Public Services (Social Value) Bill

The hon. Gentleman makes a valid point when he says that the Bill, although its scope is substantially restricted, offers some opportunity for progress to be made in support of social enterprises. The Opposition welcome and support that, but, as my right hon. Friend said, this Bill provided the Government with an opportunity to be far more ambitious in scope, and it is a tragedy that the Minister has not been able to persuade his colleagues in Government to support the more far-reaching measures. New Philanthropy Capital has assessed the funding situation facing the voluntary sector in the coming years. It noted how the scale of the cuts would be far too big for public foundations or other forms of philanthropy to be able to compensate, and also noted that charities funded by local authorities, which will bear particularly heavy cuts, are at great risk. The Minister will not, I suspect, be surprised by these difficulties facing the third sector, especially those resulting from the Government's cuts on local authorities. This is yet another example of their cutting public spending too far, too fast. I am sure the Minister will know about the cuts at Hillingdon Community Transport, Hillingdon Law Centre, Hillingdon Arts Association and Hillingdon Women's Centre. Those are just a few examples of local organisations that are being affected by the coalition's economic strategy. Social enterprises that trade directly with the public are all too aware of the extremely difficult trading environment on the high street. The latest news, which came out today, is that Sir Philip Green is having to axe a whole series of shops. That proves the error of the Government's economic strategy, and if his business is facing such difficulties it is unsurprising that social enterprises that trade with the public are also experiencing falling incomes. The crisis facing the economy, and therefore the circumstances facing social enterprises trading with the public, are yet another reason why the Chancellor should consider introducing a temporary cut in VAT and adopting the plan B proposed by the shadow Chancellor, my right hon. Friend the Member for Morley and Outwood (Ed Balls). New Philanthropy Capital also noted concerns for the third sector in respect of threats to cash flow from changes to commissioning and contracting arrangements. It points out that the shift of responsibility for commissioning from primary care trusts to GPs will create uncertainty, and the shift to payment by results could result in many social enterprises being paid for services in arrears, thereby putting strain on their cash flow. Access to grants will be important in future, and a clear, sensible, properly prepared strategy could help to ensure resources are used appropriately to support the Government's objective of encouraging more social enterprises to flourish. The second element of our proposed Government strategy to support social enterprises would be a focus on commissioning. Properly organised commissioning, with well-designed contracts and commissioners who understand the sector, could be a very important element in a successful strategy to develop the social enterprise sector. Apart from the provision of a small capacity-building pot, it is unclear whether the Government have thought through how to get the well-trained commissioners it needs, or how to get the support to the social enterprise sector that will be needed if social enterprises are to benefit from commissioning opportunities in the future. Claire Dove, chair of the Social Enterprise Coalition, said in evidence to the Public Administration Committee that uncertainty in commissioning was a key concern of the sector. The Work programme is a classic example of a poorly designed commissioning process. The Minister for the Cabinet Office and Paymaster General claimed that 35% to 40% of the value of the contracts under the Work programme would go to third sector organisations such as social enterprises. That has not happened so far. Indeed, a recent report by the National Council for Voluntary Organisations, which represents more than 8,500 social enterprises, charities and voluntary groups, highlighted its members' concerns about commissioning under the Work programme and the referrals that they were, or were not, getting. It stated:"““There have been a number of CSOs who are operating as 'specialist' or 'tier 2' providers that have not yet received any Work Programme referrals””." It also noted wider concerns about the structure of the Work programme:"““While one of civil society's strengths lies in specialist support for harder to reach customers, confining CSOs to these smaller contracts could compromise the long-term financial resilience of some organisations and their capacity to participate in future service delivery.””" In August and September the Association of Chief Executives of Voluntary Organisations conducted a survey of 155 third sector organisations that are Work programme subcontractors. It found that many had not yet received any referrals. The London Voluntary Service Council reported similar findings in its recent survey. It said the vast majority of specialist tier 2 providers in London had had no Work programme customers. The lack of a proper strategic framework for the commissioning of services from social enterprises has resulted in a poorly designed programme that is not likely to lead to the desired benefits to social enterprises. This is of concern not only to Opposition Members. Baroness Stedman-Scott is, I understand, a Conservative peer, but she raised concerns in an article that appeared in The Guardian. She is chief executive of the welfare-to-work charity, Tomorrow's People. It is having to close three offices, lay off a considerable number of staff—almost 30% of its work force—and halve the number of unemployed people it helps get into work each year from the current figure of 8,000, all because of fall-out from the Government's Work programme. The Government have not properly thought through how to make commissioning work for social enterprises and the third sector. They must do so. If the Work programme examples I have given have not convinced Members of that, let me also give examples involving the national health service, such as the commissioning experience of Central Surrey Health, an employee-owned organisation that was awarded the first ever big society award by the Prime Minister. The Minister for the Cabinet Office and Paymaster General declared it to be a classic example of the big society in action, yet in September it was announced that Central Surrey Health had lost out on a major NHS contract to a private company, Assura Medical Ltd, which is owned by Virgin Healthcare. I understand the Minister answering today's debate has said since our Committee discussions that that was ““just tough””, and that it was in the nature of competitive tendering, although I also understand he later accepted that there is not yet a genuinely level playing field for third sector organisations such as social enterprises wanting to compete with private sector organisations.