Leslie Huckfield Research

Social Impact Investment Forum (the Complete Irrelevance of)

huckfield — Thu, 13 Jun 2013 14:43:52 +0000

For starters, just think how many Social Enterprises, Voluntary and Community Organisations might be rescued or saved with the money spent on this irrelevant London Bubble Bankers’ Beano! In times of harsh austerity, Huckfield and many others reckon that the day long free binge for Social Investment Financial Intermediaries on Thursday 06 June was insulting.

The People in the Bigger Houses

Like many readers, while at school Huckfield did a rural paper round on a bike. The bigger houses took The Times or the Telegraph and were usually out on Saturdays when you rang the doorbell to collect the money. Since this was rural Worcestershire, the bigger houses also had a car and mains electricity. To see the Queen’s Coronation on June 02 1953, you had to find somebody with a black and white TV and ask if they’d let you watch.

The great majority of Social Enterprises and Third Sector Organisations must surely have felt they were looking at people in the big country houses when they saw the Social Impact Investment Forum on Thursday 06 June 2013, hailed widely in the London Bubble as Britain’s “leading the world” contribution to the G8 Summit. The Forum launched:

A Social Stock Exchange, which, as one might expect, lists Social Enterprise UK as one of its ‘friends’! To keep them company, solicitors Bates, Wells and Braithwaite provide both a Board Member and the Company Secretary. It’s the usual London Bubble suspects. Like many others, Huckfield struggles hard to equate supporting hard pressed Social Enterprises with any of this.

A Global Learning Exchange on Impact Investment. This sounds like code language for public funding to send representatives of various Social Investment Financial Intermediaries on round the world trips. Again one struggles to think how any hard pressed Social Enterprises here will benefit.

Consultation Draft on Development Impact Bonds. This sounds like the International Department for Social Impact Bonds. Presumably this will attract another £10mn “technical assistance” support from the Cabinet or Foreign Office for more trips abroad?

A full week later, the rest of us are still asking what relevance has any of this for the great majority of Social Enterprises and Third Sector Organisations outside London and their often precarious existence? If those in the London Bubble want to hold an irrelevant media extravaganza like this, why don’t they approach some bankers to fund it?

Support from Investors

At the Social Impact Investment Forum , there was the customary open letter of congratulations from the “industry” – Investors Support G8 Efforts to Catalyse Impact Investing, which included:

“We applaud Prime Minister Cameron and officials from G8 countries for their proactive step to embrace the promise of impact investing as an important complement to existing efforts by the public and non-profit sectors.”

Since some of these are either existing or wannabe Social Investment Financial Intermediaries (SIFIs) perhaps they should also have declared their financial interest in hoping to benefit from all of this?

There were also some interesting figures for the Investment and Contract Readiness Fund:

“The ICR Fund has approved 27 applications to date, committing up to £2.7mn of grant support to a range of ventures across different sectors, and is on target to meet the full £4.5mn budgeted for 2012 to 2013″.

One wonders how much of this is going to the 27 Investment and Contract Readiness Intermediaries, listed in Who will Speak Out against the Financialisation of Social Enterprise? on this site and how much to ultimate Social Enterprise beneficiaries?

Typically, like many Social Investment events in the London Bubble, at the Social Impact Investment Forum how many attendees were other SIFIs wondering how they might jump on the bandwagon?

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Growing the Social Investment Market Update

To support the Social Impact Investment Forum, there was also a rushed Growing the Social Investment Market: 2013 Progress Update. It is difficult to find anything new in its 25 pages, but on page 21 there is the most intriguing statement:

“Support Investment Readiness

Design Council

Since its resuscitation as a drowning Quango, is this an example of the Government’s “Nudge Unit” Behavioural Insights Team dreaming up funding to keep the Design Council alive? Or is this just hurried proof-reading?

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Social Enterprise Numbers – Call Yourself a Social Enterprise if you Want

Social Enterprise Market Trends, published by the Cabinet Office for the Social Impact Investment Forum, included a new “good fit” concept and some astonishing Social Enterprise numbers.

“Good Fit” Social Enterprises

The Cabinet Office has introduced a new definition, which really means “You can call yourself a Social Enterprise if you want to”. Page 8 says:

The Classification of a Social Enterprise
In the Small Business Survey (SBS) 2012, 24% of SME employers thought of themselves as Social Enterprises (defined as a business that has mainly social or environmental aims)”

“Whether a business answers ‘very good fit’ or ‘quite good fit’ is perhaps a judgemental matter, dependent on how a particular individual chooses to express themselves… For this reason, Report will focus on both those enterprises who consider themselves a ‘very good fit’ to the Social Enterprise classification, and also those enterprises who consider themselves a ‘good fit’ to the Social Enterprise classification (which includes both those enterprises who think that are a ‘very good fit’ and ‘quite a good fit’, to the social enterprise definition). The ‘good fit’ classification is closer to that employed by Social Enterprise UK.”

Using this “good fit” definition, page 10 onwards then goes well beyond the hype of Social Enterprise UK on page 8 of State of Social Enterprise Survey 2009 and on the acknowledgements page of Social Enterprise UK Fightback Britain 2011, both of which reckon that there are 62,000 Social Enterprises contributing £24bn to UK Gross National Product. The following is a small sample of what the Government would like us to accept as the ‘new normal’:

Total Estimated Number of UK SME Social Enterprises 2012. Page 11 Table 3.3 shows, using the ‘good fit’ definition, 688,200 Social Enterprises in 2012. But only 179,500 were employers.

Gross Value Added by Social Enterprises. Page 14, Table 3.9 shows £55bn Gross Value Added by all ‘good fit’ Social Enterprises and £41bn by those who were employers”.

Legal Status. Page 20, Table 4.5 shows that nearly 40% of ‘good fit’ Social Enterprise were Private Limited Companies. This has fallen from over 50% in 2010.

Regional Trends. Page 25, Table 4.10 shows ‘good fit’ Social Enterprises ranging from 4.6% in the North East to 17.5% in the Southwest.

Index of Multiple Deprivation. Page 26, Table 4.11 shows that nearly 28% in the Most Deprived Areas were ‘good fit’ Social Enterprises, compared with only 15% in the Least Deprived. This is clearly important for public policy, service delivery and employment in socially excluded areas.

An excellent article, Methodological Critique of the Social Enterprise Growth Myth, by Simon Teasdale, Fergus Lyon and Rob Baldock in the Journal of Social Entrepreneurship March 2013, is probably more accurate. On page 15:

“The reinterpretation of these elements allowed private businesses to be classiﬁed as Social Enterprises such that almost 90% of the mythical 62,000 Social Enterprises are organisations which would not have been considered Social Enterprises under the original interpretation of the definition. The most recent NSTSO (National Survey of Third Sector Organisations) allows an approximation as to how many Social Enterprises there are in the UK, meeting the 2004 interpretation of the deﬁnition. Our analysis suggests around 16,000 TSOs (Third Sector Organisations) would be considered Social Enterprises using this approach”.

Huckfield and many others others reckon that the 16,000 Social Enterprises figure is more accurate.

Social Impact Investment Forum Hoist with its Own Petard

Social Enterprise Market Trends, published by the Cabinet Office for the Social Impact Investment Forum, continues with further analysis which does not look encouraging for wannabe Social Investment Financial Intermediaries:

Income Received from Grants and Donations. Page 39, Table 5.7 shows none for 85% of ‘good fit’ and 83% of ‘very good fit’ Social Enterprises.

Whether Sought Finance in last 12 months. Page 46, Table 7.1 shows 28% for ‘good fit’ Social Enterprises.

Main Reasons for Applying for Finance. Page 47, Table 7.2 shows 57% ‘good fit’ Social Enterprises seeking finance for working capital/cash flow.

Types of Finance Sought. Page 48, Table 7.3 shows 82% ‘good fit’ Social Enterprise seeking loans/overdrafts and only 13% seeking Grants. The same table shows only 2.6% ‘good fit’ Social Enterprises seeking Asset Finance.

Tables 7.2 and 7.3 above cannot be good news for SIFIs (Social Investment Financial Intermediaries) seeking investment opportunities!

Huckfield will in future provide more analysis of Social Enterprises’ funding needs. But in the meantime, for London Bubble SIFIs, these figures are not encouraging.

Alongside this, further difficulties for SIFIs are shown in the BIS Business Support for Social Enterprises: Findings from a Longitudinal Study, October 2011, based on research by the University of Durham.

“Finance Related Issues” on page 33. “Issues are also reported around equity funding. …Despite this in November 2010, Triodos closed their Social Enterprise [equity investment] Fund – targeted at those SEs which were ‘commercial in their approach’ with the potential for a return. Triodos only made one investment from 500 enquiries over an 18-month period”.

“6.4.1 Levels of demand and levels of success” on page 97. “Survey data shows evidence of unmet demand for external finance from institutional funders. Access to finance was the single largest barrier reported by respondents to State of Social Enterprise 2011 . 44% indicated that availability and affordability of finance was an obstacle”.

“Access to external (non-grant) finance is one of the main barriers to growth among Social Enterprises. Awareness of finance products among our sample organisations was varied, ranging from a comprehensive grasp among larger organisations and a minority of the smaller Social Enterprises, to relatively poor levels of knowledge – particularly of non-bank products – among many of the smaller organisations”.

The last two bullet points above are taken from Social Enterprise UK’s Fightback Britain: State of Social Enterprise 2011.

All this shows that these three publications offered for the Social Impact Investment Forum – Cabinet Office Social Enterprise Market Trends 2013 , BIS Business Support for Social Enterprises: Findings from a Longitudinal Study, October 2011, and Social Enterprise UK Fightback Britain 2011 – offer no real evidence of any significant demand for Social Investment.

Huckfield and many others wonder how much longer the Government, supported by London Bubble SIFIs and Social Enterprise UK, can continue to claim that Social Investment is Britain’s world leading initiative?

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Hard Pressed Charities don’t need Social Enterprise Hooray Henries

huckfield — Tue, 04 Jun 2013 19:43:49 +0000

Eric Pickles’ Mechanism for Passing the Buck

As Secretary of State for Local Government and Communities, Eric Pickles has been long enough in politics to know that his agreement last week with the Chancellor on further cuts to his Departmental Budget for 2015-2016 is the easiest part. Deciding how further cuts will fall on and within Local Councils’ and Voluntary and Community Organisations’ spending is much harder.

Though the Chancellor’s 2013 Spending Review won’t be published until Wednesday 26 June, so far Local Government bodies have followed the Government’s line, typified in Public Finance on Wednesday 29 May 2013:

“The Government has confirmed that Whitehall cuts agreed yesterday will not affect Council Funding, which is still being negotiated by the various departments”.

The Local Government Association on Tuesday 28 May 2013 also followed this line:

“DCLG has confirmed that today’s announcement does not relate to local government funding, which is still being negotiated between departments. The ambiguity around today’s announcement highlights why in future local government should be much more directly involved in negotiating the settlement.

Perhaps someone should tell them that the seven Government Departments which have so far agreed to further cuts represent a mere 20% of the £11.5bn total sought by the Chancellor?

Institute for Fiscal Studies

The Institute for Fiscal Studies’ observations on The Rapidly Changing State, which accompanied the Chancellor’s Budget on Wednesday 20 March 2013, were unequivocal:

“Spending on Debt Interest, Social Security Benefits and Health accounted for just over half of total public spending in 2003–2004, but all bar £14bn of the £125bn increase in public spending is forecast to be accounted for by these components. Real spending on all other areas, including Education, Defence, Public Order and Safety, and all other Non-Health Public Services, is forecast to increase on average by a fairly meagre 5% between 2003–2004 and 2017–2018, and to take up an ever smaller proportion of total public spending”.

“The Government is currently making big choices about the shape of the State as well as about its size. On current plans, we are moving ever more rapidly towards a state focused on welfare and particularly on health and on pensions. As the population ages, this focus on health and pensions will become still more evident. However, whether spending a diminishing fraction of national income on other public services is a sustainable choice is an open question.”

The New Local Government Association

Projections like these have already made by the New Local Government Association in Gaming the Cuts: Any Borough in 2018. In its Introduction on page 9:

“With the NHS, Schools, International Development and Defence Equipment ring fenced from cuts the savings burden will again fall disproportionately on Councils. Therefore, it now seems likely that Local Government, along with some other un-ringfenced services, will face real terms reductions of at least 50% of expenditure over the period 2011-2012 to 2017-2018″.

“At the same time growing demand pressures will become particularly acute in Adult Social Care, and costs will increase by a ‘very modest £7bn’ or about 15% over the decade. As the graph below shows, the funding gap opens out immediately the projections start and reaches £16.5bn by the end of the decade”

In other words, irrespective of the Chancellor’s 2013 Spending Review Statement on Wednesday 26 June, we already know that less and less of the Government’s overall spending will be available for local service delivery by Voluntary and Community Organisations.

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The Pain of Voluntary and Community Organisations

NCVO’s Civil Society Almanac

Already, the pain of the Voluntary and Community Sector is shown in NCVO’s analysis in its detailed UK Civil Society Almanacs for 2009-2010 and 2010-2011. In basic terms, this shows that between these two years, in England alone, around 1,000 Organisations disappeared. Though overall UK Charities real income hardly changed, there was a real terms spending fall of £800mn.

In NCVO’s Counting the Cuts May 2013, further projections are made, based on Compact Voice Freedom of Information Requests in 2012 (more details below):

Figure 4 on page 15, even when based on “proportionate cuts”, shows that Voluntary Sector Organisations between 2010-2011 and 2017-2018 could lose £1.7bn or 12.5% of income.

Figure 5 on page 17 shows that under a “disproportionate cuts” scenario between 2010-2011 and 2017-2018, the Sector could lose £2.1bn or 15.3% of income.

No wonder that in its Conclusion on page 18:

“On balance, NCVO anticipates that austerity policies will continue beyond the 2015 General Election. The depth and pace of cuts may change; but it is unlikely that Government funding of Voluntary Organisations will ‘bounce back’ to levels seen prior to the 2008 financial crash”.

The Compact and Compact Voice

The Compact, December 2010 is supposed to represent a partnership between Government and Civil Society Organisations.

