Andrew O’Brien is Director of External Affairs at Social Enterprise UK
In order to appeal to Prussophiles in No.10, I am starting by reflecting on the famous saying of the 19th Century Prussian General, Helmuth von Moltke the Elder. He famously said “no plan of operations extends with any certainty beyond the first contact with the main hostile force”, usually paraphrased to “no plan survives contact with the enemy”.
True for military matters, and also it seems to government policy. Consultation of the various Treasury “books” (Green, Blue, Magenta) outline the general approach is to ensure that all public money maximises social value for the taxpayer. So many factors, models and calculations are proposed to achieve that end.
So, take the examples of a local fried chicken takeaway shop and a social enterprise stationary company which sells environmentally sustainable products and reinvests profits into helping the homeless and people with dementia. One is delivering social and environmental value, the other is providing a guilty pleasure once a week.
During the COVID-19 emergency, one of these businesses is getting 100% business rate relief for one year and a £25,000 cash grant. The other doesn’t get either. Guess which one?
That is right, the chicken shop! Perhaps you’re a fan of fried chicken and support the Chancellor’s emergency help to keep providing us with hot-wings at £1.99. But most of us would be scratching our heads. Particularly considering the Department for Health has been banging the drum about the UK’s “obesity epidemic”.
Where is your Green Book now? What good is calculating the social impact of a £15m road widening scheme when we are going to splash £7bn without any thought of how to maximise the value?
Surely in the midst of a crisis, it is even more important to make sure that we prioritise support on those that need it most – particularly if money is limited as it is here. HM Treasury is concerned that it has splashed out £60bn in emergency support for COVID-19, but if it hasn’t been well targeted does that mean that our most valuable businesses and charities should suffer?
We have entered a topsy-turvy world whereby social enterprises that receive charitable or discretionary rate relief from their local council – because they provide valuable services to the local community – get nothing. But small businesses get £10,000 merely because they happen to be in a rateable property under a certain value.
The point of this article is not to attack small businesses or takeaway providers. Small businesses are the backbone of our economy and no one would begrudge them support during this crisis. I enjoy a takeaway as much as the next person, and I don’t want my local to close because of COVID-19.
But I also don’t want our most valuable social enterprises to close either. I think if you asked most people whether they wanted to support a business that employed vulnerable people or their takeaway, they’d tell you pretty quickly the former should get help.
How does this government justify coming to this decision, with all its hundreds of pages of documentation that it issues on “value for money”, “public value”, “cost benefit ratios” and everything else?
Of course, COVID-19 has sprung up on us all, but there are plenty of ways to target support if you are prepared to consult widely and quickly. Giving social enterprises that receive discretionary rate relief or charitable relief access to the £10,000 small business grants springs to mind as pretty obvious.
The current government policy is a perverse Keynesianism. Keynes famously said that rather than doing nothing to fight the Great Depression, it would be better for the government to fill old bottles full of money and get people to dig them up.
The government seems to have taken his advice literally by dropping money into 700,000 small businesses without any thought as to whether they are providing useful work or whether helping them actually advances the government’s stated policy objectives. The proposed bailout of the airline industry is another area where government could end up undermining its own policy objectives if it is not structured correctly.
But Keynes’ point was not to just push money out the door willy-nilly but that the “cost of action” should be weighed up with the cost of inaction. If there are good ways to support the economy, do those first.
And what better way to help our economy and society than by supporting the UK’s 100,000 social enterprises which are trading for good, working in our most deprived communities, employing vulnerable people and reinvesting their profits back into areas which are been underinvested for decades? The multiplier effect of your local social enterprise will be several times the rate of your local fried chicken shop.
SEUK is working tirelessly behind the scenes to promote this opportunity, but it also requires leadership from civil servants and politicians who have the courage to plan for the future, despite the crisis of the present.
You can play your part by lobbying your local Member of Parliament and raising this argument with them. Let us know what they say!