Majesty's Opposition has spoken of the "good society", so will the hon. Gentleman explain what the good society is and the difference between it and the big society?

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office)

It is for the Minister and the Government to go first and describe their conception of the big society. We want a strong society-[Hon. Members: "Ah!"] We want strong bonds of mutuality and reciprocity to operate at every level of society, in every neighbourhood. The Bill might contribute to the development of that, but that does not mean that we should not ask difficult questions of its promoter and sponsors. That is precisely what I am doing.

How does the hon. Member for Warwick and Leamington reconcile clause 3 with the Government's motives? When the Minister for the Cabinet Office and Paymaster General was asked on the "Today" programme earlier in the week about his intentions in respect of mutuals, co-operatives and public service reform, he made it clear that companies tendering for outsourced services would have to make proposals that were

"significantly cheaper than the current provision".

There we have it: the irreconcilable contradiction between communitarian aspirations and the neo-liberal drive to reduce the cost and extent of government. There lies the Government's true motives.

Perhaps the Government will not support the Bill, but even if they do, they are more interested in lower cost services than in maximising social value. Having listened to his speech, I do not believe that the hon. Member for Warwick and Leamington wants that. Social enterprises should not be viewed as a cheaper option. They have a real contribution to make and can have a positive impact, as we have heard from Members on both sides of the House, but they should not be about enabling the Government suddenly to abdicate their responsibility to fund public services properly.

Social enterprises should-hopefully-ensure higher levels of democratic accountability.

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office)

I am about to wind up, although some might say that I have wound the hon. Gentleman up enough.

Central and local government and social entrepreneurs must work together to unleash the potential of social enterprises and the capacity of all of us to do good in our communities. Perhaps the House can agree on that. That should not be forgotten in the coalition's eagerness to cut spending and sell off large swathes of the public services. The Opposition support the aims of the Bill and believe that it should receive a Second Reading. None the less, as I have indicated, if and when the Bill reaches Committee, we will probe the details and the broad principles underlying the proposals.

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office 12:19 pm, 19th November 2010

The House has rightly expressed its admiration for my hon. Friend Chris White. I have a great deal of empathy with him, as I remember my shock at seeing my name at the top of the private Members' ballot a few months after my arrival in this place. I have been on his journey, and I wish him every success on it.

Once Hazel Blears had recovered from the shock of being described as dreary-

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

It is a little early in my speech to give way.

Once the right hon. Lady had recovered sufficiently, she expressed her admiration for the quiet determination shown by my hon. Friend the Member for Warwick and Leamington. She knows a great deal about determination, quiet or otherwise, and she was entirely right in what she said. I wish to add my sincere congratulations to him, not just on his good fortune at the ballot box but on his subsequent tenacity in building a coalition and the way in which he presented his case today. It is a considerable demonstration of his commitment to improving public services and trying to get a better deal for taxpayers.

I also wish to confirm from the start that the Government are happy for the Bill to go into Committee, if that is the will of the House. We will seek to amend it, in ways that I will explain, but we support the core proposition of the Bill that we should place a firmer requirement on commissioners-those who do the very difficult job of shaping and purchasing public services on our behalf-to consider the potential to maximise the social, environmental and economic impact of every pound they spend on behalf of the taxpayer. In doing so, the Bill builds on the principle of the best value duty, as my hon. Friend Rebecca Harris said.

The Bill is also consistent with what the Government are trying to achieve with the big society agenda. I genuinely hope that that issue becomes less partisan over time, not least because-as my hon. Friend the Member for Warwick and Leamington and the right hon. Lady, the former Secretary of State, said-the message builds on the aspirations of, and actions taken by, former Governments. Given the problems and challenges that we face as a country, it must be right to challenge all of us to think about our obligations and personal responsibilities beyond just paying taxes and obeying the law. It must be right to work together to try to find better ways to do things and, in that process, to try to tap into the skills, talents, ideas, experience and entrepreneurial energy that exists in our communities, but which too often feels shut out from the system. It must be right to encourage and support people to come together to try solve problems and improve life for themselves and their communities.

I am lucky in the job that I do-and Jon Trickett will find this, too, as he now shadows me-to visit every week communities and community organisations in which people are coming together to try to make a contribution and to do some good to improve life in their area. It is genuinely inspiring and gives me great confidence that we have a firm foundation on which to build this bigger and stronger society, if we can do more to encourage and support it.

Photo of Nadhim Zahawi Nadhim Zahawi Conservative, Stratford-on-Avon

My hon. Friend makes precisely the point about which the shadow Minister was confused. The procurement officers will not be compelled to do something from the top down, but will have the same choices before them as they have always had. Rather, they will be asked to look imaginatively at those choices. We are talking about benevolent libertarianism and a nudge forward-not what the shadow Minister was confused about.

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

I do not think that the Opposition were confused in any way: I think that they knew exactly what they were trying to do- [ Laughter. ] However, my hon. Friend is right. This is not a heavy-handed approach: it is a requirement to consider, where relevant and proportionate. My hon. Friend Fiona Bruce suggested that it was a catalyst-a good word-to try to open more minds to a better and more intelligent way to commission, which considers the opportunity to achieve multiple outcomes through the transaction.

The big society agenda is not a Government programme, but the Government have an enormously important role to play. The Prime Minister has been clear about the three strands of action that people can expect from the Government, one of which-a very important one-is public service reform. Early in the new year we will publish a White Paper on public service reform that will make it clear what we are trying to achieve and how we intend to achieve it. Our desire is that public services will be built on stronger relationships with the communities and citizens they serve, and that they will be, in the words of my hon. Friend the Member for Warwick and Leamington, more local, more personalised and more responsive. We want to devolve power to people on the front line who know how things can be done better, including extending the right to provide that was initiated by the previous Administration. We want to try to encourage and unlock that energy that sits inside the public services, which we feel has been constrained and stifled by a regime of overly oppressive targets and bureaucracy.