Compact Voice proclaims that it “represents the Voluntary Sector on the Compact – an agreement between the Sector and the Government to ensure better working together”.

Section 3 on page 10 of The Compact includes:

“Undertakings for the Government:

“3.1

“3.2

“3.3

Despite this, Compact Voice is forced to rely on Freedom of Information Requests to secure information from Central and Local Government in England.

For Local Government, Compact Voice: Local Authorities and the Voluntary and Community Sector, December 2012 shows:

Response Rates (page 9): 60 Local Councils (17%) did not reply and 39 (11%) refused to reply to Compact Voice Freedom of Information Requests .

Comparisons between 2011-2012 and 2012-2013 (page 22):
“When considered together, this results in an overall reduction in expenditure with the VCS of £60,711,392 of the 173 authorities (49%) who provided information to enable comparison. This results in an average reduction of £350,933 per local authority, but given the different range of spending involved, does not provide us with a meaningful figure”.

Clearly, many Local Councils in England took little notice when in September 2011, the Department of Communities and Local Government issued its Best Value Statutory Guidance, including page 6:

“4. Authorities should be responsive to the benefits and needs of voluntary and community sector organisations of all sizes (honouring the commitments set out in Local Compacts) and small businesses”.

“5. Authorities should seek to avoid passing on disproportionate reductions – by not passing on larger reductions to the voluntary and community sector and small businesses as a whole, than they take on themselves..”

So no wonder that Compact Voice: Local Authorities and the Voluntary Sector, December 2012 concludes on page 21:

“When using grant funding as a specific example of support for the voluntary and community sector, it is clear that the Best Value Guidance is not being upheld. Compact Voice urges CLG and the Secretary of State to do more to ensure that this guidance is being enforced.”

Reporting on Central Government Departments, Compact Voice: Central Government and the Voluntary Sector, October 2012 is equally depressing. Pages 7 and 8 show that out of 15 Government Departments to which Freedom of Information Requests were sent:

5 refused partially or completely
4 did not respond or supplied no information
Only 2 supplied full or nearly full information

The Compact and Compact Voice are supposed to represent the “Coalition Government and Civil Society Organisations working effectively in partnership for the benefit of communities and citizens in England”. But it’s clear to all that Compact Voice is just being given the “run around”. No wonder that James Allen, its departing Head, wrote a farewell piece called ‘The End’ – on Thursday 09 May 2013, which included:

“Cuts – no surprises here but clearly set to continue to 2017 and beyond. These cuts, particularly at local level, will start to bite deeper as any remaining easy targets are long gone.”

“An era of austerity means more pressure on everyone, with fewer resources. Getting people’s attention and persuading them to work with us is getting more challenging than ever”.

Though all this shows that for Voluntary and Community Organisations the Compact process is not working, Huckfield and many others have noted that the Board of Compact Voice includes ACEVO, Social Enterprise UK, NCVO and NAVCA – all organisations in a position to do something about this sad state of affairs.

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Few Voluntary and Community Organisations have any real choice

Huckfield writes this piece as a strong supporter of Social Enterprise, Cooperatives and Third Sector Organisations, wherever these emerge through genuine democracy and where their governing bodies and employees are all part of a democratic decision taking process. Huckfield doesn’t support organisations’ being forced or cajoled into becoming Social Enterprises.

So against an increasingly desperate background described above, it is dismaying that Social Enterprise UK and others seem to believe that many Voluntary Organisations and Charities have many choices for their future survival.

Social Enterprise UK

Social Enterprise UK’s Survey of Charities, May 2013 shows:

“In a survey of more than 100 charities, 92% said they would like to increase their income from trading and government contracts in the next three years”.

“When asked how they feel when they hear about social enterprise, 52% chose ‘excited’, 29% chose ‘interested and want to know more’, 12% chose ‘confused’ and only 7% chose ‘nervous’.”

From this Survey, in “Charities Happy to Trade” in Pioneers Post on Wednesday 29 May 2013, Social Enterprise UK Chief Executive Peter Holbrook writes:

“The fact that more than half of the Voluntary Sector’s income is now earned through trading (selling goods and services and delivering public contracts), rather than giving through donations, legacies and grants, may come as a surprise to many”.

He concludes:

“But it’s encouraging that the research points to a positive attitude, and it’s the job of organisations like Social Enterprise UK and NCVO to provide support and help charities navigate what at first may seem like a long and winding road”.

From this, Huckfield and many others ask a simple question. If Social Enterprise UK really wants to help Voluntary Organisations and Charities to become Social Enterprises, why does it spend so much time propogandising Big Society Capital and Social Investment, which are utterly irrelevant to the real needs of these Charities in their desperate straits?

Bates, Wells and Braithwaite Charity Law Conference, Thursday 16 May 2013

Equally perplexing were contributions at the Bates, Wells and Braithwaite Charity Law Conference, reported in Civil Society where:

A delegate from St Andrews Healthcare had been told by Charity Commissioners that calling itself a Social Enterprise would help it win contracts.

Another delegate knew of a Charity calling itself a Social Enterprise to apply for grant funding.

Stephen Lloyd from BWB was reported as saying that “Social Enterprise enhances the Charity brand.”

‘Hooray Henry’ contributions like these don’t help the cause of Charities or Social Enterprises, especially when Big Society Capital and others want to keep the “Social Enterprise” definition wide enough to include private for profit companies because there are few takers for their Social Investment.

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Enough Pain Already for Voluntary and Community Organisations

If any Social Enterprise ‘Hooray Henries’ still don’t understand the pain in Voluntary and Third Sector Organisations, they should read Michael Bell’s From Cooperation to Competition and Fragmentation in the NCIA Bulletin, November 2012 about the Patchwork Project in Newcastle bidding against Barnardos:

“There are people still meeting together in order to position themselves as a consortium to win money at the expense of their colleagues, reflecting values focused on competition – in their process destroying other projects. This assumes we can play this game, be canny and become business like – while what in fact we are doing is, firstly, making it too easy for decision makers to choose commissioning rather than use grant aid to allocate what is public monies; and, secondly, exposing ourselves and the neighbourhoods we represent to far stronger competitors”

Is it any wonder that after experiences like this, the trade union UNISON warns its members that Social Enterprises are Bad for Your Health:

“Patient care will suffer as the race to provide the cheapest service will affect the quality of care – and teams from different organisations will find it increasingly difficult to cooperate with competitors over a patient’s care”.

“If these small Social Enterprise businesses fail, the NHS will not be able to bail them out. This opens the door for multi-national companies to step in, meaning that your healthcare will be run for profit. Any surpluses will go into shareholders’ pockets rather than into improving the service”.

As shown above, especially in England, these are desperate times for Voluntary and Community Organisations:

They know more cuts are on the way.

They know they won’t get much protection through the Government’s Best Value Guidance or through Local or National Compacts when they see that Compact Voice is being given “the run around” by Central Government Departments and some Local Councils.

They understand the difficulties of the commissioning process, so they don’t want to be told that this is their way forward.

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Don’t Forget the Shareholders

Before its survey above, in October 2012 Social Enterprise UK published its own Why Social Enterprise? A Guide for Charities. On page 11 under Structure/Options, the Guide lists:

“Limited Liability Company (limited by Guarantee or Shares)”.

So the Guide says that shareholders and for profit companies are OK. On page 15, there is even:

“Setting up a Social Enterprise owned by your organisation to generate income for it: You can set up a business that has no direct connection to your
social mission but generates income that you can spend on fulfilling your social mission”.

Whatever this means, Guide for Charities advertises the services of Bates, Wells and Braithwaite and is written by ‘Social Spider’, David Floyd?

But at least this Guide lets us know clearly where everybody stands. We anticipate eagerly the next posting on David Floyd’s Beanbags and Bullshit site to tell us all where he differs in all this from Social Enterprise UK and Bates, Wells and Braithwaite.

Microscopes and micrometers may be used.

And, Finally

Independence under Threat – the Report of the Panel on the Independence of the Voluntary Sector, published by the Baring Foundation in January 2013, says on page 34:

“For example, we asked Clive Martin, the Director of Clinks, an umbrella organisation for voluntary bodies working with offenders and their families, about the impact of Government contracts on freedom of action and purpose. He said that Voluntary Organisations were the A&E of society but that, over the last ten years, that part of the sector increasingly saw its role as winning contracts, with the expertise of boards and staff shifting to support this goal. He said that he thought that it was the role and mission of the organisations he worked with to represent those on the margin”.

Survey after survey shows that many small and medium Voluntary and Community Organisations are going to the wall, never to be seen again.

They deserve better than Social Enterprise ‘Hooray Henries’ and wannabes with smart alec tips about trading and earned income. They had 13 years of that from New Labour and the Coalition Government just repeats the same message.

When it comes to cuts, no one has ever called Eric Pickles a ‘Hooray Henry’ or wannabe.

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No Standing Ovation for Big Society Capital’s First Annual Report

huckfield — Wed, 15 May 2013 13:18:10 +0000

Huckfield offers these comments on Big Society Capital’s First Annual Report , which finally appeared on Friday 10 May 2013.

In a previous posting on this site, Big Society Capital’s £600mn – An Alternative Strategy for Supporting Social Enterprises , has already been suggested.

Thirteen Years to Spend £5mn

These are highlights from a chronology of events leading to the First Annual Report of Big Society Capital (BSC):

October 18 2000 – Sir Ronald Cohen submits to Gordon Brown as Chancellor of Exchequer his First Report of the Social Investment Task Force: Enterprising Communities: Wealth Beyond Welfare

Monday 17 July 2006 – Sir Ronald Cohen becomes Chair of the Independent Commission for Unclaimed Assets. This was initiated by the Scarman Trust, with support from Charitable Foundations, including Rowntree and Carnegie.

November 26 2008 – New Labour’s Dormant Bank and Building Society Accounts Act receives Royal Assent.

May 2011 – Sir Ronald Cohen and Nick O’Donoghoe submit their Big Society Bank Outline Proposal to Government, with details of its management and organisation structure, including policies and procedures, financial modelling and interim arrangements

January 2012 – BSC signs a Subscription Agreement with its shareholder banks

March 2012 – BSC obtains Financial Services Authority authorisation

Though the concept, legislative framework and detailed proposals have been developing since the Millennium, in its first year of operation, BSC invested only £5.4mn – and some of that in Bridges Trust, where Sir Ronald Cohen Chairs its Advisory Board.

Big Society Capital roles

In describing its roles, the BSC Annual Report raises important issues:

The Social Investment Market Maker. BSC’s dual role as Investor and Social Investment Champion is described on page 13 of its Report. But BSC is also a well heeled market maker, spending public money to make a Social Investment market.

How much real Social Investment? Unclaimed Bank Assets are really public money. BSC’s ‘Founding Principles’ on page 13 include Independence (with Big Society Trust’s owning 60% BSC’s shares) and Transparency. Despite receiving £119.4mn equity capital during the year, only £5.4mn has actually been drawn down. And we still don’t know how little has yet been received by ultimate investees. £5.4mn represents investment in intermediaries, not final beneficiaries.

No benchmarks or comparators. Operating in a political and economic context without benchmarks or evaluation standards, it is not easy to reflect accurately BSC’s performance. BSC handles large amounts of public money without any UK or international precedent or comparator. In their absence, it is very difficult to judge BSC’s efficiency, productivity or effectiveness. If, as claimed in September 2012 in The First Billion Report by Big Society Capital and Boston Consulting, there is demand for £750mn Social Investment by 2015 and for £1bn in 2016, how much BSC spending activity is really additional and how much is just deadweight? Is there a need to spend so much public money on creating a Social Investment Market?

Operating in an environment without questions. Other factors mitigate against effective measurement and analysis of BSC’s performance. BSC operates in an environment where the Cabinet Office and Government are supinely supportive. Beyond its immediate operations there is minimal political understanding and, as shown below, unwavering and uncritical support from London Third Sector Organisations.

BSC’s Friends, the London Third Sector Organisations

The BSC Annual Report showers praise on London Third Sector organisations:

“We appreciate the help and encouragement that we have received from ACEVO, NCVO, Social Enterprise UK and a host of established Social Investment Finance Intermediaries and frontline organisations. We are grateful to all of them. This collaboration is critical to our long term success”. (page 11)

“Many of these (policy) initiatives have been undertaken in collaboration with partners such as NCVO, Social Enterprise UK and the City of London Corporation”. (page 32)

Directors of the Big Society Trust – with an 80% controlling vote in Big Society Capital – include Stephen Bubb (ACEVO) and Peter Holbrook (SEUK ).

Though Non Executive Directors’ fees are not ascribed or apportioned to BSC or the Big Society Trust, they receive £7,000 annually, plus £3,000 annually if Chair of a Committee and £1,500 annually for being a Committee Member. Non Executive Director’s fees in 2012 were £45,000. (page 37).

“Principles for Non Executive Remuneration” on page 37 says “Non Executive Directors will be paid an equivalent sum paid by other comparable not-for-profit and public bodies such as housing associations and primary care trusts to Non Executive Directors”.

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What has Big Society Capital done during its First Year?

Nick O’Donoghoe’s CEO Statement:

“Since our launch in April, Big Society Capital has used its capital to cornerstone ten social investment funds. These funds have diverse objectives” (page 8)

“By the end of 2012 we had committed £56mn to 20 different intermediaries, £19mn firmly committed and £37mn subject to matching finance being raised.”(page 10)

Throughout the CEO’s Statement, though BSC operates in entirely uncharted waters, there is little contextual analysis or description of any processes used. Regrettably, there is no further analysis in the Performance Review shown below.

Key Performance Indicators and Market Diversification

Despite an ongoing series of high profile media stories, this is the first time many of these figures have been released by BSC. A major problem is that much information in the Report is provided without context, without a description of criteria used or comparisons elsewhere. Page 16 shows:

£19.4mn for 15 “investments signed”
£37.2mn for 5 “in principle investment commitments”
£19.7mn “matching finance” for BSC investments made”
13 Social Investment Financial Intermediaries with £48.2mn investment commitments
23 “frontline organisations” receiving investment commitments so far

Without further details or external comparators, it is difficult to construct valid yardsticks for progress or form judgement on what all this means. On pages 16 and 17 BSC analysis poses more questions than answers through using graphics and percentages rather than actual titles or figures. For example, in which Social Investment Financial Intermediaries in the Northwest does it invest? Actual amounts may be one investment in an organisation represented on one of BSC’s boards.

