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