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Francis Maude: Speech to Voice08 Conference in Liverpool

"It's a pleasure to be here. Could I just offer on behalf of all of my Party our sincere congratulations to this city and all involved in making Liverpool the European Capital of Culture 2008. It's a fantastic achievement and one that this amazing city can be very proud of.

And it's great to be here in this brilliant new venue speaking at what I believe is the first conference held here.

I'm not here to lecture you about my party's enthusiasm for social enterprise. Yes, I want to talk about some of our thoughts. But I'm also here to listen. And it was great to have met some of you over lunch earlier and heard your views.

We want to listen because we wouldn't claim we have all the answers yet. We know that it matters and matters hugely. And under David Cameron the Conservatives have shown real passion for social enterprise. After all, David was stressing the importance of social enterprise in our ideas for Britain's future during his own leadership campaign nearly three years ago.

Why does social enterprise matter? Because no one believes any more that social progress can simply be left to the invisible hand of market forces alone, with business enterprises driven only by the profit motive. People's happiness, their general well-being, is about very much more than material prosperity and financial plenty, good though those are.

And equally no one - especially now Fidel Castro has retired - seriously believes that the all-seeing, omnicompetent state is the answer to all social ills. We'll have to wait a bit to see what Raul's view is. But no party now subscribes to the view that public services can only be delivered by the state. We are all pluralists now - at least by lip service.

So the third sector rules, OK? Well, not yet. And a word about that phrase. I don't know anyone who likes it. It sounds a little pejorative, almost third class, not even runner-up in the league tables. And yet it should really have pride of place. Private sector business enterprise, driven by the perfectly proper desire for profit, and the undoubted engine of economic growth, literally brings its own reward. The public sector, while populated largely by high-minded people pursuing a public service calling, nonetheless goes into action with all the assurance that flows from the backing of the state, with all its apparatus and sanctions.

The third sector, voluntary organisations, charities and social enterprises, has neither the rewards of the private sector nor the advantages of the public sector. You who run social enterprises and the hundreds of thousands running charities and voluntary organisations - none of you need do what you do. You do it - with all its risks and responsibilities - because of a passionate commitment - to an area, a group of people, a community, an ideal.

And the phrase "third sector" crudely lumps together a range of very different creations. A large national or international charity has little in common with a tiny local sports group. Social enterprise is different yet again, notoriously hard to define, but like the elephant not difficult to recognise. Structured as a business, with a preference for trading income, not renouncing financial profit but with a clear primacy for the social return, you are a key and growing player in an increasingly important arena. You don't exist and you won't grow because of the government - whoever forms that government. But the government can help to shape the environment within which you operate. And just as sensible supply side reform can enable businesses to grow more rapidly and to create jobs and wealth more effectively, so the government and legislative framework can help or hinder the expansion of social enterprise.

It's inevitable that the interest of politicians will be focused on social justice and the alleviation of poverty. That's our immediate bailiwick. A government gets judged - rightly - on its success in improving the condition of the people, to use a nineteenth century phrase; and especially the condition of the poorest people. I'll talk more about the role of social enterprise in our ideas for social justice later.

But while this has to be our main focus we know that the breadth and scope of social enterprises ranges much more widely. Whether it's Jamie Oliver's Fifteen group of restaurants training unemployed youngsters in the restaurant trade, CaféDirect that is leading the way for fairly traded goods from the developing world, or Green-Works, which has diverted more than 60,000 tonnes of redundant office furniture away from landfill, social enterprises are increasingly becoming an central part of communities up and down the country.

That is why we are such enthusiasts for social enterprise. For you represent the politics of the new era, the post-bureaucratic era; the politics of community-led, not government-controlled; the politics of social responsibility. It's where Britain can be seen at its very best: people working together to tackle the challenges of today and tomorrow.

Earlier today, I visited Local Solutions which is based not that far from here. Established in 1974, Local Solutions began as a small community based organisation dealing with just a few service users at a time. Now it reaches and affects the lives of 200,000 people providing care for homeless people, nursery facilities and employment preparation for disabled people, to name but a few, and has expanded to cover an ever larger area in the North West.

Local Solutions is just one of 55,000 social enterprises scattered up and down the country. Perhaps they're not all completely indispensable. But all of them meet a need - they wouldn't exist if they didn't. Remove any one of them and you begin to dissolve the glue that holds that community together.

