The Social Business

Outsourcing and the pursuit of shared goals

There was a good article in the Guardian yesterday about how public sector spending cuts mean boom times for outsourcing companies such as Serco.  

The much-accepted logic is that outsourcing saves money.  Yet the Audit Commission has suggested that councils may be overstating the savings that come from outsourcing.  More importantly, from my point of view, is this:

[The Audit Commission] said that it had found evidence of councils having difficulty with managing the complexity of contracts and assessing performance.  "Some councils have relied unduly on the spirit of partnership, believing that contractors would pursue shared goals without incentives to do so," it added.  

We've all seen examples (not just in the public sector) of business relationships where the language of partnership has been spoken, but the reality has been far less collaborative. You could also suggest that the belief  that contractors would pursue shared goals - without explicit agreement on how that would be done - is pretty naive.  And, ultimately, poor use of public money.

I think there are opportunities to do things better here - and there's a clear role for social enterprises.  I'm working on a local authority project at the moment where, when we drew up the tender documents, we agreed clear social objectives that we wanted to see achieved.  Then, with the people who have won the contract, we have agreed how achievement of those objectives will be monitored.  Progress on achievement will form the basis of the contract-management meetings.  

The alternative would have been a dry, outputs-based process which loses any sense of the real change that you wanted to achieve through tendering out the service in the first place.  Instead, by making it clear that we want to achieve certain things, then working together to agree exactly how that will be done, we should have a better chance of achieving what we want to achieve (and of course, manage the relationship with the contractor).

I'm not making big promises about how much we'll achieve, because social impact reporting can be hard work, and it's the first time we've done this.  This is why I go to Social Impact Camp - to try to work with other people on this issue.    But for me the clever thing here is that we've integrated social impact reporting into a process that was happening anyway - the contract management process.  So it's more work, but it's added on to (and could eventually replace) something that was happening anyway.  

Is that an incentive to pursue shared goals?  I think you could say it is.  It's certainly making it explicit that we want to see certain things achieved - and it should also give clear direction to the people delivering the contract.  In itself it won't  make the contract a success, but it at least gives us a framework for judging success - and for trying to improve things in the future.  

Are Tory co-op plans "clearly a social good"?

I've been enjoying witnessing the Co-operative Labour movement making it abundantly clear that they are the real co-operators over the last couple of days, since the Tory announcement of their plans to encourage co-operatives and social enterprises to deliver public services.

I sent my previous piece on this via Twitter to Phillip Blond, the architect of the Tory plans.  Here's his reply:

Thanks - will read and study.  But surely just a negative reaction is wrong and a misaligned reflex.  This is a social good. 

This is a social good.  Blond clearly doesn't lack confidence. 

First things first, I haven't really read any of his work in any detail, or read the detail of the Tory co-op plans.  I will do as soon as I've moved house and unpacked the boxes in ten days time.  But I've kept an eye on what he's been saying in the newspapers and elsewhere.

Secondly, I think it is a fairly negative piece so I take his point.  And that's a fault of mine - I try hard to write positive stories, and to be constructive, but I know that I can dwell on the negative sometimes.  But show me a writer who doesn't.  It's easy writing.  And there are downsides to be told in a social enterprise sector which sometimes only tells the good stories.  And I enjoy having a go at George Osborne. 

Yet I'm interested in Blond and his Red Tory ideas.   I'm also intrigued by his background.  Like me, he grew up in 1980s Liverpool and he says the impact of Thatcherism on the city has been a big influence on his life and work.  I'd say the same.   I can see how to this day Thatcher's policies - and the Militant response - did a lot of damage to my home city, and that legacy is still with us.

But I can't help but question the claim:  this is a social good.  Says who?  Who's to say that opening up the market for public services to social enterprises won't create a massive amount of damage to a fragile, skint society?  Or that the real impact of opening up to social enterprises will be to create a market in which the private sector will eventually dominate, thus (potentially) further alienating local communities?  Or that the undoubted social good that will come from the many great social enterprises that will deliver services will be counterbalanced by the regular bailouts of the ones that fail?