Review of the Business features on page 38:

“During 2012, £119.4mn of equity capital has been received, £71.7mn from the dormant bank accounts via the Reclaim Fund Limited and £47.7mn from the shareholder banks. In principle commitments of £56.6mn have been made for 20 investments. Of this total, £5.4mn has been drawn down. Total revenue for the year was £1.9mn principally from treasury management returns. Expenses were £3.0mn with average headcount of 18.”

So, despite drawing nearly £120mn equity capital during its first year, £462,471 of BSC’s income of £1.9mn was a Government Grant. Page 39 shows that the company made a loss of £1.1mn. Most small to medium Social Enterprises would need to manage cash flow better than this!

Sums for Specialised Funds, General Funds and Operating Intermediaries are very large. There is little justification provided on pages 20 and 21 for chosen intermediaries or the amounts BSC invested in them. These questions are surely relevant:

Since all this is very new market, how were bids or submissions for these investments assessed or prioritised? Which potential Social Investment Financial Intermediaries were invited by BSC to make submissions?

Significant investments were made in organisations represented on BSC’s various boards. Big investees are well represented, including by Chief Executives, either as BSC Directors, Big Society Trust Directors or Advisory Board members. While not suggesting any impropriety, at each stage Sir Ronald Cohen sits on boards throughout the investment processs – Big Society Trust, Big Society Capital and Bridges Trust Advisory Board (Bridges received £10mn for Social Impact Bonds)

What assessment criteria or ranking were used before investing, for example, £950,000 in Big Issue Invest (on BSC Advisory Board) and £8mn in NESTA (on Advisory Board and BSC main board)? (page 20.)

What criteria were used to determine that NESTA should receive £8mn and Impact Ventures UK £10mn, whether this represented “value for money” or the best investments which could be made by BSC? Do NESTA or Impact Ventures have staff to provide required information and to evaluate and appraise their own investments?

To become an “Operating Intermediary”, what kind of Business Plan did ClearlySo (on Advisory Board) submit? For its £1mn, does ClearlySo have appropriate staff to provide investment support required by BSC?

None of this is suggesting any impropriety or wrongdoing. However, against a similar background of close relationships, Civil Society on Tuesday 19 March 2013 reported Questions are raised over Social Action Fund grant to Big Society Network. Complaints were made to the Office for Civil Society and Social Investment Business about Big Society Network, which received £200,000 in Round Two of the Social Action Fund, concerning the way in which the grant was processed.

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What Remit for Policy Changes?

BSC has sought to fashion various national and EU policies. Since it uses public money, where is BSC’s remit, or where has it sought policy guidance for shaping significant policy changes outlined on page 32? These include:

Furtherance of Payment by Results
Seeking tax relief for investors
Seeking to widen scope for Charities’ investments
Making submissions in response to the Government’s Red Tap Challenge Consultation (which includes dilution or removal of some sensitive business names, including “cooperatives”) and
Influencing policy under the EU Social Business Initiative.

Through the influence of BSC and others, policy headings for the EU Social Business Initiative have been steered from Social Enterprise towards Social Investment. The Outline of the EU Guide to Social Innovation February 2013 summarises actions which may be undertaken by either For Profit or Not for Profit Organisations in a deliberately ‘sector blind’ approach.

The EU’s Social Business Initiative is now less concerned with governance arrangements of funding recipients so that funding for Social Innovation may be received by public, private and Third Sector Organisations.

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Social Investment in the Education Sector

Page 33 shows that a Report on Opportunities for Social Investment in the Education Sector, partnered with the Private Equity Foundation, is expected in Spring 2013. The incursion of For Profit Academies into Secondary Education and For Profit Universities into Higher Education are already highly controversial. Almost politically unnoticed, BIS Alternative Providers Draft Guidance in April 2013 permits For Profit HE providers’ access to the English Student Loan System. They will also remain outside HEFCE Controls on Student Numbers until 2014-2015.

Who gave BSC policy advice to encourage more “Alternative Providers” in Higher Education? Since BSC is increasingly sector blind in its approach, all this will increase fears that in an already highly politically charged arena, further For Profit and private equity expansion in English Higher Education could be disguised as “social”.

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Financial Statements and Auditors’ Report

Page 61 “Note 17 – Valuation of Financial Investments” says:

“If future cash flows can be reasonably estimated, and it is felt that the risks, due to the high level of subjectivity, involved in applying the Discounted Cash Flow method do not render the method insufficiently reliable, this will be applied.

“If industry benchmarks can be applied to the investment to derive a fair value, these will be applied. The company may decide to use a combination of the mentioned methods, or other methods that are considered more appropriate to derive the fair value of its investments.

“Given that all investments have been made recently, the company has used Price of Recent Investment, unless a more accurate valuation is available. The company has considered whether there is any evidence to indicate that the Price of Recent Investment is no longer relevant, where this is the case a fair value adjustment has been made.

It is not being suggested here that any of these valuations are irregular or unethical. However, most of BSC’s operations are in areas without market assessment of asset and investment values. Are the “fair value” criteria chosen above those which are most appropriate in the circumstances? Since BSC uses public finance, will any comment be made by the Financial Conduct Authority or other regulator?

The detail in Note 17 shows that BCS is aware that much of this is unfamiliar investment territory. It would be more helpful if the Performance Review below showed an awareness of this.

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Performance Review

The BSC “Performance Review” has been trailed heavily by Pioneers Post and other media. James Perry – a director of Cook, a family run frozen meals business – writes as a “co investor”. But there is nothing which shows that he is also a member of the BSC Advisory Board (page 35 of the Annual Report). Since this ‘Review’ appeared before publication of the BSC First Annual Report, its writer will obviously have seen the Report’s contents. This is hardly an independent performance review!

Despite raising several important issues, the “Performance Review” offers no real analysis. As an example, James Perry writes:

“There is a fundamental mismatch between BSC’s supply of capital and the demand side. One way to address this mismatch is for BSC to focus on fewer, bigger deals with established market participants, such as Ecology Building Society and Charity Bank”.

Though he offers no analysis, is Perry is really confirming that most BSC investments so far have followed this strategy?

Page 33 of the BSC Annual Report shows that finding investees has been hard going. ‘Seeking Opportunities and Ideas for Social Investment’ says:

“An active ideas co-development programme – since late 2012 we have run four programmes to co develop investment ideas with potential partners in a range of target areas such as social housing and community assets”.

Though this seems to show that BSC is finding progress is difficult in these areas, none of this is really analysed further by Perry.

On BSC’s “Creating a New Culture”, Perry writes:

“Engaging with Social Investment is a bruising experience for the social sector, as it comes to terms with new expectations. If BSC cannot bring the social sector with it, then it will have to move into a bunker. The recently advertised social sector leader role at BSC is perhaps a recognition of the need to strengthen this area. It is crucial that this role is seen as strategically core to BSC and allowed to infuse every nook and cranny of BSC’s organisational culture, from top to bottom.”

What a pity James Perry didn’t enlarge on this – which is surely BSC’s core problem – that Social Investment is neither sought, needed nor appropriate for most Social Enterprise and Third Sector Organisations.

Throughout this Pioneers’ Post Performance Review Perry selectively refers to the “social sector”, “Social Investment” and “social transformation”. As they scan the horizons for real investees, BSC and its Social Investment Financial Intermediaries are becoming less concerned about any distinction between For Profit and Not for Profit entities and their governance. They are increasingly sector blind. As long as a “social sector” company proclaims a “social mission”, that seems to be acceptable.

As Huckfield has written before, surely there must be more effective ways of spending £400mn of Unclaimed Bank Assets, £200mn from Merlin Banks and up to £1bn when the contribution from the Cabinet Office is added?

Big Society Capital’s £600mn – An Alternative Strategy for Supporting Social Enterprises has already been suggested.

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We will say this only once: “You will become a Mutual”

huckfield — Mon, 06 May 2013 21:27:09 +0000

Background and Outline

Huckfield writes this as a strong supporter of Social Enterprise, Cooperatives and Third Sector Organisations, wherever these emerge through genuine democracy and where governing bodies and employees were all part of a democratic decision taking process.

In its desperate haste to reduce the extent and size of the public sector before the next UK General Election on Thursday 07 May 2015, the UK Coalition Government is not really giving many in the public sector any choice. The message is that they will become a Mutual or Social Enterprise, often with encouragement to form a joint venture with the private sector. So trade unions are right to be concerned.

In many cases, this mutualisation processs is happening under Right to Request and Right to Provide procedures set up under New Labour.

Based New Labour’s foundations, UK Coalition Government policies mean that a wide range of national and local public services ultimately will be delivered by Capita, Serco, Sohexho, A4E and perhaps one or two big Charities.

Whether through opening up the NHS to private tendering, under the DWP’s Work Programme, or through contracting Probation and Prison Services under the National Offender Management Service and Ministry of Justice, most will be based on Payment by Results and Impact Measurement, with more funding through private Social Investment and Social Impact Bonds.

Private investment in public service delivery will be promoted as Britain’s offering to the G8 Summit at Lough Erne, Fermanagh from Sunday 16 June till Tuesday 18 June 2013.

Increasingly, these services will be benchmarked not by public service delivered but for the financial return they produce for private investors. JP Morgan’s Global Social Finance: Perspectives on Progress, January 07 2013 on page 16 refers to “standardised metrics for impact measurement” as “important for development of the industry.” For Independent Financial Advisers, Retail Social Investment has already been included in the Financial Services Authority’s Newsletter in February 2013.

Already up to £1bn is being provided by the Cabinet Office, Big Society Capital and various intermediaries to promote this Social Investment in Social Enterprise. But since Social Investment is being resisted by many Social Enterprises, for trade unions, the faster pace of forced mutualisation poses a more direct threat.

An example of the mutualisation process was given on page 32 of the Response from the Trades Union Congress to the Government’s Open Public Services White Paper October 13 2011:

“Feedback from unions working in areas earmarked for the 20 or so Pathfinder Mutuals has been similar. In nearly every case, the drive has been from management. In many cases, there has been very little or no consultation with staff and even less with unions”

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75,000 jobs to the Private Sector – an Insight into Government Behaviour?

The ‘Independent’ newspaper on Wednesday 01 May 2013 carried the story The Great Civil Service Sell-off: Dozens of Services and 75,000 Staff set to be Transferred to Private Sector. These are the main points of the story:

Cabinet Office minister Francis Maude announced that the Government’s Behavioural Insights Team – its “Nudge Unit” – will become the most high-profile area of Government to be “mutualised”.

It will be turned into a profit-making joint venture with private companies invited to bid for a stake of up to 50%.

The move heralds a wider sell-off of Government functions and assets. Among areas under consideration are Whitehall’s IT, personnel and legal functions.

Cabinet Office sources said they hoped to support “dozens of such spin-offs” in a programme to raise £mns for the Treasury. It will leave a dramatically slimmed-down Civil Service providing only core functions of policy advice and implementation.

Eventually other Government bodies – the Land Registry and Office for National Statistics – could become candidates for mutualisation.

No wonder that Dave Prentis, General Secretary of Unison, the public sector union, called this “privatisation by stealth”.

“The involvement of big private companies makes mutuals just another Tory party ploy to sell off public services. The Government is stretching the definition of mutuals to the limit – genuine coops and mutuals will be up in arms.”

For damage limitation, on the Civil Service site, Sir Bob Kerslake, the new Head of the Civil Service, replied on the same day in A Nudge in the Right Direction:

“Some of you will have read today’s article in the ‘Independent’ claiming there will be a “Civil Service sell-off”. The first point to make is that there are no plans to transfer 75,000 civil servants into new organisations and we have no firm targets for services and employees spinning out of the public sector”.

But Sir Bob has a problem. This isn’t what is shown under Action 4 on Clarifying the Future Size and Shape of the Civil Service on the new Civil Service Beta site which is maintained by the Government Digital Service:

“The Delivery Landscape and Arms Length Bodies
By the end of March 2015 approximately 500 bodies will be reformed and the total number reduced by over 250. The Government estimate that public bodies will deliver administrative savings of £2.6bn over the spending review period. All remaining NDPBs are now subject to review every three years, which will seek to identify innovations and new models for delivery, such as mutualisation, joint venture partnerships and transferring to the voluntary or private sectors, and strengthen accountability and governance arrangements for NDPBs that remain.”

A footnote on the new Civil Service Beta site admits:

“This site is provided by Government Digital Service, and once membership is up and running, we’ll moderate some of the community areas. Where groups are more specific in content, other teams take moderation responsibility. In comment sections we ask that you stick to our house rules”

This is really ‘Sir Humphrey speak’ for “We are still learning how to ‘spin’ our stories better”

If there are still any doubts about the size and scale of the Government’s intentions, the Cabinet Office Public Service Mutuals Presentation to Local Authorities on Friday 15 February 2013 in Slide 49 under the “Right to Provide” shows the full range of services now on offer for mutualisation.

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“With a Little Help from our Friends”

On this site Huckfield is frequently critical of the timid role of the Association of Chief Executives of Voluntary Organisations, Social Enterprise UK and the National Council Council for Voluntary Organisations which offer little resistance as the Cabinet Office, Big Society Capital and hordes of financial and legal intermediaries force inroads for private investment into Social Enterprise. But the Cabinet Office also has some “little helpers” in its mutualisation process.

The Cooperative Group has set up Public Service Mutuals to lend a helping hand. With Social Enterprise UK, the Employee Ownership Association, and the Baxi Partnership, Cooperatives UK is also a member of the Cabinet Office Mutuals Information Service.

The Cooperative Group’s Public Service Mutuals site proclaims:

“We believe the principles upon which mutuals are founded have a particular resonance in the public sector where there is an underlying sense of public purpose. Unlike private ownership which tends to be for the financial benefit of the few, mutual ownership is shared amongst stakeholders and is therefore more fitting for the delivery of a public purpose.

“Significant parts of the UK’s public sector are now in forms of cooperative or mutual ownership, the highest profile examples being NHS Foundation Trusts and cooperative schools.

