Wednesday, July 1, 2009

`Building Britain's Future' - Why this is bad for social enterprise

How should social entrepreneurs respond to Building Britain's Future, Gordon Brown's recently announced plans for the next Parliament?

Well, if I were you, I would be pretty skeptical. If you run a social enterprise that delivers public sector contracts, Building Britain's Future will not change the fact that your business is likely to come under seismic pressure from the most dramatic cuts in public spending since the late 1970s. Public spending is the last great bubble to burst.

So let's get real here. You know it. I know it. Most of the Cabinet knows it! Britain has run out of money for new public spending commitments, especially un-costed ones like in Building Britain's Future, which promises enforceable rights to public services far into the future. These ‘entitlements', according to the respected Institute of Fiscal Studies, were unsustainable even before the recession came along. Now they are just fantasy. Brown's promises therefore are not worth the fag packet they were written on. And to even imply that the public spending jamboree is going to continue is, for me, bordering on irresponsible.

Which is why Building Britain's Future was, for me as CEO of a public sector oriented social business, such a big ‘miss'. What could have turned it into a ‘hit'? Number one for me was a convincing story about how Labour in power would use the opportunity afforded by recession to bring in game-changing reforms in the way public services are provided. Breath-taking, audacious reform which would see the social business sector play a decisive role in both shaping and delivering new style public services for the 21st century. Services that not only delivered more, cheaper and better, but delivered in ways which put individuals and communities centre stage, like the stuff you see in places like Sunlight, led by the inspirational Peter Holbrook - things the state could never and will never do. This is the real opportunity agenda for social enterprises working with the public sector. And, at the moment, it is going begging.

What about business-to-business or consumer-facing social businesses? I think you should be equally wary. You will already have been deep in recession for at least a year and are probably yelping with pain. Unfortunately for you, Brown's measures at £5bn (little of it new) don't make a tiny bit of difference to when or how quickly recovery begins. Britain is a £1.1tn economy of which the government spends about £650bn. In terms of recession-impact Building Britain's Future is a flea-bite on an elephant. It won't help you one bit.

What Building Britain's Future will do, however, is cement the perception internationally that Brown isn't willing to acknowledge the need to control our debt. This will do social businesses like yours no good at all. It adds to the risk in 2010 or 2011 of quickly rising interest rates, tax increases and the vapourisation of consumer confidence…again. This is the real nightmare we must avoid at all costs. If this happens - and it will if whoever in government doesn't get a grip on public debt - we will sink into a second ‘dip', which will signal game over for many social businesses that, from what I hear anecdotally, are already on the edge of survival.

Yes, Building Britain's Future is, from a social enterprise perspective, more of a hazard than an opportunity. It is pure politics, designed to shore up Labour's core vote. Nothing more, nothing less. It isn't serious policy. There is nothing in it for our sector. If it was there would be a price tag and some specifics about the role social entrepreneurs will play. Hell, even Barack Obama name-checks us these days! No, sorry, Building Britain's Future takes us further away from a critical breakthrough than ever.

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