Let me finish on a positive.  I, like many other people, see the damage that poor public services do to individuals and communities.  I also believe that we need socially enterprising approaches to changing society - and some of those will come in the form of social enterprises.  So, I'm going to try hard to be constructive, as well as critical, in the debate about mutuality and public services.  I hope the people who seem to only see the upside of these proposals - who see them as a clear social good, might also peer over at the slightly less green grass on my side of the fence. 

Osborne, Co-ops, Free Schools and Privatisation

George Osborne was on the Today programme this morning talking about Tory plans to open up the delivery of public services to social enterprises  - in particular, it seems, to co-operatives.  I assume Steve Hilton has decided that we're not awake enough to understand what a social enterprise is at 7.10am (he's probably not wrong), so he instructed him to just keep saying the word co-operative as often as he could in three minutes.  It is a lovely word after all.

I have written a lot about how public services need to improve.  I am also an enthusiast for socially enterprising approaches to delivering services.  But I'm suspicious of political enthusiasm for social enterprise.  In this case I'm picking on the Tories, because I find them (and Osborne in particular) unconvincing, but I'm pretty sceptical about Labour's motives in this field too.  

There's something of the four legs good, two legs bad dogma about politicians embracing social enterprise. They are so desperate (as they should be) to work out ways to make the UK a better place to live that they can end up believing that transferring services to social enterprises will magically make things better. They can definitely make a big difference if the social enterprise is good at what it does.  But they are not inherently better at doing things than other organisations or businesses.

I also have a question about the likely capacity for social enterprises to deliver services.  I know all the stats about how the sector is expanding, but I'm also aware that not everyone is cut out to be an active member of an employee-owned business, of the kind Osborne is proposing.  I'd be a rich man if I had a pound for every public sector employee who's told me that they're hatching plans to set up in business, to break free from the dead hand of bureacracy.  I'd have about £3 if I had a pound for every one that's done it.  Osborne said this morning that services will only be transferred to co-operatives if that's what staff want.  I think that, sadly perhaps, is a big if.  

So, if I'm right, and the public sector won't be transformed by hordes of public sector workers all desperate to set up co-operatives, how will we find different ways to deliver services?  Enter the private sector - particularly if the Tories get into power.  I suggest that politicians will keep talking about the opportunities for social enterprises, pointing us to that lovely social enterprise which collects bulky waste in Liverpool, whilst plenty of the opportunities will actually be gobbled up by the private sector, who will soon speak the language of social responsibility with more fluency than your average social entrepreneur.  

I do think that will happen more quickly if the Tories get in.  Read for example this account of a recent Politics Show about Michael Gove's Free School plans.  They interviewed Tory MP Tim Yeo, who made it clear that he thought that the Free School plans were flawed - not because schools should not be independent, but because the organisations that will run them won't be allowed to make a profit.  One rogue Tory does not a party make, but I very much doubt that Yeo is alone.  

Gove wouldn't dare allow idea of private-sector-run Free Schools to get in front of voters.  But two years into a Tory government, with restless right-wing backbenchers giving Cameron grief, you can well imagine that things might change.  Co-operatives'  real value to Osborne and his colleagues may be to clear the way for further privatisation of public services.  

Efficiency savings and failure demand

Whilst Liam is briefly away from an internet connection in Bangladesh, I'll talk for a while about matters closer to home.

With the Pre-budget report on its way this week, there's plenty of talk from politicians and commentators about how we're going to save money and get debt under control.  Good old "efficiency savings"  got another outing yesterday, with Gordon Brown pointing to at least £1.3 billion that could be saved over four years.

Is he right?  God knows.  Anyone who has any dealings with the public sector (that's all of us then) won't need telling that there are some pretty inefficient public sector services out there.  My public sector friends never tire of telling me about inefficiencies in their particular part of the sector.  So you can see why, if you're sat on top of the pile as Prime Minister, that you'd make greater efficiency a priority.