“Across the political spectrum mutual organisations are now seen as a legitimate alternative to privatisation and we want to help you determine whether the mutual way is the right way for you.”

But surely the policy motives of the Cooperative Group with Public Service Mutuals and Cooperatives UK are not the same as those of the Cabinet Office with its ultimate aim of shifting more public service delivery to the private sector?

Ed Mayo, Secretary General of Cooperatives UK, wrote in the Guardian on Friday 03 May 2013 under Nudged Out: This is Mutualisation, but not as we know it:

“But the Government’s entry definition of mutual ownership, with a paltry 25% for staff and no rights for service users, gives no guarantees of member control and leaves investors in charge. It is a start, but when public services have been sold in this way before, such as the bus firms in the 1980s, the assets moved as night follows day from being employee-owned into private hands.”

These are fine words. But does this mean that Cooperatives UK will remain a member of the Mutuals Information Service as the main body promoting all this? Does it mean that the Cooperative Group’s Public Service Mutuals service will now force the pace by insisting that genuine prior consultation with staff takes place?

Huckfield hopes that Cooperatives UK and the Cooperative Group will not follow established precedents where ACEVO, NCVO and Social Enterprise UK offer occasional, tepid and timid reservations about Government policies for Social Investment in Social Enterprise, but still support their general thrust.

This continuing timidity of London based Third Sector Organisations was questioned in the January 2013 ‘Independence under Threat’ Report of the Panel on the Independence of the Voluntary Sector. On Infrastructure Bodies, on page 43, the Report said:

“We also believe that infrastructure bodies could do even more than just question practices that threaten the independence of the sector – for example by launching judicial reviews of contractual terms which reduce independence.”

What Others are Saying

The following shows that mutualisation and setting up mutuals might not be all that the Cabinet Office would like us to believe:

The House of Commons Select Committee on Communities and Local Government Report on Mutual and Cooperative Approaches to Delivering Local Services, November 21 2012, in its Conclusion in paragraph 94 on page 41:

The Association for Public Services Excellence in ‘Proof of Delivery? A Review of the role of Co-operatives and Mutuals in Public Service Provision’ August 2011. on page 11 says:

Public Finance on August 18 2011 summarised this Report:

None of this offers a ringing endorsement of the Cabinet Office or its Mutuals Information Service

This surely isn’t supposed to happen as part of the service offered by Public Service Mutuals?

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A Range of Issues to be Considered

Legal Form and Governance Framework for giving workers a say.
The Cabinet Office is happy for ‘mutual’ to remain a wide ranging term. ‘What is a Mutual?’ on its Mutuals Information Service site shows that mutuals may be a Limited Company (Limited by Guarantee or by Shares), Community Interest Company, Industrial and Provident Society (a Cooperative or Community Benefit Society) or Charitable Incorporated Organisation. The Government also encourages Joint Ventures which include private investment. The Quick Reference Guide to Legal Forms on the Mutuals Information Service site shows a legal minefield.

This will be further complicated if under the current Business, Innovation and Skills Company and Business Names Consultation under its Red Tape Challenge, February 2013 protection for terms like “Cooperative” under the 2006 Companies Act is weakened. The Consultation Response from Cooperatives UK says in Section 4.21 that “businesses would be trading off the value of the cooperative identity, but also undermining it in that they are making essentially false claims as to the nature of their business”.

Funding Expected from a Commissioning Body
While initially a mutual may receive a grant or contact from its Commissioning Body, most contracts will need to be retendered. Capita, Serco, A4E and some of the major Charities will be watching and waiting.

Central Surrey Health. A major warning precedent on re tendering is from Central Surrey Health losing out to Virgin Healthcare in September 2011 when it failed to raise the required £10mn bond.

Secure Healthcare, one of the original 2006 Department of Health Social Enterprise Pathfinders, despite an initial £0.5mn Department of Health grant, winning a £5mn a year contact with HMP Wandsworth and receiving further funding from Futurebuilders, went into debt in 2009 and was taken back into the NHS. The Wandsworth Council Health Overview and Scrutiny Committee January 11 2010 on Secure Healthcare recommends on page 14 that “No bidder should be allowed to progress within a tender process if they cannot prove themselves to be adequate on both a service delivery and qualitative basis and also on a Financial Capacity basis”.

Length and Extent of Initial Contact .
From a standing start, after negotiating the obstacles above, any new mutual will need to rehearse its Business Plan and devise a Bidding Strategy. Capita, Serco, A4E and existing bigger Charities have full time teams working on tenders, able to submit them “off the shelf”

DA Partnership, a mutual set up after the Secretary of State for Communities and Local Government abolished the Audit Commission in 2012 with an initial minority stake from accountants Mazars, bid for £90mn of private contacts and won only one out of 10. Others went to Grant Thornton, KPMG and Ernst and Young. Previous DA Partnership ‘mutual employees’ now feature under Public Services on Mazars Accountants’ site as ‘recently recruited former Audit Commission staff’

Competition to be faced by a Mutual following an Initial Contract
EU Procurement Law means that the NHS, Councils and other Public Service Commissioners seeking to establish shared service, spinouts or ‘in house procurement’ must conform to various precedents for Teckal (in house or shared services) initiatives. This is not straightforward – as shown in Local Government Lawyer’s ‘Use of Teckal Company Structures in Public Service Delivery’. A new EU Directive is scheduled for 2014, with the requirement that a Teckal company undertakes at least 90% of activities for its owner public authority. Otherwise the tender must be offered under the full force of current EU Procurement Directives.

Accountability for Service Users and Commissioners
Policy Network on October 12 2010, carried a major feature:
This was written by Michael Stephenson as General Secretary of the Cooperative Party on ‘The Limits of National State Social Democracy’ as part of research for Policy Network.

Pay, Conditions and Collective Bargaining
Huckfield is a member of a Unite Not for Profit branch and well understands the difficulties for trade union representatives on behalf of their members in negotiations with mutual employers whose background may have been Third Sector but lacking trade union involvement.

Asset Locks .
There are significant recent examples where neither employee ownership nor an asset lock under a Community Interest Company may be adequate to prevent private sector acquisition:
All this shows that even with strict definitions of ownership, profit distribution and an asset lock, it is still possible that assets held for employees or the community may pass into private ownership.

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And, Finally

Huckfield recognises that this is detailed and perhaps pretty tedious stuff. The Cabinet Office and Mutuals Information Service will not emphasise that one of its main policy aims is to outsource and move public services from Central Government, NHS and Local Government to the private sector.

Because they have have the resources and staff, Capita, Serco, A4E and some bigger Charities have worked out most of this already. So even if they don’t win the first contract, they will have the muscle and resources to win the second – even if the contract is based on Minimum Wage, Zero Hours or payment only for “Face Time”.

Huckfield doesn’t believe that this is how public services should be delivered. But, based on policies and procedures put in place by New Labour, all this is UK Coalition Government policy.

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Why Craig Dearden Phillips is wrong on Trade Unions and Social Enterprise

huckfield — Tue, 30 Apr 2013 19:57:24 +0000

Defending Public Services

Craig’s site claims that he’s “one of the UK’s best known social entrepreneurs”.

But his posting True Enemies – or Necessary Allies? Unions and Social Enterprise on Saturday 20 April 2013 shows that he doesn’t know much about trade unions.

Much of his piece seems based on Care Plus in North East Lincolnshire. From this one example – about which Huckfield doesn’t know enough to comment – his posting becomes a wide ranging and general rant against trade unions. He writes:

“We have to get prepared, together, for the possibility that very few services will be delivered directly by the State within a decade, particularly if growth does not materialise.”

Huckfield doesn’t disagree and regularly makes postings on this site about cuts in public expenditure, including Private Philanthropy is not the Answer to Public Spending Cuts.

The latest projection by the New Local Government Network’s April 2013 Gaming the Cuts: AnyBorough 2016 on page 9 is that “Local Government, along with some other un-ringfenced services, will face real terms reductions of at least 50% of expenditure over the period 2011/12 to 2017/18″.

But how can Craig blame trade unions for resisting cuts and reductions in services when London Third Sector Organisations encourage more competition through external tendering for delivery of these services, especially in the NHS? That’s why trade unions have fiercely opposed ACEVO in its campaign to open up the NHS to more private competition through its support for the National Health Service (Procurement, Patient Choice and Competition) Regulations) 2013.

Whatever Craig may think, trade unions and the rest of us know that these Regulations will open the NHS door ever wider to the private sector.

Trade union members have not forgotten that on Friday 19 October 2012, the Chief Executives and Secretaries of several London Third Sector Organisations sent a Letter to Sajid Javid MP, Economic Secretary to the Treasury, which led many to believe that they had not only signed up to the Coalition Government’s spending cuts, but to its welfare reforms too!

In that letter, these organisations wrote:

“Firstly, our sector stands ready to make a greater contribution to the Government’s Open Public Services agenda. Crucially, we need the opportunities to do this. National and local commissioners need more encouragement and support to engage with the sector”.

“…..Naturally, the Government wants to support people off benefits and back into jobs wherever possible. But we know that it can end up costing Government more if vulnerable people are not supported through these processes appropriately: the costs associated with contested work capability assessments are an example of this. We therefore ask Ministers to give special consideration to the important work that our sector, and particularly advice services, can play in relation to welfare reforms and preparing for their impact”.

Trade unions know that among the organisations which signed this letter were:

It is any wonder that in October 2012 Unite Voluntary Sector members called for Charities to leave ACEVO?

Unite Community, Youth and Not for Profit members working for Crisis, Greenpeace and Amnesty International and from Unite’s London and Eastern Regions, sought action at national level.

On Wednesday 21 November 2012 NCIA (the National Coalition for Independent Action) reckoned that these Third Sector organisations had signed up to privatisation and welfare reform and responded:

“NCIA says the open public services agenda is code for privatisation and termination of public services. ..We question whether we should connive in delivery of policies about which there is growing evidence of damage to our common wealth and to vulnerable people. Our starting point should always be the expressed needs of our beneficiaries and those with whom we stand in common cause.”

And in January 2013, Independence under Threat – the Report of the Panel on the Independence of the Voluntary Sector on page 43 said:

“The letter was seen by some as placing the Voluntary Sector at the disposal of the Government machine”.

So instead of ranting against trade unions trying to defend public services, perhaps Craig should address his remarks to those London Social Enterprise and Third Sector Organisations which through their actions support UK Coalition Government policy of opening up public services to private profit-making, payment by results and funding through Social Investment?

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‘Defined out of the Equation’

Craig writes about trade union fears of being “defined out of the equation”. But the real trade union fear is of services themselves being “defined out of the equation”.

Unite has a Community Membership for those not in paid employment, students, carers, and those who are retired or unemployed – for 50p a week. What will Craig do when these Community members team up with those union branches of which he complains to defend services – when those delivering services could be in the same union as those receiving them?

Huckfield belongs to a Unite Not for Profit branch in Edinburgh which is setting the pace in recruiting Personal Assistants employed through Personal Health and Care Budgets. Through trying to safeguard these assistants’ employment rights and conditions, the branch also works to uphold and extend the levels of service delivery made possible through these payments.

Huckfield hopes that Craig supports trade unions working with local communities and service recipients to maintain delivery of their services.

“Let me talk to the Workers”

Referring to Care Plus, Craig writes:

“my understanding is they (the employers) have tried to change terms and conditions for staff and, in doing so, have sought to deal directly with their own workforce (who are also owners of the company) – rather than deal mainly with the unions.”

But he also writes:

“It is easy to see where the unions are coming from. The public sector is, in many ways, the only place left in the UK where terms and conditions of staff are relatively good. History has taught the unions that once things are moved out of the public sector, things get worst a lot more quickly for the staff”.

Craig should know that “Let me talk to the workers directly” is the oldest trick in any employer’s book. In reality, many of these are not – as Craig describes – “conversations between bosses and workers”, since neither employer nor employee may know enough about employment law.

Anyone attending the Edinburgh Unite Not for Profit Branch, of which Huckfield is a member, will hear an unending littany about employers’ ignorance of employment law.

Members of this branch work for Third Sector organisations in and around Scotland’s Capital – Voluntary Organisations, Charities and Social Enterprises. Each month it’s the same. Members’ and stewards’ workplace reports tell of Third Sector employers knowing little about sickness pay, redundancy and the rest. And some of these employers are large Scottish and UK organisations, including Housing Associations.

So the Branch is now producing some basic guidance on these issues. Though this is for members, their employers will probably read it keenly.

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Resisting the Next Public Spending Cuts

Craig writes:

“… trade unions, I believe, need to re-evaluate the Social Enterprise route in terms of its alternatives as the UK enters its next round of public austerity.”

Huckfield hopes that Craig will support trade union opposition where Local Councils may decide to contract out their entire homelessness provision on a payment by results basis. Political decisions for payment by results mean that only the biggest providers – especially those members of the Employment Related Services Association – stand a chance of getting the contract.

Trade unions already resist contracts where their members providing care only get paid “face time” and nothing for time spent between home visits. And some Third Sector employers have agreed contracts which only allow payment for “face time”.

Trade unions will also oppose any attempts to provide housing and care services using a “volunteer plus” formula, under which mentors or befrienders instead of paid employees deliver the service.

Surely Craig supports unions’ arguing against these minimal levels of service delivery?

The Coalition’s Third Sector Procurement

Craig writes:

“Furthermore, there need to be assurances to trade unions that all will be done to ensure that they are included fully in the operation of these businesses. It happens on the Continent and there is no reason it should not happen here.”

But there is a major political difference for Social Enterprises and Third Sector organisations in many Continental countries. The UK has never experienced a sustained political period when Social Enterprises or Third Sector organisations are regarded as part of a mixed economy in public service delivery.

Jim Callaghan’s 1976 to 1979 Labour Government gave more encouragement to the Third Sector than during the whole recent New Labour era, when a string of Government Third Sector policy statements and documents read like a Procurement Manual.

The latest testimony to this came in the January 2013 Independence under Threat – the Report of the Panel on the Independence of the Voluntary Sector.

On Infrastructure Bodies, on page 43, the Report said:

Hopefully, Craig will recognise that these timid “infrastructure bodies” are those same London Third Sector organisations which through their actions are signed up to the UK Coalition Government’s political agenda.

