A social purpose company

The approved description of A4e (approved, at least, by A4e) is "social purpose company". According to Mark Lovell on 3 February last year, "Over the last few years Emma came up with a nice phrase that we use to define what we do – a Social Purpose Company. As a business we have a really focused view of the social impact we aim to deliver; Improving People’s Lives. We have a strong set of commercial skills and principles that we continue to mature and develop. We have a strong set of values and a clear culture about the services we deliver, how we deliver them and how we want the business to evolve."

But if you google on the phrase, you find that it doesn't seem to be Emma's invention. For instance, on a website on Belgian law, we have "Belgian legislation has also created a hybrid entity, the social purpose company, which can be considered as an alternative to non-profit associations. Unlike these associations, a social purpose company may perform a commercial activity, but this activity should be carried out in a non-profit context." This is more or less what we would call a social enterprise; it doesn't describe A4e. Then there's an internet selling company called OneNest which sells artisan goods. It's founder says, "Exactly ten years ago, I created my first social purpose company, oneNest." And, "Global Partners & Associates is a social purpose company working to promote democratic politics, effective governance and human rights."

So the phrase can mean whatever you want it to mean. What A4e apparently wants it to mean is that they're not like all those other private companies, like Serco, Capita, G4S et al, which take whatever contracts they can get in order to make a profit. No, A4e sees itself as blending "commercial and social principles" and coming up with something new. They've got a long way to go to persuade many of the people they've had dealings with that this is the case.

And as a PS, I wonder why there are almost no comments under any of Lovell's blog posts.

It's who you know

I have thought carefully about how to comment on this article in the Express by A4e's Emma Harrison - and decided that there's nothing I can say. Just enjoy the irony.

Toynbee article. And why it matters

There's an excellent article by Polly Toynbee in the Guardian, looking at the "benefits bonanza" of the Work Programme contracts. She points out that the big winner, Ingeus Deloitte, is run by a former director at the DWP, and that the company underbid the other providers to a worrying extent. She expresses surprise that previous performance is not taken into account, talking about the failure of A4e and Reed in the Pathways programme. We have pointed this out before, and it continues to startle people that a company can bodge one contract after another but still get the business. Toynbee asks why the providers would want these contracts now, and says that there are two reasons: "in previous contracts when they ran out of money they ganged together, demanded more – and got it. The government had no option. Not one company has ever been terminated for missing its targets. So price is flexible. The other reason is that these contracts are small beer, loss-leaders for large companies with their eye on massively lucrative future contracts in the great Cameron outsourcing bonanza."

But why does it matter if a private company provides a public service? Who cares. as long as it's provided efficiently and cheaply? Successive governments have taken this view, and David Cameron has been explicit about it. There is a market place, and the private sector can compete with the public sector to deliver the goods. Those of us who question this philosophy are regarded as socialists (a dirty word) or stupid. But I'll try to explain why it matters.

If my local council decides to contract out the maintenance of its housing stock, that would seem to be simply a matter of getting the best deal for council tax payers. But there are problems. Council tax payers won't be allowed to know how much it's costing, because the contract is "commercially sensitive". One firm may under-bid to secure the business, buying up its competitors, and then go bust, leaving my council to pick up the pieces. A contract may turn out not to serve the interests of residents, but can't be re-negotiated. One could regard these as matters of practicality rather than morality.

There are areas, however, where questions of morality are inescapable. There has always been a market in healthcare and education, the result of people being able to buy their way out of public provision. When it seems that the public provision may disappear altogether, in favour of the market, there are protests - too late. Three areas remain where many citizens expect, and assume, that the market should not operate, even as it takes over; areas where the commodity is people: offender management, advice services and welfare. Private prisons have been in existence for years; a few days ago it was announced that Birmingham jail was to be contracted out to G4S, the first time that a publicly-run prison has been sold off. Another jail is to be run on a payment-by-results contract; the private firm will get paid for the number of people it can keep from re-offending. Advice services used to be run by not-for-profit organisations like the CAB; deliberately so, because it was thought that such services should be clearly distinct from government. Now they are sold to the highest bidder. And, of course, there is a thriving market in welfare-to-work services. In these three areas, people in need of help are sold for private profit. They cease to be citizens, part of society with rights and responsibilities in a public space, and become objects in the market place.