I'm interested in considering the incentives people have for being more efficient, against continuing to be inefficient.  This is where one of my favourite ideas, failure demand, comes in.  I've written about it before so won't go on, but the basic idea is that a lot of apparent demand in a system tends to come from mistakes - people not being dealt with properly first time round.

I'd encourage you to think about your recent interactions with public services.  Was any of the demand that you created actually failure demand?   Where you weren't dealt with properly straight away, so had to phone back, email again, or go to an office again?  I've got two examples in my life from the last 7 days alone.

My question is whether there is a disincentive to become more efficient in the public sector.  What will happen if you tackle failure demand, particularly at a time when the State is looking to cut costs?  You won't get rewarded - certainly not with a bonus.  They'll realise that fewer people are needed to administer your particular system, and they'll make you redundant.  So what does the rational person do?  Stick with the inefficient system, which is helping to keep you in a job. 

I know that's a rather bleak view of humanity, but I think it's a realistic view.  I also accept that inefficiency isn't just about individual decisions to "be inefficient".  But I also don't accept the argument that it's all "the system's fault", and that all public sector workers are heroic selfless individuals.    

So what do you do to solve this problem  - if you agree with my analysis?  I think first of all you acknowledge the issue.  You are honest about the reasons why efficiency savings never happen at the scale that they are expected.  And then, to be frank, I'm not sure what you do.  In theory you reconnect your staff with the social purpose of their service, and create a culture in society where we all acknowledge the part each of us plays in helping the State to spend our money more wisely.  As I say, that's the theory.  What will happen in reality? We shall see.  I can't say I'm feeling that hopeful.  

Angel Entrepreneurs

It's Social Enterprise Day today.  So, for 24 hours at least, I'll put my default setting of sceptical enthusiast on hold and tell you a bit about my favourite social business - Angels Housekeeping. (I won't even mention that I can't wait to look at the detail of the Coalition's research - published today - that social enterprises are twice as optimistic about the future as SMEs).

Angels Housekeeping are based in Leeds and I've known them since they started out in 2005.  They are a CIC, and their main business is delivering domestic services - principally cleaning - to older people in Leeds.

You may wonder what's particularly socially enterprising about delivering a cleaning service.  To understand that, it's probably worth understanding the context they work within.  As yesterday's Queen's Speech illustrated, access to social care - particularly for older people, is a massive issue.  As more people require services, most Councils raise their criteria so that only those in the most need can get free or subsidised services in their home.  Increasing numbers of people need to find services themselves, and pay for them themselves. 

So what happens?  Some people are fine - they find services and they pay for them.  Others, for a variety of reasons, don't access services, and a slow but sure decline can set in - until a crisis happens - and the person needs expensive, intensive support from the State.  They suffer - and, to be blunt, we all end up paying.

This is where Angels make a difference.  They keep people's homes clean, but they do far more than that.  They put people in touch with the Council if they need a Social Care Assessment.  They fill in forms to get Attendance Allowance.  They phone the Fire Service to get smoke alarms fitted.  They ring the energy company when they've overcharged.  They keep in touch with relatives and let them know if there's a problem. More than anything they care - and if they go into your home and they see that you need something - they won't just walk back out again.  You'll never hear them say "Sorry, we don't deal with that", or "That's not my responsibility, you'll need to ring the Council."

The issue for them - and I'm sure they won't mind me sharing this - is that no-one pays at the moment for all that extra stuff - the social impact.  To anyone who knows them it's obvious that they make a difference to hundreds of people - and that they save the State thousands of pounds.  But it's hard to convince the State that investing here could save money elsewhere.  (The one exception to this is Keeping House -  a Leeds City Council project which I work on - which has supported Angels from the start.)

One of Angels' Directors, Gill Coupland, is also a Social Enterprise Ambassador.   She's at Number 10 today so who knows she might get the chance to make this point to someone who'll listen (although her dad told her to watch her purse - as it's Gordon Brown who needs the cash.)