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‘Privatisation – you’re just as a bad as all the rest’

Craig writes:

“Compared to the prospect of mass-privatisation to firms with dubious motives and a bad track-record, Social Enterprise may well look more attractive, particularly if this can also maintain a wider range of services”

But what does Craig expect unions to say when Big Society Capital, Social Investment Business and London Third Sector Organisations keep extending the range of “social sector organisations” which now style themselves “Social Enterprises”?

Big Society Capital in its For Profit Social Sector Organisations Governance Agreement September 2012 shows that shareholders’ interests are as important as those for whom services are being delivered:

“The Company exists:
(a) Primarily to provide affordable credit and other financial services to individuals
and organisations which are excluded from or are underserved by mainstream credit and financial services markets; and

(b) As an equal or subsidiary object, to generate value for shareholders.”

Rodney Schwartz, Chief Executive of ClearlySo, when he wrote Social Investment is a Large Tent that is Broadly Defined in Third Sector News on Tuesday 09 April 2013, was equally relaxed about extending to more organisations with a self-styled social mission:

“Thus, we endeavour to bring in more investment from individuals or organisations with capital, however they choose to define ‘social’ (within the bounds of decency and legality, of course) and match them with appropriate investments. By defining the sector broadly, we help to create the largest possible market”.

Again, the conclusion of Independence under Threat – the Report of the Panel on the Independence of the Voluntary Sector is relevant. On the independence of the sector on page 25, the Report says:

“One danger is that commentators will call for new categories of Not for Profit Organisations to be created, where public money is received, reducing rather than reinforcing distinctiveness. The defining characteristic of the Voluntary Sector should be the primacy of its mission and purpose and independence, rather than the source of funding or activities. A clearer definition of Social Enterprise is needed to prevent abuse”.

On Social Enterprise on page 25, the Report says:

“.. 26% of small and medium size enterprises badge themselves as Social Enterprises. (Annual Small Business Survey 2010, BIS, April 2011) The Voluntary Sector brand is being abused. ‘Social Enterprise’ is a totally unregulated or defined concept and, for some, just a convenient brand”.

Hopefully Craig will agree that the Baring Foundation’s Panel membership isn’t from trade unions but from those with a distinguished track record of service in the Third Sector.

And, Finally

None of the above represents what Craig calls an argument between “Two Tribes”. “Face time contracts” and mainstream public services delivered by “volunteer plus” befrienders are on the agenda right now. Craig should surely be arguing against Social Enterprises and Third Sector Organisations being driven into contracts which only permit payment for “face time” or public services delivered by volunteers?

Instead of ranting against trade unions, he should surely recognise that these public spending reductions are so big that Social Enterprises and unions should join together to resist them?

Just as importantly, Craig should be asking those London Third Sector Organisations why they have allowed the whole concept of Social Enterprise to become so diluted that Big Society Capital, ClearlySo and others in the London Bubble no longer distinguish between Social Enterprises and profit making Companies Limited by Shares with a self-styled social mission.

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Social Investment – Scotland does it without the Hype

huckfield — Tue, 23 Apr 2013 19:12:22 +0000

Social Investment in Govanhill, Glasgow without the Hype

During April 2013, there have been two significant and high powered Social Enterprise events:

Skoll Foundation’s Oxford Jam and 10th Skoll World Forum on Social Entrepreneurship April 10-12 2013

“What is the Future of the Third Sector?” The National Conference of the Third Sector Research Centre in London on Friday 19 April 2013

Sandwiched between these illustrious events, last week in Scotland it was such a relief to hear about the typical problems faced by Social Enterprise and Third Sector Organisations discussed in a thoughtful, down to earth and constructive way at:

The Social Investment 2013 Conference on Monday 15 April 2013 was held at Elim Church, Govanhill, Glasgow – well organised by Spectrum Solutions .

By no means was this a dull or boring conference. It was well attended by most of Scotland’s big funders, intermediaries and project managers.

Huckfield in this posting summarises the presentations made, all of which add up to Scotland’s very different approach to Social Enterprise and Third Sector funding. No one mentioned “structured investment products” all day!

Pat Armstrong, Chief Executive, Association of Chief Officers or Scottish Voluntary Organisations

Pat gave a rounded welcome to all those attending. For each of her interventions she had a memorable quotation. Huckfield and others noted that in tone and style, her presentation and approach were very different from her counterpart in England!

Jackie Killeen, Scottish Director, Big Lottery Fund

Jackie explained that among 3000 Big Lottery grants last year, there were £63mn Strategic Grants, £13.8mn in small grants and £7.4mn in mid grants.

There is a Social Investment strand in the 2013-2015 budget, the main focus of which is stimulating a pipeline. Projects needed support on impact measurement. The Budget included £6mn for Social Investment from 2013 till 2015. So this did not represent a wholesale shift. The focus would be:

Stimulating the Pipeline
Supporting Investment Readiness
New models of Community Investment
Investing in Research

Compared with the usual Social Investment announcements from the London Bubble, where nothing from Big Society Capital happens without an expensive media launch and cast of thousands, many of us thought that this was Social Investment put rightly in context.

Ken Ferguson, Director of Robertson Trust

Ken explained that the Scottish Government’s Christie Commission Report in June 2011 had emphasised early intervention with longer term horizons and relationships before seeing results. With a tightening of funds, funders were looking at core not just supplementary funding. Grant making Trustees had difficulties in making forecasts for longer periods involved. There was also more demand for revenue rather than capital funding and increasing pressure on smaller charities.

In an impressive funding matrix he analysed some funding models on offer and the issues these raised:

Social Impact Bonds. These were a rare species in Scotland and would be described later by Jane Newman from Social Finance.

Public Social Partnerships were funded by the Scottish Government. Further evaluation was needed and there were potential problems with longer term tendering and sustainability of services. PSPs were more attractive when there was genuine social change. A PSP might act as a barrier against Third Sector involvement since the provider could lose Intellectual Property and three years’ work. Large organisations could gain entry on the back of this.

Allia Bonds. Allia offers a range of bonds. Through on lending at a fixed rate to a social housing provider, the Charitable Bond allows the yield to be discounted either in part or full at the choice of the investor and paid upfront to the investor’s nominated charity.

Covenants, loans or other bonds might carry more risk. There were generally not resources for tracking risk and investors couldn’t set losses against investment.

Whereas Public Social Partnerships were worked out with the public sector, with SIBs and other investment, providers had more freedom to develop new delivery models. Social Impact and Allia Bonds had a more prescriptive approach. Social Impact Bonds could either cost too much or nothing.

Outcomes needed to be understood, especially to assess what delivered change. More independent assessment was needed of outcomes.

Following a detailed presentation, Ken’s conclusion was that, regrettably, currently in Scotland there was no clear route map for going forward.

David Hardie – Head of Venture Philanthropy at Inspiring Scotland

David described his role in Venture Philanthropy at Inspiring Scotland. He is also Senior Corporate Partner at Dundas & Wilson LLP.

The European Venture Philanthropy Association defined ‘Venture Philanthropy’ as ‘a field of philanthropic activity where private equity/venture capital models are applied in the non-profit and charitable sectors. 64 ventures were currently receiving investment from Inspiring Scotland.

Funding came from those investors which sought social change, including some attending the conference. An external review had shown that Inspiring Scotland was increasing efficiency in investment and maximising its return, creating more sustainable ventures and delivering outcomes which could change lives.

Jane Newman – International Director at Social Finance

Jane was keen to distinguish between Social Impact Bond projects under the Department of Work and Pensions Innovation Fund and the Social Finance fully developed approach, starting from social issues. Social Finance played a key role in the Peterborough Young Offenders Social Impact Bond Project. She offered an overview of future developments for an approach which she thought had potential.

In reply to a question from Huckfield on “sector blindness” and lack of guidance on sector eligibility under the Cabinet Office Social Outcomes Fund, in which Social Finance has a significant advisory role, Jane felt that the Cabinet Office would probably apply a filter process to encourage Social Enterprise and Third Sector organisations.

Ian Marr from YMCA Scotland and Adrian Bell, Partner at Morton Fraser LLP

Ian spoke on setting up the employability Social Impact Bond at Perth YMCA and Adrian described work in his firm to produce required documentation. He sought to produce a ‘regular package’ which was usable elsewhere.

Rachel Searle-Mbullu, Foundation Scotland and Carole Patrick, Life Changes Trust, Foundation Scotland

Huckfield and others found presentations from Foundation Scotland, formerly the Scottish Community Foundation, innovative since they described setting up Trusts for Jessica Scotland and Resilient Scotland. Where community organisations were distant from the market, their involvement in a Trust or Foundation might lend weight and credibility.

Carole spoke about Next Generation Trusts. The Life Changes Trust has £50mn from Big Lottery over 10 years and is working to help those leaving care and with dementia. Life Changes is an Independent Trust with Founding Partners. All this represents an innovative route forward, including development funding for new partnerships.

John Devine, Regeneration Manager for NG Homes

John was keen on Housing Associations providing supporting roles beyond housing provision. NG Homes had set up a Social Enterprise, training and jobs. The Association’s “School of Hard Knocks” Rugby initiative would feature on Sky TV. John’s video presentations drew significant applause.

Paul Bannon, Scottish Charity Finance Directors Group

Paul’s description of the intricacies of Scottish Charity Law and its operation was impressive. This was one of the sessions which would probably have merited closer and smaller discussion.

Chic Brodie MSP, Convenor of the Holyrood All Party Social Enterprise Group

Chic made his usual “onwards and upwards” windup for which he is renowned.

Pat Armstrong then closed the Conference – with yet another quotation – and expressed sincere thanks to presenters and attendees.

And, Finally

Huckfield concluded that the day was neatly summarised, when, just before leaving, he was asked by an Edinburgh Youth Club Worker what the day had achieved. The questioner described worries from his English colleagues about impact measurement increasingly required by funders, some of which they felt was not really relevant.

Huckfield’s response was that if the same conference had taken place in England, especially somewhere in the London Bubble, the whole event would have been overpopulated by Investment Bankers and Financial Advisers, talking nonstop about equity investment and impact measurement. Above all, the Conference had showed that Scotland is different and prepared to work things out for itself – without the hype and the bankers.

Huckfield caught the No 31 bus back into the City.

Big Society Capital’s £600mn – An Alternative Strategy for Supporting Social Enterprises

huckfield — Mon, 01 Apr 2013 21:10:10 +0000

“Beware the Ides of March” (March 15 2013 AD, not 44 BC)

The Soothsayer’s warning to Julius Caesar on March 15 proved fatal.

While not wishing a similar fate for Big Society Capital, Social Enterprise UK and London Third Sector Organisations in the Big Society Capital Glee Club, Social Enterprises across the country have noted that during the second half of March 2013 things have not been going well for Social Investment Market protagonists. And all this despite the post Budget hype about possible tax relief on Social Enterprise investment!

Above all, most Social Enterprises believe that the £600mn allocated to Big Society Capital could be more effectively used. The first draft of An Alternative Strategy to Support Social Enterprises is shown below.

The following represents a brief summary of events since the Ides of March 2013:

Niahm Goggin’s Institute for Voluntary Action ‘Charities and Social Investment’ Research Report for the Charity Commission
Page 18.“Most of the study participants in charitable trusts and foundations said that they had not reached their current limits for social investment and could do more. There was some scepticism about recent projections of market size.”

Page 24. “Study participants in charities and some national bodies suggested that non-charitable social investment intermediaries were overly concerned with charity demand for investment rather than charity need for investment to meet the needs of their beneficiaries.”

Page 25.“‘I want to bring elements of the casino to the social investment market, not bring the social investment market into the casino.’ (Intermediary)”

Mary Duffy’s Clore Fellowship ‘Shining Armour or Sheep’s Clothing?’ Report
Page 23.“The Social Enterprise landscape is dominated by SMEs and the deals being sought by many investors are bigger than these organisations require. Some point to a ‘big hole’ at the <£50k investment level (even more acute at <£20k) and the failure to address this because of administrative costs and risk involved. They say that this gap is greatest at the start-up stage where organisations struggle to reassure investors that they are a good risk. There are concerns that smaller scale, tougher work will suffer, threatening creativity and diversification and cutting across the rhetoric about fostering social impact innovation across the funding arena".

Page 27.“There is a view that many intermediary organisations populate their teams mainly with those from the finance side, demonstrating what they prioritise and what they are seeking in terms of direction. This leads to trust issues – are these ‘bankers out of work following the crash’ trying to cash in on something to ‘tide them over until they go back to earning big bucks’? Are they ‘rich ex City guys seeking salvation’?”

Nick O’Donoghue’s “Plan Vanilla” lending pronouncement, Wednesday 27 March 2013 – which represents a big shift in focus for Big Society Capital from his bold £100mn investment pronouncement on Tuesday 15 January 2013. This perhaps represents his first public acknowledgement of difficulties with Social Investment?

Vibeka Mair’s “White-washing Capitalism” piece in Civil Society on Wednesday 27 March 2013 in which she quoted Robbie Davison, Chief Executive of Community Interest Company Can Cook, and his accusation about “Big Society Capital, the biggest Social Investor in the UK, imposing a market-based ideology on the social investment sector”. She continued: “And he and others say that Social Investment intermediaries are concentrated in a City of London bubble with no real understanding of the finance needs of the voluntary sector”.

Reports on March 19 2013 about the Social Investment Business grant of £199,000 to Big Society Network
“It is also not clear how the £199,900 has been spent and what, if any, social outcomes have been achieved, as the campaign that was meant to be funded by the grant appears never to have launched and has now been put on hold by the Cabinet Office.”

@j0nathanjenkins (Chief Executive of Social Investment Business) and his anguished Twitter exchanges last week, in particular, asking “@huckfield how wud u allocate 600m then to 3rd sector if the only given is you must do it in a sustainable way not a one off?”

@huckfield replied to @j0nathanjenkins, saying that alternatives would be posted on this site. The first draft of An Alternative Strategy to Support Social Enterprises is shown below.

But as all these ‘London Bubble’ events above have been unfolding, Leslie Huckfield Research and many others are most of all concerned that many Social Enterprises across the country face severe financial difficulties, are being forced to declare staff redundant and are eating into their reserves.