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

I have expressed to several hon. Members my concern about the process of transferring assets, possibly to social enterprises, which then swiftly progress to private, commercial organisations. Does the Minister agree that where public sector assets, purchased by the taxpayer, are to be transferred to other organisations there must be an asset lock to ensure the proper stewardship of the assets and democratic governance within the legal framework of those organisations?

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

I hear the right hon. Lady's concern. She makes a valid point, and she used a very important word-"stewardship". I totally agree that there is a duty of good stewardship. That contains two elements: a requirement to make sure that public assets are used most productively for the public, and a requirement to make sure that they are not misused in any way. In some ways that is a contracting issue. The right hon. Lady will know that social enterprises take many different organisational forms, and that there is a bespoke legal form for social enterprise called the community interest company, which specifically provides for an asset lock. However, that falls outside the immediate scope of the Bill.

I was talking about why we think the Bill is consistent with our ambitions and aspirations for public service reform. One of our aims is to encourage greater diversity of supply and provision. Here there may be some theological differences between us and the Opposition. We have a strong desire to try to incentivise and encourage much greater flexibility at a local level, such as providing opportunities to pool budgets and integrate services. She may be aware of some pilots that we are encouraging through the Cabinet Office on local integrated services, where the onus is much more on getting out there to find out what the community wants. All those aspirations will be backed up by action that will be reflected in the White Paper.

In the context of encouraging greater diversity of supply, on which the Bill touches, we have an explicit commitment in the programme for Government and the coalition agreement to support the creation and expansion of mutuals, co-operatives, charities and social enterprises, and enable those groups to have a much greater involvement in running public services.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

Clause 1 calls on the Secretary of State to prepare a national social enterprise strategy. We do not need to legislate for that if, as my hon. Friend is saying, the Government are already going to do it of their own free will. Are they going to do it and, if so, when?

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

I will come to clause 1, and I think that my remarks will give my hon. Friend some reassurance.

We are determined to try to open up the public services markets to a broader diversity of suppliers, and we have been specific about wanting to encourage social enterprises, charities and the voluntary sector to have a bigger role. Why? Most constituency MPs have a sense of the reason. Faced with some of the really stubborn and expensive social problems that this country faces-expensive in terms not only of money but of human cost-there is overwhelming evidence in certain cases, such as the hard job of getting people back into work or keeping people out of jail, that a social enterprise or community-based solution is often most effective in doing the really difficult work. We have to respond practically to the challenge-the right hon. Member for Salford and Eccles, as a former Secretary of State for Communities and Local Government, knows that it is a challenge-of opening up those public services markets to try to create more space for these organisations to participate and add value. It is not about trying to do things on the cheap, but about trying to deliver better solutions and to "do more with less", to use the cliché of the moment. That requires a radical reform of commissioning and how the state buys, because, as the right hon. Member for Salford and Eccles said, there is a strong feeling out there, represented by the Social Enterprise Coalition and others, that the system is obstructive and gets in the way.

That is why I and the Office for Civil Society are determined to get this right and are on the point of issuing a consultation document setting out what we need to change in state commissioning to fulfil the coalition Government commitment to create more space for social enterprises, charities, co-operatives and mutuals. The consultation document will ask the following main questions: in which public service areas could the Government create new opportunities for civil society organisations to deliver, and why? How can the Government make existing public service markets more accessible? How can commissioners use assessments of full social, environmental and economic value to inform their commissioning decisions? How can civil society organisations support greater citizen and community involvement in all stages of commissioning? And how we can reduce the amount of bureaucracy, form-filling and regulation that gets in the way of and infuriates and frustrates civil society organisations? The whole business of applying for and reporting public money is a bureaucratic nightmare for too many organisations and is often totally disproportionate to the sums of money involved. We are determined to do something about it.

In that context, the Bill's core proposition-a requirement to consider social and environmental value where it is relevant and proportionate-is a useful complement to our own work of reform and commitment to making it easier for voluntary and community organisations and social enterprises to deliver public services. The Bill has the scope to ensure that commissioners consider the full effect of services on the people whom they serve and enable them to maximise the social, environmental and economic value of every penny they spend.

The Bill reinforces our commitment to value for money. In these tight economic times, it is particularly important that we achieve maximum value in our spend, but our observation is that currently some commissioners miss the opportunity to secure the best price and meet the wider social, economic and environmental needs of the community. Under procurement law, a contract must be awarded on the basis of the tender that is most economically advantaged or offers the lowest price. The Bill does not undermine or circumvent this requirement or otherwise undermine the Government's value-for-money agenda and efficiency reform. On the contrary, it is anticipated that by taking full economic, social and environmental value into account, the quality and efficiency of public contracts can be improved.

I think that most hon. Members will see the potential for that just from their observations and visits. In my constituency, Hillingdon borough contracts a good proportion of public landscaping work with a company called Blue Sky. It is the only company in the country where someone has to have a criminal record to work. It does a brilliant job in offering employment opportunities to people coming out of jail-a critical milestone in proving to a future employer that they can be trusted. The people of Hillingdon are delighted with the service and the council are very satisfied with the price, and through this process we are making a huge impact in helping people to turn their lives around. I have spoken to some of the people working there. Some of them travel the length of the Central line every day to be on the course, because they see it as their way out.

That is intelligent commissioning at its best, and we want to encourage more of it. I remember visiting a social firm called Clarity that makes soap and liquids for cleaning hands. What differentiates this business is that, as I walked around the floor, I noticed that every single employee was disabled in some way-often in major ways. Again, this is an opportunity for them to build their own sense of worth and confidence, and to carve a different path that otherwise would have been shut to them. That is another opportunity for intelligent commissioning.