I'm interested  - and I know Gill is too - to find out about Social Impact Bonds.  As I understand it the basic idea is about investing to save.  It's a way to invest in innovative approaches, with the potential for financial rewards for the investor if they promised social impacts are delivered. 

I think Angels would be perfect for this.  A back of a mop bucket calculation with Gill the other day suggested that they'll have had around £100k of added impact this year - from early interventions, referrals, benefits claimed etc.  If £25k had been invested - or even £50k -  in Angels to deliver that - then that wouldn't be a bad return.  And it would be a way to ensure that these impacts can be delivered in the long term.

And the award goes to...

Just been to have a look round a local primary school - Francis will start school next year.  

It was OK - but pretty uninspiring.  I'm not sure what I expected - obviously I haven't been in a primary school for 30 years - but I did want to be inspired.  Not by the stats about attainment or anything like that, but by the feel of the place, a sense of purpose.

I came prepared with a list of questions. Mostly the Head responded with talk of this Award that they've got, that Initiative that they're part of, this Programme that they follow.  Healthy Schools, Creative Schools, Green Schools, and god knows what else. Good tick box answers. Perhaps that was shorthand for telling me that they're doing OK, but I'm a bit sceptical about all that stuff.   

Does it really make the school a better place?  Or is that kind of thing a top-down initiative which raises the profile of a particular issue for a while, but doesn't really change things for the better in the long term.  The overgrown garden - no doubt a thriving mini-allotment when the funding was there two years ago - suggests that I'm not completely wrong.

As I mentioned a couple of weeks back we're hoping to move house this year - so may not go to that school after all.  But will it be the same wherever we go?  All the boxes ticked, all the certificates on the wall, but something special missing.  

The state must become a smarter shopper

I've got a short piece in today's Guardian  - they asked me to write a piece in response to their  A New Public Services feature last week.  Here's my piece - and here are the rest of the responses.  

Have the bosses got a point for once?

Education's on my mind at the moment.  We're putting our house up for sale this week and one of the main drivers for moving is so Francis can hopefully get into a half-decent school, as the one he'd end up in here is by all accounts pretty poor.  I'm aware it'll be even worse when bright kids like Francis who could end up there don't end up there, but there you go, that's aspiration for you.

Education's in the news too - the CBI (aka "bosses") reckon that university students should pay more for their education.  The NUS have predictably called the bosses "fat cats" and I imagine the bosses have called the students "pizza munching wasters", although that last bit hasn't been widely reported.

It goes against my just society/meritocratic instincts, but I'm not convinced by the expansion of higher education.  If you were to stand all of the UK's 18 year olds in front of me, I doubt that you could convince me that 50% of them would benefit from an academic education for the next three years of their lives.  Similarly I'm not so sure that the society and the economy will be improved if we have more young people going to University.  

I guess the NUS will have a go at me for pulling up the drawbridge after I've bagged my redbrick degree with a minimal level of debt (2:1 in Spanish and French from Leeds University since you ask.)  But given that, as Nick Clegg pointed out yesterday, money no longer grows on trees, society has to prioritise where we spend.  And I'm not sure that expansion of post-18 education is high on my priority list.

I think it was Charles Clarke, when he was Education Secretary, who said that if he was a proper socialist he'd take away all the money from Universities and give it to Primary Schools, because that's where young people's life chances are largely determined.  Clearly that's not going to happen, but I would agree that we're missing the point if we think expanding University education is going to improve people's life chances, the economy and society in a meaningful way.  If we want to have an impact, we need to question how young people are educated at a much earlier age.  

The third sector - guilty of believing its own hype?

Here's a letter I wrote to this month's New Start Magazine, in response to comments from third sector umbrella body leaders on partnerships between third sector and private sector organisations.  You can see the original article here.  

