Introduction
in How Blair killed the co-ops

Introduction, explaining chapters and the author’s questioning of the dominant academic interpretations of UK social enterprise policy development. Initial overview of themes throughout book, including other academic contributions’ undue reliance on North American and mainland European marketised structures, their neglect of previous UK indigenous structures and failure to synchronise voluntary, community and social enterprise developments, the political and economic significance of New Labour’s policy shift from co-operatives to social enterprise, the unreported role of academic and third sector policy entrepreneurs and the reality of social enterprise policy driven by third sector organisations themselves.

Organisations labelled “social enterprises” are now redefined, reinvented and written up widely as though they were for low-cost delivery of public services. Social enterprise today is also frequently presented as an alternative to, as an amendment or even resistance to neoliberalism and capitalism. But in this book the author shows that, far from forming an alternative to neoliberalism, social enterprise and much of the third sector now feature as platforms for its incursion into ever wider spheres of public life. As a central part of this process, especially for the Labour Party, a previous emphasis on co-operatives and locally controlled democratic organisations is now largely jettisoned. Had their previous community control been retained, their transformation for this new purpose would not have been possible. A further motive for this shift of emphasis from co-operatives and community controlled structures to more loosely defined social enterprise structures is that all this encourages the growth of social finance and social investment – an infusion of external private funds to deliver so-called impact investment, which is nowadays even encouraged in university incubators. In its more recent incarnation of social impact bonds private investors receive payments when public service outcomes are achieved. Social enterprise is now promoted globally by the British Council and the Global Strategy Group for Impact Investment as an instrument of financial liberalisation and the dilution of the role of the public sector in delivery of public services.

As a former Member of the House of Commons and the European Parliament, followed by a career in further and higher education and in training and funding third sector organisations (TSOs), the author is uniquely positioned to write with personal first-hand experience of these developments throughout the entire period of this book. Having been first elected to Parliament in 1967, one year before Labour’s first Urban Development Programme in 1968 with its community development projects (CDPs), he was later joint leader of the occupation of the Triumph Motorcycle Factory in Meriden in 1973 to form a workers’ co-operative. He was then an Industry Minister in the Callaghan government, which introduced the 1976 Industrial Common Ownership Act and 1978 Co-operative Development Agency Act. He was a member of the London Co-operative Society Political Committee from 1978 until 1993. As a member of the Labour Party National Executive Committee, where he represented co-operative societies, he chaired the National Executive Committee Working Group on Worker Co-operatives, whose 1980 report formed the basis of co-operatives policy in Labour’s 1983 General Election Manifesto. As a Member of the European Parliament from 1984 till 1989, he developed the use of European funding for community and third sector structures. From 1989 to 2004, working for Merseyside Colleges and the Association of Colleges in the West Midlands, he promoted and developed projects for TSOs.

After moving to Scotland in 2004, he set up the Plean Community Trust in one of Stirling’s Eastern Villages in 2008 and in 2009 became a Director of the Social Entrepreneurs’ Network Scotland (SENSCOT). After working on a series of third sector projects, in 2015 he conducted 11 EU Funding Master-classes across Scotland for SENSCOT, Social Firms Scotland, the Development Trusts Association Scotland and Scottish Community Alliance. From 2016 he has lectured in social enterprise at GCU, where he gained his PhD in 2018. In 2018 he became a member of the Shadow Chancellor’s Implementation Group which produced recommendations for Labour’s 2017 and 2019 manifesto commitment to double the size of the co-operative economy. He continues as a director of the Sheffield Co-operative Development Group.

