Being made a fool of by Peter Mandelson … and other thoughts on the third sector and recession
Peter Mandelson has made a fool of me once again. There I was in yesterday’s blog, and in a short clip on Newsnight, praising his speech and willingness to address head on the challenges of being in government in recession. It was only after I had gone on the record that I found that Peter had removed some pre-briefed sections of his speech – presumably as a result of a ticking-off from Downing Street!
Generally, I try to avoid being clipped for TV programmes – you are never sure which bit of the interview they are going to use and whether it will give a balanced impression. In fact I did say something controversial to Newsnight which wasn’t used: referring to the argument about bonuses, I suggested that this might be another example of the Government making a decision which would have made sense a year ago, but may not now. The bonus culture was a huge problem in the days of excess, but now, arguably, we need more people willing to take risks to keep valuable businesses afloat and back new ventures.
Far be it for me to use my blog to try to bounce my Trustees but the case I am trying to make to them at the moment is that the RSA continues to be ambitious despite the hard times. Not surprisingly, the recession is putting pressure on our Hospitality business and we are finding it harder to retain Fellows, but overall we are not doing badly. I hope we will have the confidence to continue the process of the reform of the Society.
The dilemmas facing the RSA are typical of the third sector as a whole. In a piece with the irresponsibly depressing headline, ‘The worst is yet to come’, David Brindle, Editor of Society Guardian, today makes some gloomy predictions about the voluntary sector. It is true that only a small number of charities have substantial endowments or reserves, but I hope these organisations will be generous and brave in the coming period. After all, what are those reserves for if not to be used at the time of greatest need? Of course, if the recession deepens into a depression and goes on for several years, then all bets are off, but in the short to medium term we need as many people as possible to do what they can to help keep activities going and stimulate new initiatives. It will be the behaviour of the private and public sectors that determines when we pull out of these dark days, but the third sector needs to show courage and leadership too.
Voluntary sector – immune to producer capture?
Is the voluntary sector immune to producer capture? I thought about this question when reading the other day the views of veteran film maker Ken Loach. The director of Kes, Raining Stones and countless other powerful pieces of social realism, was urging people not to donate to the homelessness charity Shelter while it was in conflict with its own employees over plans which may worsen the terms and conditions of some of the charity’s staff. In defending the action of Shelter management, its chief executive, Adam Sampson (a recent speaker at RSA), said ‘People give us money not to benefit our staff but to benefit those we were set up to serve – the poor, the vulnerable, the homeless – and my moral and legal duty is to use that money as efficiently as possible’.
‘Producer capture’ is one of the key concepts imported by New Labour from the nostrums of neo-liberal economics. It describes the process whereby the goals of an organisation reflect the interests and prejudices of its employees (the producers) rather than those it is supposed to serve (the consumers, customers or citizens). More precisely, given that workers in a customer-friendly organisation will see their own interests served by serving the customer, capture is evident when producer interests are not aligned with those of the consumer and it is the former that predominate.
New Labour reformers in large part accepted the neo-liberal charge that public services – sheltered from the disciplines of competition or profit – were prone to producer capture. This insight contributed to some of New Labour’s most important public service reforms. It also legitimised rhetoric critical of public employees. This rhetoric (remember the ‘scars on my back’?) also contributed to the public service morale problems which have plagued this Government despite extra investment and higher public sector pay.
I am often asked to speak on issues relating to that nebulous concept ‘the third sector’. With all the major parties taking every opportunity to sing the praises of, and make more promises to, the third sector I feel honour-bound to challenge the consensus, arguing that the voluntary sector is as prone to producer capture as the public sector.
If you were to plot the sectors as lines on an axis of producer capture, I suspect the voluntary sector would be the longest. In other words the third sector contains both the least producer captured and the most producer captured organisations. The former would include small community based groups run on a shoestring by low paid employees and volunteers while the latter might include (naming no names) well-heeled high status NGOs that have managed to make themselves almost immune to any tough questioning about the actual impact of their work. A trustee of one of these organisations recently described to me spending a whole day being shown round its offices before eventually bursting out in exasperation ‘the offices are great, the staff lovely but when am I actually going to meet a client?’.