Download NewStartArticle

Reading the debate about whether third sector organisations should partner with private businesses in last month's New Start, you'd be forgiven for having the impression that all private businesses are run by villains and all third sector organisations by saints.

It's natural that umbrella body leaders generalise - they need to given that they represent a wide range of people.  But I think some of the generalisations that your contributors offered point us to some of the difficulties in achieving more cross-sector partnerships.  

The tensions, it is assumed, stem from a private sector value system which is at odds with a third-sector ethos.  That can definitely be an issue - but I'd suggest that the third sector’s over-inflated ego often gets in the way as well.

Peter Lewis's assertion that the third sector is "the sector that always puts people first" is amusing, as is his suggestion that we should focus on what we can "teach" the private sector about public service delivery.  Similarly Allison Ogden-Newton’s belief that the third sector is “the future of service delivery in the UK” seems, to me, a bit over-the-top. 

This kind of over-confidence in the uniqueness of the sector (just read ACEVO Chief Exec Stephen Bubb’s blog if you need any convincing) can, I believe, get in the way of effective partnerships.  Who wants to partner with organisations that seem so full of their own importance, and so dismissive of a different way of doing business?

As Allison Ogden-Newton suggests, it is the social impact that you have that matters most.  That’s why I think that structure and ownership will become of decreasing importance over the next few years – just at the time that we’re expecting the third sector’s role in public service delivery to grow. 

Cash-strapped Councils, on the look-out for safe bets, will choose the organisations which look like they will deliver, rather than the ones that talk a good game.  And don’t assume that your snappy social mission will save the day.  It’s a safe bet that private sector firms will find their way around the clunky social clauses in contracts.  They might, in some cases, actually deliver better impacts than their third sector competitors, who take their delivery of social benefits for granted.  In other words, they might not need us after all.  

I am by no means an apologist for the private sector.  But I’m similarly unconvinced by a lot of third-sector rhetoric.  I think that before you enter into a partnership, you need a good sense of who you really are, not who you think you are.  

Benefit Busters

I wrote a while back about the Government's plans for welfare reform - and my concerns about the category captain approach that they were adopting.   So I was keen to watch last night's programme on Channel 4 about A4E and their back to work schemes.

I found it very uncomfortable to watch.  The programme followed a group of unemployed single parents (all women) who were on a 6 week course, which was being trialled in Doncaster (seemingly South Yorkshire is Channel 4's it's grim up north place of choice these days).

The star of the show was a tough-love toting group leader who will now doubt be standing in for Jeremy Kyle next time he goes on holiday.  To my eye (and of course this is TV) it was mainly pop psychology and group bonding, strengthened by regular public bursts into tears.  I'm not saying that there isn't some merit in that, but I still was left feeling like the people, who were all in challenging circumstances, were being belittled and patronised as much as they were being given a confidence boost.  

I'm keen to see the other programmes.  I think there's another one on A4E, whilst others look at other initiatives to get people back to work - including one in Leeds.  

I wasn't born with a silver spoon in my mouth.  I was brought up by my mum in a middle-of-the-road inner city area of Liverpool.  We weren't really poor - but it was a struggle for my mum to make ends meet - two jobs, being a catalogue agent and family allowance kept the wolves from the door.  We also had good support from an extended family.   I'm telling you this because I don't want it to appear that I'm peering down into the gutter from my elevated position of lifelong wealth and privilege.  

But having said that, whenever I see programmes like this - or visit inner-city estates - like I did in Bradford yesterday - I am genuinely shocked by what I see.  The poverty that still exists in Britain is unbelievable.  This is why, it is said,  we need tough love like that shown by A4E to help to change things.  

I didn't like the approach that was portrayed on the television yesterday, yet I bet it's better than the bureaucratic indifference that was previously offered by the State.  What bothers me more is that the situation that so many people are in, ingrained, generations-long unemployment and underemployment, where your best offer is a two-week unpaid placement at Poundland - means that initiatives like that are deemed necessary and acceptable.