There are lots of other examples. In 2006, the London borough of Camden renewed its schools catering contract. At that point, there had been significant dissatisfaction with the quality and performance under the contract. There was a best-value service review prior to retendering, involving extensive consultation with parents, teachers, pupils and local social enterprise and voluntary and community stakeholders. The remit included consideration of wider social environmental and economic factors, and the new contract was shaped around the results of the review. As a result, the uptake of meals by children in primary and special schools rose by 10%, and teachers reported indirect benefits from the new contract. It has improved service and food quality without an increase in contractors' margins. Again, that is intelligent commissioning.

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

The Minister will have heard me refer to the innovative construction company, B4Box, which has worked on a legal framework for JCT Contracts. Would the Minster be willing to meet me and Aileen McDonald of B4Box to discuss how that legal framework might be used as a basis for wider scaling up of such innovative construction projects?

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

I would be delighted to arrange that meeting. Aileen McDonald sounds wonderfully inspiring, and if she can help us to open doors to more intelligent commissioning, we should be all ears.

Photo of Ben Gummer Ben Gummer Conservative, Ipswich

The Minister has provided some good examples of what he called intelligent commissioning, and I provided an example of a bad commissioning decision. Would he characterise that as unintelligent commissioning? If so, is that not precisely what the Bill is trying to correct?

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

My hon. Friend was good enough to introduce diverse representation from Ipswich, and the anger about the decision was palpable. It might be risky to comment from afar without knowing the details, but what struck me about the commissioning decision was that if 65% of the demand for the contract was based in Ipswich, it seems odd that there was no consultation. The process effectively removed an organisation that was clearly successful in delivering what the contract intended to deliver and had a massive social impact and value in that community. The decision seemed to be taken a long way away from the people who needed the help, and that is a problem.

The spirit of the Bill builds on the Government's commitment to economic growth and the promotion of entrepreneurship. It is appropriate that it should come to the House in global entrepreneurship week, and the day after social enterprise day, which many hon. Members celebrated. We should not forget that social enterprises are, first and foremost, businesses that contribute £24 billion-that seems to be the official figure-to the UK economy and employ more than 800,000 people. As the hon. Member for Hemsworth powerfully said, they make an enormous contribution by creating and stimulating markets, bringing wealth into struggling communities, creating jobs, supporting disadvantaged people into employment, pioneering innovative products in ethical markets, and attracting new people into business, particularly the young, women and people from minority ethnic communities.

I was struck by a recent comment from Steve Jobs, who leads Apple, a brand that is always associated with innovation. He said that innovation is the difference between leaders and followers. The country desperately needs leadership and people who are capable of pointing to better ways of doing things, and it is in the social entrepreneur community that there are genuine leaders.

I was in Sheffield last week visiting a social enterprise, Zest, which has incredible leadership. It demonstrates how youth services can be run in such a way that young people turn up. It shows how libraries can be run in a way that involves the community, and how to engage with the public on public health issues. I sat at a table with people from the local PCT and the local council, hoping that they were learning and reflecting on how much money might have been wasted over the years. Organisations such as Zest are showing the way forward and opening minds to doing things better.

The point was well made, not least by my hon. Friend the Member for Congleton and, I think, the right hon. Member for Salford and Eccles, that this is not just about social enterprise. Social value is not just about an organisational form called social enterprise, however broad that form might be. I hope that the Bill will also be a catalyst to encourage traditional businesses to speak up more about what they are doing in the community. We all know from our constituencies that many businesses, often family owned businesses with a strong sense of community, do a huge amount, but there is now a challenge, in the context of the big society, to everyone in traditional businesses to think harder about their social responsibility and their commitment to the community. The Government will be saying more about that shortly.

I have set out why we support many of the principles and objectives of the Bill, but we are legislators and we have a duty to ensure that the legislation that passes through the House is robust, is needed and adds value. I suspect that that is one of the themes that we can anticipate hearing from the most distinguished Friday face in the Chamber, my hon. Friend Mr Chope.

I want to get into the detail of the Bill. The primary measure that the Government support is clause 3, which deals with contracts of contracting authorities. As my hon. Friend the Member for Warwick and Leamington has already outlined, clause 3 requires contracting authorities to consider how they might promote or improve economic, social or environmental well-being through a contract. In policy terms, we often refer to this well-being as "value", because commissioners who already voluntarily follow this approach tend to attribute a quantifiable worth to it and consider it as part of their wider evaluation of bids to deliver public services. The title of the Bill reflects this commonly used terminology.

The Government are supporting this measure for a two main reasons. First, and most importantly, the Bill sends an unequivocal message to those spending public money that it is vital that they maximise the value achieved by every penny. This is particularly important in the current public spending context. We acknowledge that many of the best commissioners already recognise the importance of this and are exemplars to the public sector. Yesterday, I was privileged to sit in on the first meeting between the London Probation Trust and two social enterprises. The conversation covered how the trust could work differently to commission social enterprises to set up community enterprises such as cafés, garden centres and small garages to employ offenders in the community. This is an example of a commissioner thinking outside the traditional box, and that is the kind of progressive commissioning that we want to encourage.

Photo of Steven Baker Steven Baker Conservative, Wycombe

Will the Minister join me in celebrating the brilliance of some of our public sector employees, and confirm that we are reforming not because we are challenging the individuals but because we are challenging the system? In some places, it is the system that we have inherited; in others, it is the system that has been established over a much longer period. Will my hon. Friend join me in celebrating the talents of our public sector employees?