For them, Social Investment promoted by Big Society Capital, Social Investment Business, UnLtd and other intermediaries is irrelevant, inaccessible and serves none of their desperate needs.

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An Alternative Strategy to Support Social Enterprises

Leslie Huckfield Research offers the following proposals as a basis for further discussion. These are summarised below and set out in more detail in An Alternative Strategy for Supporting Social Enterprises under Hot Topics .

At this stage Leslie Huckfield Research offers this Initial Draft of An Alternative Strategy for Supporting Social Enterprises merely as a basis for discussion. But these suggestions are offered in the knowledge that they are more relevant to the real needs of Social Enterprises than the “structured investment products” promoted by Big Society Capital and its Social Investment Market intermediaries.

It is proposed that £400mn Dormant and Unclaimed Bank and Building Society Accounts, together with a further £200mn investment under the Merlin Agreement from four major banks – previously allocated to Big Society Capital and its intermediaries for development of a Social Investment Market – should now be reallocated to regional Social Enterprise Networks for their decision on spending priorities.

Following detailed consultation with appropriate regional Social Enterprise Networks, it is proposed that for future Social Enterprise support and development, these Networks might seek to pursue the following Menu Options:

A) Supporting Social Enterprise Regional/Local Networks

B) Public Social Partnerships And Change Funds

C) Social Enterprise Markets Programme and Social Enterprise Infrastructure Support Fund

A) SUPPORTING SOCIAL ENTERPRISE REGIONAL NETWORKS
(the following to be discussed):

OUTCOME 1:
To ensure that Social Enterprises are better funded, informed, encouraged and supported to develop, grow and contribute to public and other service provision and delivery.

Objectives:

To encourage national and local government, Trusts and Foundations to create new Social Enterprise funding programmes, initiatives and availability, including investment in new structures.

To improve communication and connections, information sharing and links between social entrepreneurs and Social Enterprises across regional areas.

To provide up to date, relevant information and support of benefit to Social Enterprise and Social Firms at the level of individual organisations.

To ensure Social Enterprises are better informed on policy development and signposting to local, regional and national support programmes and initiatives.

To develop and promote mutual Social Enterprise support and inter-trading opportunities.

To optimise regional and local initiatives so that these incorporate and relate to local Social Enterprise and Third Sector developments.

OUTCOME 2:
To enhance the profile of Social Enterprises, their value to local communities, meeting regional and national objectives using policy engagement and media.

Objectives:

To raise the profile of Social Enterprise as a business model, through highlighting values and benefits of Social Enterprise to broad range of stakeholders.

To increase understanding and awareness of Social Firms and work integration opportunities.

To measure, record and disseminate economic progress of Social Enterprises and Social Firms and identify ways in which they can improve performance.

OUTCOME 3:
To ensure that influence and contributions from Social Enterprises to policy development locally and nationally is enhanced

Objectives:

To represent the needs and views of Social Enterprise to policy and decision makers at regional, local and national levels to assist proactive policy development.

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B) PUBLIC SOCIAL PARTNERSHIPS AND CHANGE FUNDS
(the following to be discussed):

1) Public Social Partnerships (further details and examples to be provided)

A Public Service Partnership (PSP) differs from other commissioning approaches since it is based on needs to be addressed, rather than services available. These needs become the driver for other partnerships. A PSP typically comprises three stages:

Social Enterprises work with public sector purchasers to design a service

A consortium of public, Social Enterprise and Third Sector Organisations may conduct a short-term pilot, helping to refine service delivery parameters

The service is further developed to maximise community benefit before being competitively tendered

The PSP Concept was developed in Scotland under the previous EQUAL Social Economy Scotland Partnership.

2) Change Funds (based on current Scottish Government funding models)

The Scottish Government currently operates 3 Change Funds – for Reducing Reoffending, Integration of Adult Health and Social Care and Early Years, which fund development and operation of Public/Third Sector Partnerships for developing integrated services.

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C) DEVELOPMENT OF MARKETS AND SOCIAL ENTERPRISE INFRASTRUCTURE
(the following to be discussed):

1)Developing Social Enterprise Markets (based on current Scottish Government Programme)

The Programme would complement the Public Services (Social Value) Act 2012 and other procurement initiatives.

This Programme would increase Social Enterprise engagement in service design to meet community needs and increase overall Social Enterprise sustainability.

Resulting from this public sector commissioners would be able to contract sustainably, maximise Social Value, and deepen their engagement with Social Enterprise.

2)Social Enterprise Infrastructure Fund (based on NCVO Funding Commission Report 2009)

Regional Social Enterprise Network Restructuring Funds might be established:

The Social Enterprise Infrastructure Fund might assist one-off support, legal costs re-structuring costs, including rationalising and/or restructuring regional and local infrastructure.

Regional and Local Social Enterprise Networks would provide a significant role in helping to reconfigure the present pattern of infrastructure, through:
- Working with relevant regional structures and key funders like Big Lotery, Trusts and Foundations at the national, regional and local level.
- Highlighting where investment needed to bring provision up to standards and ensuring best use made of ICT.
- Encouraging Social Enterprise Infrastructure Networks to apply for support for developing merger or collaborative working and shared support

And, Finally

These proposals above represent the response from Leslie Huckfield Research to @j0nathanjenkins. Though the above proposals are based on funding and projects under programmes and recommendations elsewhere, they are offered here as a basis for discussion and detailed consultation with appropriate regional Social Enterprise Networks for their decision.

Since many of these proposals are based on those which are currently operating in Scotland, funding suggestions are offered primarily as a basis for further discussion with appropriate regional Social Enterprise Networks across England, and where appropriate, in other devolved nations.

Above all, these suggestions recognise the acute funding problems now faced by many Social Enterprises – which the Social Investment products offered by Big Society Capital and its intermediaries fail to understand and offer no solution.

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Thoughts from the Social Enterprise Exchange

huckfield — Sun, 24 Mar 2013 20:35:35 +0000

Well done, Social Enterprise Scotland and CEIS

Heartiest congratulations are due to Social Enterprise Scotland and CEIS for their organisation of a highly successful Exchange at the SECC, Glasgow on Thursday 21 March 2013. Not only was the Exchange well-attended but it was less densely populated than last year by London investment bankers and brokers trying to sell Structured Social Investment Projects. Though the mood was of grim reality, many acknowledged that this was better than hyped up claims about Social Investment.

But there was still much discussion about Social Investment. It took Nigel Kershaw from Big Issue Invest to strike one of the Exchange’s more memorable moments, when, during an afternoon Theatre Session on “Financing Social Enterprise”, he questioned:

“Finance is just a bloody tool. How do we embed the sense of Social Mission?”.

The Panel just looked nonplussed and could only mouth less than memorable platitudes in reply.

As a Board Member of the Social Entrepreneurs’ Network Scotland, Huckfield once more declares an interest. Senscot promotes its own definition of Social Enterprise, in which Social Mission is critical. These are the details of the Voluntary Code of Practice for Social Enterprise in Scotland – the Senscot Code

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Time to Draw a Line in the Sand on Social Investment

Many of us outside the “London Bubble” have been saying for a long time that it’s time to draw a line in the sand for Social Investment and that the £400mn unclaimed assets from dormant bank accounts and building societies could be more effectively used to support the real needs of Social Enterprise and the Third Sector

10% of Social Enterprises. Despite nearly £1bn of funding from Big Society Capital, Big Lottery, the Cabinet Office and others to promote Social Finance and Social Investment, it will only ever be of interest and accessible to around 10% of Social Enterprises.

Out of reach, inaccessible and unwanted. Ambitious projections for Social Investment growth come from Big Society Capital and the supply side. Most evidence from the demand side in a long line of surveys shows that Social Investment is out of reach, inaccessible and unwanted by most Social Enterprises.

Unclaimed assets could be better spent. As shown below, others are becoming fed up with the way Big Society Capital is spending unclaimed bank and building society accounts. More are concluding that these are public assets which could be better spent.

Social Enterprise survival risk. With many Social Enterprise and Third Sector Organisations now eating into reserves, merging and declaring redundancies, there is a real risk that through this unrelenting emphasis on Social Investment, many smaller Social Enterprises which are desperate for grants or loans between £20,000 and £50,000 for working capital, to scale up or deliver services, may not survive.

Doubts about the intermediaries. As shown below, there are growing doubts about many so-called “Social Investment Intermediaries” which don’t understand the constitutions of Social Enterprises and Third Sector Organisations which don’t allow dividends.

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Continued Outpourings on Social Investment from the “London Bubble”

The deluge on Social Investment from those in London hardly allows the rest of to find shelter. This is a random sample:

Ten Reforms to Grow the Social Investment Market from Bates, Wells and Braithwaite in July 2012 on page 5 represents a typical example:

“Funding Gap
The 2011 State Aid application of the UK Government in respect of Big Society Capital, estimates that Social Enterprises are receiving £0.9-1.7bn less finance than they need, when compared to the level of financing of SMEs using information derived from the 2010 BIS SME survey”

“Potential Growth
A June 2012 internal study carried out by Big Society Capital estimates that total investment inflows into the UK Social Investment market has the potential to grow from £165mn to up to £750mn by 2015 on the basis of demand for Social Investment on the part of Social Enterprises”

The Report produces no evidence of this “potential to grow” and offers “special thanks” for comments and feedback to Social Enterprise UK and Big Society Capital!

Beanbags and Bullshit “Sense of Relief” posting . David Floyd’s posting last week, is rightly wary of Social Investment. But while he welcomes the Chancellor’s first steps towards tax relief for investment in Social Enterprise, he seems to overlook that it has been Third Sector Organisations within the “London Bubble” – ACEVO, NCVO and Social Enterprise UK – which have been pressing for tax relief just as hard as Big Society Capital’s Investment Bankers Glee Club.

The 2013 Budget : 10 Things You and Your Charity Need to Know by NCVO’s Head of Policy Karl Wilding, refers to Big Society Capital as “our partners” and then refers to the NCVO Commission on Tax Incentives for Social Investment Analysis and Recommendations January 2012 – produced by NCVO and Social Enterprise UK happily sitting alongside Big Society Capital, Social Finance and Bates, Wells and Braithwaite – the usual crowd of well-heeled intermediaries.

The Commission Report includes the perhaps remarkable quotation on page 11 from Bridges Ventures on “how the social sector’s potential is held back by lack of appropriate growth, development and risk capital”:

“Bridges Ventures, for example, observed how the “traditional venture capital model is not appropriate for social ventures, where the social mission is core to the business usually are not comfortable aiming to sell onto another business or issuing shares on an ordinary exchange because the social mission may be compromised by the new owners’ desire to maximize profits”

Perhaps we should not be surprised about another recommendation on page 14?:

“To ensure that the tax rules can be applied in a meaningful way to non-profit distributing bodies, equity-like investments for social ventures could be defined by the reference, not to profit, but to performance and results, however they may be defined. Instruments and arrangements which exhibit characteristics more akin to equity than debt should be treated as analogous to equity.”

In other words, in their Report NCVO and SEUK are saying that not only should performance and results should be measured to secure equity investment, but also to ensure tax relief on that investment. Surely many NCVO and Social Enterprise UK members are unaware of what London based organisations are saying on their behalf?

Bridging the Gap between the Social Investor and the Civil Society Organisation by Paul Henry and Chris Hardy in Pioneers Post on Saturday 16 March 2013 again perpetuates some of the myths:

“Initially many viewed, or were led to perceive, Social Investment as a replacement for public sector funding. It has been said that the issue being faced by the sector is a lack of available Social Investment, leading the Government to focus on expanding the amount and types of social finance available.”

“Our experience from engaging with grass roots Social Enterprises, charities and community groups is that the majority do not see Social Investment as an attractive proposition, or more often they have not considered it at all”.

Despite all this, the Pioneers Post piece concludes that it’s now up to Social Investment Finance Intermediaries to bridge the gap. Don’t they understand, as shown below, that there is no gap to be bridged? For the 90% of Social Enterprises, Social Investment, in all forms described in detail by Paul Henry and Chris Hardy, is either inappropriate, irrelevant or inaccessible for their real needs.

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The Evidence just keeps Building against Social Investment

In the face of this growing army of well paid intermediaries, many of them strangers to most Social Enterprises, there is a constant flow of Reports showing that the demand for Social Investment is minimal:

Investment Readiness in the UK by Dan Gregory, Katie Hill, Iona Joy and Sarah Keen (ClearlySo, New Philanthropy Capital and Big Lottery Fund) (page 9) “Furthermore, it seems that significant time and resources are being wasted by applicants and investors alike in working – but failing – to secure deals. This increases transaction costs and market inefficiencies and could be considered as a market failure. Conversion rates among social investors, (not including government-backed softloan and grant funds) appear to sit between 5% and 15%. At one extreme, Community Builders had 4000 enquiries leading to 200 applications and 37 investees – equivalent to less than a 1% conversion rate and thus a significant mismatch of perceptions between investors and applicants”.

Rethinking Community Practice – Gabriel Chanan and Colin Miller (Policy Press) “There is a scattering of good neighbourhood work by Locality and others, but the biggest current resource in this field, the £600m Big Society Bank, is misguidedly trying to turn all community and voluntary organisations into small businesses. This important fund ought instead to endow a system of grants and service level agreements which the myriad of small and medium sized community groups could safely operate to back up neighbourhood partnerships.”

Institute for Voluntary Action Research Charities and Social Investment by Niamh Goggin and Leila Baker (Research Report for the Charity Commission) (page 24) “Most study participants also said that Social Investment should not be seen as a panacea for the financial needs of all charities or for every social problem. Study participants in charities and some national bodies suggested that non-charitable Social Investment intermediaries were overly concerned with charity demand for investment rather than charity need for investment to meet the needs of their beneficiaries. Estimates of Social Investment demand have been based on projected growth of Social Enterprise opportunities to supply public services, rather than on charities’ need to grow in scale and scope to deliver on their charitable purposes”.

