Telegraph 20/02/11

Is there an alternative to the Big Society?The Big Society is a work in progress – and so it should be, says Rodney Schwartz.

David Cameron has launched a defence of the Big Society  Photo: PABy Rodney Schwartz 6:29PM GMT 17 Feb 2011

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David Cameron began the week by launching a defence of the Big Society; his “mission in politics”. Over the past few days the programme has been systematically roasted by commentators on all sides. The Left sees it as a fig-leaf for fiscal cuts; the right finds it deeply troubling in a more visceral way – but is less able to articulate why. I see the programme as containing the germ of a good idea, and not only because anything so hated by both sides of the aisle must have merit.

At its root, the Big Society is about three things: decentralisation, grass roots initiatives and a smaller state. The Government, with Ministers Hurd, Maude and Pickles in the lead, has announced a plethora of initiatives and legislative intentions which do these things in various combinations. There is certainly no lack of “joined-up thinking”. With each new pronouncement, another part of the plan is revealed.

I am not sure where they are heading – I suspect they are not sure either, but I find something touchingly honest, and therefore rare, in a Government programme that is quite obviously a work-in-progress. For something as radical as this, such an approach seems appropriate and prudent.

Now the Big Society is a silly name and I, like most commentators, have had a hard time avoiding the temptation to refer to the BS Bank derisively. I also have some deep concerns about the actual operations of the Big Society Bank. Will it really be independent of Government? With 4/5 of its balance sheet coming from the banks on “commercial terms”, how independent of them can it be? Is there really demand for so much capital in this nascent sector – or will it dwarf the available opportunities?

The risk of this small sector, in which I have been involved for 12 years, being overwhelmed by the size of the Big Society Bank is extremely high. Despite the squeals of some to the contrary, there is capital available for viable social enterprises. But it takes far longer to build and grow these than to amass pools of funds, which can be done, as we are about to witness, with the stroke of a ministerial pen (OK, with some clearing bank ink). Moreover, there is something undeniably perverse about the Government being the initiator and funder of a massive programme, a key feature of which is a smaller state. It’s a little like the kindergarten teacher instructing children to play nicely, and of their own accord. The challenge for the Government is to facilitate without maintaining or increasing the dependency culture it seeks to bring to an end.

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So what is there in the Big Society programme which offers promise? I do not believe it is just a fig leaf for cuts. The cuts were inevitable and would have been similar in a Labour Government. Their severity may prove excessive, and I am not sure how fair they were, but we will never know the extent to which the markets were settled by the Coalition’s decisiveness on the deficit. There is a real likelihood that anything less would have subjected the Pound Sterling and UK debt instruments to a severe crisis of confidence. Unlike Spain and Greece, the umbrella of Euro membership would have offered no protection.

Given the extent of cuts, it would be irresponsible not to offer an alternative for social programmes destined for pruning or closure. The Big Society and some of the mechanisms around it at least offer some options.

More importantly, as a long term supporter of the social business, enterprise and investment movement, the Big Society offers some semi-official context against which the movement or sector can operate. This is not only out of selfish interest, as ClearlySo, the business I run, is totally immersed in the sector. The social sector offers some unique advantages which we desperately need to tap into in our resource-constrained time. The sector is able to raise capital at below market rates. Last year two well-known social enterprises, HCT Group (a community owned bus company based in Hackney) and the Ethical Property Company (a commercial landlord renting only, at a discount, to social change organisations) each raised £3-5 million of cheap debt, equity or “quasi-equity”. The serendipitous emergence of the socially-minded investor lay behind these transactions.

The sector also benefits from easier access to publicity. This has been of substantial benefit to some well-known social businesses, such as The Body Shop in its day, as consumers responded positively to its ethical campaigns. Labour costs to the sector are also below average, as staff seems willing to work for below market rates in support of the values of social enterprises. Social entrepreneurs are also extraordinarily innovative, deploying models that seem to derive results out of thin air.

This new, emergent Social Economy, as I prefer to describe it, recognises that the market economy and the entrepreneurial structures contain some powerful elements which can be exploited. It also recognizes that the pure pursuit of the “profit maximisation at all costs” approach has an ugly “downside”, as we have seen over the last two years. This new balanced model offers a vital hope as we climb out of the mess in which we find ourselves.

I am not unsympathetic to those who would like to maintain the traditions of the past century, where state provision of public services was the only guarantor of a just society. Sadly, this became unsustainable – and both Labour and Conservative Governments in the UK, and Left-wing and Right-wing regimes across the “West”, contributed to this predicament. Few have no blood on their hands. A new balanced model which puts power and responsibility directly into citizen’s hands feels very appealing – I am also not sure there is any alternative.

Rodney Schwartz is the CEO of ClearlySo.