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

I certainly will, and it is important to do so. This is largely about freeing people who work in the public sector to express themselves more and to explore their own ideas of how things can be done better. I remember vividly a visit to Merton, where one person working in the mental health field had recognised that the system was failing some people with multiple chaotic problems in their lives. He had shown leadership and pulled people round a table and said, "What we are delivering isn't good enough." Together, they produced a new system of support, and the people receiving that support came into the room to talk to me about it. Two of them burst into tears of gratitude. It is very rare for the public to weep with gratitude for the public services that they receive, and this was a direct consequence of one person's ability to think differently. We want to encourage more of that, but it requires action to create the space and to send the message that, yes, it is okay to think differently and show innovation inside the public services. We need to unlock the potential to do things better.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

Before my hon. Friend moves from clause 3, will he explain why it is mandatory on local authorities? I thought that the Government believed in localism and would trust local authorities to make these judgments themselves without Government interference.

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

It is a requirement to consider, where "relevant" and "proportionate", and it does not compromise local authority autonomy in responding to the requirement. It is simply a requirement to consider. I do not see it as heavy-handed; it is simply designed to be a catalyst to encourage more people to think more intelligently about commissioning.

The need to support commissioners in this process was raised earlier. It is not just about sending a stronger signal on the requirement to consider, as there are also issues about how to measure social value and how to support commissioners. That is why the Cabinet Office has supported the measuring social value project to try to create a methodology and tools to make measures that are realistically capable of implementation. There is a clear need to advance and bring together some more standard and consistent methodologies in this area.

Furthermore, through the national programme for commissioning, we have trained well in excess of 2,000 commissioners across England and across a range of public service areas. All the commissioners have had the opportunity to receive specialist training in measuring wider social, environmental and economic value. I am delighted to say, following the comprehensive spending review, that we are going to continue this training beyond March 2011. I sat in on a session in Birmingham and it struck me that there are many commissioners out there who would like the chance to do things differently and to do more with the voluntary community sector and with social enterprises, but need some help-busting a few myths and getting some practical support. The process of engagement through the partnership improvement programme for commissioning is, I think, valuable. I am delighted that we can continue with it.

We feel that these policy interventions are important in supporting the objectives stated in our coalition programme, but we also feel that they will be insufficient without some legislative intervention to achieve the goals. That is why we support clause 3. Returning to the point made by my hon. Friend the Member for Christchurch, we believe that these provisions are consistent with the Government's wider localism agenda in three main ways.

First, the Bill will support the Government's commitment to community empowerment as a fundamental element of localism. The Bill includes a requirement on commissioners to consider whether to consult the intended beneficiaries of the service in considering how to take account of wider social, environmental and economic value. Although that does not require commissioners to engage with their communities, it sends out a strong message about the importance placed by the Government on involving local citizens and communities in shaping the services they receive. This will inevitably improve community involvement in commissioning and help to ensure that it responds to the full range of communities' priorities.

Secondly, while empowering communities, the Bill also respects the need to ensure the autonomy and flexibility of commissioners in responding to local needs. Commissioners retain the discretion to determine how social, environmental and economic value is taken into account. The Bill does not stipulate the methodology that should be adopted by commissioners, and it is right not to do so. Local autonomy is maintained.

Thirdly, the Bill does not impose an additional burden on contracting authorities. The specification that contracting authorities are required to take wider value into account only where it is relevant and proportionate means that authorities can use their common sense and avoid excessive costs or bureaucracy. It also allows them to use and draw on existing infrastructure and opportunities to consult their beneficiaries and make sensible decisions in the interests of the people they serve. For example, it is highly likely to be "relevant" and "proportionate" to consider the wider social impact of a service and to consult citizens when contracting for a citizen-facing service such as social care as opposed to a contract by councils for use by an authority's employees. The Bill therefore requires a common-sense approach, with the authorities having appropriate discretion.

I have explained where we support the Bill and I would now like to spend a few minutes explaining what conditions we attach to our support. Although we support all the objectives, a number of conditions are attached. If the Bill goes into Committee, with the will of the House, we intend to table amendments. These will include the removal of clauses 1 and 2, which refer to a "national social enterprise strategy" and "local authority strategies".

I am not theological about strategies. Having been in business for 18 years before entering Government, I think that on the whole it is probably a good thing to have a strategy. However, I believe that, particularly in this context, strategies should be governed by the need of the moment, and should be driven by conviction rather than by a requirement to comply with some bureaucratic process. I do not want the process of drawing up strategies to be bureaucratic. I do not want it to be simply an exercise in producing more glossy brochures that fill up the bookshelves in our offices, which are not read and which do not have real traction. Strategies must be driven by need and by conviction at the time.

Photo of Steven Baker Steven Baker Conservative, Wycombe

I congratulate the Minister on his wisdom in attaching this condition to the Bill-I find it hugely reassuring-but will he say a little about clause 2(3), which deals with the definition of social enterprises? I should be grateful for the Government's definition of a social enterprise.

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

I am rarely accused of wisdom, so this is a pleasant moment that I shall relish.

The definitions of social enterprise in the Bill are in the context of requiring a social enterprise strategy, which we do not consider necessary, but there is a legitimate point to be made about defining social enterprise, because, as I mentioned earlier, there is a broad spectrum of social enterprise activity. At one end of the spectrum are businesses that are acting in a socially responsible way or making big social contributions to their communities, while at the other end is pure social enterprise.

The definition developed by the sector is as follows:

"A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners."

That is a reasonable start, but there is a spectrum of activity, including charities which are tendering for contracts and trying to generate new revenue streams through that process, and which consider themselves to be hybrids in that sense. So there is no straightforward answer to my hon. Friend's question.

As I was saying, the Government are uncomfortable about legislating for strategies at both a national and a local level. Several Members-including the hon. Member for Hemsworth, the Opposition spokesman-have agreed that that goes against the grain of localism. We therefore do not agree with legislating for local social enterprise strategies, however desirable they might be as components of existing sustainable community strategies.

