Social enterprise and the smart Welsh state

A key decision for the next Welsh Government will be whether it will extend the social market experiment in housing – the stock transfer of properties from local authorities to housing associations – into education and health, the core areas of public service delivery. We need to continue to move in the direction of collaborative governance, with the public sector working with a massively expanded social business sphere to co-produce public value. Social enterprise – combining as it does the entrepreneurialism of the private sector with the accountability and public service ethos of the public sector – undoubtedly has the potential to drive up quality and effectiveness in public services.

To put it another way, an urgent question that will face the incoming Welsh government is this: can it transform Wales into a smart state? A preliminary first step would be to create a new work strand for the Welsh Government’s Efficiency and Innovation Board, tasked with developing a new breed of public-service social enterprise.

The model of co-operative trust schools involving teachers, parents and the local community could be promoted in Wales as an alternative to current local authority provision. The still thorny problem of adequate Welsh medium provision – as most recently demonstrated by the saga of Ysgol Treganna in Cardiff – could be addressed by giving parents the tools to turn their right to Welsh-medium education enshrined in the One Wales agreement, into a reality through their own initiative. The issue of school reorganisation in rural areas could also gain a new dimension if co-operative provision involving a stronger and structured level of parent and community involvement was included as an option.

Social care is another area where there are major opportunities for the expansion of the social business sector – not as a precursor to privatisation but as a bulwark against it. There are already plenty of examples of social businesses working in this field: worker co-operatives in domiciliary care, housing associations providing residential care, as well as charities and friendly societies. The advantage of the social business sector is its greater capacity to involve service users when compared to either private or public sectors.

It can also be more efficient (and better at income generation) than the public sector while the clear distinction with the private sector is that these financial gains are recycled for public purposes not private profit at the expense of the quality of care.  At a national level the Welsh Assembly Government could make it a clear objective of policy to make the social enterprise sector the biggest provider of social care within a generation.  Working with Housing Associations to create the sheltered housing necessary to shrink the £30 million still wasted within the NHS through bed-blocking annually would also seem an attractive public investment.

By far the most controversial area for policy makers is healthcare. Social business is already a part of this sector:  through the hospice movement and the children’s hospital Tŷ Hafan. The work of mental health charities in providing support to mental health service users. Similar work in the area of substance-abuse by organisations like Rhoserchan. The air ambulance service supported exclusively through voluntary contributions. Overall, however, the idea of direct public sector provision has become something of an article of faith since the foundation of the NHS. Ironically, the oft-quoted model for the National Health Service was itself a voluntary health insurance scheme that continued to provide additional health care to its members until the 1990s.

While BUPA can hardly be described as a social enterprise – it would be akin to calling the pre-flotation Goldman Sachs a workers’ co-operative – the Welsh independent healthcare providers, WHA and the Gwent Hospitals Contributory Fund, are closer to healthcare friendly societies like Benenden that recently joined Co-operatives UK and Medicash, used by health union Unison for its own members health insurance, so efforts should be made to bring them into the social enterprise fold.

There is, in our view, considerable scope to expand the role of the social business sector in the provision of Welsh healthcare services. At the basic level, Welsh healthcare workers should be given the right, as in England, to form employee-owned co-operatives or community mutuals where they can demonstrate community benefit.

At a more radical level, thought should be given to the means by which social business may be able to assist with the process of NHS reconfiguration – a must-do in the next twenty years if the National Health Service is to survive – with acute and specialist services provided in regional centres by the central NHS and primary services being managed progressively by the social enterprise sector, whether local GP co-operatives, community-owned hospitals, charitable organisations or genuinely mutual healthcare providers.

Social business could also be the solution to governance issues within public service broadcasting. Senior Labour politicians have suggested that the BBC Trust should become a mutual with license payers able to elect members to its Board. At the same time the accountability crisis at S4C has prompted renewed calls for the devolution of its supervision to the National Assembly. The fact that the channel is currently overseen by politicians in London who do not watch it, and could not understand it if they did, is for many the root cause of the current collapse in confidence in the broadcaster as well as the more long-term erosion in its viewing figures.

Gerry Holtham has suggested a mutual solution could strengthen accountability  while continuing to provide independent funding (Barry, 2010).  The new mutual could operate along the lines of the Canadian regional broadcaster Knowledge, where 26,000 household partners make additional voluntary contributions in addition to its core funding. This extra cash, together with core funding for S4C and the Books Council, could help realise the dream of a Welsh language daily newspaper in printed form as originally envisaged by proponents of the social enterprise Y Byd. The Chair of the Authority would be elected by the membership, rather than appointed by an English Secretary of State – which from the point of view of basic accountability would surely be an improvement.

Other statutory bodies could also be candidates for mutualisation, as the experience of British Waterways teaches us. The historic site management responsibilities of CADW could be merged with the National Trust in Wales to form a new distinctive Welsh historic buildings and monuments entity – part-funded by government, partly by member contributions and through commercial revenue. Social businesses, imbued with all the passion of a mission-driven, member-driven organisation can muster, are well-placed to deliver broader public goods like conservation. If anyone doubts this, look at the renaissance of Central Park in New York, rescued from terminal decline at the hands of the City Council by a determined group of civic entrepreneurs who formed the Central Park Conservancy that has been running and renewing the Park under a management agreement with the City since 1980.

This article is extracted from the pamphlet The Collective Entrepreneur: Social Enterprise and the Smart State, published today by Community Housing Cymru and the Charity Bank.