Clause 1 - National social enterprise strategy

Public Services (Social Enterprise and Social Value) Bill – in a Public Bill Committee on 19th October 2011.

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Question proposed, That the clause stand part of the Bill.

Photo of James Gray James Gray Conservative, North Wiltshire 9:30 am, 19th October 2011

With this it will be convenient to discuss Government amendments 18 and 21.

I welcome members of the Committee to this stage of the Public Services (Social Enterprise and Social Value) Bill and congratulate the hon. Member for Warwick and Leamington (Chris White) on the Bill being read in Committee and on securing the Government’s support.

Much against my better judgment, the House agreed last week to allow the use of electronic devices in Committee. It was a dreadful decision, but there we are. Of course, members of the Committee may do so, but only if the devices are in silent mode and used with discretion and without disturbing the Committee in any shape, size or form. My preference for dress code in Committee remains the same as it is in the main Chamber, so hon. Gentlemen should keep their coats on. I hope that that is agreeable.

Photo of Chris White Chris White Conservative, Warwick and Leamington

It is a pleasure to serve under your chairmanship, Mr Gray, particularly as I am new to the process of private Member’s Bills. I understand from colleagues with far longer service than I have that this is quite a rare occasion and your experience will be gratefully received.

I begin by expressing my gratitude to right hon. and hon. Members and friends for giving me their most valuable resource this morning—their time. I am grateful to the Minister for his support so far and to the shadow Minister for the Labour party’s support for the Bill’s principles. I want to express special appreciation to the right hon. Member for Salford and Eccles for her words of advice and encouragement during the Bill’s early development. Finally, I thank Social Enterprise UK for its assistance throughout that process.

Over the past 11 months since the Bill was discussed on Second Reading, I have been surprised and warmed by the support that the Bill has received throughout civil society. Voluntary organisations, community groups and social enterprises have written to me or contacted my office to express their support for the Bill, which they believe could, through their organisations, make a real difference in communities.

Although the Government have tabled some amendments today, I am pleased that the Bill’s core principle will remain intact and that its main thrust, which will level the playing field for civil society, will not be affected.  The amendments will remove the social enterprise strategies from the Bill. That is a condition of the Government’s support. Although I hope that the message sent out by the Bill will be that local authorities should be fully open when consulting social enterprises and keep them in mind when looking at their local economies and public services, I must accept that the strategies might have placed too much of a burden on local authorities when we are asking them to cut costs and focus on front-line services.

Photo of Chris White Chris White Conservative, Warwick and Leamington

May I make a little more progress?

Although many believe that the strategies would force local authorities and the national Government to consider social enterprise more thoroughly when planning for the future, the duty to consider consultation—also under the Bill—will give public bodies the incentive to go out and talk to the sector, our charities and voluntary organisations and to work with them on how we can create better procurement systems that benefit our communities.

It is also important to remember that, although the strategies have their place—nothing prevents the Government or local authorities from voluntarily creating their own strategies for social enterprises—the best way in which we can help social enterprise in the public sector is to reform our procurement process. The Bill will achieve a big step forward in that respect. Moreover, I agree that the focus should be on the pre-procurement stage. I believe that that will make the Bill’s impact stronger, by building in social value from the outset of the procurement process, so that we imbed social value throughout the contract process and ensure that, when criteria relating to social value reach the final stage of the procurement process, they are relevant and focus the social impact on those parts of our communities that need it most.

Some of the amendments would strengthen the Bill further. For example, amendment 5 will insert proposed subsections (2A) and (2B) into clause 3 to ensure that, when reviewing “the relevant area” that is to be considered for social value, account is taken of the whole area for which a local authority carries out procurement. Therefore, social value will be given as wide as possible a scope within a commissioning authority, and there will be more opportunities for taking into account during that phase of the procurement process the excellent work that social enterprises, voluntary organisations and community groups perform across our communities.

To reflect the amendments, the title will be changed to the Public Services (Social Value) Bill. I appreciate that change, which not only reflects the essential importance of social value—hon. Members on both sides of the Committee agree that that is the most important part of the Bill—but provides the snappiness that titles of private Members’ Bills sometimes lack.