I know this is a dialogue of the deaf. Growing numbers of people have been persuaded that the services used by other people (rarely by themselves) can be a matter of private profit, and there are no practical or moral objections to a few people getting rich from the public purse. To them, I would recommend the book Consumed by Benjamin R. Barber.

A4e and money

A press release by the Press Association this morning hasn't been picked up by the media. A4e has another contract. That fact is rather tucked away in the story that, "A new independent service is being launched to offer free advice on financial issues over the phone, the internet and face-to-face through a nationwide network of centres." This "Money Advice Service" is free to use for everyone, and is a rehashing of a service that's been there for a while. Now it's adding a national face-to-face service, provided in England and Northern Ireland by A4e. (In Scotland and Wales, Citizens Advice have the contract.) A4e have been involved in this for a while so perhaps the papers don't think it's news. They're too busy pushing the start of the drive to get people off incapacity benefits. The Money Advice Service's own website makes no mention of A4e. And there's nowhere a statement of how much this contract is worth to A4e.

Emma Harrison has been in America looking at social and welfare reform, while Mark Lovell reports "some good new business in welfare skills and local govt."

£1.4 million a year for Emma Harrison

This is a must-read article for anyone interested in A4e. In the Guardian, Toby Helm and Daniel Boffey have been going over A4e's accounts and report that Harrison and her husband have a joint income of £1.4m from government contracts.

The writers give the incomes of Serco bosses and point out that a recent report for the government called for a fair pay code for company executives. Then they turn to A4e. "A4e's latest accounts show that Harrison, who lives with her husband in Thornbridge Hall, a 12th-century stately home in the heart of the Peak District, has an 85.5% shareholding in the Sheffield-based company. She receives a salary of £365,000 a year. On top of this, last year she and her husband received an additional £462,000 from A4e for the company's use of her home for conferences and administrative work. .Her husband received an additional £626,856 for the lease of another property to A4e." The company's "turnover hit £190,990,000 and its profit increased 80% to £6.2m in the last financial year". The accounts take an upbeat view of the "opportunities" to be had from the "pressure on public spending".

Union leaders are quoted. Understandably, they're not happy. But, "A spokesman for A4e said the £462,000 paid to Harrison and her husband for the use of Thornbridge Hall last year was part of a leasing arrangement covering several years. The spokesman added: 'Over the past 20 years Emma Harrison has grown A4e from a small, Sheffield-based training business to one of the largest social purpose companies in the UK, helping unemployed people back into work. This has been a long journey, at times involving significant personal financial risk.'"

This is a timely article. It's just a pity that it won't change anything.

Reactions

Reactions to the contracts awards are interesting. G4S, with 3 contracts (and the contract for running Birmingham prison, announced yesterday) saw its share price go up, while Serco, with only 2, saw a fall. A4e doesn't have shareholders - but if it had, the shares would surely have risen. The Guardian reports that, "Small voluntary groups complained ministers had undermined the 'big society' by handing the £5bn-plus contracts to big providers." The Association of Learning Providers, a trade body for the industry, wants the government to go the whole hog and privatise Jobcentre Plus. Put that alongside another Guardian piece, "Jobcentres tricking people out of benefits to cut costs, says whistleblower" which is quite horrifying, and you see that it's a real possibility.

A4e has been named by a Dutch outfit as one of Britain's top employers. "The research shows that A4e has outstanding HR policies and excellent working conditions." That could come as a surprise to some.

Work Programme contracts out

The list of contractors is out and can be seen at http://goo.gl/GA32u

There are either two or three providers in each of the 11 areas.

The biggest winner is Ingeus Deloitte, with 7.

Next comes A4e with 5 (East Midlands, London East, North West, South East and South Yorkshire).

Seetec, Avanta, G4S and Working Links each have 3.

Maximus, Rehab Group, Newcastle College and Serco each have 2.

CDG, Reed, Prospects, JHP, Pertemps, Fourstar, ESG and BEST have 1 each.

Only one of those primes, Rehab Group, is a voluntary sector organisation. One, Newcastle College, counts as public sector.

Perhaps Ingeus's partnership with the massive financial company Deloitte helped its success. But A4e have done very well. Serco, on the other hand, has done badly. But that's assuming that these contracts are going to be money spinners.

There's also a list of subcontractors out. Only 36 are listed, 25 of them voluntary sector. That suggests that there are going to be a lot of redundancies in those organisations which are currently sub-contracting under FND.