(page 29) “The charity sector appears to be largely absent from conversations about the Social Investment market, while non-charitable intermediaries have been actively participating in them. Our study findings suggest that there is little movement between the practical experiences of charity investees and the theories and ideas behind the development of the Social Investment market”

Shining Armour or Sheep’s Clothing: View on Social Investment in the UK by Mary Duffy (Clore Social Leadership Programme/New Street) (page 4) “The involvement of for-profit ‘social businesses’ raises mission related concerns and there is discomfort among some about downplaying organisational structure for recipients of Social Investment.

(page 18)“Even the ambitious (and contested) projected UK demand for Social Investment of £1bn by 2016 only equals the amount that UK charities currently borrow annually from commercial lenders yet the apparent lack of investees is used by critics to challenge rhetoric about the importance of Social Investment. Arguments framed in terms of a lack of ‘investment readiness’ among charities and social enterprises are further criticised by sceptics as an absurd laying of blame with the customer for not turning up at the store”.

“….Notwithstanding how various investment readiness support programmes may support those seeking investment, in this context Big Society Capital‘s aspiration to invest an estimated £3 billion overall seems a considerable stretch. This is one reason why BSC and others are looking to widen the investment space beyond charities and not-for-profit social enterprises to include for-profit social businesses. Whilst not all for-profit social businesses are easy to slate, some organisations in this space are more readily cast as inconsistent with a core social mission.”

(page 27) “There is a view that many intermediary organisations populate their teams mainly with those from the finance side, demonstrating what they prioritise and what they are seeking in terms of direction. This leads to trust issues – are these ‘bankers out of work following the crash’ trying to cash in on something to ‘tide them over until they go back to earning big bucks’? Are they ‘rich ex City guys seeking salvation’?”

Shortage of space rather than lack of evidence precludes the inclusion of even more reports. If Investment Readiness in the UK above, based on a survey of nearly 7,500 Voluntary, Community and Social Enterprise organisations, doesn’t convince Big Society Capital and its entourage that there are big problems with Social Investment, one wonders what will?

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And, Finally

Huckfield fears that as Big Society Capital and its entourage encounter more resistance from even more Social Enterprises turning their backs on Social Investment, the Government’s answer will be for the Cabinet Office and Office for Civil Society to step up the Technical Assistance funding to overcome a perceived “market failure”. Stand by for another £10mn for Investment and Contract Readiness.

Big Society Capital and its well heeled intermediaries are being funded from unclaimed and dormant bank and building society accounts – so it’s really our money. Surely we should have more say on the way it’s being used?

Social Investment is the Coalition Government’s Big Idea for the Lough Erne G8 Summit in June. Despite spending up to £1bn to create a Social Investment Market, the Government does not have the evidence to support its case. Since Social Investment isn’t working, Social Enterprises should be pressing their MPs to table Parliamentary Questions, asking how the nation’s unclaimed assets of dormant bank and building accounts are being spent.

A series of regional conferences and seminars might be convened for Social Enterprise and Third Sector Intermediaries, Trusts and Foundations to spell out clearly to the Government that there are more effective ways of spending nearly £1bn than supporting the lifestyles and ambitions of the Big Society Capital Glee Club.

If there is no turning away from Social Investment to meet the real needs of Social Enterprises and Third Sector Organisations, there is a genuine risk that many will go to the wall. Their capacity, their experience and their social mission and purpose may not be recoverable.

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Local Healthwatch – Ode to a Mouse!

huckfield — Sun, 24 Feb 2013 20:24:26 +0000

Ode to a Mouse

Robert Burns had it right when in November 1785 he wrote “To a Mouse: On Turning Up Her Nest with the Plough”.

“Wee, sleekit, cow’rin, tim’rous beastie,
O, what a panic’s in thy breastie!
Thou need na start awa sae hasty,
Wi’ bickering brattle!
I wad be laith to rin an’ chase thee,
Wi’ murd’ring pattle!”

Burns is telling the poor little mouse, whose winter shelter he has just unearthed with the plough, that she doesn’t have to run away and that he means no harm.

Some of us who have written to Healthwatch England about its overdue Press Statement of Tuesday 05 February 2013 , on the new Local Healthwatch Regulations Sections 35 and 36, feel a bit like Robbie Burns. We reckon we’ve disturbed a mouse.

But the real problem – as shown below – is that Local Healthwatch organisations which are now being unearthed all across England, may be forced to be even more timid – by law!

The National Coalition for Independent Action was spot on and should be congratulated for its statement of Thursday 14 February 2013 How to Make a Toothless Watchdog – ‘Healthwatch’ Censored and Emasculated. The NCIA statement focuses on Section 36, which, as shown below, effectively prevents any new Local Healthwatch from any involvement in what might be deemed “political activity”.

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Section 36: Political Activities not to be Treated as being carried on for the Benefit of the Community

To save some time, you can skip these details of Section 36 here and go straight to What Does All this Mean? below, which analyses where Local Healthwatch organisations may now find themselves.

36(1) For the purposes of section 222(9) of the 2007 Act (Social Enterprises: activities for the benefit of the community) and regulation 35(1)(b), the following activities are to be treated as not being activities which a person might reasonably consider to be activities carried on for the benefit of the community in England:

(a) the promotion of, or opposition to, changes in:

(i)

(ii)the policy adopted by any governmental or public authority in relation to any matter

(b)the promotion of, or opposition (including the promotion of changes) to, the policy which any governmental or public authority proposes to adopt in relation to any matter:

(c)activities which can reasonably be regarded as intended or likely to:

(i)

(ii)influence voters in relation to any election or referendum.

(2) But activities of the descriptions prescribed in paragraph (1) are to be treated as being activities which a person might reasonably consider to be activities carried on for the benefit of the community in England if:

(a)

(b)those other activities cannot reasonably be regarded as incidental to activities of the descriptions prescribed in paragraph (1)

(3) In this regulation:

“governmental authority”

(a)

(b)the EU(1), or any of its institutions or agencies; and

(c)any organisation which is able to make rules or adopt decisions which are legally binding on any governmental authority falling within paragraph (a) or (b) of this definition

“political campaigning organisation” means any person carrying on, or proposing to carry on activities:

(a)

(b)which could reasonably be regarded as intended to affect public support for a political party, or to influence voters in relation to any election or referendum (unless such activities are incidental to other activities carried on by that person)

“political party” includes any person standing, or proposing to stand, as a candidate at any election, and any person holding public office following election to that office

“public authority” includes:

(a)

(b)any person certain of whose functions are functions of a public nature

“referendum”includes any national or regional referendum or other poll held in pursuance of any provision made by or under the law of any state on one or more questions or propositions specified in or in accordance with any such provision

Without in any way proffering a legal opinion, many new Local Healthwatch organisations could not have been aware of these detailed restrictions on their potential activities when they tendered for contracts because they were not laid before Parliament until Monday 17 December 2012. Surely they may have been misinformed or misled?

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What Does All This Mean?

An examination of procurement procedures used by Local Authorities for tendering and contracts for these Local Healthwatch organisations shows that most of these preceded publication of these Regulations. Neither the Local Government Association’s Get in on the Act: Health and Social Care Act Guidance of June 2012 or the Department of Health’s Summary Report on Issues Relating to Healthwatch Regulations of July 2012 contain any information about these restrictions in Section 36.

The Local Government Association published Establishing Local Healthwatch : Governance in October 2012. This excellent and comprehensive document contains no reference to the Section 36 restrictions imposed on Local Healthwatch organisations.

The Local Government Association, Healthwatch England and Skills for Care issued their comprehensive Knowledge and Skills and Competences for an Effective Local Healthwatch in January 2013. This wide ranging document contains no reference to the Section 36 restrictions imposed on Local Healthwatch organisations.

So little advance warning seems to have been given about the content of these Regulations. Most Local Authority Commissioning Strategies and Invitations to Tender were decided in advance of their publication and most contracts for Local Healthwatch organisations are already awarded or being awarded.

This surely raises at least a possibility that some tendering or contracted organisations may have been misinformed about the powers and functions of Local Healthwatch bodies?

One example of these tendering procedures is Medway Council Invitation to Tender February 11 2013, which on page 95 gives the Strategic Objectives of Local Healthwatch:

a) information and advice to the public about accessing health and social care services and choice in relation to aspects of those services

b) make the views and experiences of people known to Healthwatch England helping it to carry out its role as national champion

c) make recommendations to Healthwatch England to advise the Care Quality Commission to carry out special reviews or investigations into areas of concern (or, if the circumstances justify it, go direct to the CQC with their recommendations, for example if urgent action were required by the CQC)

d) promote and support the involvement of people in the monitoring, commissioning and provision of local care services

e) obtain the views of people about their needs for and experience of local care services and make those views known to those involved in the commissioning, provision and scrutiny of care services

f) make reports and make recommendations about how those services could or should be improved.

These functions are taken directly from page 14 of the Department of Health’s own Local Healthwatch: A Strong Voice for the People: The Policy Explained of March 02 2012.

This is not being unfair to or singling out Medway – which has issued a very comprehensive document – since most Invitations to Tender are probably similar. But which Local Healthwatch organisation will now feel able or empowered to carry out these functions when restricted by Section 36 of the Local Healthwatch Regulations above?

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What Happens after the Francis Report into Mid Staffordshire Foundation Trust?

All this follows the outcome of the Francis Inquiry Report into Care Provided by The Mid Staffordshire Foundation Trust and the Department of Health’s announced intention to investigate other Trusts. The importance of Local Healthwatch organisations’ being genuinely representative of and rooted in their local communities, with unfettered rights to speak on behalf of NHS service users, should surely therefore be paramount?

Perhaps the best one might hope is that:

a Westminster Member of Parliament might table an appropriate Parliamentary Question, or

a newly appointed Local Healthwatch organisation may feel enabled to challenge its contract if it believes that it may have been misinformed

Though on Tuesday 05 February 2013 in a press statement Healthwatch England Highlighted Concern about Local Healthwatch Regulations, especially Sections 35 and 36, its position is that it only intends “to clarify any confusion”. The statement concluded:

“Healthwatch England recommends that the above concerns be resolved in future statutory instruments.”

The Healthwatch England Press Statement was issued on the same day that Richard Francis QC presented his Mid Staffordshire NHS Trust Inquiry Report to the Secretary of State for Health.

Surely Healthwatch England should now seek the withdrawal of these Regulations?

Compared with previous NHS and other Health and Care service user structures, as they stand, together the definition and restrictions on the activities of Local Healthwatch organisations surely represent the weakest version of service user representation which has ever appeared in any Department of Health legislation?

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Who will Speak Out against the Financialisation of Social Enterprise?

huckfield — Fri, 08 Feb 2013 14:00:37 +0000

As a Board Member of the Social Entrepreneurs’ Network Scotland, HUCKFIELD once more declares an interest. Senscot promotes its own definition of Social Enterprise. These are the details of the Voluntary Code of Practice for Social Enterprise in Scotland – the Senscot Code

Does Social Finance understand Social Need? by Robbie Davison

The wider Social Enterprise movement is much indebted to Robbie Davison for his Does Social Finance understand Social Need?

Robbie runs a Social Enterprise called Can Cook Studio, in Garston, Liverpool. His down to earth ‘reality’ exposition of Social Finance is overdue and should be required Red Box reading for Ministers and Senior Civil Servants at the Cabinet Office and the Office for Civil Society. Robbie summarises accurately the dilemma posed for the majority of Social Enterprises by the growing range of Social Investment Market intermediaries being encouraged by these Ministers. On page 9, for example, he writes:

“This presents a displaced picture of finance versus need; a picture that is at odds with the assumptions that most Social Enterprise practitioners have about the purpose of social finance. This picture also appears to have the social financiers conceiving new products in a vacuum. Wherein they negotiate with each other and seemingly launch product after product that is counter-intuitive to the needs of the Social Enterprise marketplace”.

To counter this, Big Society Capital, the Social Investment Business and others with a City of London financial background have well oiled and funded PR machines. Anthony Hilton’s piece in the London Evening Standard Tuesday 05 February “The Social Bonds making an Impact” reads as though based on one of their double spaced, easy to read media handouts:

“In terms of money, there are now about £280mn of social bonds in issue, a figure that is predicted to rise to £750mn in 2015 and £1bn in 2016. That sum, or something near it, represents a serious injection of capital and expertise into a sector that has for a long time been short of both. Given that inequality is deemed by most people under 30 to be the most pressing social problem of our times, it is an innovation whose time has come”.

As might be expected, missing from this piece was any mention of cash flow difficulties, payment by results, impact measurement and the inevitable cherry picking. Will Anthony Hilton write in the same vein if he revisits some of these Impact Bonds in five years’ time and discovers that many of the “hardest to reach” still haven’t been reached?

HUCKFIELD in this posting wonders why some national Third Sector organisations are not more vocal about finding a way through this dilemma. Perhaps their members should be asking whether they are compromised by the roles of these organisations in Social Investment and how much this explains their failure to oppose Government initiatives. This posting gives some recent examples.

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Big Society Capital and Social Enterprise UK’s Interlocking Directorships

Nick Temple, Business Director for Social Enterprise UK had a convoluted piece in Third Sector News on Tuesday 08 January 2013 Social Investors Should Choose Horses for Courses. This sounded like Social Enterprise UK’s riding two horses:

“Plenty of Social Enterprises and charities are making use of social investment, at all scales of operations, to provide capital to deliver and expand their work and social impact. And there are plenty of others for whom the strategy is simply unsuitable or who find it difficult to access and navigate what is still a fledgling and fragmented market”.

“To use an old maxim, it is horses for courses. But first we need to help organisations on the ground better understand their particular ‘course’ (their needs, model and readiness) and then help them to understand the range of ‘horses’ available (including different types of finance, the various providers and the terms and restrictions involved). We must make it easier for them to get on board. It’s about finding what is appropriate and right”.

But wouldn’t it be better if Nick explained the delicate balancing act of his organisation? The Chief Executives of Social Enterprise UK and the Association of Chief Executives of Voluntary Organisations both hold positions on the Big Society Trust, which is supposed to ensure that Big Society Capital remains true to its mission.

Similarly, don’t expect much speaking out for Social Enterprise from the Big Society Capital’s Advisory Board. A hefty majority are either involved in some way in Social Investment or closely aligned with its mission.

And finally, for those readers who perhaps hadn’t noticed, the CEO of Big Society Capital is a Board Member of Social Enterprise UK. The “Companies and Markets” pages of the Financial Times would call this “interlocking directorships”.

