19 November 2010
Harriett Baldwin backs a Private Member's Bill which aims to make it easier for social enterprises to secure contracts to deliver public sector services and to require that public sector contracts include provisions relating to social outcomes and social values. Harriett Baldwin (West Worcestershire) (Con): I am grateful for the opportunity to speak on this interesting private Member's Bill, and it is an honour to follow the right hon. Member for Salford and Eccles (Hazel Blears) because she obviously knows such an enormous amount about this topic. I draw the House's attention to my entry in the Register of Members' Financial Interests. For the last couple of years, I have had the privilege of sitting on the board of the Social Investment Business-a social enterprise itself-which has been a fascinating place from which to observe some of the issues and challenges in the social enterprise sector. The social enterprise sector is not widely known or acknowledged by the public. If we asked people in the street to define a social enterprise, I think that most people would look fairly blank, but the right hon. Lady gave us some excellent examples of social enterprises in her constituency, and most people will have heard of organisations such as Jamie Oliver's Fifteen. It is a restaurant that runs on a commercial basis, but it helps young people who are struggling to get into employment by training them as chefs. People have also heard of organisations such as Cafédirect and The Big Issue-the latter being a social enterprise in which the commercial magazine helps homeless people to earn an income. However, social enterprise still has some work to do in engendering public knowledge, understanding and acceptance of what it does. From the perch that I have occupied for the last couple of years, it has been fascinating to observe some of the issues and challenges for the social enterprise sector. In particular, I have chaired the investment committee, which has disbursed the money from the Futurebuilders fund, which was almost £200 million of Government funding that was designed to be used in loans to completely unbankable social enterprise organisations. If social enterprises were trying to win contracts from public sector organisations, the Futurebuilders money was designed to be the last resort. If organisations had already been to the banks, applied for grants and pursued all the other sources of potential funding, but still needed that last little bit of funding to make the project viable-the unbankable funds-the Futurebuilders fund could help. The fund has now been fully disbursed and, for the last five or six years, it has been a portfolio of loans. I wonder whether hon. Members wish to guess what the annual default rate has been-in this very tough financial period-on that series of unbankable loans to social enterprises. Dr Thérèse Coffey (Suffolk Coastal) (Con): My guess is that it would be less than 1%. Harriett Baldwin: That is an extremely low rate, but in fact the annualised default rate has been just over 1%. The case has been proven that a portfolio approach can be taken to investment in such social enterprise organisations. I am sorry that my hon. Friend the Member for Wycombe (Steve Baker) is no longer in his place, because he and I have enjoyed many lively debates on many different topics and I would have pointed out to him that we do have an arrangement in this country whereby the Government spend money on behalf of taxpayers-and that is an accepted fact. This Bill would helpfully draw to the attention of the procurer who spends public money the existence of social enterprises, which might offer an attractive alternative to the state building its own apparatus or to a private sector provider. Nadhim Zahawi (Stratford-on-Avon) (Con): I congratulate my hon. Friend the Member for Warwick and Leamington (Chris White) on introducing this Bill. Two Fridays ago in Stratford-on-Avon we held a big society day. Local government attended and we had standing room only. Two things emerged. First, what Government can do is to provide-in business terms-the mission statement. Secondly, that mission statement then needs to be implemented locally in, perhaps, diverse ways. That is where the gap in the debate may occur. Another point that emerged from the big society day was the overlap between social enterprises and voluntary providers. We need to send a message to them that in such cases it would be of benefit to both if they worked together more closely, which could make them more successful in bidding for some of this money. Harriett Baldwin: I thank my hon. Friend for that informative intervention. I, too, represent a constituency that has many shining examples of big society organisations. From my perch on the investment committee at the Social Investment Business, I have been able to see many different social enterprises across the land that are flourishing-from Salford to Stratford-and that would be helped by being brought to the attention of public service procurers in other areas. By outlining the need for a national strategy, my hon. Friend the Member for Warwick and Leamington has introduced a very helpful Bill. As we all know, there is allegedly no money left, so it will probably not be as easy as it was to help the social enterprise sector. I am sure that the right hon. Member for Salford and Eccles would agree that even had her party been elected to government it would have found it difficult to provide similar amounts for funds such as the Futurebuilders fund as they did before. Therefore, we need to emphasis the role that foundations, philanthropists or people who would like to invest in an ethical ISA could play by providing a portfolio of funding to help to draw on the experience that Government money has developed over the years, as well as the low default rate and good rate of return. Dan Byles (North Warwickshire) (Con): What I find most interesting about my hon. Friend's speech is that she is making the clear point that social enterprise is not the same as charity, and that it can be a financially and economically sustainable model. Harriett Baldwin: Indeed. I do not want to rule out the possibility that charities may want to use loan finance from time to time; obviously, they often do. My point is that, in this sector, we do not need to rely solely on help from Government procurement and funding. I want to put on record that if it is to continue to experience rapid growth, there is also a role for other providers of capital. We have had the fascinating example of the social impact bond. I believe that contract involved a charity, rather than a social enterprise, which was looking at a way of reducing reoffending rates. The rate of return that investors could earn on the social impact bond was a function of how successful the charity was in delivering on that contract. That is another creative and innovative way to find more money to help the social enterprise sector to grow. With the Minister in his place on the Front Bench, I would like to take the opportunity to refer to a policy that the Conservative party was considering in opposition-the role of the social enterprise zone as a means of the Government helping social enterprises in particular areas to attract money from private investors through additional tax breaks. This is potentially a very powerful and excellent Bill, and I am delighted to urge all my colleagues and all Opposition Members to support it. 10.42 am | Hansard