Although putting any Bill on the statute book is a long process, I have been most pleased by the consensus built around the Bill. In working with colleagues from all political parties and with organisations from across civil society, I have been impressed by how everyone has gone about the business. What matters most is that  social value is instilled across public sector procurement to achieve smarter, more socially aware commissioning. The backing of groups such as the National Council for Voluntary Organisations, the Association of Chief Executives of Voluntary Organisations, the National Association for Voluntary and Community Action, Social Enterprise UK and many others shows how much support the Bill has.

I hope that, together, we will see the Bill become law, which will be an important win for social enterprises, charities and voluntary organisations throughout the country and for smarter public sector commissioning, which will benefit all our communities. I therefore ask the Committee to support the Government’s amendments, to move the Bill another step forward, and I again thank right hon. and hon. Members for their time. The Bill will change how we do things for the better, across the country, by opening up public services to those organisations with the knowledge, skill and dedication to help our communities, which is what it set out to do.

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

I am delighted to serve under your chairmanship in Committee on this Private Member’s Bill, Mr Gray.

In relation to clauses 1 and 2, on Second Reading, I referred to the Bill as relatively small but with a big idea and as having the potential to transform procurement in this country—I think that I called it small and perfectly formed. I am genuinely disappointed that the Bill, which was small, is now much smaller in both intent and in effect.

I welcome discussion with the Minister and with the hon. Member for Warwick and Leamington, because I thought the title was important, not so much in relation to strategies as to the definition of social enterprise in the Bill. Clauses 1 and 2 give a good definition of social enterprise. Clause 1(5)(b) provides that a social enterprise has to be a business that is

“carried on primarily for a purpose that promotes or improves the social or environmental well-being”,

and, importantly for me, paragraph (c) provides that

“the greater part of any profits for distribution is applied for” a social and community benefit purpose.

I have pressed several Ministers, whether the Health Secretary or other Secretaries of State, for a definition of what they mean by social enterprise. We have heard a lot of rhetoric about mutualisation, about transforming social enterprise and about putting it at the forefront of our delivery mechanisms. However, time and again when I have pressed for a definition, it is like my squeezing a sponge that slips away from me, because no one appears willing to say that a social enterprise is one that is carried on for profit, most of which has to be applied for a public purpose. No one is willing to say that there should be an asset lock on social enterprises leaving the public sector to protect the taxpayer’s assets that have been built up over many years, so that they are not simply transferred to the private sector.

We had some debate about that on Second Reading, and I had hoped that the Bill would provide, in legislation, an opportunity to define a social enterprise. We might still have had arguments about that definition, because people have different views, but at least there would have been something on the statute book. I am increasingly worried that the idea of social enterprise covers a multitude  of sins and is a very woolly concept. People have come along to various events thinking that commissioning will be transformed and therefore that there have to be social enterprises to get the contracts. All kinds of private organisations are dressing up and putting on the label of social enterprise. Perhaps they put 5% of their profits back into the community, but 95% of their profits are basically private sector.

I have no problem with people being in a private sector enterprise—fine, be a business—but people should be honest about it and not try to squeeze one form of corporate activity into what they think is a flavour-of-the-month political position to take advantage of a commissioning framework. If the commissioning framework proposed under Government amendments is to be effective in addressing what I know are the hon. Gentleman’s deep, deep concerns, we must be far more honest and rigorous in defining the type of organisations that we want to go forward.

I have a second concern about deleting clauses 1 and 2. There is a very good provision for local authorities not only to consult social enterprises in drawing up a national strategy but to consult the public. Again, we have amendments that would allow local authorities to consult the public, but if something is urgent and they are not able to do so, they would not have to do so. A key part of transforming local communities means asking what the public want, not just the businesses that will provide the services. It needs a sense of community governance of the different forms of organisation. That is where we get the real community benefit.

The Minister understands that where we involve the users of the service, the citizens who pay for it and the staff who provide it to get that whole total approach, we get far more social value out of such investment. I am worried that we are moving to a simply transactional process: the local authority purchases a service, which happens to take place after having an analysis of social value. That is a very small incremental step, given where we want to be. This is a missed opportunity to do the transformation that was talked about on Second Reading. I know the practical pressures that are on the Minister and I know that the hon. Member for Warwick and Leamington is committed, but I believe that he would want a more transformational Bill.