The place of social enterprise in Conservative policy

Let me say a word now about the place of social enterprise in our merging policy. I mentioned earlier the cross-party consensus that now obtains - in theory anyway - on the need for plurality of provision of public services. We see enormous scope for social enterprise in that plurality, in a range of areas.

When we open up the supply side for new schools.

In the provision of health and social care.

In the immensely complex requirements for the effective delivery of welfare to work, whether for people receiving Incapacity Benefit who can and want to return to work; for lone parents whose self-confidence in the world of work may have taken a battering; for those out of work for long periods who need active intervention to help them back into the workplace.

In the field of penal reform, as we address the disgrace that is the re-offending and reconviction rate of Britain's prisoners.

No one believes that there exist today the range and scale of social and voluntary enterprises that will be needed to meet challenges on this scale. So what do we need to do to encourage scaling up? And wouldn't it be easier just to rely on good old monolithic state provision?

Well, probably yes, is the answer. Easier but not as good. Not because of bad intentions in the public sector. But because we're talking about people who need really proactive, individual support, from an organisation that can differentiate, customise and personalise what it does. The state by its very nature is poor at this. It has to run by strict rules along rigid tramlines. It might have been all right for the bureaucratic age. But we're coming out of that era into the post-bureaucratic age, where speed, flexibility, innovation and responsiveness are the watchwords.

So what is the next Conservative government to do? First, as the doctors swear, do no harm. Don't make life more difficult. A tiny example: this week Parliament has implemented a very boring new Statutory Instrument: the Draft Charities Act 2006 (Charitable Companies Audit and Group Accounts Provisions) Order 2008. mostly sensible stuff, but because of an overlap with another consultation - again broadly desirable - there are some charitable companies that will be relieved of the need for independent scrutiny of their accounts for this year; required to undergo it next year; and then the year after relieved again of this burden. The world will still revolve; but for the lazy want of some joined-up thought somewhere in Whitehall life will have become that little bit more difficult for some organisations just trying to do the right thing.

So constant alertness to the need to minimise burdens. Then some real stress on making the Compact a reality. Especially on full cost-recovery - as we know much more widely honoured in the breach than in the observance. Without the ability to cover your outgoings your ability to invest in growth is plainly hamstrung.

Then we will need to be much better commissioners. More imaginative, more technically proficient, understanding better the quantum leaps in progress that can be achieved when the ability to innovate is unconstrained. There can be little scope for really fresh thinking when tender documents merely describe in painful detail exactly what is currently done, and invite bidders to replicate it more cheaply.

It will also need a change in our audit culture. Of course we're right to demand proper use of public money and accountability. But a culture which condemns all failure stifles innovation. Where there is no failure there is little progress. Not all failure is culpable. Where the risks are sensibly assessed and mitigated, where all parties go in with eyes open, failure will nonetheless occur and it may still have been the right thing to do. For every such failure there will be at least two breakthroughs. And who says that monolithic state provision never fails?

But we know that there are some neighbourhoods where the problems of social deprivation are so deeply entrenched that it will not be enough simply to allow a hundred flowers to bloom. That's why we have proposed the establishment of Social Enterprise Zones, where the financial and planning constraints faced by social enterprises in these neighbourhoods can be cleared away. The analogy is with the Enterprise Zones set up in the early eighties in areas stubbornly resistant to new job- and wealth-creating investment.

Our work on this is developing and we welcome your thoughts and ideas. I say in passing what a pity it seems that the government rejected the imaginative and through work undertaken by Sir Ronnie Cohen's Commission on Unclaimed Assets, so that the scope for establish the Social Investment Bank that could make a huge contribution to the growth of the sector is to take third place behind two undoubtedly worthy and deserving causes. The reality is that there is likely to be little left for any kind of serious financial institution. And that's a massive missed opportunity.

I know there are fears that social and voluntary enterprises that take statutory funding imperil their independence. That when you take the Queen's shilling - whoever the Queen's representative may be - you forfeit the ability to be true to your mission. You have to resist the distortion of your mission. You do what you do because it meets identified needs, not because you are conforming to a political or bureaucratic priority. We must respect that and you must hold us to that.

Conclusion

Thank you again for asking me to be with you today. As Britain moves into this challenging but exciting new era, we need a new partnership based on shared responsibility, social responsibility. Yes there is such a thing as society. It's just not the same thing as the state. What you do and what we must do gives the best hope for making that society one that is whole again, where prosperity is shared and where opportunity and security march hand in hand. A fast-growing role for social enterprise we think is central to a future Britain that is whole and successful. There are loads of challenges. But with goodwill and determination together we can solve them."

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