None of that should be taken as reflecting any lack of Government support for social enterprise, or even a lack of desire to communicate a strategy. The Office for Civil Society is working with the Department for Business, Innovation and Skills and others across Government to produce a refreshed national strategy for social enterprise, which we will publish in March 2011.

The former Secretary of State for Communities and Local Government, the right hon. Member for Salford and Eccles, knows both the value and the difficulty of working across Government, but I think it extremely important that we do so in this context. My colleagues from the DBIS have embraced the opportunity, and we look forward to producing the refreshed strategy in March. In particular, we will step up engagement with the social enterprise sector so that we better understand the needs of enterprises and the opportunities that could be unlocked. We want to consider how to maximise our support for social enterprises.

Photo of Fiona Bruce Fiona Bruce Conservative, Congleton

May I invite the Minister to meet representatives of the Eden Project and the Message Trust? I believe that they have much to offer local communities: indeed, they aspire to engage with up to 60 local communities across the nation.

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

I should be happy to do that. I have written to all Members of Parliament offering them the opportunity to bring in representatives of voluntary community sector organisations in their constituencies. I understand that there is tremendous enthusiasm out there, and that organisations are anxious to understand the big society agenda better and what it could mean for them. The invitation is open to all Members on both sides of the House.

We consider social enterprises to be valuable in terms of making a social impact and our determination to promote enterprise and private-sector growth. We are making it easier to run a social enterprise by: establishing a taskforce to reduce bureaucracy and red tape for social enterprises; reducing the small-profits rate of corporation tax to 20% from April 2011; offering a one-year temporary increase in the level of small business rate relief from October 2011; and taking a different approach to regulation by introducing the one-in, one-out rule, whereby we will not introduce any new regulation without abolishing existing regulations with a net cost to business.

Secondly, we are ensuring the resilience of the social enterprise sector by developing a big society bank to help grow the new market of social investment that is seeking to blend financial return with social impact. It is a real market, but also an embryonic one and we want to accelerate its growth. We think the big society bank can be a catalyst for that, such as by making it easier for social enterprises to access the capital they need. That will come on stream in quarter two or quarter three of next year.

As has been said, we have-at a time when there is very little money around-set up a £100-million transition fund to support voluntary community organisations and social enterprises delivering front-line services that stand to be affected in the short term by reductions in spending. We have also included social enterprises in the offer to access a £1.4 billion regional growth fund to invest in projects and programmes with significant potential for growth and employment.

Finally, we are making it easier to do business with the state by opening up markets for social enterprises, as I have discussed. There will be a fundamental reform of public services with an explicit commitment to try to create more space for social enterprises, charities and voluntary organisations to help us deliver better public services.

With the two conditions of our resistance to legislating for strategies both at national and local authority level, we support the Bill's objectives. We think it is consistent with the big society agenda and our public service reform aims, and with our intention to make it easier for charities, voluntary sector organisations and social enterprises to deliver public services. We think it will help us maximise value for the taxpayer and improve the process of consultation with communities in the shaping of public services. It will support social enterprise, which in itself is a worthy aim. It simply proposes a duty to consider, where relevant and proportionate. It does not compromise autonomy or add additional burdens. It is about trying to turn best practice into standard practice and to deliver the best possible value to taxpayers, and it is on that basis that we are prepared to support the Bill.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch 12:57 pm, 19th November 2010

I am very grateful to the Minister for the compliments he paid me earlier-I took them as compliments anyway. I congratulate him on having looked at this Bill in some detail, and on having reached not dissimilar conclusions to those that a number of my hon. Friends had already reached, and which were articulated earlier in the debate. There is no need for me to go over those concerns again as I presume that my hon. Friend Chris White-whom I congratulate on having introduced the Bill-will be happy to accept the conditions laid down by the Minister. If my hon. Friend does not accept them, his Bill is obviously unlikely to make much more progress.

If my hon. Friend does accept the conditions, we will have a Bill that is far removed from the long title it had when it was first presented to the House on 30 June this year. It will effectively be a Bill about procurement for local authorities and public bodies. That covers a specific area, and what pleases me is that clause 3(2) states:

"The authority must consider how it might promote or improve the economic, social or environmental well-being of the relevant area by means of such a contract."

That is different from the definition of a social enterprise in clauses 1 and 2, which confine it to being one

"that promotes or improves the social or environmental well-being".

Economic well-being is vital to our communities up and down the land, and that is why I am pleased by the distinction drawn by clauses 1 and 2 on the one hand and clause 3 on the other. I understand why my hon. Friend the Minister is more enthusiastic about clause 3, because of the insertion of that element.

Earlier, I mentioned the exchanges that I have had with the Federation of Small Businesses, which I am sure will be equally pleased by the development, which will be surprising to some, in my hon. Friend's announcement. The FSB is keen to point out that there are 4.6 million micro-businesses in this country, but only 16% of the value of public sector contracts currently goes to small and micro-businesses. The federation was worried that such businesses would be squeezed out by social enterprises.

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

Perhaps my hon. Friend will be reassured if I draw to his attention the Cabinet Office announcement in November of a series of measures designed to make it easier for small firms and organisations to do business with Government. They include measures to progress the Government's aspiration to award 25% of Government contracts to small and medium-sized enterprises.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I am sure that that will be greeted with great enthusiasm by small businesses throughout the country. To achieve that, we do not need legislation; all that is required is positive will on the part of the Government. There are many examples across the public sector of small-scale enterprises being squeezed out by larger organisations in the procurement process.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

One of the objectives we hope to achieve through the Bill will result from its focus on local social enterprises. By its very nature, that will weaken the default position whereby contracts go to large, national organisations, with their inbuilt advantages in procurement. Does my hon. Friend agree with that point?

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I do. One of the amendments to clause 2 that I would have suggested is that social enterprises should be defined as small businesses with those objectives, because of the danger of ending up with some very large social enterprises that are, in many respects, not dissimilar from large public limited companies.

