Big Society

DAVID CAMERON, the prime minister, used to shout about the “Big Society”. He wanted to encourage small groups, charities and business to play a role in welfare provision. But recently we have heard less about the idea. Many people found it too abstract to be enticing. And cynics argued that the concept was devised to provide cover for swingeing government cuts.

Despite the criticism, the Big Society is not dead. In fact, the Conservative party is firmly behind the idea. But questions have been asked about the impact of fiscal austerity on Mr Cameron’s grand vision. Some argue that a philanthropy-friendly culture will emerge only if the government gets out of the way. And by some readings, the State is doing just that. When excluding money spent on “unavoidable statutory obligations” - such as waste removal - local government spending will fall by around 65% by 2020. With fewer State-run social services, the voluntary sector should fill the gap.

But history suggests that the withdrawal of the State will not result in an explosion of community organisations. Recent research by Arthur Downing, at Oxford University, looks at 19th century Britain, when politicians were trying to create something that looks remarkably similar to Mr Cameron’s Big Society. Back then, “Friendly Societies” - co-operatives that provided things like insurance and pension schemes - were in vogue. And reformers wanted more of them, to strengthen community spirit.

In 1834 the government embraced a period of cutbacks. But rather than encouraging the growth of Friendly Societies, austerity inhibited it. Mr Downing reckons that during the period of State retrenchment, people felt poorer. They had neither the money, nor the time, to devote themselves to community organisations. Eventually, Queen Victoria’s government changed tack. From 1855 the government reformed Friendly Society registrars, and they became better at management and legal support. And this had a strong positive effect on membership. By 1900 there were 10m more members than there had been 50 years earlier.

This historical research is important, since it suggests that State cuts may damage the emergence of the Big Society. But the coalition seems to know its history. Jesse Norman, a Tory MP and a big thinker in conservative circles, argues that the coalition should learn from the Friendly Society experience and actively help community organisations to grow.

Big Society Capital (BSC), which launched in 2012, offers funding to social enterprises, which include voluntary and charitable outfits. It provides loans (which must be repaid), rather than grants (which are not). And in 2012 it made £57m ($88m) of investments. Organisations that have received funding through BSC are generally enthusiastic about the scheme. Carn Brea Leisure Centre, in Cornwall, recently received a loan to fit energy-efficient light bulbs. It may sound trivial, but the bulbs will save the organisation £20,000 a year. Outfits like Carn Brea can get small but vital loans relatively easily. And these loans come with lower interest rates than those offered by high-street banks.

Nick O’Donohoe, the chief executive of BSC, is positive about his organisation’s prospects. Charities that continue to rely on grant funding are likely to suffer in the coming years, as local government expenditure is cut back. Yet Mr O’Donohoe argues that a broader range of finance options, including loans, will enable some charitable or voluntary outfits to improve their services. This year he expects his organisation to invest around £75m in social enterprise - and to encourage other lenders into the market.

But research by Paul Palmer, at Cass Business School, shows that smaller charities, in particular, struggle to adapt to loan-based forms of financing. And BSC’s potential £600m pot is overshadowed by the £1 billion drop in funding from government to the voluntary sector over the next four years.

Under fiscal austerity, the Big Society will not emerge of its own accord. British history demonstrates this. But the government seems to know its history. And Big Society Capital is a good, if incomplete, start.

To do/questions:

1. Explain the words in bold in the above text taken from The Economist.
2. Summarise the article.
3. Who benefits most from BSC loans?
4. Why are smaller charities likely to disappear?
5. How can the Big Society succeed according to the journalist?
6. Comment the cartoons (compare their message to that of the text).