If we simply end up with another form of transaction—buying the service that does a little bit of calculation about the social return on the investment—that does not involve the public, the users and the people who provide the services, we will not maximise the impact that we make from our investment. Money is tight across the public service. The way to multiply social value out of investment is by ensuring that all partners are involved.

I am disappointed that the Bill will be smaller. I will support it because it is an incremental step along the way, but I think that it has been somewhat eviscerated, given the ideas that the hon. Gentleman originally proposed. That is not a criticism of him. I know the practicalities of getting the Government to support any private Member’s Bill and I think he has done a heroic job in getting this far, but I would very much like clauses 1 and 2 to remain. I am not wedded to bureaucratic strategies, but I support the idea of a definition of  social enterprise that involves all the partners, including the public, in deciding the type of services that we want to provide.

I have concerns about some of the amendments on the process as well, but on the principle of clauses 1 and 2, I want to say for the record that I am disappointed that we have not been able to keep them in the Bill. Perhaps we will have another private Member’s Bill at some point in the future to bring back some of those items of substance, and the hon. Gentleman would have my full support in doing so.

Photo of Gareth Thomas Gareth Thomas Shadow Minister (Cabinet Office), Party Chair, Co-operative Party

It is a pleasure to serve under your chairmanship, Mr Gray. It is a particular pleasure to follow my right hon. Friend the Member for Salford and Eccles, who was a great propagandist for social enterprises when she was a Secretary of State. She continues to be an expert in this field. It is also a pleasure to have the opportunity to praise the hon. Member for Warwick and Leamington for introducing the Bill and establishing a coalition of support.

Despite the inevitable intimidation and bullying to which Back Benchers are subjected by ministerial colleagues when introducing a private Member’s Bill, the hon. Member for Warwick and Leamington has nevertheless managed to defend an important part of the Bill. I genuinely congratulate him on the work he has done, particularly on clause 3, the fundamentals of which have been protected despite the amendments tabled by the Minister, which I understand to be relatively technical. The Bill is a worthy and important step forward from which the social enterprise movement will undoubtedly benefit.

It is a privilege to shadow my neighbour, the hon. Member for Ruislip, Northwood and Pinner. I have always had a profound sense of sympathy for his being able to see the best constituency in Britain without being able to represent it, which must be terribly tough.

Back in the mists of time, on 20 January 1999, I had the good fortune to initiate an Adjournment debate in the House on social enterprises, so I feel that I have returned to my past by having the privilege of taking part in this debate. In the Adjournment debate back in ‘99 I urged the then Government to introduce an overarching strategy that would tackle the lack of recognition and effective support for social enterprises—my right hon. Friend touched on that—and the inability of too many social entrepreneurs and social enterprises to access finance. We have come a long way since that Adjournment debate, not least thanks to the considerable work of many members of the previous Government, including my right hon. Friend.

I would be interested to hear the Minister’s reason for trying to persuade the Committee that clause 1 should not stand part of the Bill. I suspect that he remembers his own private Member’s Bill, the Sustainable Communities Act 2007, which also requires local authorities to prepare strategies for making things better. Clauses 1 and 2 of the Bill seek to amend that Act in a relatively small way, and I suspect that, if he were to be honest with the Committee or in private, he has lost an argument with his friends in the Department for Communities and  Local Government. The idea that a social enterprise strategy would be a huge burden on Whitehall or on local authorities is a little far-fetched. Deleting clauses 1 and 2 and changing the Bill’s title would gut many of the potentially huge wins that the Bill might deliver, notwithstanding the benefits of clause 3.

The Minister, given the training he has received from many of my former constituents in Pinner and Hatch End, will no doubt merit promotion at some stage, and the Minister who comes after him may not have his apparent commitment to promoting social enterprises or his apparent clout in Whitehall—I take that at face value because I have not had the chance to study his record in office. In the absence of a Minister with such enthusiasm, who will encourage the Government to come together to ensure that cross-Whitehall commitment to addressing the problems faced by social enterprises is maintained beyond these first months of the coalition Government?

The Committee will be aware of the problems many social enterprises have had with the Work programme and the problems of Central Surrey Health, a social enterprise set up to win contracts from the NHS, which is a big society award winner that has lost out to a private sector player. The benefit of having a strategy is that it creates political space, a dialogue and a conversation across Whitehall and the sector, allowing them to think through the challenges faced by social enterprises and what can be done to meet those challenges.