Photo of Ben Gummer Ben Gummer Conservative, Ipswich

Often, the problem for procurement officials is that the lowest-risk option for them is to choose a large, established organisation, because that protects their position. One can understand why they would do that. The Bill would empower procurement officials to consider the whole range of possibilities and to take a slightly more risky approach sometimes, which would be to the benefit of local communities.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

My hon. Friend makes a good point. He is right to emphasise the riskier approach, because sometimes there is a risk. For example, in my constituency, the local council decided to let the contract for the running of the local leisure centre to a charitable trust based in Poole. It became apparent that the trust was not delivering on what was set out in the contract, and after several years the contract had to be taken back in-house. Subsequently, a couple of other projects that the trust was running were found to be financially unsustainable, and that was the end of that, I think. We must not get into a frame of mind in which we think that anything that calls itself a social enterprise is, by definition, a good thing. Such bodies have to be run along business lines.

To take another example, people in Verwood-a town that is no longer in my constituency, sadly, but was until the time of the last general election-have set up a community enterprise called the Verwood Hub, which is a community centre. Unfortunately, it is becoming clear that they have not been applying business principles to the running of that centre, so they are having to go back to the local authority and say, "Please give us some more money." The local authority is making it clear that it can go only so far in doing that, because there is a limit to how much it can be expected to use local taxpayers' money to make up for the deficiencies in the business plan of what might otherwise be described as a laudable community enterprise.

Photo of Fiona Bruce Fiona Bruce Conservative, Congleton

We must not let the example of one or two less successful projects restrict the opportunity for the public sector to enter into entrepreneurial projects with local groups. The spirit of enterprise does, of necessity, involve risk. We have seen that spirit in this nation over many decades, if not centuries, and it is the seed of the fruit of phenomenally successful community and commercial organisations. We can look back in the history of this nation at some tremendous businesses that have done social good, so it would be dangerous for us almost to sanitise public procurement, as we have done to a large extent,. It can never be risk-free. Without an element of risk, we will reduce the opportunity for those great potential benefits that have flourished in this nation in years gone by.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I am grateful to my hon. Friend, who made a powerful speech on the same theme.

People going into public procurement often say, "We've got to do it for the long term, with a five-year, a seven-year, or an even longer contract period." If a relatively small and untested organisation is bidding, it will be a very big risk for it to sign up to a seven-year contract. Procuring on the basis of a one-year contract gives new organisations on the block much more of an opportunity to show their worth, and if they make a Horlicks of it after a year, they will not expect to be invited to re-tender. Some long contracts have been particularly damaging to the interests of small and social enterprises. Minimising risk for the procurer has made it much more difficult for new entrants to take on such contracts.

I hope that the FSB will be encouraged by the attitude of the Government. We are all proud when we have businesses in our local communities that flourish, no more so than those which start up with only half a dozen people, or even one or two, and then become national enterprises, perhaps ultimately getting a listing on the stock exchange.

I was worried that my hon. Friend the Member for Warwick and Leamington suggested that businesses that are in it for profit are at odds with those that are in it to produce good for society. In my constituency, some of the businesses that have been the most successful in the marketplace have made profits that they have been able to use to help to support local activities in the community. For example, one of the most successful companies in this country, Tesco, puts a lot of money back into the community every year by enabling people to get vouchers that are then used to buy IT equipment, and other equipment, for schools. Every year for the past 10 years, I have had the privilege of presenting some of that equipment to the schools in my constituency because parents, teachers and supporters of those schools have been able to get those vouchers and then convert them into important and useful goods.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

My hon. Friend makes an excellent point, and I have shared his experience of Tesco at one of the two branches in my constituency. He mentioned profit, which is often put in the same vein as people being rich. Actually, profit is what people reinvest in their business so that they can provide better services in their community. For social enterprises and charities, the ability to earn a surplus is important. Often, they find that they do not have enough of an earnings margin from local contracts to be able to reinvest in local projects, so that they can continue to provide services for five or seven years. Does he recognise that we need to go beyond the crass definitions of profit being bad and social enterprise good, and instead concentrate on the services that local businesses and social enterprises provide?

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

Absolutely, and that is very much the theme behind the submission from the Federation of Small Businesses on the Bill, which a number of hon. Members will have received. It makes the point:

"The Bill describes social enterprises as businesses 'carried on primarily for a purpose that promotes or improves social or environmental well-being'. While such organisations are undeniably valuable, micro businesses also serve such a function. What sets them apart from social enterprises however is that their primary purpose will be to make a profit and remain in business."

That is the important part-remaining in business. They cannot do that unless they make a profit, as they are often unable to raise capital. That was the problem with the charitable trust that I mentioned earlier. It was not able to reinvest in the leisure centre, which as a result became rather dowdy and did not meet the needs of the customers.

Photo of Fiona Bruce Fiona Bruce Conservative, Congleton

Staying in business may be the immediate aim of a micro-business, but there is often a greater end to that. The aspiration is that in time, it will be able to become an established small business and make a difference to its community and environment. We have to support and nurture micro-businesses in order for them to make that difference.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

My hon. Friend is absolutely right, and we all have examples from our constituencies of businesses that started very small and have become quite large. One such business in my constituency makes organic baby food, and now supplies it to major national retailers. It was based on the idea of an entrepreneur who asked, "Why are we not ensuring that people can guarantee that their children are being fed wholesome baby food at the most nutritionally important time of their life?" That enterprise struck a chord with the consumer, hence its great success. There are a lot of other examples that I will not trouble the House with at the moment.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

My hon. Friend is encouraging me to trouble the House with more examples. In that case, I will choose an example on the other side of the argument. There are publicly funded organisations that, over a period of time, have shown themselves to be hostile in the extreme to small and local businesses. I say quite openly that I believe that Eaga is one such organisation.

