A4e wants a debate

A4e, in the shape of its Director of Strategy and Policy, Jonty Olliff-Cooper, wants a debate - about the real issues, he says, not "semantics".  The piece he has written for the Guardian's Social Enterprise Network site is in response to the ASA's ruling that the company can't call itself a "social purpose company".  It's a lengthy piece, so I want to take time to answer it.

First, let's clear away another bit of "semantics".  He refers several times to their "customers".  This is inaccurate and thoroughly misleading.  As with all such contractors, the customer is the body buying the service, whether that is central government or a local council.  Ultimately, of course, that means the tax-payer.

And then, a bit of background on Mr Olliff-Cooper.  I can't do better than the Daily Mail back in February  which showed his "top-drawer Conservative Party contacts".  

So, to engage with what he says.  He believes that there is "fuzziness" in our thinking now.  The previous clear distinctions between public sector, private sector and charities no longer apply, because lots of other types of organisations have grown up in the gaps.  He refers, not very wittily, to the "blurred sector".  This is manifestly true.  A great many charities now exist solely on government contracts, often doing things vastly different from what they were set up to do.  They still, however, have to plough profits back into the work of the organisation.  We now have "social enterprises", which can take many forms (Wikipedia has a good article on this) but which are defined by not offering any benefit to their investors.  Cooper wants to say that A4e fits neatly into the mix because it "attempts to tackle poverty not through corporate social responsibility but through its core business".  He insists that they combine profit and social values and that "A4e's success has been good for our customers, good for taxpayers and good for the economy".

And that's where his argument starts to fall apart.  A4e has undoubtedly been good for large numbers of individual clients.  But it has failed many more.  And it has certainly not been good for taxpayers, having consistently failed to meet its targets whilst sucking up so much profit that it could pay out £11m in dividends last year.  Any company can call itself a "social purpose company" and few would deny that they have "social values" (even those whose businesses are clearly anti-social).  A long cooment under the article is by someone claiming to run a "profit-for-purpose" company.  It's meaningless.  And there is now, perhaps more than ever, a need to recognise that if government or councils choose to contract with private companies, this is a business arrangement.  The company is paid to deliver a service.  No amount of pretentious waffle should obscure that.

What's in a name?

A4e gets a mention in a piece in the Guardian about a school in Middlesborough which has been teaching kids how to set up and run businesses. A4e's role, apparently, was to co-ordinate the programme. Trouble is, the writer, Patrick Kingsley, initially described A4e as a "social enterprise". Someone quickly pointed out that it is not a social enterprise but a "straightforward, profit-making business". And to give the Guardian its due, they changed it straight away - to "social purpose company". But the Guardian has made this mistake before, so it shows how the wrong description has stuck. The official definition is: "a social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners' (DTI, 2002)." Clearly A4e doesn't fit that definition. But to call it, instead, a "social purpose company" (apparently Emma Harrison's idea) is to deliberately fudge the issue.