The author’s role in policy development and implementation offers a first-hand witness account from the 1960s and 1970s to the present day, which is reinforced by data collection and interviews with key participants over the same period. However, he recognises that others involved in social enterprise, co-operative and third sector narratives may not share his perspective and may offer different interpretations. For objectivity and in search of a more independent perspective, as described in Chapter 2, this book has been written with a Critical Realist philosophy (R. Bhaskar 1989):

“Philosophical under-labouring” is most characteristically what critical realist philosophy does. The metaphor of “under-labouring” comes from John Locke who said:

“The commonwealth of learning is not at this time without master-builders, whose mighty designs, in advancing the sciences will leave lasting monuments to the admiration of posterity: but everyone must not hope to be a Boyle or a Sydenham; and in an age that produced such masters as the great Huygenius and the incomparable Mr Newton, with some others of that strain, it is ambition enough to be employed as an under-labourer in clearing the ground a little, and removing some of the rubbish that lies in the way to knowledge.” (Locke 1959)

Chapters in this book

The author is critical of a dominant interpretation of social enterprise in the UK as a market-oriented public service delivery vehicle, promoted under New Labour and augmented since 2010 by Conservative governments. His alternative narrative for social enterprise and the third sector consists of seven chapters, which are structured as follows:

  • Chapter 1: Introduction, explaining this book’s chapters and the author’s approach, setting out the book’s context and recurring themes.
  • Chapter 2: Background, which describes how research for this book was carried out, using Critical Realism as its basis and how this approach differs from other current contributions.
  • Chapter 3: Theoretical foundations and conceptual interpretations for the third sector, summarising literature contributions from North America and European concepts of a social economy, including the approach of French Regulationists. These contrast with the narrower market approach of L’Emergence de l’Entreprise Sociale en Europe Research Network (EMES) and UK social enterprise.
  • Chapter 4: 1960s–1980s regeneration, showing local indigenous structures in the UK as a response to deindustrialisation and job losses, especially following the 1976 Industrial Common Ownership Act and Beechwood College, Leeds. These are the true antecedents for UK social enterprise.
  • Chapter 5: New Labour, co-operatives and social enterprise, showing key developments including Social Enterprise London (SEL) 1998, the Department of Trade and Industry (DTI) Social Enterprise Unit 2001, the Social Enterprise Coalition (SEC), Department of Trade and Industry “Strategy for Success” document, HM Treasury Cross Cutting Review and “Private Action, Public Benefit” in 2002. The years 1998 to 2002 saw major changes.
  • Chapter 6: Explanations, offering reasons for possible misrepresentations and misconceptions in other UK academic contributions. These include their borrowing from North American and selective European academic contributions, UK exclusion from the initial period of the Social Chapter in the European Union (EU) and an apparent neglect of enhanced EU funding and influences in mainland European and other contemporary developments.
  • Chapter 7: Conclusions, outlining reasons for this book’s different conclusion in contrast to other UK contributions, with suggestions for further research and alternative policy development.

The policy issues

North American discourses

The concept of independent social entrepreneurship, imported from North America, rather than community organisations, is becoming more dominant in the UK. Though social enterprise in North America started from a different position and operates in a different environment, for the UK the influence of American business schools at Stanford, Harvard and Duke Universities has been significant (Nicholls 2010, 618). United States nonprofits operate alongside private corporations and are significantly influenced by the policies of foundations and tax exemption, with a significant expansion following Reagan’s and Bush’s “roll back neoliberalism” from the 1980s onwards (Peck and Tickell 2002). Because North American business schools dominated early literature on social entrepreneurship (Dees and Anderson 2006; Nicholls 2006; Austin 2006), their influence constitutes “a legitimating strategy in which organizations actively engage in processes that align field-level and internal logics to shape emergent institutional fields as closed systems of self-legitimation” (Nicholls 2010, 617).

Mainland EU social economy discourses

Apart from US contributions, UK discourses have been heavily influenced by the EMES, with its restricted focus on social enterprise as a marketised variant in a social economy. Earlier mainland European interpretations of social enterprise as collective, associational or mutual activities were closer to the International Centre of Research and Information on the Public, Social and Co-operative Economy (CIRIEC) view of a social economy. Typically, EMES now focuses on Work Integration Social Enterprises (WISEs), in which social enterprises frequently compete for contracts to deliver public services.