Eaga receives a large amount of money from the taxpayer to help provide insulation and subsidies so that people can increase the energy efficiency of their homes and the appliances within them. A lot of work has been done showing that its contractors-often firms that are subsidiaries of Eaga itself-provide services at a much higher cost than local contractors would, and less efficiently. I have had public arguments with Eaga about that and been told, "Well, none of these small companies will be able to give us long-term guarantees that if anything goes wrong with their work, they will be able to put it right."

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

As my hon. Friend says, that is ridiculous. The previous Government were too obsessed with the fact that this organisation was based in the north-east of England and had grown significantly as a result of all the money that it had received from the public purse. I hope that the new coalition Government will introduce a bit more sanity and proportion into the way in which that money is spent so that we can ensure that relatively small local contractors can participate.

Photo of Jacob Rees-Mogg Jacob Rees-Mogg Conservative, North East Somerset

Does my hon. Friend agree that what he suggests is a good way of moving towards the localism agenda? If something is local, it can be smaller and involve smaller, more community-sized businesses much more easily than it can if it takes a central, Big Brother, top-down approach.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

My hon. Friend is absolutely right. Given time, I am sure that he would develop his argument in relation to north Somerset, as he has so ably on previous Fridays.

Localism is of great importance. When we talk about its importance, we should not be too fussed about whether we are talking about a local small business, a local social enterprise or a local charity. We must not create artificial distinctions.

Photo of Fiona Bruce Fiona Bruce Conservative, Congleton

We must also not differentiate between a business being local and being big. It would be dangerous if we equated local with small. As a member of the all-party group on small business, I was a guest yesterday evening at an event at which one of the "Dragons", Theo Paphitis, spoke powerfully about the impact of his chain of shops, Ryman. He took the group on when there were about 80 shops, and there are now about 260. He encourages local staff at each store to raise money for local community projects and he then matches it. Does my hon. Friend agree that it would be dangerous if we started defining too narrowly the scope of even the businesses with which we want to engage? Local does not necessarily mean small, although as someone who has run a small local business, I fully emphasise the importance of what small businesses bring to local community life.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I agree absolutely. There are so many examples. The local community may be dependent on the local post office, but the Post Office is a national organisation with a national network. None the less, it is ever so important that the local branch of that national network in a particular village is maintained and viable. The same is true of the local pub. It does not have to be owned as a freehold by somebody local; it may be part of a national pub chain. That makes no difference to the important role that it will play in helping to maintain the local community. We could go on with lots of other examples.

I turn now to the "residue" of the Bill, and I should tell my hon. Friend the Member for Warwick and Leamington that I do not mean that disparagingly-perhaps "a distillation of the Bill" would be a better expression. When we get to clause 3, we are left with a duty on local authorities not to do anything, but to consider something. My hon. Friend said that that does not offend against the principles of localism and that it is legitimate for the Government to require local authorities, and thereby councillors, to consider particular things.

Photo of Nick Hurd Nick Hurd The Parliamentary Secretary, Cabinet Office, The Parliamentary Secretary, Cabinet Office

Just to clarify, my hon. Friend is narrowing his remarks down to the local authorities, but clause 3 actually applies to public authorities that are contracting authorities as defined by the Public Contracts Regulations 2006. That is, the clause applies to bodies that are already subject to procurement law, which include Government Departments, local authorities and many other bodies.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I am grateful to my hon. Friend for that correction and I am sorry that I was concentrating just on the local authority side. Local authorities are independently accountable through their councillors to their electors for what they think and do, and that is localism, but I can understand that there is a stronger case for saying that unelected public authorities, such as hospital trusts or ambulance trusts, must consider something before they do it because there is a democratic deficit between the people and those organisations.

I only wish that the South Western Ambulance Service NHS Trust had given some consideration to how they might have improved

"the economic, social or environmental well-being" of my constituency before deciding on the procurement process for the hospital car service. If ever there was an activity that is best kept local, where it is most flexible and offers the best value for money, it is the hospital car service. It was run by the ambulance trust, which stopped doing that. However, instead of being given to a range of local providers, it was given to one particular taxi firm, thereby squeezing out organisations with volunteer drivers and imposing significant extra costs on many of the people being taken to and from hospital. That is only one example. If that particular organisation had thought a bit more, perhaps in accordance with clause 3, things would have been different.

Photo of Sam Gyimah Sam Gyimah Conservative, East Surrey

Does my hon. Friend think that the new version of the Bill should cover the qualifications to do with contracting? It is all well and good having a strategy that states that small businesses and social enterprises need to be considered, but the lengthy forms that they have to fill in and the qualification criteria are just as difficult a hurdle for them as being recognised in the first place.

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. When Members make interventions, could they please face the Chair because it is sometimes difficult for me to hear what is being said? It is not a private conversation between two Members, it needs to be recorded for Hansard.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

I am sorry, Madam Deputy Speaker. As a result of where some hon. Members are sitting, it may sometimes seem as though we are a cosy cabal, but we are not. We are trying to address our remarks to the wider world, and my hon. Friend Mr Gyimah made an excellent point, which he also raised in his speech.

Under clause 3:

"The authority must consider how it might promote or improve the economic, social or environmental well-being of the relevant area".

I am glad that that will not be defined because it should be left to the individual procurers. I am not so sure about the requirement in subsection (4):

"The authority must consider whether to consult the persons (if any) for whom the authority is making provision in the exercise of that function."

Again, there is no requirement that authorities should consult-they only have to consider whether to do that. However, that could be important.

Photo of Ben Gummer Ben Gummer Conservative, Ipswich

One matter that has not been drawn out in this debate-my hon. Friend is an expert on this and may wish to comment-is the interaction between the Bill and European tendering legislation. Such legislation is often thrown up like chaff by procurement officials, especially when they have got something wrong. They say, "Oh, it's all because of European rules," when most of the time, it is nothing of the sort. Officials must consider a range of variables when making buying decisions, but that is completely in accordance with current European tendering legislation.