So when dealing with Big Society Capital, who speaks up for Social Enterprise?

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NCVO Working with SERCO

Civil Society on Tuesday 05 February 2013 carried an amazing story – NCVO Collaborates with SERCO:

“NCVO is working with SERCO to develop standards for the relationship between prime and sub-contractors delivering public contracts”

“James Allen, head of public services and partnerships at NCVO, revealed the partnership today at a Public Administration Select Committee hearing on public procurement”.

“Allen said NCVO was working with SERCO to develop standards around how the prime and sub-contractor relationship should work, including the level of support giving to sub-contractors and the availability of shared back office facilities”.

At the very least, Social Enterprises might hope that through collaboration with SERCO, NCVO might prevent Department of Work and Pensions Press Releases like that on Thursday 08 November 2012 More Voluntary Sector Organisations join Work Programme:

“These new entrants take the total number of voluntary and community sector organisations taking part in the Work Programme to 368. This means nearly half – 47% – of all sub contractors are from this sector”.

DWP statements like this hardly square with the difficulties which NCVO itself recently identified in the Work Programme. An NCVO Statement NCVO:Rehabilitation Reform must not repeat Mistakes of Work Programme on Wednesday 09 January 2013 ran totally counter to that above of the Department of Work and Pensions:

“However, under its most significant public service reform so far, the Work Programme, many charities have found themselves squeezed out by large commercial providers. In the interests of helping ex-offenders who could benefit from charities’ expertise, the government must ensure the mistakes of the Work Programme are not repeated”.

This was endorsed by the Independence Panel for the Voluntary Sector Independence under Threat: The Voluntary Sector in 2013, on page 37 of its Report in January 2013:

“The Work Programme appears to be having a damaging effect of the finances of voluntary sector organisations. In research published by the NCVO in October 2012, which surveyed 98 voluntary sector providers to the Work Programme, seven out of ten indicated that their contract was at risk of failure and 47% feared that their contract would fail in the next six months. In more than half of cases the number of referrals had not matched expectations, and a third of providers had not received any referrals at all – these were mostly providers offering specialist services. Worryingly, almost half of providers were subsidising their Work Programme delivery from their reserves, and respondent said that primes were doing little to shield voluntary sector providers from risk – in one extreme case a charity had received more than 50 referrals without any payment.”

In the face if all this, does NCVO really believe that the role of Social Enterprises and Third Sector organisations can be enhanced through closer collaboration with SERCO?

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Social Investment Business and Social Enterprise

The Social Investment Business Group is less guarded about its composition and mission. The SIB Group has just appointed five new Board Members:

Civil Society on Thursday 31 January 2013 reported that Chair of the Social Investment Business Group, who is also the Chief Executive of the Association of Chief Executives of Voluntary Organisations, said of the appointments:

“These are top-class recruits and I remain privileged to lead such talented boards. Our new appointments are the product of a rigorous search process and highlight the capacity of our sector to attract the very best.”

Three of the five have financial backgrounds. One is an ex Tory Minister. Another is from the City of London. While in no way seeking to challenge their motives or competence, was it not at all possible to find at least one at least with some kind of Third Sector background?

There is a similar one sided tilt in appointments and involvements of ‘providers’ under the Social Investment Business Group’s promotion of the Investment and Contract Readiness Fund – a £10mn Cabinet Office fund to prepare Social Enterprises for Social Investment. If you try to Find a Provider under the Social Investment Business Investment and Contract Readiness Fund, you’ll find that there are no less than 27 from which to choose:

The Association of Chief Executives of Voluntary Organisations. ACEVO’s Chief Executive is also Chair of the Social Investment Business Group.

The Advantage Business Agency, A “Global Network of Specialists which provides Consulting, Accounting and Financial Services”

ATQ Consultants who “work across the public, private and third sectors to help commsisioners, providers and investors improve and reform public services”

Banks Cannell LLP which comprises former “senior managers and practitioners from the NHS, education and private sectors who are passionate about health, education and social services and their role in our society”.

Bates, Wells and Braithwaite LLP which has been a leading advocate for changes in Charity law to permit more Social Investment

Bidright UK whose “aim is to provide the highest standard of bid-writing possible, combined with excellent customer service and high win rates”.

Bridge Consulting “Typically our clients are small and medium sized enterprises (SMEs) who are experiencing or planning for growth and who wish to manage that process effectively”.

Can Invest. “CAN is also a co-founder of SEUK and Unltd and Strategic Partner of the Cabinet Office on social entrepreneurship, social finance and impact”.

Claridge Capital Corporate Finance “We have great networks of companies, investors and professionals around the world to make deals happen”.

ClearlySo. “This Fund is not just restricted to those organisations with non-profit legal forms and we welcome applications from profit distributing entities who deliver social impact”.

Cogent Ventures “We help our clients create and deliver competitive advantage in an increasingly commercial and often financially constrained environment”.

Deloitte “Deloitte is one of the UK’s largest professional services firms providing audit, consulting, financial advisory and tax services to clients across all industries, including extensive work with the third sector, public sector and with social purpose businesses”.

Eastside. “Social ventures will have to work in partnership with an approved Investment and Contract Readiness Provider to make an application to this Fund”

Equity Development. “Our senior management has substantial experience in both developing social businesses and in capital market activities”.

Gecko. “have track-record of working to develop concepts through partnerships, into winning tenders that lead to robust implementation plans and social impacts”.

Hogan Lovells. “a global legal practice that helps corporations, financial institutions, and governmental entities across the spectrum of their critical business and legal issues globally and locally”.

Impetus Trust. “We use our highly effective venture philanthropy model to accelerate the growth of carefully selected charities and social enterprises so they can help many more people living in poverty.”

Inspire2Aspire “We specialise in strategic development, feasibility studies, business planning, coaching and exit strategies leading to profitable organisations.”

Investing for Good. “We have a vision for a financial system that enables investors to make investments that reconnect money to social value.”

Locality. “Our mission in Local Partnerships is to support the delivery of investment in local infrastructure and local services, and this means we work across central and local government, and the community focused third sector”.

PWC (Price Waterhouse Cooper). “We bring together people from across the firm and our key partners to provide all the services social enterprises need to be ready for investment or contract delivery.”

Pulse Regeneration. “has been awarded a major new Government contract to help social ventures prepare themselves ready to secure social investment of at least £500,000 or to bid for a public service contract with a value in excess of £1mn”.

Resonance. “If a Social Enterprise is looking to find gap funding, there are often a number of steps and processes it needs to work through in order to become attractive to private equity investors.”

Social Enterprise Support Centre.. “SESC supports social enterprises to become financially sustainable, deliver quality services, and where appropriate, supports their efforts to gain and deliver public service contracts”.

Social Finance. We support social organisations to raise and deploy capital; we work with government to deliver social change; and we develop social investment markets and opportunities.”

Stepping Out. “What makes a social business or mutual special is that it engages staff, citizens and communities in ways that makes services even better. And profits get recycled back into the community”.

Triodos Bank. “we believe that profit doesn’t need to be at the expense of the world’s most pressing environmental problems.”

After the management fees, commissions and other payments to 27 providers, how much of the Investment and Contact Readiness Fund is left over for Social Enterprises?

By any stretch of the imagination in the above list, those providers recognised by most Social Enterprises as “speaking for them” are easily outnumbered four to one by those with financial and legal interests.

So when dealing with the Social Investment Business Group, HUCKFIELD again asks who speaks up for Social Enterprise?

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The Independence of Social Enterprise and the Voluntary Sector

If there are still some readers of this posting not yet convinced that national Third Sector Organisations seem to be falling under the Government’s spell, it’s worth returning to Independence under Threat: The Voluntary Sector in 2013 by the Independence Panel funded by the Baring Foundation in its Annual Report in January 2013 on page 26 says:

“..26% of small and medium size enterprises badge themselves as Social Enterprises. The voluntary sector brand is being abused: ‘Social Enterprise’ is a totally unregulated or defined concept and, for some, just a convenient brand”.

“On the one hand, the voluntary sector is being seen as a desirable brand. On the other, the distinctive value an independent voluntary sector can bring is not being unrecognised in commissioning arrangements. We think there is a real danger of parts of the sector being subsumed into the public or private sectors as boundaries are not just blurred but crossed. Some organisations are already being ‘dragged’ into unwelcome sub-contracting relationships with the private sector because it is difficult to gain prime contracts or are being forced to mimic other sectors to qualify for public sector funding”.

The Report of the Independence Panel continues tellingly on page 43:

“And yet we suspect there is a growing reluctance in the sector to speak truth to power, partly because it is so hard to gain the ear of Government for the voluntary sector, as discussed below. For example, leading infrastructure bodies came under attack from within the sector when they wrote as ‘charity leaders’ to the Economic Secretary to the Treasury on 19th October 2012 saying that they ‘were looking forward to working with you to build a more sustainable economic future for our country, by stimulating growth and tackling the deficit’. The letter was seen by some as placing the voluntary sector at the disposal of the government machine”.

Conclusion

David Floyd in his Beanbags and Bullshit posting Helping the Least Needy on Saturday 02 February 2013 wrote:

“It’s vitally important that our social investment eco-system develops approaches that can manage the trade-offs between short-term financial viability, innovation and social need. That means finding ways to invest in risky social enterprises and projects that have the potential to deliver big social impacts. And also finding ways to invest in less commercially viable Social Enterprises and projects that tackle the most severe social needs”.

HUCKFIELD believes that the problem with this approach is that national Third Sector Organisations seem to have fallen for the Government’s message on Social Investment. Perhaps the time has come for Social Enterprises themselves to do more to amplify the excellent case made by Robbie Davison? For most of us, the essence of the case he makes is not based on meeting Social Finance half way or reaching a compromise. It’s much more about stopping Social Investment in its tracks before large swathes of public service delivery are funded by the whim of private Social Investment.

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Leslie Huckfield Research

Social Impact Investment Forum (the Complete Irrelevance of)

The People in the Bigger Houses

Support from Investors

Growing the Social Investment Market Update

Social Enterprise Numbers – Call Yourself a Social Enterprise if you Want

“Good Fit” Social Enterprises

Social Impact Investment Forum Hoist with its Own Petard

Hard Pressed Charities don’t need Social Enterprise Hooray Henries

Eric Pickles’ Mechanism for Passing the Buck

Institute for Fiscal Studies

The New Local Government Association

The Pain of Voluntary and Community Organisations

NCVO’s Civil Society Almanac

The Compact and Compact Voice

Few Voluntary and Community Organisations have any real choice

Social Enterprise UK

Bates, Wells and Braithwaite Charity Law Conference, Thursday 16 May 2013

Enough Pain Already for Voluntary and Community Organisations

Don’t Forget the Shareholders

And, Finally

No Standing Ovation for Big Society Capital’s First Annual Report

Thirteen Years to Spend £5mn

Big Society Capital roles

BSC’s Friends, the London Third Sector Organisations

What has Big Society Capital done during its First Year?

Nick O’Donoghoe’s CEO Statement:

Key Performance Indicators and Market Diversification

What Remit for Policy Changes?

Social Investment in the Education Sector

Financial Statements and Auditors’ Report

Performance Review

We will say this only once: “You will become a Mutual”

Background and Outline

75,000 jobs to the Private Sector – an Insight into Government Behaviour?

“With a Little Help from our Friends”

What Others are Saying

A Range of Issues to be Considered

And, Finally

Why Craig Dearden Phillips is wrong on Trade Unions and Social Enterprise

Defending Public Services

‘Defined out of the Equation’

“Let me talk to the Workers”

Resisting the Next Public Spending Cuts

The Coalition’s Third Sector Procurement

‘Privatisation – you’re just as a bad as all the rest’

And, Finally

Social Investment – Scotland does it without the Hype

Social Investment in Govanhill, Glasgow without the Hype

Pat Armstrong, Chief Executive, Association of Chief Officers or Scottish Voluntary Organisations

Jackie Killeen, Scottish Director, Big Lottery Fund

Ken Ferguson, Director of Robertson Trust

David Hardie – Head of Venture Philanthropy at Inspiring Scotland

Jane Newman – International Director at Social Finance

Ian Marr from YMCA Scotland and Adrian Bell, Partner at Morton Fraser LLP

Rachel Searle-Mbullu, Foundation Scotland and Carole Patrick, Life Changes Trust, Foundation Scotland

John Devine, Regeneration Manager for NG Homes

Paul Bannon, Scottish Charity Finance Directors Group

Chic Brodie MSP, Convenor of the Holyrood All Party Social Enterprise Group

And, Finally

Big Society Capital’s £600mn – An Alternative Strategy for Supporting Social Enterprises

“Beware the Ides of March” (March 15 2013 AD, not 44 BC)

An Alternative Strategy to Support Social Enterprises

A) SUPPORTING SOCIAL ENTERPRISE REGIONAL NETWORKS (the following to be discussed):

B) PUBLIC SOCIAL PARTNERSHIPS AND CHANGE FUNDS (the following to be discussed):

C) DEVELOPMENT OF MARKETS AND SOCIAL ENTERPRISE INFRASTRUCTURE (the following to be discussed):

And, Finally

Thoughts from the Social Enterprise Exchange

Well done, Social Enterprise Scotland and CEIS

Time to Draw a Line in the Sand on Social Investment

Continued Outpourings on Social Investment from the “London Bubble”

The Evidence just keeps Building against Social Investment

And, Finally

Local Healthwatch – Ode to a Mouse!

Ode to a Mouse

Section 36: Political Activities not to be Treated as being carried on for the Benefit of the Community

What Does All This Mean?

What Happens after the Francis Report into Mid Staffordshire Foundation Trust?

Who will Speak Out against the Financialisation of Social Enterprise?

Does Social Finance understand Social Need? by Robbie Davison

A) SUPPORTING SOCIAL ENTERPRISE REGIONAL NETWORKS
(the following to be discussed):

B) PUBLIC SOCIAL PARTNERSHIPS AND CHANGE FUNDS
(the following to be discussed):

C) DEVELOPMENT OF MARKETS AND SOCIAL ENTERPRISE INFRASTRUCTURE
(the following to be discussed):