The EMES approach dominates many European discourses, despite mainland European interpretations of previous earlier institutionalisation of co-operative, mutual and associational structures (Vivet and Thiry 2000, 33) with public service delivery projected under Christian Democracy (Van Kersbergen 2003; Esping-Andersen 1999; Huber, Ragin and Stephens 1993).

Neglect of earlier indigenous structures

Apart from the influence of North American and EMES discourses, for the author the major problem in most current UK interpretations of social enterprise is that large numbers of community-based regeneration structures in the 1970s and 1980s have been neglected, though they originated as community defences during a period of massive deindustrialisation and job losses, and were the genuine antecedents of social enterprise in the UK. Following Labour’s 1976 Industrial Common Ownership Act (Watkins 1976) and the 1978 Co-operative Development Agency Act, during the 1970s and 1980s the size of the co-operative economy more than doubled.1 Labour’s 2017 and 2019 General Election manifestos (Labour Party 2017; 2019) included a commitment to double the size of the co-operative economy.

Voluntary, community organisations and social enterprise

Most UK contributions do not synchronise voluntary, community and social enterprise developments, despite many policies to encourage voluntary and community sector participation in a marketised public service delivery which prefaced similar later policies for social enterprise. Other contributions support the author’s contention. “In such a perspective, the third sector can no longer be viewed as fully separated from the private for-profit and the public sectors; instead, it appears as an intermediate sector” (Defourny, Nyssens and EMES 2012, 11). The third sector definition is extended specifically in order to include social enterprises, which, until that point, were institutionally dealt with as businesses, and part of the market, rather than the third sector (Carmel and Harlock 2008, 160).

Social enterprise policy shift

The components of the major policy shift running throughout this book are, firstly, New Labour’s marginalisation of co-operatives and the wider Co-operative Movement in favour of social enterprise and, secondly, UK and other academic contributors’ complete neglect of the genuine antecedents of social enterprise, many of which were themselves co-operatives, registered by the Industrial Common Ownership Movement (ICOM). The underlying motive behind this policy shift was to enable social enterprise activities to refocus on public service delivery. All this involved a political rupture with the Co-operative Movement which was at least as politically significant as Labour’s repudiation of Clause Four of its constitution in 1995. As shown in Chapter 4, most 1980s and 1990s co-operatives were registered as companies limited by guarantee, rather than as industrial and provident society (IPS) or Financial Conduct Authority co-operatives. These were similar registrations to most of today’s social enterprises.2 Data and interviews in Chapter 5 show that rather than a transfer of emphasis from co-operatives in the 1990s to social enterprise in the 2000s, this was a more intense policy divergence between the Labour and Co-operative Movements. Labour’s turn to social enterprise was as much a political move as a structural change.

Political encouragement for New Labour social enterprise structures was heralded by publications such as Marxism Today and pamphlets from the think tank Demos by Mulgan and Landry (1995) and Leadbeater (1997). Many still refer to Leadbeater’s contribution as a founding document for social enterprise in the UK. But a further motivation for these contributions was welfare reform and greater private sector involvement (Leadbeater 1997, 78), which became a New Labour mutation from US President Clinton’s 1996 Personal Responsibility and Work Opportunity Act, which he described as “the end of welfare as we know it”. This replacement of welfare by “workfare” was part of a process often described as the “Clintonisation of the Labour Party” (Rustin 1996).

All this represented a significant departure from the policies of ICOM as the main registration body for co-operatives, which had operated as part of alternative local social economies and alongside local enterprise support agencies (Patel, Carter and Parkinson 1999a; 1999b; Wood, Reason and Egan 1999; Martinelli et al. 2003; Cornforth et al. 1988; Knight 1993). New Labour policies represented a policy shift from radical community economic development to increased dependence on the skills of individuals (Chapman, Forbes and Brown 2007; Parkinson and Howorth 2008; Parkinson 2005). This involved a change in governance from collective, co-operative and mutual organisations to those with less democratic accountability. UK contributions which omit this “paradigm shift” in voluntary, community and social enterprise policy – as interpreted by Kuhn (1962) and Hall (1993) – not only neglect social enterprise and co-operative antecedents from twenty years previously but also discard contemporaneous concepts of an alternative local social economy as described by Lipietz (1996), Mayer (2003) and Amin et al. (2002).