Photo of Christopher Chope Christopher Chope Conservative, Christchurch

My hon. Friend makes a good point. Anyone who mentions the European Union in the House immediately assures that more attention will be paid to what they have said.

I hesitate to give credit to the previous Government, who left our national finances in such a dire mess, but they were quite helpful in setting out clear advice to local authorities on what they could do under the public procurement requirements laid down in EU legislation. Contrary to what some suppose, that legislation allowed local authorities and other public procurement bodies to take into account social considerations-both in pre-procurement, to which my hon. Friend the Member for East Surrey referred, and in the specification, selection and award stages-provided that the economic advantages for the contracting authority were linked to the product or service that was the subject of the contract.

That was quite helpfully set out in detailed advice by the previous Government, and it will be replicated and slightly amended in the forthcoming White Paper that the Minister has promised. I was involved in procurement as a local councillor. One of the most frustrating things is to be told by the solicitor or officer responsible, "You can't do this because it's not allowed." Councillors, who often have a strong feeling for common sense, reply by asking, "Why can't we do it?" As my hon. Friend Ben Gummer said, when we look at the small print, we find that applying wider common-sense considerations to procurement is not prohibited by EU directives.

Jon Trickett, who spoke for the Opposition, criticised Government Members on the basis that a large number of their speeches and interventions were slightly at odds with each other, but we should be congratulated on that, because it shows that we are engaged in a healthy political debate. In a brilliant intervention, my hon. Friend Steve Baker undermined the case for the Bill very effectively, and underlined the importance of keeping the state out of social enterprise as much as possible and trusting people to come up with the right results.

I hesitated to say anything at that time, but I know of a good example of the state getting it all wrong. We were assured by the previous Government that, as a result of changes in European law, only 16,000 new migrants from the newly admitted eastern European countries would come to participate in our buoyant UK economy. I forget whether that estimate was out by 100% or 1,000%, but why was it so significantly wrong? It was wrong because no Government can second-guess what ordinary individuals will do in a given set of circumstances. My hon. Friend therefore told the House an important cautionary tale.

When my hon. Friend the Member for Warwick and Leamington makes his winding-up speech, which I hope will be shortly, he can rest on his laurels having brought to the House an important topic for discussion. Indeed, he put so much work into the drafting of his Bill that it could only be provided three days ago. For historians, it will be interesting to look back and compare the final version of his Bill-if it gets to Third Reading-with what was set out in the helpful research paper from the Library. It set out in 11 pages what it was thought the Bill would contain. Although it is now a much shorter and more focused Bill-and there is a case for saying that the title of the Bill should now be changed-it will be an important first for my hon. Friend if he gets it on to the statute book. Some of us have been in the House for more than 20 years and have never been successful in the private Members' ballot. Even if I had been successful, I am not sure that I would ever have been able to emulate the success that my hon. Friend will soon enjoy of steering a Bill through to a successful Second Reading.

Photo of Chris White Chris White Conservative, Warwick and Leamington 1:31 pm, 19th November 2010

I thank my hon. Friend Mr Chope. He suggested that I might rest on my laurels, but I do not intend to do so if we reach the next stage of the process.

I thank all those hon. Members who have attended this debate on a Friday, who have contributed so well to it and who have made interventions-some helpful, some very helpful and some less so. I especially thank Hazel Blears and my hon. Friends the Members for West Worcestershire (Harriett Baldwin), for Bedford (Richard Fuller), for Wycombe (Steve Baker), for Ipswich (Ben Gummer), for Castle Point (Rebecca Harris), for Congleton (Fiona Bruce), for North East Somerset (Jacob Rees-Mogg), for Christchurch (Mr Chope) and for East Surrey (Mr Gyimah).

We can all agree on some things. There are nuances of ideology, but I am sure that we agree that we all enter politics for the same reason-to help our constituents and the communities that we serve and in which we live. Even if the Bill falls at this stage, this debate has given us the opportunity to discuss some of these very real issues about how we procure and commission services. At the very least, our commissioners will be provoked into thinking about a different way to do things and the need to include our social enterprises, small businesses and charities-we have all given examples of their work. We all agree that these are difficult financial times, and we need to look at new models and new directions to make our communities more successful and bind our neighbourhoods together. That is a very important task for this House.

It has been pointed out-and I thank my hon. Friend the Member for Christchurch-that I would be foolish not to agree with some of the suggestions made by my hon. Friend the Minister. I take his suggestions on board, but it is important for this Bill to reach the next stage, because we need to have those discussions in Committee. We can all put our ideas on the table and help to move forward. I thank everyone for their time today and I hope that their contributions to the next phase will be equally helpful, supportive and useful.

Question put and agreed to.

Bill accordingly read a Second time; to stand committed to a Public Bill Committee (Standing Order No. 63).

Photo of Jon Trickett Jon Trickett Shadow Minister (Cabinet Office)

On a point of order, Madam Deputy Speaker. Pursuant to the point of order made earlier today by my hon. Friend Huw Irranca-Davies, who, the House will recall, requested that a Minister be brought to the Dispatch Box immediately to explain the outrageous comments by the Prime Minister's enterprise adviser, I understand that the adviser has been forced to resign or may even have been sacked. Can you ensure that a Minister appears at the Dispatch Box this afternoon to explain what has happened to the shambles of the Government's enterprise policy, given what has happened today?

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

As the hon. Gentleman knows, I have no power to compel a Minister to come to the Dispatch Box; nor have I received any notice of a statement. His point has been placed on the record. I am sure that those on the Treasury Bench have heard his comments. There is nothing further that I can do on that point.