Photo of Charlie Elphicke Charlie Elphicke Conservative, Dover 9:45 am, 19th October 2011

The hon. Gentleman is right that having a strategy creates a discussion, but is not the central point that we should be not only having a conversation, but doing something? Whitehall is littered with strategies and box-ticking, followed by award ceremonies for those who have ticked most boxes. Should we not be writing a duty into contracts and making it happen rather than simply talking about it?

Photo of Gareth Thomas Gareth Thomas Shadow Minister (Cabinet Office), Party Chair, Co-operative Party

The hon. Gentleman is absolutely right, but we must have the opportunity to discuss what needs to be done and what role Government can play in helping social enterprises to flourish. Had I been given the opportunity, early on, to try and influence the hon. Member for Warwick and Leamington in the drafting of the Bill, I would have wanted the clause to be somewhat tougher. I might have wanted to include a requirement to report to Parliament on the strategy’s progress.

Nevertheless, potentially, the clause creates a vehicle for ensuring that the Government are clearly accountable for their progress in supporting the development of the social enterprise sector. In the clause, the hon. Gentleman would allow the Government to make up their own mind about whether the strategy should be reviewed. Again, I hope we might have encouraged the hon. Gentleman, with hindsight, to require them to do so to see how the strategy is working. They might review it after three years—certainly after five. That is the requirement in other areas of legislation, and it would toughen up the clause. In so doing, it would help to ensure that there remained in other Departments across government—not just the Minister’s—the capacity to think through the issues affecting social enterprise. It would require senior officials in each part of Whitehall always to be thinking about what else they could do to help such  social enterprises. Clearly, there are problems with how those in health and in the Department for Work and Pensions understand how to help social enterprises, and with the scale of cuts in funding for local authorities, there are also problems for the Department for Communities and Local Government.

I gently encourage Opposition Members to resist the Minister’s considerable charms and to support the retention of clauses 1 and 2. We will listen with great interest to what the Minister says to justify the deletion of a strategy, but I am minded to encourage Committee members to divide on the amendment.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

It is a great pleasure to contribute to the debate, Mr Gray, and to follow the distinguished speeches that began it. It is also a great honour to congratulate my hon. Friend the Member for Warwick and Leamington. He is described in the newspapers today as self-deprecating—and he is. He has achieved a tremendous amount with the Bill, so far. It is the desire of Members on both sides of the House that his journey, and ours with him, should continue in promoting the role of social enterprises in the United Kingdom. I also thank the Minister for his efforts in promoting the parts of the Bill that he thinks fit the Government’s overall strategy. That is a tremendous help for all of us who believe that social enterprise’s evolving and emerging role in our economy should be encouraged and nurtured, both in our local communities and nationally.

Good points have been made about clauses 1 and 2 from the Opposition Benches—I say that, but this is pretty much a communal effort. I shall speak briefly about a couple of those points.

Photo of James Gray James Gray Conservative, North Wiltshire

Order. We are, of course, considering clause 1.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

Thank you, Mr Gray.

The right hon. Member for Salford and Eccles talked about the definition of social enterprise being important, and she is correct. Looking back, we can see that that definition has been elusive. I remember at business school back in the 1980s being taught by Amitai Etzioni, who was advancing his own view about the definition of social enterprise and its role. That definition has evolved greatly over the 20 or so—maybe even 30—years since. The right hon. Lady mentioned that an asset lock was important, and many of us would agree, although it is not part of the definition in the Bill. She made the good point that that is such an important issue that perhaps it should be in a different Bill. There are many different views on that, and the circumstances are evolving. It would be a shame to hold up the progress that can be made now on the impact of social value and procurement while we debate the greater issue.