Though social enterprise emerged as a novel policy initiative during these major political changes, there has been almost no analysis of the wider political context. For the author, the totality of this paradigm shift ranks alongside Hall’s (1993) description of the abandonment of Keynesian demand management and its replacement with monetarism in the 1980s (Baumgartner and Jones 1991; Daigneault 2014; White 2012).

Policy entrepreneurs

Today’s interpretations of UK social enterprise and third sector policy development are strongly driven by policy entrepreneurs. The qualities of a successful policy entrepreneur are useful in the process of softening up the system. They lie in wait for a window to open. “In the process of leaping at their opportunity, they play a central role in coupling the streams at the window” (Kingdon 2011, 181). “As to proposals, entrepreneurs are central to the softening-up process … They float their ideas as trial balloons, get reactions, revise their proposals in the light of reactions, and float them again” (Kingdon 2011, 205). Quoting from Majone (1988, 160), Mintrom stresses that “before the dialectic of conflicting positions can unfold”, there must be agreement about the nature of problems then facing the community (Mintrom 1997, 739). Policy entrepreneurs can therefore be thought of as being to the policy-making process what economic entrepreneurs are to the marketplace (Mintrom 1997, 740). “[P]olicy networks, or professional-bureaucratic functional alliances … restrict who contributes to policy-making and policy implementation … They are also a form of private government; much of their work is invisible to the parliamentary and public eye” (Rhodes 1994, 147).

Academic and third sector policy entrepreneurs

There is a strong history of influential academic and third sector policy entrepreneurs in North America and the UK. Indifference or hostility of the state and the weakness of US sector organisation were counterbalanced by the development of a strong and well-resourced non-profit academic community and lobby (Rochester 2013, 45). North American policy was particularly driven by the Johns Hopkins Global Non Profits study (Salamon and Anheier 1997b). Because the institutionalisation of non-profit public service delivery followed different paths in North America, though UK academics have borrowed from these discourses, it is questionable whether these are appropriate as UK policy precedents.

In the US, there was a major output of PhDs and widening postgraduate education for the managers and leaders of non-profit organisations (Rochester 2013, 45). Business investment in higher education made possible the establishment of academic disciplines as powerful elements in policy entrepreneurship for political and industrial self-government. Historians were both propagandists and apologists for the new order (Dobkin Hall 2001, 5). Defending the role of academics, Salamon replied to David Horton Smith: “Those of us who sought to bring the dark matter of the staffed non-profit world into view therefore had the same sense of discovery that you seem to exhibit” (Salamon 1998, 89). Though rarely mentioned in UK contributions, papers from the Open University Research Unit provided academic underpinning for the expansion of co-operatives in the 1980s and 1990s (Cornforth et al. 1988; Spear 1999). During the early days of New Labour, Westall and Grenier performed the same function (Grenier 2002; Westall 2001a). Though these performed similar policy entrepreneur roles in their respective periods, 1980s contributions are not mentioned in those of the 2000s.

In the UK there are strong policy entrepreneur precedents for voluntary organisations. The “voluntary sector”, as a concept created a new policy field as well as developing a policy sub-elite made up of those who lead the intermediary bodies and those who act for government at central and local level, together with some “useful” fellow-travelling intellectuals (Rochester 2013, 52). “Modernisation of the sector helped to create or entrench the power of this sub-elite, identified by 6 and Leat (1997) as the inventors of the concept of a sector … Government has identified sector ‘leaders’ and co-opted them to its ‘modernisation’ project” (Rochester 2013, 77). 6 and Leat say of contributions from academia that “to weave numbers around the concept of ‘sector’ created for political purposes, one needs intellectuals” (6 and Leat 1997, 39). This view is echoed by Alcock and Kendall (Alcock and Kendall 2010, 8):

In an analysis of the structures set up to review research and seeking to set the agenda for policy from Wolfenden (1978) to Deakin (1995), 6 and Leat (1997) argued that these “committees” had essentially operated to politically construct “the voluntary sector” as an entity.