If this was an essay not a blog post I could spend more time exploring producer capture in each sector. It is, for example, a difficult concept to apply to the private sector. Last week many people were outraged at the profits of energy companies at a time of rising prices and fuel poverty. But many of us complaining are also shareholders in these same companies through our pensions funds, life insurance or savings. So where does the producer interest lie? This is, by the way, one of the issues we will be exploring in our Tomorrow’s Investor project (for which we’d love another sponsor or two!).
For now let me end with a plea to avoid ‘sectorism’. The private, public and voluntary sectors are different in systematic ways, but it is more obfuscating than illuminating to ascribe any characteristics, including producer capture, to a sector as whole.
Beyond the third sector
I was great fan of the Eurostar until last Friday. I was among the people stranded in Paris when it was cancelled due to a fire near the line in Wandsworth. Eventually I got home via Calais and Dover but the people I felt sorry for were the young couples – lots of tearful faces – crestfallen at their plans being kyboshed.
The fire wasn’t Eurostar’s fault and no business is going to fold because a meeting gets cancelled, but maybe for the Friday journeys in particular they should go out of their way to offer an alternative route for those with their hearts set on a romantic weekend away.
I was in Paris as the ‘keynote’ (flattery will get you everywhere) speaker at the launch of EUCLID the first pan European network dedicated to third sector leaders. I told them there are powerful ideological, organisational and social reasons why the third sector is being so heavily courted by the political establishment in the UK and some other countries.
The ideological opportunity is presented by the emerging consensus formed by a right of centre that no longer thinks markets and individualism is sufficient to solve social and environmental problems, and a thinking left of centre seeing diversity of supply as a good way to bring innovation into public services.
The organisational opportunity comes from a recognition of the problems of communication, motivation and engagement in large bureaucratic organisations. The more devolved, ethically driven, diverse third sector seems to offer a better way to connect with people and provide services.
The social opportunity lies in a growing awareness that many of the most pressing problems we face are not amenable to answers which treat people as objects. Instead citizens must be the active subjects developing their own individual and collective solutions. As third sector organisations are generally created from the citizen up they seem more suited to this new way of thinking.
But with each opportunity comes a set of issues to be confronted. It is great that every political party wants to hug the third sector, but one of the important aspects of its role is advocacy, which sometimes needs to be outspoken and controversial. There is no inherent reason why charities can’t combine service delivery with advocacy but they need to think through the dilemmas posed.
Two issues are raised by the idea that third sector organisations are better suited to delivering certain social outcomes.
First, are they? I must admit to having sat through too many dispiriting and failed attempts to demonstrate that there is something about, say, a social enterprise – that makes it more responsive, dependable or innovative.
Second, if third sector organisations do grow they have to make sure they don’t simply become inflexible bureaucracies themselves. All large third sector organisations should have a copy of the last page of Animal Farm on their office wall.
Finally, the sector should see the social argument about needing to engage people more ambitiously and directly as a starting point for a wider debate. To develop what I have called a citizen-centric (rather then Government-centric) model of social change means reform beyond the third sector. It requires a rounded model of citizenship involving entitlements and expectations, a more participative democracy and radically new ways of working for the state.
Avoiding the temptation of self congratulation, the third sector should be at the forefront of this debate showing it is as driven by high ideals as by winning the next contract or spot on the Today programme.
So, there you have it. On the plus side you’ve avoided the fifteen minutes speech and read the argument in two minutes (which as readers of his Observer column know, will be a relief to my newest fan Henry Porter). On the down side you didn’t get the nice buffet, the lovely walk through Paris and the evocative pleasure of a windswept, deserted night ferry to Dover.
RSA Animate
RSA Mobile
RSA Comment- RSA Projects Blogs
- Twitter @RSAMatthew
RSA Bookshop
The RSA Bookshop, in partnership with Blackwell's the UK's leading academic bookseller, offers Fellows and friends an opportunity to purchase books and to explore our speakers’ ideas in greater detail. Visit the RSA Bookshop.