Photo of Gareth Thomas Gareth Thomas Shadow Minister (Cabinet Office), Party Chair, Co-operative Party

The hon. Gentleman has rightly taken up the point that my right hon. Friend the Member for Salford and Eccles made about asset locks. Social enterprises can use a whole series of legal forms that have an asset lock in place. Might not a discussion about the strategy to support social enterprises at a national level allow the debate about asset lock requirements to flourish? I encourage the hon. Gentleman in particular to resist the blandishments of the Minister and to support clause 1 stand part of the Bill.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

I appreciate that. I do not need much encouragement to go against the blandishments of the Minister, but I do not agree with the hon. Gentleman. The Bill provides an opportunity to continue to paint a future together for social enterprise, and it would be sad if he moved forward with this amendment. It is useful as a probing amendment, but I urge him not to press it to a vote. I will definitely support the Government on this matter, because, as my hon. Friend the Member for Dover has mentioned, people would like the parts of the Bill that impact procurement now to move forward now. The Minister has shown that that is his intent, and they are the most practical parts of the Bill. The comments that the hon. Member for Harrow West has made about discussion are perfectly valid, and we should discuss the matter, but that does not have to be done within the context of the Bill.

Photo of Gareth Thomas Gareth Thomas Shadow Minister (Cabinet Office), Party Chair, Co-operative Party

To be clear, I seek to defend the integrity of the Bill. It is the Minister who wishes to move an amendment to delete clause 1.

Photo of Richard Fuller Richard Fuller Conservative, Bedford

I appreciate the hon. Gentleman’s clarification of his point. Nevertheless, this Bill is important because it is another step in a journey, and many in the social enterprise world see it as a valuable step forward. We should move forward with the Bill, and we should also move forward separately with trying to help the Government in their broader understanding of the role of social enterprises in our community.

There is a risk that the role of social value and social enterprises is seen as something that we should consider after we have completed the process of deficit reduction. That view suggests that we have to tackle deficit reduction before we look at social value, which I do not think is right. I think—I am sure that the Minister shares this view—that social enterprise is part of the solution to getting our public finances back into shape. We want to encourage the diversity of organisations in our community, quite rightly, as the right hon. Member for Salford and Eccles mentioned, including the participation of the public and the broader community of other non-profits and charities in that dialogue, to help local authorities and national Government to achieve the goal of getting our public finances back in order.

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

I am listening carefully to the hon. Gentleman’s comments. On Second Reading we discussed family intervention projects, which I feel are the best example of where we can save money and have a transformational effect on people’s lives. Much of that work is best carried out by social enterprises together with other community groups. The Government have now adopted the previous Government’s proposal on family intervention projects; I think that the Secretary of State for Communities and Local Government is talking about the top 100,000 families, which is absolutely where we ought to be. That is to some extent why I support my hon. Friend the Member for Harrow West on the need for a strategy. As I said, I am not wedded to strategies simply to have them lie about Whitehall and tick boxes. If one wants integrated service provision, it is essential to get all the Departments lined up, facing in the same direction and coming together for that purpose. The hon. Gentleman made that point very well.

Photo of Richard Fuller Richard Fuller Conservative, Bedford 10:00 am, 19th October 2011

I appreciate the right hon. Lady’s comments. Strategy could happen in two ways. I agree with her that we do not want to see another report on the shelf. However, we are at a period in our history, with the circumstances of our public finances and the evolution of different forms of social and corporate enterprise, where strategy will emerge from action, rather than being dictated or viewed from the top. We have the opportunity by passing the Bill to learn an enormous amount to help us with the definition of the two parts. That is why it is so important that we move forward with the Bill and that we encourage—through our words, deeds and legislation—all the things that will help us to create the knowledge that in two or three years’ time will enable us to have a much deeper and richer understanding of the strategy. For that reason, I shall support the Government on the Bill. I congratulate my hon. Friend the Member for Warwick and Leamington on enabling us together to paint a better future for our country.

Photo of Lorely Burt Lorely Burt Chair of the Liberal Democrat Parliamentary Party

I had not intended to speak. When I read the Bill, I was hugely impressed and I congratulate my hon. Friend the Member for Warwick and Leamington. When I saw the Government amendments, I felt that the Bill had had the heart ripped out of it, if I am honest. I was particularly taken with the comments of the right hon. Member for Salford and Eccles. The last thing that I want to do is scupper my hon. Friend’s valiant efforts, so I am minded to support the Bill.

I have worked extensively in procurement policy, particularly procurement from small business and women-owned businesses. I have looked at the feasibility of using Government procurement power to achieve good, social aims. I agree with the right hon. Lady that procurement is not a huge thing to ask of local authorities and Government, because they deal with a lot of administration.

