Labour’s ‘securonomics’ needs a strong social economy to succeed
I was first elected to Parliament in 1997, representing my home seat of Salford. It’s still fresh in my mind. I was part of a new government with a big mandate that wanted to change Britain for the better.
People genuinely felt hopeful about the future. Our economy was relatively stable and growing. Sentiments about globalisation were broadly positive and external factors were largely favourable. Taken together, alongside the advent of the digital age, it really felt like a moment of huge possibilities.
If we are to arrest this economic malaise and social despair, then bold action is needed
Fast forward over a quarter of a century, and the contrast couldn’t be more stark. Economic growth – our engine for sustained prosperity – has stalled. Productivity has flatlined across the county, bar a few exceptions. Living standards have been stagnant for over a decade. Huge numbers now live day by day in a precarious state, with 14 million people having less than £100 in the bank. For healthy life expectancy, the differences between richer and poorer areas is now almost twenty years.
Our social realm has equally taken a battering. High streets have been hollowed out and struggled to adapt in an era of online retail. Large cuts to local government budgets have seen cash starved councils sell off vital community assets, leaving entire areas without the social institutions that bring people together and give meaning to places. Charities and social enterprises working on the frontline to support hard pressed communities have struggled to meet increased demand for their services with fewer resources and funding.
Against this backdrop, it’s little wonder that three out of four people feel the country is getting worse as a place to live. If we are to arrest this economic malaise and social despair, then bold action is needed. The shadow chancellor Rachel Reeves has been powerfully arguing for a new business model for Britain. She recently sketched out what this looks like and calls it “securonomics”. At its heart, is a more secure, resilient, and productive economy, that sees a “nation mobilising all its resources – the human potential found in every town and city – to build a stronger economy.”
To achieve this ambition, will require not only a dynamic private sector and thriving public services, but a crucial third pillar – a strong social economy. This sector includes everything from social enterprises, community businesses, local cooperatives, and charities. What they all have in common is that they are committed to solving our biggest social challenges and take an entrepreneurial approach in doing so.
That could be a social business that collects unwanted furniture from households, repairing it and then selling to people in need at very low prices. Or it could be a charity supporting those with long-term health conditions to find and sustain good employment. Or it could be a social enterprise that intercepts food waste and distributes it to local people on a ‘pay what you can afford’ basis. The key point is that these types of businesses are focused on harnessing everyone’s talents, reinvesting their profits back into their missions, and leaving no place or person behind.
Recent analysis from the Department for Digital, Culture, Media and Sport and Social Investment Business (SIB) shows the dividends we can reap if we provide sustainable financing to grow and resource this type of social economy. The Futurebuilders England Fund gave over £100m in loans and other financing to more than 400 social businesses in England from 2004 to 2010.
The long-term result was lower deprivation (average 12 per cent reduction) and higher economic output and productivity (average 14 per cent increase) in the most deprived communities compared to surrounding areas. The social investment directed into these organisations also contributed to their strengthened financial resilience and created more good paying jobs. One of the best things about it all, is that over £100m of the original loan investment from the fund has been repaid and handed back to the Treasury for re-use.
Whichever party forms the next government should carefully look upon the Futurebuilders England Fund as an exemplar for how we can effectively deploy social investment to support all those businesses at the coalface of the country’s biggest challenges. Be that the renewal of our high streets; supporting people to access good work and sustained employment; creating the foundations for a revolution in community energy generation and renewable power; or delivering community-based health and wellbeing services.
The country may feel broken but it doesn’t have to be. Our social economy holds the key to unlocking that prize.
Hazel Blears, former Labour MP for Salford, former communities and local government secretary and chair of Social Investment Business (SIB).
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