Research Profile

Thursday, 12 August 2010

A Bond for the Big Society

David Cameron has come in for some criticism of his idea of a Big Society. Detractors claim that the concept lacks detail and is a tactic to divert attention away from the swingeing cuts that we face. However we all know examples of the profoundly important work that individual volunteers do in direct support of their community. The proponents of the Big Society seek to broaden the scope and participation in such activities and in so doing, create an additional benefit, which is a collective sense of working for our society.


For individuals to make voluntary contributions to society, they need to trust that their efforts will make a difference and be valued as a complement, rather than a cheap alternative, to public services. In that context we face a serious problem, because the lack of trust between the public and politicians, does nothing to reassure individual volunteers. Modern party politics is partly to blame. For example, politicians often highlight the apparent inefficiencies of the public sector, perhaps in part so that they can reassure us that front-line services will not be cut when there is less money available. The demonization of taxation (and by association the “Big State”), as part of the differentiation of political ideology is also unhelpful. Over time this rhetoric is deeply damaging, it erodes our trust in the public sector to deliver efficient public services and in politicians to act in the public interest, by the thoughtful and strategic distribution of public funds for the greatest good.


Mr Cameron’s attempt to establish a dialogue about the role of the individual in helping create a better society is welcome and a focus on that contribution to specific (often local) community issues is a sensible strategy for encouraging participation. However Big Society needs some refining. Firstly we need to stop the demonization of taxation (and the Big State) because we need to pay for public services, and secondly it needs government intervention to stimulate broader participation in a more structured and sustainable way.


So how might we proceed in a way that captures the imagination of the public, allows the public and politicians to start to re-build a collective trusting relationship and work together for the good of our communities? One possibility is an expansion of social enterprises, which are businesses that operate for specific social purposes and which reinvest any profits for those social aims. This is an idea, which should appeal to the coalition government and to our society, because it encourages endeavour, entrepreneurship, accountability and social responsibility. However like all businesses and public services, social enterprises need help and stimulation. They need mechanisms that bring together like-minded groups of people who have a common interest in a social issue. With widespread access to the internet and the development of clever social networking facilities such as Mapping for Change it has become easier to nucleate such activities. Social enterprises also need money and there are a variety of investors who have created funds for this purpose. For example Unltd is a charity that uses £100M endowment to provide loans to numerous social enterprises. The requirement for new financial mechanisms in support of Big Society activities has been recognized and Mr Cameron’s adviser on the Big Society, Lord Wei has suggested some potentially useful possibilities, including for example a Big Society ISA (http://bit.ly/bXHvq0).


There is a case to build on these ideas and find new ways to stimulate the generation of “social bonds” in support of social enterprises as a foundation for the Big Society. A social bond is issued in order to raise a sum of money from a variety of sources (individuals, companies etc), but which is, in effect, an interest-free loan (http://bit.ly/9C6XoS). The funds are then made available to social enterprises in the form of business-friendly loans, which can provide support for the activity. At the end of the term the capital is returned to the investors or recycled into new loans if the investors prefer. The benefit to the investor is that the funds are secure and being used for a social profit, and for many this offers an attractive alternative to the financial return currently offered by high street banks. There are many excellent examples of how such bonds have helped social enterprises and this provides an important context for a wider development that the Big Society demands.


A possible variation on the conventional social bond could be a new “National Social Enterprise Bond” that would be launched to stimulate the Big Society. The bond and the resulting funds, could be administered by an organization such as the Big Society Bank. If the government provided support from the regional growth fund (http://bit.ly/9QmZVS) to match pound for pound the investment from non-governmental sources it could generate a major fund (>£500M) for social enterprises. This would then be available for tens of thousands of new social enterprises, and immediately turn the Big Society idea into reality. Individuals and government would know that they could choose to recover their investment, at the end of the lifetime of the bond.


By issuing a National Social Enterprise Bond, the coalition government could launch a meaningful and substantive basis for the Big Society and encourage a decade of social entrepreneurship. Social enterprises are effective mechanisms for capturing and encouraging entrepreneurship for societal, rather than purely commercial imperatives. Large-scale participation in social enterprises could provide the basis for a transformation of the UK and offer a chance for millions of people to work together toward a more cohesive society with an enhanced sense of community. The creation of a National Social Enterprise Bond by the coalition government, would not simply provide the money required for social enterprises, it would also help rebuild mutual trust between the public and politicians. And that really would be a Big Society.


www.mappingforchange.org

www.unltd.org.uk

http://twitter.com/SteveCaddick