I hope to hear from the Minister whether it would be possible to move forward incrementally, particularly in the definition of social enterprise, as mentioned by the right hon. Lady. Perhaps something like that could be built into the Bill in a Government amendment on Third Reading. That would take the ideals and the practicality of ensuring that the Bill is effective and achieves its aims as far as possible.

Photo of Steven Baker Steven Baker Conservative, Wycombe

I congratulate my hon. Friend the Member for Warwick and Leamington on promoting the Bill. I stand by the remarks that I made on Second Reading. In contrast to some of my colleagues, I am delighted that the Government plan to remove clause 1. I am sure that we all wish to live in a society where the ties of voluntary association that bind us together and cause us to strengthen bonds of fellow-feeling are increased. We all value that richness of relationships, which is the basis of human flourishing. I can think of nothing more likely to trample and destroy those bonds of voluntary association than a national or, indeed, local strategy to make it so.

I welcome the Government’s turning down of clauses 1 and 2. I recognise the need to be clear about what a social enterprise is; that is a conversation we could certainly have. Perhaps we know one when we see  it—mutuality, friendly societies, co-operatives and people coming together voluntarily to serve one another—and, of course, I am all in favour of that. Local and national strategies may be more prejudicial to success than helpful, so I am delighted to support the Government’s stand against clauses 1 and 2.

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

It is a genuine pleasure to serve for the first time under your chairmanship, Mr Gray, and out of respect for you, my BlackBerry will stay firmly in my pocket. I apologise to you and the Committee for being a little under par this morning—I am suffering from receding man flu—but it is a genuine pleasure to speak to the amendments.

It would be churlish not to welcome the shadow Minister for Civil Society, and my Harrow neighbour, the hon. Member for Harrow West to his new role. He has accused me of intimidation and bullying, and he surprised me by suggesting that I have clout across Whitehall. That is news to me, and to many of my colleagues. However, it is good to see the hon. Gentleman in his place.

I pay a sincere tribute to my hon. Friend the Member for Warwick and Leamington, both personally and on behalf of the Government, not just for his choice of Bill but the skill with which he has built a coalition of the willing and his patience throughout a frustrating process. I speak from experience, having shepherded the Sustainable Communities Act 2007 through Parliament, which was a tortuous process. I was helped not least by the then Labour Secretary of State, the right hon. Member for Salford and Eccles, who was extremely helpful. I heartily congratulate my hon. Friend on what he has achieved so far.

Building a coalition around the Bill is no small feat, and it is worth stepping back and focusing on what we agree on, because it is another milestone or stepping stone on quite a long journey. I am prepared to pay full tribute to the previous Administration for their sincere efforts to support social enterprises, led by the right hon. Lady. I think that we all agree on the need to try to encourage more intelligent commissioning.

Most of the people charged with spending hundreds of millions of pounds of taxpayers’ money are doing an incredibly difficult job at this time, and we must support them in doing that job as intelligently as possible. In the current circumstances, when there is much less money around, that means trying to extract as much value from every pound of taxpayers’ money as possible. There is a debate about what value means in that process, and there is a lot of agreement in the Committee that value should extend just beyond the lowest price. We want those who buy on behalf of taxpayers to have the freedom to think with a little more latitude about wider social, environmental and economic value in the long term. Most of us who have become engaged with the issue know the difficulty and the challenge of trying to break through. It is a cultural challenge as much as anything, when managing risk in the public sector.

The Bill is an important stepping stone in the process; it is not the end of the journey, but it moves things along the road to more intelligent commissioning. It encourages innovation, leadership and perhaps some risk, because the risk attached to the status quo is so high. The cost of the status quo, which is that we are  failing to deliver value on, is high and consistently underestimated by the system. There is cross-party agreement—it was good to hear the shadow Minister articulate it—on the need to try to make it easier for social enterprises and not-for-profit organisations to participate in public service and to play a bigger role in challenging the status quo.

The Bill goes with the grain of that, and certainly with the grain of what the Government are trying to achieve through public service reform, not least—this was not mentioned in speeches—the new best-value duty that my right hon. Friend the Secretary of State for Communities and Local Government has placed on local authorities to consider value, including social value, in all contracts throughout the process and a recurrence of extensive consultation with end-users.

