Monday, April 8, 2013

Is local government ever going to embrace social enterprise?

Will there be some kind of tipping point for social enterprise in UK local government?  So far we are in the Innovator / Early Adapter stage with many watching to see what happens in the first wave. 

But my view, which is of course not a disinterested one, is that we will get there.

Why?  Because of three related crisis': financial, services and political.


The knock-on of austerity for the public realm in the UK is not yet apparent, except for a very small minority of people at the wrong end of welfare or social care cuts.

For the rest of us it is still an abstraction.

But this will change as local authorities face up to an existential challenge from 2014-18.  The hard facts are that English local councils will have lost up to 40% of their income between 2010 and 2015.     

Many Councils, among them Newcastle upon Tyne, will, by 2020, only have enough in the kitty to fund statutory social care costs, leaving nothing for other things.  A taste of things-to-come in Newcastle is the abolition of all Council funding for arts and culture in the city from this April.  It is also closing a number of libraries and, probably, the City Pool, the main swimming baths. 

Faced with this scale of challenge, Councils are really having to think hard about how to respond beyond finding efficiencies, selective closures and privatisation of remaining 'in-house' services.

Councils now realise that public money isn't the only ingredient in a successful public realm.   Combined with community endevour, it can be a potent factor in keeping public services in business.   

Let's look at Newcastle again.  Twenty years ago, Jesmond Pool in Newcastle became a social enterprise, after a lot of argy-bargy about privatisation.   It is run by local people, for local people. Today, it is in a far better position to survive than other neighbourhood pools, thanks to the low level of dependency it has on local authority funding. 

  This might be harder to do, say, in Elswick, at the opposite end of the social scale to Jesmond, but surely it is right to look at this possibility carefully before ever closing facilities.

While a surprising number of Councils still seem to be asleep at the wheel, there is a dawning realisation that if local councils let the car drive off the cliff then voters faced with closed parks, dirty streets and pot-holed streets will punish them at the ballot box.  

This isn't to mention the negative effects on an area's image that a negative spiral will create.  Nightmare scenarios in places like Detroit in the US privately haunt Leaders in parts of the North, especially, where there is a real risk of a point-of-no-return being reached if decline is not arrested.  

In this environment, again, it is occurring to many in Councils that the role of the Council as core provider is probably over and that new, more dynamic, more community-engaged vehicles are set up to support people and places to operate as they should.   

Devolution of budgets to community level (now happening in many places) is on important aspect of this.  So too is social enterprise, be this a community or charity takeover of a public service, or a spin-out from public services. 


If Councils need to start closing the services that the majority see and use they know they will be in trouble at the polls, sooner or later. 

While the parcel can be passed to central government for a while, as has happened in Newcastle, this won't last forever.  People get angry when the streets are dirty and their local library isn't there any more. 

The most enterprising councils understand that a new settlement around Discretionary services ups essential if local services are to be maintained.  So in Wycombe, their woodlands services were moved into a mutual this year (with our help) because the alternative was probably a load of grief about the demise of the local environment. 

In this context, social enterprise looks sensible politically.


The 1945 settlement basically gave a state-backed guarantee to all citizens around social protection.  Nearly 70 years on, the 'Beveridge Settlement' is no longer properly deliverable by appointed local state bodies like Councils and the various branches of the NHS.   

This isn't just because it is unaffordable now, but also because the society it serves has become too complex to be serviced effectively by public sector bodies.  This is well documented in other places (see the 2020 Commission on Public Services led by the RSA) but the reason to mention it here is that Councils now have to face this full-on because they have no money.  

This is an opportunity, disguised as a problem, in my view.  Social enterprise is part of a new settlement which says that we need to help people to look after themselves and each other with the state in a partner rather than a parent role.  Large, single providers who are seen by citizens as 'responsible' do not fit into this world.  As Councils try to forge a new kind of relationship with citizens, social enterprise comes more clearly into view as a means of delivering public services.

What, if anything, does this add to up?  Taken together, the financial crisis, the service crisis and the political crisis facing local government appears to be opening minds.  

Councils' first instinct is to set up their own ventures - which is very easy and quick to do - but the challenge, from my own very first hand experience, is that such ventures tend to a bit like teenagers who never leave home.  They look and occasionally act like grown-ups, but the relationship remains one of dependency. 

The good thing about social enterprise is that the child does leave home and forge a healthier relationship with its parent based on respect and appropriate distance.  There is still a bond, but a very different one to when everyone was under one roof.

This more closely mirrors the grown up relationships with their citizens to which Councils now aspire.  Which is why, although it's still early in the day, social enterprise, I think, has a big future in local government services. 

1 comment:

Yaina said...

Totally agree, by the people for the people, social enterprise is the way.