Those benefiting most from the idea of “voluntary sector unity” have been, on the one hand, the “top 2%” of voluntary agencies and those like NCVO (National Council for Voluntary Organisations) and ACEVO (Association of Chief Executives of Voluntary Organisations), which promote their interests and, on the other, those in government bent on privatising public services (Rochester 2013, 214). Of academic contributions on the voluntary and community sector, Harris describes their “inclination to focus their attention on the grand questions of policy development and policy outcomes rather than on the messy practicalities of the mediating organisation though which social policy implementation is achieved” (Harris 2001, 222). There are also contributions,3 which, though descriptive, lack analysis of developments. With a few exceptions,4 most contributions have failed to provide a critique of these developments (Rochester 2013, 126). This has paved the way for “welfare pluralism” in the UK. “‘Welfare pluralism’ could replace ‘welfare statism’ as a central plan of social policy” (Rochester 2013, 46).

Rochester calls in evidence DiMaggio and Powell’s institutional isomorphism (DiMaggio and Powell 1983; Rochester 2013, 128). NCVO and voluntary and community sector organisations willingly engaged in the rolling out of government policies. “There remains the issue of how far the voluntary sector is being harnessed to New Labour’s project ‘for itself’, and how far it is still a matter of it serving government’s ends” (Lewis 1999, 265). The third sector policy agenda is driven by the sector itself (Lewis 1999), with “identifiable interlocutors in the form of the National Council for Voluntary Organisations (NCVO) and other national bodies” (Carmel and Harlock 2008, 159).

Conclusion

Social enterprise and third sector policy development in the UK has been heavily influenced by discourses from North America and by the EMES in mainland Europe. But the UK social enterprise policy agenda has also been dominated by the failure of many contributions to revisit the lessons of earlier community and third sector development in the 1970s and 1980s, in which the author was heavily involved. The contemporary roles of academics and TSOs as policy entrepreneurs are frequently overlooked. This has been important not only for the “invention of the voluntary sector” (Rochester 2013; 6 and Leat 1997) and the role of North American business schools (Grenier 2009; Salamon and Anheier 1997b), but also for the expanding roles of UK third sector representative organisations like SEL and the SEC, especially between 1998 and 2002.

From the author’s political and personal experience, this book will show that all this has resulted in a UK social enterprise policy within a marketised and neoliberal framework. Co-operatives and locally accountable TSOs have been major casualties throughout these developments. As chapters 6 and 7 show, many of these structures now struggle for survival.

Notes

1 In 2018 and 2019, the author was a member of Labour Shadow Chancellor John McDonnell MP’s Implementation Group to carry forward Labour’s manifesto commitment to “double the size of the cooperative economy”. He has written elsewhere of his surprise that many involved in Implementation Group discussions had no understanding that “doubling the cooperative economy” had already happened in the 1970s and 1980s.
2 Further details of different registrations are shown in Appendix 2.
3 Paola Grenier wrote her PhD thesis while New Labour social enterprise policy was unfolding and places social entrepreneurship within a contemporary current economic and political framework rather than as challenging it (Grenier 2002). Alibeth Somers worked for SEL during this initial period. Though her PhD thesis provides a contemporary interpretation, it lacks analysis of antecedents and policy. See A. Somers, “The Emergence of Social Enterprise Policy in New Labour’s Second Term”, Goldsmiths College, University of London, 2013, http://research.gold.ac.uk/id/eprint/8051/.
4 A smaller number of academic contributions on social investment also describe the roles of policy entrepreneurs, including in higher education. See J. Morley, “Elite Networks and the Rise of Social Impact Reporting in the UK Social Sector”, SSRN Scholarly Paper No. ID 2736167 (Rochester, NY: Social Science Research Network 2016).

How Blair killed the co-ops

Reclaiming social enterprise from its neoliberal turn

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