The Bill goes with the grain of what the Government want to support and what previous Governments have wanted to support, so its principle is welcome, but the right hon. Member for Salford and Eccles and the shadow Minister, who also served as a Minister, both know better than I do that, in government, one has to strike balances. In this situation, we need to strike a balance between the imposition of new duties and our desire to streamline, speed up and make processes more efficient, because there are lots of complaints from social enterprises and charities about how slow the process can be.

As legislators, we all have a responsibility, when considering proposals and new legislation, first, to ask whether a new law is needed and, secondly, to ensure that that law is focused on what will make an impact and a difference. That brings me to our first set of amendments to clause 1. We believe that clauses 1 and 2 should be deleted. The logic flows across both clauses, so, with your permission, Mr Gray, I will speak to clause 2 as well as clause 1.

Photo of James Gray James Gray Conservative, North Wiltshire

We will debate clause 2 shortly, so it is better to keep it separate.

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

Okay. Thank you for your guidance, Mr Gray.

I made it clear on Second Reading that we supported the Bill in principle. I said that we would be extremely happy to consider it in Committee, but that we would make amendments. I was explicit at that time in saying that we wanted to remove clauses 1 and 2, because we believe that it is not necessary to legislate in this context. That comes back to a fundamental point that has been touched on by various people: I am all for strategies, but they have to be driven by need and conviction.

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

I will just finish my point.

Where legislation becomes a bureaucratic box-ticking exercise, it loses tremendous value. I remember being aghast in my first Parliament about the amount of documents and papers that came thudding through the mail box into the office and then sat on shelves. There were strategy documents covering all manner of things. I increasingly questioned whether they would make any difference to anyone. Precisely because I want local authority leaders and commissioners to embrace social enterprises and take forward this agenda with conviction,  I do not want this to involve a sense of duty to comply with a bureaucratic exercise. We have mentioned sustainable communities and sustainable community strategies. Too often, glossy brochures are produced because they have to be and not enough conviction and thought are put into them.

As I have said, there is an explicit coalition Government commitment to encourage and support social enterprise mutuals to make it easier for them to participate in public service. Before I give way to the shadow Minister, I will say that there is an enormous amount of activity going on to support social enterprise, but there is a fundamental point about whether we need to legislate to require central Government and local authorities to produce social enterprise strategies. I fear that we would lose something in that process. We want to persuade people. We want to see real leadership. If this just becomes a bureaucratic function that everyone has to do, there is a danger that we will be working against ourselves.

Photo of Gareth Thomas Gareth Thomas Shadow Minister (Cabinet Office), Party Chair, Co-operative Party

I understand the Minister’s argument, even though I am not thus far convinced by it. He said that a whole series of things are being done to help social enterprises. Is there a strategy to promote social enterprises?

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

Yes, there is, and it flows from an explicit coalition Government commitment to support social enterprise mutuals and to make it easier for them to participate in public service delivery. Since the debate on Second Reading, we have published, as promised, a social investment strategy that addresses access to capital, which, as he and the right hon. Member for Salford and Eccles know, has for some time been rightly expressed as one of the great brakes on the expansion of social enterprises. My hon. Friend the Member for Bedford knows that issue well, too. The first strategy document published was entirely focused on our mission to grow—

Mr Thomas rose—

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

Let me finish my answer to the hon. Gentleman’s first intervention. The document was entirely focused on what we are doing to try to grow the social investment market. It is a small, fledgling, embryonic but real market, and we are extremely excited about its potential, because if we can achieve our aim—the strategy sets out a number of avenues of activity, not least the creation of Big Society Capital—we will make it easier for social entrepreneurs to access capital. Over many years, such people have told us consistently that difficulties relating to that are the biggest barrier to growth.

Photo of Gareth Thomas Gareth Thomas Shadow Minister (Cabinet Office), Party Chair, Co-operative Party 10:15 am, 19th October 2011

Access to finance is clearly an element that one would hope to see in a strategy on social enterprise, but surely it is not the only factor. I look forward to the Minister setting out the strategy’s other elements, but at what point does he think that Parliament will have the opportunity to review the success of the Government’s strategy on social enterprises?

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

The hon. Gentleman is entirely right that other elements are involved, not least the opening up of new markets for social enterprises, which was discussed a lot in the social investment strategy and is at the heart of the public service reform White Paper, too.

We are trying to create new market opportunities for social enterprises and to make it easier for them to access capital in addition to the Big Society Capital project, which is working towards creating a new institution with £600 million of capital. That is a serious play in this area. We have also announced that we will set aside at least £10 million for a technical assistance fund to help social enterprises become more investment-ready, so that they can go to Big Society Capital through intermediaries and try to access the money.

Additionally, we are working closely with Ministers at the Department for Business, Innovation and Skills to ensure that we are fully joined up on the work that they are doing and the opportunities that they present to social enterprises, which, in my view, can play an incredibly important role in the growth agenda, or the economic priority to create jobs. The regional growth fund is relevant here, as are the plans to develop a network of 40,000 mentors to support small businesses, including social firms.

The Government are joined up. A huge amount of activity is going on to support social enterprises and other entrepreneurs. That is being communicated to stakeholders, and I continue to discuss with Ministers whether there are merits in joining that up in a formal strategy document. I will come back to my earlier point: the previous Administration were guilty of believing that just publishing a strategy document was enough and that suddenly doing so would be transformative. In my view, it is not. There are occasions when a strategy document is useful—we certainly felt that it was in relation to our plans to grow the social investment market—but we do not think that it is necessary to legislate for one.

Photo of Hazel Blears Hazel Blears Labour, Salford and Eccles

A significant amount of public money is now being used to commission services in the social enterprise sector, but does the Minister think it important that we have a proper, agreed definition of a social enterprise? Some Ministers have told me that it is anything not in the public sector, and I am increasingly worried that the integrity of the social enterprise sector is being worn down because organisations that are clearly not social enterprises are parading as them. Will the Minister tell us where we can get a legally agreed definition of social enterprise?

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

Legally agreed is one matter—a definition is included in the Bill, and it is one that I am perfectly comfortable with. However, in terms of where legal definitions may emerge and the need for them, one has not perhaps been required up to now, although that may change. I refer the right hon. Lady to regulations relating to the Localism Bill, particularly the right to challenge and the right to buy, about which the definition of legal form and agenda has been an issue, and she has spoken consistently and quite rightly about the need for protection with regard to asset locks. That is the forum for such a discussion on definition through regulation. We are also about to embark on a review of charity law, and I suspect that to be part of the debate, too.

The right hon. Lady’s fundamental point is right. As hon. Members will be aware there is a spectrum, from pure charitable activity to social businesses. Some blurring of lines might not have mattered until now. She may be right that we have reached the point at which some definition in law is needed. As I have indicated, there are two legislative opportunities for that to happen.

Photo of Gareth Thomas Gareth Thomas Shadow Minister (Cabinet Office), Party Chair, Co-operative Party

I mentioned the problems that social enterprises have had in winning contracts connected to the Work programme. Perhaps the absence of a definition of social enterprise has been one of the factors. What happens when something goes wrong, as in the case of the Work programme, with the informal strategy the Minister alludes to? What are the means of accountability for the Government to put right those problems and—as the hon. Member for Dover said—as a result, to make things happen?

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

The hon. Gentleman talks about accountability and suggests that the lack of a formal strategy is a problem. I have laboured the point that the Government made a formal commitment, for which we will be accountable. He talks about the Work programme, though it is a little early to make definitive judgments about whether things are going wrong. He should know that the Government, including DWP Ministers, have an explicit intent to make it easier for the not-for-profit-and-dividend sector to participate in that programme, precisely because evidence shows that social enterprises and charities prove extremely effective at the tough work of getting people back into work, because they enjoy a different relationship of trust with the people whom they are trying to help.

Around 300 social sector organisations are actively involved in the supply chain. The Minister responsible has said that they stand to gain at least £100 million from that process, depending on results. That is a major opportunity created by the Government for the sector. I know from my contact with Minsters that they are closely monitoring what is happening on the ground and take it very seriously. All that flows from the coalition Government commitment, for which we are prepared to be accountable.

I return to the fundamental point: we need to be clear why we are legislating. The Government do not believe it necessary to legislate to impose a duty on Government and local authorities to publish social enterprise strategies under clause 2. Publication of strategies should be driven by need of the moment and conviction, rather than a bureaucratic duty.

Question put, That the clause stand part of the Bill.

The Committee divided: Ayes 6, Noes 8.

Division number 1 Decision Time — Clause 1 - National social enterprise strategy

Aye: 6 MPs

No: 8 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.